Slovak Telekom, A.S

THIS DOCUMENT IS A TRANSLATION OF THE PROSPECTUS IN SLOVAK LANGUAGE APPROVED BY THE NATIONAL BANK OF SLOVAKIA MADE UNDER THE SOLE RESPONSIBILITY OF SLOVAK TELEKOM A.S.

Slovak Telekom, a.s. Offering of up to 42,341,537 Shares in the form of Offer Shares and Global Depositary Receipts with one Global Depositary Receipt representing an interest in one Share Offer Price Range: EUR 17.70 to EUR 23.60 per Offer Share and U.S.$ 19.00 to U.S.$ 25.30 per Global Depositary Receipt

This document has been approved by the National Bank of Slovakia (the NBS), which is the Slovak competent authority for the purposes of Directive 2003/71/EC, as amended (the Prospectus Directive), as a prospectus (the Prospectus) in accordance with Slovak Act No. 566/2001 Coll. on securities and investment services, as amended (the Slovak Securities Act), and Regulation (EC) No. 809/2004 of 29 April 2004 implementing the Prospectus Directive, as amended (the Prospectus Rules). This Prospectus has not been, and will not be, approved by any competent authority of the European Economic Area (EEA) other than the NBS. The Company has requested that the NBS notify the United Kingdom Financial Conduct Authority (the FCA) and Czech National Bank by providing a certificate of approval of the Prospectus (the Notification). This Prospectus has been prepared by Slovak Telekom, a.s. (the Company or Slovak Telekom), a company organised under the laws of the Slovak Republic. The Company accepts responsibility for the Prospectus and having taken all reasonable care to ensure that such is the case, to the best of the knowledge and belief of the Company, the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import. The Prospectus has been prepared for the purposes of: (i) an offering (the Offering) by the National Property Fund of the Slovak Republic (the Selling Shareholder) of up to 42,341,537 ordinary shares in the Company, each fully paid-up with a nominal value of 10 EUR per share (the Offer Shares), in the form of the Offer Shares and global depositary receipts (the GDRs, and together with the Offer Shares, the Offer Securities), with one GDR representing an interest in one Share (as defined below); (ii) an application to Burza cennyćh papierov v Bratislave a. s. (the Bratislava Stock Exchange) for admission of 86,411,300 ordinary shares, each fully paid-up with a nominal value of 10 EUR (the Shares, and together with GDRs, the Securities), comprising 100% of the registered capital of the Company to trading on the Main Listed Market of the Bratislava Stock Exchange; and (iii) an application to (A) the FCA in its capacity as competent authority (the United Kingdom Listing Authority or the UKLA) under the United Kingdom Financial Services and Markets Act 2000 (the FSMA) for admission of up to 42,341,537 GDRs to listing on the official list of the FCA (the Official List) and to (B) the London Stock Exchange plc (the London Stock Exchange) for admission of up to 42,341,537 GDRs to trading on the main market for listed securities of the London Stock Exchange. The Bratislava Stock Exchange and the London Stock Exchange are both regulated markets in the EEA for the purposes of Directive 2004/39/EC (the Directive on Markets in Financial Instruments). Prior to the Offering, there has been no public market for the Securities. The Offering is structured as (i) an offering of the Offer Securities to the public in the Slovak Republic and of the Offer Shares in the Czech Republic and (ii) an institutional offering of the Offer Securities outside of the Slovak Republic and the Czech Republic. The Offer Securities are being offered in the United States to certain qualified institutional buyers (QIBs) as defined in, and in reliance on, Rule 144A (Rule 144A) under the U.S. Securities Act of 1933, as amended (the Securities Act), and outside the United States in offshore transactions in reliance on Regulation S under the Securities Act (Regulation S). The Securities have not been and will not be registered under the Securities Act and may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Prospective purchasers are hereby notified that the seller of the Securities may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A or another exemption from, or transaction not subject to, registration under the Securities Act. There will be no public offering of the Offer Securities in any jurisdiction other than the Slovak Republic and, in respect of the Offer Shares, the Czech Republic, although the Offer Securities may also be offered to institutional investors in accordance with applicable law. The Offering does not constitute an offer to sell, or solicitation of an offer to buy, the Securities in any jurisdiction in which such offer or solicitation would be unlawful. For a description of these and certain further restrictions on offers, sales and transfers of the Securities and the distribution of this Prospectus, see ‘‘The Offering’’, ‘‘Plan of Distribution (Terms of the Offer)’’, ‘‘Terms and Conditions of the Global Depositary Receipts’’ and ‘‘Transfer Restrictions’’. In connection with the Offering, the Selling Shareholder has agreed that Citigroup Global Markets Limited and Erste Group Bank AG, as stabilisation managers (the Stabilisation Managers), will have the right to acquire up to 4,234,153 Offer Securities, in order to stabilise the stock market price of the Offer Securities at a level higher than that which would otherwise prevail. The acquisition of the Offer Securities in connection with stabilising transactions will be subject to the applicable provisions of Commission Regulation (EC) No. 2273/2003 (the Stabilisation Regulation). The transactions to purchase the Offer Securities may be effected only during the period commencing on the earlier of the first listing day of the Shares on the Bratislava Stock Exchange and of the GDRs on the London Stock Exchange and terminating 30 days after that date (the Stabilisation Period). The transactions to purchase the Offer Securities may only be effected at a price not exceeding the relevant Offer Price. The Stabilisation Managers will not, however, be required to take any stabilisation actions. If any such actions are taken by the Stabilisation Managers, they may be discontinued at any time, but not later than the end of the Stabilisation Period. No assurance can be given that such stabilisation actions, if taken, will bring the expected results. See ‘‘Plan of Distribution (Terms of the Offer) – Stabilisation’’. Investing in the Securities involves a high degree of risk. Prospective investors should read the entire document and, in particular, see ‘‘Risk Factors’’ beginning on page 25. The GDRs are to be issued against the deposit of Shares with Citibank Europe plc, acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky, as custodian (the Custodian) for Citibank, N.A., a national banking association organised under the laws of the United States, as depositary (the Depositary). The GDRs offered and sold in the United States (the Rule 144A GDRs) will be evidenced by a Master Rule 144A Global Depositary Receipt (the Master Rule 144A GDR) registered in the name of Cede & Co., as nominee for The Depository Trust Company (DTC), and the GDRs offered and sold outside the United States (the Regulation S GDRs) will be evidenced by a Master Regulation S Global Depositary Receipt (the Master Regulation S GDR, and together with the Master Rule 144A GDR, the Master GDRs) registered in the name of Citivic Nominees Limited as nominee for Citibank Europe plc, as common depositary for Euroclear Bank SA/ NV (Euroclear) and Clearstream Banking, socie´te´ anonyme (Clearstream). It is expected that delivery of the Offer Securities will be made against payment therefor in same day funds through the facilities of Centra´lny depozita´r cennyćh papierov SR, a.s. (the Slovak Central Depository)inthe case of the Offer Shares, and DTC, Euroclear and Clearstream, in the case of the GDRs, on 12 May 2015 (the Closing Date). The Company will apply for admission of the Shares to trading on the Main Listed Market of the Bratislava Stock Exchange and the trading is expected to commence on 12 May 2015 under the symbol ‘‘STX’’. It is expected that admission to the Official List and unconditional trading through the International Order Book (IOB) on the London Stock Exchange (together with the admission to trading on the Bratislava Stock Exchange, the Admission) will commence on the London Stock Exchange at 8.00 a.m. (London time) on 12 May 2015 under the symbol ‘‘STXX’’. No assurance can be made that applications for the Admission will be approved.

Joint Global Coordinators and Joint Bookrunners Citigroup J.P. Morgan Joint Lead Manager and Retail Offering Co-ordinator Joint Lead Manager and Regional Offering Co-ordinator Erste Group WOOD & Company The date of this Prospectus is 17 April 2015. TABLE OF CONTENTS

Page SUMMARY ...... 1 RISK FACTORS ...... 25 Risks Related to the Group’s Business and Industry...... 25 Legal and Regulatory Risks...... 32 Risks Related to the Slovak Republic...... 37 Risks Related to the Group’s Relationship with Deutsche Telekom...... 40 Risks Related to the Securities and the Offering...... 41 IMPORTANT INFORMATION ABOUT THIS PROSPECTUS...... 46 Notice to United States Investors...... 48 Notice to New Hampshire Residents only ...... 48 Notice to United Kingdom and other European Economic Area Investors ...... 49 Available Information ...... 50 Service of Process and Enforcement of Civil Liabilities ...... 50 FORWARD-LOOKING STATEMENTS ...... 53 PRESENTATION OF FINANCIAL AND OTHER INFORMATION...... 54 Presentation of Financial Information...... 54 The Company’s Independent Auditors...... 54 Certain Deﬁnitions ...... 54 Certain Currencies ...... 54 Non-IFRS Information ...... 54 Rounding ...... 55 Exchange Rate Information ...... 55 Foreign Language Terms ...... 55 Information Derived from Third Parties...... 55 THE OFFERING ...... 57 USE OF PROCEEDS...... 63 EXPECTED TIMETABLE OF PRINCIPAL EVENTS ...... 64 DIVIDENDS...... 65 CAPITALISATION ...... 67 CONSOLIDATED HISTORICAL FINANCIAL INFORMATION ...... 68 Selected Consolidated Income Statement Information...... 68 Selected Consolidated Statement of Comprehensive Income Information...... 68 Selected Consolidated Statement of Financial Position Information ...... 69 Selected Consolidated Statements of Cash Flows Information ...... 70 Other Financial Information(1)...... 70 Reconciliation of Operating Proﬁt to Adjusted EBITDA and Operating Free Cash Flow. 71 BUSINESS ...... 72 Overview ...... 72 Group Structure ...... 77 History ...... 78 Fixed-line Business ...... 78 Mobile Business...... 82 Other Businesses ...... 84 Marketing and Distribution ...... 85 Brands...... 87 Customer Service ...... 87 Networks...... 88 Billing and Collections ...... 89 Information Technology...... 89 Key Suppliers...... 90 Intellectual Property ...... 90 Quality Control ...... 90 Insurance...... 90 Employees ...... 91 Corporate Responsibility...... 92 Principal Tangible Fixed Assets...... 92

i Material Contracts...... 92 Legal Proceedings ...... 92 Key Sector-specific Regulations Applicable to the Group...... 96 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 103 Overview ...... 103 Recent Developments and Trends ...... 103 Key Factors Affecting Results of Operations ...... 104 Segmentation...... 108 Seasonality ...... 109 Restatement of Presentation and Internal Controls Remediation...... 109 Description of Key Income Statement Line Items...... 110 Segmental comparison of results of operations for the years ended 31 December 2014, 2013 and 2012...... 121 Liquidity and Capital Resources...... 122 Contractual Obligations ...... 125 Other provisions and contingencies ...... 126 Risk Management...... 127 Critical Accounting Policies ...... 129 SLOVAK TELECOMMUNICATIONS MARKET ...... 132 MANAGEMENT...... 140 Overview ...... 140 Corporate Governance ...... 140 Executive Management Board ...... 142 Board of Directors ...... 144 Supervisory Board ...... 147 Code of Conduct...... 149 Remuneration and the Remuneration Committee ...... 149 Audit Committee ...... 151 Nomination Committee...... 151 Interests of the Management in the Company...... 151 Conflicts of Interest...... 151 PRINCIPAL AND SELLING SHAREHOLDERS...... 153 General...... 153 Principal Shareholder ...... 153 Selling Shareholder ...... 153 Shareholders’ Agreement...... 154 RELATED PARTY TRANSACTIONS...... 157 Deutsche Telekom Related Parties ...... 157 Slovak Government Related Parties ...... 159 Additional Information ...... 160 TELECOMMUNICATION REGULATION IN THE SLOVAK REPUBLIC...... 161 International Obligations...... 161 EU Telecom Regulatory Framework...... 161 Slovak National Telecom Regulatory Framework...... 166 Further Applicable Regulation ...... 176 THE BRATISLAVA STOCK EXCHANGE AND SLOVAK SECURITIES REGULATION . 184 Introduction ...... 184 The Markets of the Bratislava Stock Exchange...... 184 Trading and Settlement ...... 185 SAX Index ...... 185 Trading Volumes and Liquidity...... 185 Notification and Reporting Requirements...... 186 Major Shareholding Notifications...... 187 Suspension and Ceasing of Trading in the Shares...... 188 Takeover Rules...... 188 Delisting...... 189 Squeeze-out and Buy-out ...... 189

ii DESCRIPTION OF SHARE CAPITAL AND SUMMARY OF ARTICLES OF ASSOCIATION...... 190 Adoption of the New Articles ...... 190 Share Capital ...... 191 Shareholder Rights ...... 191 Increases in Share Capital...... 192 Decreases in Share Capital...... 193 Acquisition of Shares by the Company...... 194 Form, Ownership and Transfer of the Shares ...... 194 Reporting Requirements...... 195 Summary of the Articles of Association ...... 195 TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS ...... 198 1. Deposit of Shares ...... 199 2. Withdrawal of Deposited Property ...... 202 3. Suspension of Issue of GDRs and of Withdrawal of Deposited Property ...... 203 4. Transfer and Ownership...... 204 5. Cash Distributions...... 204 6. Distributions of Shares...... 205 7. Distributions Other than Cash or Shares...... 205 8. Rights Issues ...... 206 9. Redemption...... 207 10. GDR Record Dates...... 207 11. Conversion of Foreign Currency ...... 208 12. Distribution of any Payments ...... 208 13. Capital Reorganisation ...... 209 14. Elective Distributions...... 209 15. Taxation and Applicable Laws ...... 210 16. Voting Rights...... 210 17. Liability...... 211 18. Issue and Delivery of Replacement GDRs and Exchange of GDRs...... 214 19. GDR Fees and Charges ...... 214 20. Listing ...... 216 21. The Custodian ...... 216 22. Resignation and Termination of Appointment of the Depositary ...... 216 23. Termination of Deposit Agreement ...... 216 24. Amendment of Deposit Agreement and Conditions ...... 217 25. Notices ...... 218 26. Reports and Information on the Company...... 218 27. Copies of Company Notices ...... 219 28. Moneys Held by the Depositary...... 219 29. Severability...... 219 30. Governing Law ...... 219 31. Contracts (Rights of Third Parties) Act 1999 ...... 220 DESCRIPTION OF KEY PROVISIONS RELATING TO THE GLOBAL DEPOSITARY RECEIPTS WHILE IN MASTER FORM...... 221 Exchange...... 221 Payments and Distributions ...... 221 Surrender of GDRs...... 222 Notices ...... 222 Information...... 222 Governing Law...... 222 DESCRIPTION OF ARRANGEMENTS TO SAFEGUARD THE RIGHTS OF THE HOLDERS OF THE GLOBAL DEPOSITARY RECEIPTS...... 223 TRANSFER RESTRICTIONS ...... 226 Rule 144A...... 226 Regulation S ...... 227 Other Provisions Regarding Transfers of the GDRs...... 228 TAXATION ...... 229 Certain Slovak Tax Considerations ...... 229

iii Certain Czech Tax Considerations ...... 232 Certain U.S. Federal Income Tax Considerations ...... 236 United Kingdom Tax Considerations...... 239 Stamp Duty and Stamp Duty Reserve Tax ...... 241 PLAN OF DISTRIBUTION (TERMS OF THE OFFER)...... 242 General Information about the Offering ...... 242 Offer Period ...... 242 Offer Price ...... 242 Retail Offering...... 244 Underwriting Agreements...... 244 Lock-up Provisions...... 247 Change and Withdrawal of Subscriptions...... 247 Allocation of the Offer Securities ...... 247 Admission to Trading ...... 248 Stabilisation ...... 249 Existing shareholdings ...... 250 Selling Restrictions ...... 250 No Public Offering outside the Slovak Republic and the Czech Republic ...... 250 CLEARING AND SETTLEMENT ...... 252 Clearing and Settlement of the Shares ...... 252 Clearing and Settlement of GDRs...... 252 Settlement of the GDRs...... 255 INFORMATION RELATING TO THE DEPOSITARY ...... 256 INDEPENDENT AUDITORS ...... 257 LEGAL MATTERS ...... 258 ADDITIONAL INFORMATION ...... 259 Authorisations and Consents ...... 259 No Material Adverse Change ...... 259 Documents on Display...... 259 Publication of the Prospectus ...... 259 Websites ...... 259 GLOSSARY ...... 260 RESPONSIBILITY STATEMENT AND SIGNATURES...... 266 INDEX TO FINANCIAL STATEMENTS ...... F-1

iv SUMMARY

Summaries are made up of disclosure requirements known as ‘‘Elements’’. These Elements are numbered in Section A –Section E (A.1 – E7). This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of ‘‘not applicable.’’

Section A – Introduction and warnings

A.1 Warning This summary should be read as an introduction to the Prospectus; any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the member states of the EEA, have to bear the costs of translating the Prospectus before the legal proceedings are initiated; and civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. The Person responsible for the summary is the Company represented by Mr. Miroslav Majorosˇ, Chairman of the Board of Directors, and Mr. Michal Vaverka, Vice Chairman of the Board of Directors.

A.2 Subsequent resale or Not applicable. The Company has not consented to the use of the Prospectus for final placement of subsequent resale or final placement of securities by financial intermediaries. securities by financial intermediaries

Section B – Issuer

B.1 The legal and Slovak Telekom, a.s. (the Company) commercial name

B.2 Domicile / Legal Form / The Company is a joint-stock company incorporated under the laws of the Slovak Legislation / Country Republic. of Incorporation The registered seat of the Company is at Bajkalska´ 28, 817 62 Bratislava, Slovak Republic.

B.3 Key factors relating to, The Group (as defined in element B.5 below) is the largest multimedia and the nature of issuer’s telecommunications operator in the Slovak Republic by revenue, offering a full current operations and range of broadband, fixed telephony, Pay-TV, mobile data and voice services as principal activities well as a comprehensive suite of ICT services. The Group is part of the Deutsche Telekom Group and markets most of its services under the Deutsche Telekom ‘‘T’’ brand. Before liberalisation of the Slovak telecommunication market, in 2002, it was the only provider of fixed telephony services in the Slovak Republic. The Group carries out substantially all its activities in the Slovak Republic. In terms of market position the Group is the market leader (measured by revenue) in fixed voice, fixed broadband and Pay-TV for the year ended 31 December 2014. It is also the second largest provider of mobile telecommunication services by service revenue. Fixed-line services provided by the Group consist mainly of core fixed voice and broadband internet complemented by a range of value-added services offered through the Group’s extensive fixed-line telecommunications network benefiting from an on-going roll-out of modern fibre optic technology. The Group provides comprehensive and premium content through its Pay-TV services, including a high definition and interactive IPTV platform. The Group is also a leading provider of ICT services and offers wholesale services to a number of retail Internet service providers (ISPs) and other licensed operators in the Slovak Republic and abroad.

1 The Group also offers a full range of voice and data mobile services, including traditional and value-added voice services, international roaming services, interconnection services with other mobile operators inside and outside the Slovak Republic, messaging and data services using 2G (GSM), 3G (UMTS) and 4G (LTE) network technologies. As the first multimedia operator in the Slovak Republic, the Group offers the television services via both cable and satellite technology. Except for standard TV channels, the Group offers premium and exclusive sports content. High-end TV service with interactive features (VOD, catch-up TV functions, recording) supported by IPTV technology are offered under TV Magio brand, while linear mass market television services mostly provided via satellite technology are offered under DIGI brand operated through the Group’s wholly-owned subsidiary DIGI SLOVAKIA s.r.o. (DIGI). The Group considers itself to be the leader in the Slovak market for ICT solutions. The Group’s ICT solutions are provided through the Company and its subsidiary PosAm. The Group’s ICT business consists primarily of cloud-based services (private as well as public), tailor-made IT solutions, mobile device management and car monitoring, offering customers both cost efficiency and flexibility with the higher security and service availability. The Group also operates modern data centres across the Slovak Republic. The Group also introduced a cloud application platform in 2014, and offers applications focused on providing a quality customer experience tailored to the Slovak market. The Group also offers virtual servers (IaaS), web hosting services, M2M (Machine-to-machine) & IoT (Internet of Things) solutions, and healthcare information systems for hospitals.

B.4a Significant trends Pricing and competition The Group is subject to significant competition for its products and services. In light of this competition, overall prices for most products and services offered to customers in the telecommunications markets in the Slovak Republic have steadily decreased in recent years. The Group seeks to maintain and improve its competitive position by offering products and services that it believes are more appealing to customers. The Group seeks to provide customers with access to premium and exclusive content, high levels of customer support, leading network infrastructure and superior mobile spectrum portfolio. In addition, the Group benefits from having a relatively higher proportion of post-paid mobile telephone customers. Nevertheless, the overall pricing environment may be disturbed by the entry of a significant new operator or competitor, as occurred when O2 started offering mobile services in 2007. Bundling of products and services Telecommunication service providers, including the Group, increasingly seek to offer bundled offerings of multiple products. These offerings combine fixed and/or mobile services and allow for differentiation based on quality and value of service provided. In addition, bundled offerings generally drive and support telephony and broadband internet products and often help to reduce customer churn as compared with individually sold products and services. Management believes that offering an integrated mobile and fixed service portfolio with high quality and reliability enables it to sell additional as well as premium versions of existing services, such as internet in mobile data packages or data consuming premium services, such as Magio Go, while also reducing churn because customers often prefer bundled products due to the convenience and cost savings that are available when acquiring fixed-line and mobile telephony, fixed and mobile broadband internet and television services from a single provider for one price. Product bundles also grant opportunities to cross-sell services to customers, thereby encouraging them to procure additional services from the Group, such as by encouraging broadband customers to acquire pay-TV services from the Group, as well as increase network utilization. Bundled services also facilitate the Group’s ability to capitalize on developing market trends, such as the emergence of fixed-mobile convergence in the Slovak Republic, which is the bundling or packaging of fixed and mobile services together into a single customer package. Accordingly, since 2015 the Group has started offering product bundles that combine both fixed-line services and mobile services.

2 Macroeconomic conditions in the Slovak Republic The Group’s results of operations have been and will continue to be influenced by macro economic conditions in the Slovak Republic, including trends in real GDP and private consumption. As real GDP increases, the Group generally experiences an increase in demand for its telecommunications services. In particular, increased domestic consumption tends to result in increased spending on telecommunications services, particularly by consumers. For example, consumers may be more likely to subscribe for broadband or pay-TV packages, or may subscribe to higher-cost packages, during periods of relatively favourable economic conditions. Conversely, during periods of low or negative growth in GDP or consumer spending, both B2C and B2B customers tend to reduce their expenditures on telecommunications services. Moreover, such reductions may not be fully offset during subsequent periods of improved economic conditions Interconnection charges and regulations The Group generates revenues from other network operators in the form of access and interconnection fees for voice calls terminated on the Group’s networks, and is required to pay access and interconnection fees to other network operators for calls terminated on their networks, in each case both domestic and international. These access and interconnection fees are based on set termination rates for both fixed and mobile voice calls. In recent years, the Slovak NRA has taken action to significantly reduce these termination rates and the reductions in FTRs and MTRs have significantly affected the Group’s revenue in recent periods. Management believes that there is limited scope for further reductions in interconnection rates, as MTRs are generally in-line with EU and regional medians and FTRs are already at low levels, such that the impact on the Group’s revenues in future periods is likely to be more limited. The Group also generates revenues from retail and wholesale international voice and data roaming charges for calls and SMS made by visitors to the Slovak Republic using the Group’s mobile network, and incurs costs associated with the Group’s access and interconnection expenses for calls and SMS made by the Group’s subscribers who are abroad and have to rely on other network operators for fulfilment of their calls. Applicable European Union regulations have required significant reductions in such fees. In addition, the Group has been designated as having significant market power in fixed voice and fixed broadband markets in the Slovak Republic. The Slovak NRA has imposed certain obligations on the Group relating to, among other things, access and use of specific network facilities, non-discrimination, transparency or the level of tariffs at the regulated wholesale or retail markets. As a result, the Group is required to provide certain services to customers, and it may be limited in its ability to adjust pricing in order to maintain regulatory required margins. The Group is also required to make fixed voice, fixed broadband and mobile roaming services available on a wholesale basis. While the Group seek to change market prices for these services, in some cases it is requested to offer the services below cost. Cost reduction program In order to maintain its competitive position and its financial performance, the Group has undertaken a number of initiatives in order to reduce its costs and improve its operating efficiencies. A cost reduction program undertaken by the Group from 2010 through 2014 included personnel reductions; technology improvements and modernization; rationalization of the Group’s real estate; energy efficiency improvements; improving operational efficiency; and implementing electronic billing and other systems. Measures introduced since 2014 have sought to further the transformation of the Group into an ‘‘eCompany’’ by reducing the use of paper, streamlining and simplifying support processes, including customer payment methods, using more online channels for sales and focusing on an omnichannel approach to customers through a stable and developed online platform. In addition, as a member of the Deutsche Telekom group, the Group participates in a number of cost-reduction programs, which complement the programs adopted at the Group level. Key accomplishments during the period under review include switching its fixed-line network to all-IP, which was completed in December 2014, as well as an employee reduction program led by Deutsche Telekom, which is expected to be finalised by 2016. The Group has also undertaken other

3 improvements to reduce costs, such as the combination of its fixed-line and mobile businesses resulting from the merger with T-Mobile Slovakia, which previously operated as a separate legal entity within the Group, and which was largely finalised by the end of 2012. Capital expenditures and investments in network The Group’s ability to provide fixed and mobile telephony, fixed and mobile broadband internet and TV to retail customers as well as telecommunications and ICT solutions to business customers depends in large part on its ability to provide attractive and competitive product offerings to its customers by upgrading and maintaining its fixed and mobile networks. In light of the growing penetration of smartphones and the increasing demand for data services, upgrading and maintaining the Group’s networks is key to the provision of services to its customers and meeting the increasing needs of the customers for high-quality fixed and mobile data services. Perception of network quality and speed are important factors in the Group’s ability to be able to attract and retain its customers, and therefore minimize churn by offering the best products and services to its customers. In particular, in recent years the Group has invested in rolling-out a fixed-line fibre network, and its LTE mobile network. The Group was the first mobile operator in the Slovak Republic to launch commercial LTE services, in November 2013, giving it a ‘‘first mover’’ advantage, and has the largest 4G network coverage in the Slovak Republic, covering 52% of the population of the Slovak Republic in January 2015.

B.5 Description of the The Company is a parent company of a group that comprises the Company and its issuer’s group consolidated subsidiaries Zoznam, s.r.o. and Zoznam Mobile, s.r.o. (internet content), Telekom Sec, s.r.o. (security services), PosAm, spol.s r.o. (IT and data services) and DIGI SLOVAKIA, s.r.o. (digital and cable television services) (the Group). The Group conducts majority of its operations through the Company. The following chart shows the structure of the Group as at the date of this Prospectus; the percentages show shares in the registered capital and voting rights:

Slovak Telekom, a.s.

DIGI SLOVAKIA, Telekom Sec, s.r.o. Zoznam, s.r.o. Zoznam Mobile, s.r.o. PosAm, spol. s.r.o. s.r.o.

100% 100% 100% 100% 51% Established 2006 Acquired in 2013 Acquired in 2005 Acquired in 2005 Acquired in 2010 Main activities: Main activities: Main activities: Main activities: Main activities:

security services; digital and cable internet content and internet content and specific IT and television and internet advertisement advertisement infrastructure automated data services; services. services, solutions for processing. corporate TV program graphic design. customers. broadcasting.

4 B.6 Interests in shares / The Company is controlled by Deutsche Telekom AG on the basis of holding 51% voting rights / of the registered capital and voting right in the Company. Deutsche Telekom AG controllers holds the controlling interest in the Company through its indirectly wholly owned subsidiary Deutsche Telekom Europe B.V. (before 1 March 2015, the name of the entity was CMobil B.V.). Prior to the Offering, the remaining 49% of the Shares are owned by the National Property Fund of the Slovak Republic (the Selling Shareholder).

B.7 Selected historical The historical financial information set forth below as at and for the years ended financial information 31 December 2014, 2013 and 2012 has been extracted without material adjustment from the Company’s audited consolidated financial statements as of 31 December 2014, 31 December 2013 and 31 December 2012 and for the years then ended. Selected Consolidated Income Statement Information Year ended 31 December 2014 2013 2012 (EUR million) Revenues...... 767.6 809.0 826.8

Financial income...... 2.9 2.6 4.9 Financial expense...... (1.2) (1.8) (1.8) Net financial result ...... 1.7 0.8 3.1 Profit before tax...... 71.0 70.2 113.6 Income tax expense...... (27.4) (20.9) (50.5) Profit for the year ...... 43.6 49.3 63.1

Selected Statement of Financial Position Information As at 31 December 2014 2013 2012 ASSETS (EUR million) Non-current assets Property and equipment ...... 792.2 817.6 918.5 Intangible assets...... 404.4 443.0 358.1 Available-for-sale investments ...... 32.1 176.6 — Deferred tax...... 0.8 0.9 0.2 Term deposits ...... — 1.1 — Trade and other receivables...... 1.7 9.1 9.1 Prepaid expenses and other assets ...... 13.2 12.8 14.2 1,244.4 1,461.2 1,300.2 Current Assets Inventories ...... 12.1 14.2 14.0 Investments at amortized cost ...... 3.1 3.1 74.3 Available-for-sale investments ...... 172.0 49.9 — Term deposits ...... 219.6 142.3 106.0 Loans ...... 150.0 — — Escrow ...... 1.0 13.0 — Trade and other receivables...... 112.1 130.7 110.5 Prepaid expenses and other assets ...... 6.5 7.8 9.8 Current income tax receivables...... 10.0 0.8 4.0 Cash and cash equivalents...... 93.1 229.1 371.5 779.5 590.9 690.1 Assets held for sale ...... 8.6 19.8 — 788.1 610.7 690.1 TOTAL ASSETS...... 2,032.5 2,071.9 1,990.3

5 As at 31 December 2014 2013 2012 EQUITY AND LIABILITIES (EUR million) Shareholders’ equity Issued capital ...... 864.1 864.1 864.1 Share premium...... 386.1 386.1 386.1 Statutory reserve fund ...... 172.8 172.8 170.6 Other...... (1.9) 1.8 0.6 Retained earnings and proﬁt for the year ...... 187.6 160.4 183.8 Total Shareholders’ equity...... 1,608.7 1,585.3 1,605.4 Non-current liabilities Deferred tax...... 115.9 128.3 150.5 Provisions...... 25.8 16.9 18.2 Trade and other payables ...... 0.6 1.1 0.3 Other liabilities and deferred income...... 3.5 2.8 4.8 Total Non-current liabilities ...... 145.8 149.1 173.8 Current liabilities Provisions...... 37.4 34.3 5.2 Trade and other payables ...... 129.0 225.2 133.5 Other liabilities and deferred income...... 110.6 74.0 72.2 Current income tax liabilities ...... 0.9 4.0 0.1 Total Current liabilities ...... 278.0 337.6 211.1 Total liabilities ...... 423.8 486.7 384.9 TOTAL EQUITY AND LIABILITIES ...... 2,032.5 2,071.9 1,990.3

At the General Meeting held on 31 March 2015, the shareholders approved a dividend of 80% of the Company‘s distributable profit in respect of 2014, amounting to an aggregate of EUR 32.5 million. These dividends are expected to be paid in late April 2015. In January 2015, the Company paid its fine of EUR 38.838 million to the European Commission. In March 2015, the Company and the claimant on the CDI Case entered into a settlement agreement. Except as described above, no significant change in the financial or trading position of the Group has occurred between 31 December 2014 and the date of this Prospectus.

B.8 Selected key pro forma Not applicable. The Prospectus does not include any pro forma financial financial information, information. The Company has no obligation to present pro forma financial identified as such. information in the Prospectus.

B.9 Profit forecast or Not applicable. The Prospectus does not include a profit forecast or estimate by the estimate Company and no profit forecast or estimate has been published by the Company.

B.10 Qualifications in the Not applicable. There are no qualifications in the audit report on the historical audit report financial information.

B.11 If the issuer’s working Not applicable. Management is of the opinion that the Group has sufﬁcient capital is not sufﬁcient working capital for its present requirements, that is, for at least the 12 months for the issuer’s present following the date of this Prospectus. requirements, an explanation should be included.

B.31 Information about the issuer of the underlying shares

B.1 Legal and commercial Slovak Telekom, a.s. name

B.2 Domicile / Legal Form / The Company is a joint-stock company incorporated under the laws of the Slovak Legislation / Country of Republic. Incorporation The registered seat of the Company is at Bajkalska´ 28, 817 62 Bratislava, Slovak Republic.

6 B.3 Key factors relating to, The Group is the largest multimedia and telecommunications operator in the the nature of issuer’s Slovak Republic by revenue, offering a full range of broadband, fixed telephony, current operations and Pay-TV, mobile data and voice services as well as a comprehensive suite of ICT principal activities services. The Group is part of the Deutsche Telekom Group and markets most of its services under the Deutsche Telekom ‘‘T’’ brand. Before liberalisation of the Slovak telecommunication market, in 2002, it was the only provider of fixed telephony services in the Slovak Republic. The Group carries out substantially all its activities in the Slovak Republic. In terms of market position the Group is the market leader (measured by revenue) in fixed voice, fixed broadband and Pay-TV for the year ended 31 December 2014. It is also the second largest provider of mobile telecommunication services by service revenue. Fixed-line services provided by the Group consist mainly of core fixed voice and broadband internet complemented by a range of value-added services offered through the Group’s extensive fixed-line telecommunications network benefiting from an on-going roll-out of modern fibre optic technology. The Group provides comprehensive and premium content through its Pay-TV services, including a high definition and interactive IPTV platform. The Group is also a leading provider of ICT services and offers wholesale services to a number of retail Internet service providers (ISPs) and other licensed operators in the Slovak Republic and abroad. The Group also offers a full range of voice and data mobile services, including traditional and value-added voice services, international roaming services, interconnection services with other mobile operators inside and outside the Slovak Republic, messaging and data services using 2G (GSM), 3G (UMTS) and 4G (LTE) network technologies. As the first multimedia operator in the Slovak Republic, the Group offers the television services via both cable and satellite technology. Except for standard TV channels, the Group offers premium and exclusive sports content. High-end TV service with interactive features (VOD, catch-up TV functions, recording) supported by IPTV technology are offered under TV Magio brand, while linear mass market television services mostly provided via satellite technology are offered under DIGI brand operated through the Group’s wholly-owned subsidiary DIGI SLOVAKIA s.r.o. (DIGI). The Group considers itself to be the leader in the Slovak market for ICT solutions. The Group’s ICT solutions are provided through the Company and its subsidiary PosAm. The Group’s ICT business consists primarily of cloud-based services (private as well as public), tailor-made IT solutions, mobile device management and car monitoring, offering customers both cost efficiency and flexibility with the higher security and service availability. The Group also operates modern data centres across the Slovak Republic. The Group also introduced a cloud application platform in 2014, and offers applications focused on providing a quality customer experience tailored to the Slovak market. The Group also offers virtual servers (IaaS), web hosting services, M2M (Machine-to-machine) & IoT (Internet of Things) solutions, and healthcare information systems for hospitals.

7 provided. In addition, bundled offerings generally drive and support telephony and broadband internet products and often help to reduce customer churn as compared with individually sold products and services. Management believes that offering an integrated mobile and fixed service portfolio with high quality and reliability enables it to sell additional as well as premium versions of existing services, such as internet in mobile data packages or data consuming premium services, such as Magio Go, while also reducing churn because customers often prefer bundled products due to the convenience and cost savings that are available when acquiring fixed-line and mobile telephony, fixed and mobile broadband internet and television services from a single provider for one price. Product bundles also grant opportunities to cross-sell services to customers, thereby encouraging them to procure additional services from the Group, such as by encouraging broadband customers to acquire pay-TV services from the Group, as well as increase network utilization. Bundled services also facilitate the Group’s ability to capitalize on developing market trends, such as the emergence of fixed-mobile convergence in the Slovak Republic, which is the bundling or packaging of fixed and mobile services together into a single customer package. Accordingly, since 2015 the Group has started offering product bundles that combine both fixed-line services and mobile services. Macroeconomic conditions in the Slovak Republic The Group’s results of operations have been and will continue to be influenced by macro economic conditions in the Slovak Republic, including trends in real GDP and private consumption. As real GDP increases, the Group generally experiences an increase in demand for its telecommunications services. In particular, increased domestic consumption tends to result in increased spending on telecommunications services, particularly by consumers. For example, consumers may be more likely to subscribe for broadband or pay-TV packages, or may subscribe to higher-cost packages, during periods of relatively favourable economic conditions. Conversely, during periods of low or negative growth in GDP or consumer spending, both B2C and B2B customers tend to reduce their expenditures on telecommunications services. Moreover, such reductions may not be fully offset during subsequent periods of improved economic conditions Interconnection charges and regulations The Group generates revenues from other network operators in the form of access and interconnection fees for voice calls terminated on the Group’s networks, and is required to pay access and interconnection fees to other network operators for calls terminated on their networks, in each case both domestic and international. These access and interconnection fees are based on set termination rates for both fixed and mobile voice calls. In recent years, the Slovak NRA has taken action to significantly reduce these termination rates and the reductions in FTRs and MTRs have significantly affected the Group’s revenue in recent periods. Management believes that there is limited scope for further reductions in interconnection rates, as MTRs are generally in-line with EU and regional medians and FTRs are already at low levels, such that the impact on the Group’s revenues in future periods is likely to be more limited. The Group also generates revenues from retail and wholesale international voice and data roaming charges for calls and SMS made by visitors to the Slovak Republic using the Group’s mobile network, and incurs costs associated with the Group’s access and interconnection expenses for calls and SMS made by the Group’s subscribers who are abroad and have to rely on other network operators for fulfilment of their calls. Applicable European Union regulations have required significant reductions in such fees. In addition, the Group has been designated as having significant market power in fixed voice and fixed broadband markets in the Slovak Republic. The Slovak NRA has imposed certain obligations on the Group relating to, among other things, access and use of specific network facilities, non-discrimination, transparency or the level of tariffs at the regulated wholesale or retail markets. As a result, the Group is required to provide certain services to customers, and it may be limited in its ability to adjust pricing in order to maintain regulatory required margins. The Group is also required to make fixed voice, fixed broadband and mobile roaming services available on a wholesale basis. While the Group seek to change market prices for these services, in some cases it is requested to offer the services below cost.

8 Cost reduction program In order to maintain its competitive position and its financial performance, the Group has undertaken a number of initiatives in order to reduce its costs and improve its operating efficiencies. A cost reduction program undertaken by the Group from 2010 through 2014 included personnel reductions; technology improvements and modernization; rationalization of the Group’s real estate; energy efficiency improvements; improving operational efficiency; and implementing electronic billing and other systems. Measures introduced since 2014 have sought to further the transformation of the Group into an ‘‘eCompany’’ by reducing the use of paper, streamlining and simplifying support processes, including customer payment methods, using more online channels for sales and focusing on an omnichannel approach to customers through a stable and developed online platform. In addition, as a member of the Deutsche Telekom group, the Group participates in a number of cost-reduction programs, which complement the programs adopted at the Group level. Key accomplishments during the period under review include switching its fixed-line network to all-IP, which was completed in December 2014, as well as an employee reduction program led by Deutsche Telekom, which is expected to be finalised by 2016. The Group has also undertaken other improvements to reduce costs, such as the combination of its fixed-line and mobile businesses resulting from the merger with T-Mobile Slovakia, which previously operated as a separate legal entity within the Group, and which was largely finalised by the end of 2012. Capital expenditures and investments in network The Group’s ability to provide fixed and mobile telephony, fixed and mobile broadband internet and TV to retail customers as well as telecommunications and ICT solutions to business customers depends in large part on its ability to provide attractive and competitive product offerings to its customers by upgrading and maintaining its fixed and mobile networks. In light of the growing penetration of smartphones and the increasing demand for data services, upgrading and maintaining the Group’s networks is key to the provision of services to its customers and meeting the increasing needs of the customers for high-quality fixed and mobile data services. Perception of network quality and speed are important factors in the Group’s ability to be able to attract and retain its customers, and therefore minimize churn by offering the best products and services to its customers. In particular, in recent years the Group has invested in rolling-out a fixed-line fibre network, and its LTE mobile network. The Group was the first mobile operator in the Slovak Republic to launch commercial LTE services, in November 2013, giving it a ‘‘first mover’’ advantage, and has the largest 4G network coverage in the Slovak Republic, covering 52% of the population of the Slovak Republic in January 2015.

B.4b Trends affecting the The trends described in B.4a are likely to continue to have an effect on the issuer and the Company for the foreseeable future. industries in which it operates

9 B.5 Description of the The Company is a parent company of the Group that comprises the Company and issuer’s group its consolidated subsidiaries Zoznam, s.r.o. and Zoznam Mobile, s.r.o. (internet content), Telekom Sec, s.r.o. (security services), PosAm, spol.s r.o. (IT and data services) and DIGI SLOVAKIA, s.r.o. (digital and cable television services). The Group conducts majority of its operations through the Company. The following chart shows the structure of the Group as at the date of this Prospectus; the percentages show shares in the registered capital and voting rights:

Slovak Telekom, a.s.

DIGI SLOVAKIA, Telekom Sec, s.r.o. Zoznam, s.r.o. Zoznam Mobile, s.r.o. PosAm, spol. s.r.o. s.r.o.

100% 100% 100% 100% 51% Established 2006 Acquired in 2013 Acquired in 2005 Acquired in 2005 Acquired in 2010 Main activities: Main activities: Main activities: Main activities: Main activities:

B.6 Interests in shares / The Company is controlled by Deutsche Telekom AG on the basis of holding 51% voting rights / of the registered capital and voting right in the Company. Deutsche Telekom AG controllers holds the controlling interest in the Company through its indirectly wholly owned subsidiary Deutsche Telekom Europe B.V. (before 1 March 2015, the name of the entity was CMobil B.V.). Prior to the Offering, the remaining 49% of the Shares are owned by the National Property Fund of the Slovak Republic (the Selling Shareholder).

B.7 Selected historical The financial information set forth below as at and for the years ended 31 December financial information 2014, 2013 and 2012 has been extracted without material adjustment from the Company’s audited consolidated financial statements as of 31 December 2014, 31 December 2013 and 31 December 2012 and the years then ended. Selected Consolidated Income Statement Information Year ended 31 December 2014 2013 2012 (EUR million) Revenues...... 767.6 809.0 826.8

Staff costs ...... (130.1) (132.4) (129.8) Material and equipment ...... (101.2) (104.5) (92.6) Depreciation, amortization and impairment losses ...... (195.0) (236.9) (236.4) Interconnection and other fees to operators .. (65.7) (70.5) (87.0) Other operating income...... 12.6 10.9 10.5 Other operating costs...... (218.9) (206.2) (181.1) Operating profit...... 69.3 69.3 110.5 Financial income...... 2.9 2.6 4.9 Financial expense...... (1.2) (1.8) (1.8) Net financial result ...... 1.7 0.8 3.1 Profit before tax...... 71.0 70.2 113.6 Income tax expense...... (27.4) (20.9) (50.5)

Proﬁt for the year ...... 43.6 49.3 63.1

10 Selected Statement of Financial Position Information As at 31 December 2014 2013 2012 ASSETS (EUR million) Non-current assets Property and equipment ...... 792.2 817.6 918.5 Intangible assets...... 404.4 443.0 358.1 Available-for-sale investments ...... 32.1 176.6 — Deferred tax...... 0.8 0.9 0.2 Term deposits ...... — 1.1 — Trade and other receivables...... 1.7 9.1 9.1 Prepaid expenses and other assets ...... 13.2 12.8 14.2 1,244.4 1,461.2 1,300.2 Current Assets Inventories ...... 12.1 14.2 14.0 Investments at amortized cost ...... 3.1 3.1 74.3 Available-for-sale investments ...... 172.0 49.9 — Term deposits ...... 219.6 142.3 106.0 Loans ...... 150.0 — — Escrow ...... 1.0 13.0 — Trade and other receivables...... 112.1 130.7 110.5 Prepaid expenses and other assets ...... 6.5 7.8 9.8 Current income tax receivables...... 10.0 0.8 4.0 Cash and cash equivalents...... 93.1 229.1 371.5 779.5 590.9 690.1 Assets held for sale ...... 8.6 19.8 — 788.1 610.7 690.1 TOTAL ASSETS ...... 2,032.5 2,071.9 1,990.3

As at 31 December 2014 2013 2012 EQUITY AND LIABILITIES (EUR million) Shareholders’ equity Issued capital ...... 864.1 864.1 864.1 Share premium...... 386.1 386.1 386.1 Statutory reserve fund ...... 172.8 172.8 170.6 Other...... (1.9) 1.8 0.6 Retained earnings and proﬁt for the year ...... 187.6 160.4 183.8 Total Shareholders’ equity...... 1,608.7 1,585.3 1,605.4 Non-current liabilities Deferred tax...... 115.9 128.3 150.5 Provisions...... 25.8 16.9 18.2 Trade and other payables ...... 0.6 1.1 0.3 Other liabilities and deferred income...... 3.5 2.8 4.8 Total Non-current liabilities ...... 145.8 149.1 173.8

Current liabilities Provisions...... 37.4 34.3 5.2 Trade and other payables ...... 129.0 225.2 133.5 Other liabilities and deferred income...... 110.6 74.0 72.2 Current income tax liabilities ...... 0.9 4.0 0.1 Total Current liabilities ...... 278.0 337.6 211.1 Total liabilities ...... 423.8 486.7 384.9

TOTAL EQUITY AND LIABILITIES ...... 2,032.5 2,071.9 1,990.3

11 claimant on the CDI Case entered into a settlement agreement. Except as described above, no signiﬁcant change in the ﬁnancial or trading position of the Group has occurred between 31 December 2014 and the date of this Prospectus.

B.9 Profit forecast or Not applicable. The Prospectus does not include a profit forecast or estimate by the estimate Company and no profit forecast or estimate has been published by the Company.

B.10 Qualifications in the Not applicable. There are no qualifications in the audit report on the historical audit report financial information.

D.4 / Key information on the Risks Related to the Group’s Business and Industry D.2 key risks that are * specific to the issuer. The Group is subject to significant competition from new and established competitors and to changing market conditions. * The businesses in which the Group operates are subject to rapid and significant changes in technology, and any failure to adapt to new technological developments, or the cost of doing so, may materially and adversely affect the Group’s business, financial condition and results of operations. * The Group enters into wholesale agreements offering fixed voice, broadband and certain mobile services to its competitors and is required under applicable regulations to offer such services on terms that may increase the ability of its competitors to compete with the Group. * The Group’s revenue from fixed and mobile voice and mobile messaging services has declined significantly in recent years, and the Group may not be able to offset these declines. * The Group’s revenue from fixed and mobile interconnection services and international mobile roaming has declined significantly in recent years and may continue to decline. * The Group relies on the integrity of its networks and its information technology systems for the operation of its business, and these systems may be disrupted by systems failures or security breaches. * The Group is reliant on third parties and suppliers for operation of part of its network and infrastructure, equipment and provisions of certain services. * The Group is reliant on specific third party suppliers and manufacturers to provide specialty, high-demand products to meet consumer expectations. * The Group relies on its network infrastructure and platforms which are vulnerable to disruptive events. * The Group operates in a capital-intensive business, and any inability to meet its capital expenditure requirements or failure to invest in the continued upgrades of its network capabilities could materially and adversely affect its business, financial condition and results of operations. * Acquisitions or investments may not generate expected benefits or synergies and could disrupt the Group’s on-going business, distract its management or increase its expenses. * The Group competes in part by offering converged and bundled products, and it may not succeed in further developing such products or may be unsuccessful in marketing such products. * The Group collects and maintains data on its customers digitally and is therefore exposed to risks of unauthorised or unintended data release through system failures or hacking. * Any inability by the Group to obtain and maintain competitive content for its broadcast services on satisfactory terms may adversely affect the Group’s competitive position, business, financial condition and result of operations. * The Group depends on the image and recognition of its brands including ‘T’ or ‘Telekom’, Zoznam, PosAm and DIGI, and any failure to maintain the positive image and recognition of these brands could materially and adversely affect the Group’s business and results of operations. * The Group uses a number of retailers, franchise shops and other distributors to distribute or sell its products, and any interruption to these contractual

12 relationships could increase the Group’s costs and/or have a material adverse effect on its business, financial condition and results of operations. * The Group may face difficulties in recruiting and retaining experienced personnel. * A significant event that exceeds the coverage limits of the Group’s insurance could result in substantial losses. Legal and Regulatory Risks * Investigations and litigation against the Group may lead to awards of damages, fines or other penalties, which may have a material adverse effect on the Group’s business, financial condition and results of operations. * The Group is subject to Slovak and European Union competition law regulations. * The Group’s ability to provide commercially viable telecommunications services depends in part upon various intellectual property rights it owns, and the Group may be subject to claims from third parties for infringement of intellectual property rights. * Spectrum limitations may adversely affect the Group’s ability to provide services to its customers. * Licences and authorisations material to the business of the Group may be difficult to obtain or may be withdrawn. * The Group may encounter difficulties in obtaining the required location, construction and use permits to build or renew its fixed and mobile infrastructure and/or the permits and approvals which the Company requires for its business may be missing, insufficient, defective or inadequate. * Any inability by the Group to provide emergency call service or interference with other radio equipment may result in financial and regulatory penalties, legal proceedings and damage to reputation. * Actual or perceived health risks or other problems relating to mobile handsets or base stations could lead to decreased mobile communications usage, significantly increased costs involved in offering mobile telephone services, litigation risk and/or difficulties in obtaining permits for base stations. Risks Related to the Slovak Republic * The Group operates solely in the Slovak Republic, and its business, financial condition and the results of operations are dependent on economic conditions in the Slovak Republic. Investing in less developed markets, such as the Slovak Republic, entails certain risks, which may be greater than risks inherent in more developed markets. * Certain global events may indirectly affect the outlook for the Slovak Republic and adversely affect the Group. * The Group’s ability to conduct business and its financial condition, results of operations and prospects could be adversely affected by corruption and money laundering. * The Slovak legal system and Slovak legislation continue to develop, which may create an uncertain environment for investment and for business activity. * A special levy is imposed on regulated industries in the Slovak Republic, and the Slovak taxation system is subject to change and may issue inconsistent interpretations of tax legislation. Risks Related to the Group’s Relationship with Deutsche Telekom * The Group is dependent on its controlling shareholder, Deutsche Telekom, and a change in or loss of this relationship may adversely affect the Group’s business and results of operations. * Interests of Deutsche Telekom may differ from those of holders of the Securities.

13 * The Company may decide not to, or may be unable to, pay dividends or other shareholder remuneration. * The Principal Shareholder will retain a significant percentage of the Company’s shares and future sales of substantial amounts of the Securities, or the perception that such sales could occur, could adversely affect the market value of the Securities. B.32 Issuer of the depositary The Depositary is Citibank, N.A., a national banking association organised under receipts the laws of the United States. The Depositary is an indirect wholly-owned subsidiary of Citigroup Inc., a Delaware corporation. The Depositary was originally organised on 16 June 1812 under the National Bank Act of 1864 and is primarily regulated by the United States Office of the Comptroller of the Currency. Its principal executive office is at 399 Park Avenue, New York, NY 10043, United States of America.

Section C – Securities

C.1 Type and class of the This Prospectus relates to the Offering by the Selling Shareholder of up to securities being 42,341,537 ordinary shares in the Company, each fully paid-up with a nominal offered and/or admitted value of 10 EUR per share, in the form of the Offer Shares or GDRs, with one to trading GDR representing an interest in one Share. The Shares are ordinary shares in registered non-bearer form. The GDRs are to be issued against the deposit of the Offer Shares with Citibank Europe plc, acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky, as custodian for the Depositary. The GDRs will be governed by English law and will be issued in registered form. This Prospectus has been also drawn up for the purposes of admission to trading on the Main Listed Market of the Bratislava Stock Exchange of all Shares issued by the Company, i.e. 86,411,300 ordinary shares, each with a par value of EUR 10 per share and which are fully paid-up. The Shares are ordinary shares in registered non-bearer form. The security identiﬁcation number (ISIN) of Shares is: SK 1110017722 (series 1) Bratislava Stock Exchange trading symbol for the Shares: ‘‘STX’’ The security code numbers and trading symbols of the GDRs are as follows: Rule 144A GDR Common Code: 122274519 Rule 144A GDR ISIN: US8315901046 Rule 144A GDR CUSIP: 831590 104 Rule 144A GDR SEDOL: BWFDGC1 Regulation S GDR Common Code: 122274756 Regulation S GDR ISIN: US8315902036 Regulation S GDR CUSIP: 831590 203 Regulation S GDR SEDOL: BWFDGD2 London Stock Exchange GDR trading symbol: ‘‘STXX’’

C.2 Currency of the The currency of the Shares is EUR. securities issue The currency of the GDRs is U.S. dollars.

C.3 Number of Shares As at the date of the Prospectus, the Company’s issued share capital is EUR 864,113,000 divided into 86,411,300 ordinary shares, with a par value of EUR 10 per share and all of which are fully paid.

C.4 Rights attached to the Holders of the Shares have the right to vote at all General Shareholders’ Meetings securities. of the Company (General Shareholders’ Meetings), subject to certain Slovak law requirements. As required by Slovak Act No. 513/1991 Coll. the Commercial Code, as amended (the Slovak Commercial Code) and the Company’s Articles of Association, all of the Shares have the same nominal value and grant to their holders identical rights. Each Share gives its holder the right to, inter alia: * the right to receive dividends if any when declared by the Company;

14 * a right of pre-emption on subscription for new shares in the Company; * the right to receive a shareholding in the share capital of the Company in the case of a decrease in share capital equivalent in proportion to that owned immediately prior to the decrease in share capital; * the right to receive an amount of the Company’s liquidation proceeds after fulﬁlment of its obligations to creditors, proportionate to their shareholding; * the right of shareholders subject to certain conditions to buy out their shares by the Company in case of change of legal form of the Company, merger of the Company or delisting of the Company’s shares; * the right to attend any General Meeting, submit proposals at General Meetings, take part in discussions and vote at General Meeting; * the right to request certain information and explanations, including copies of certain documents relating to the business of the Company; and * the right to challenge the decisions of the General Meeting in court proceedings subject to conditions set out in the Slovak Commercial Code. One GDR represents an interest in one Share on deposit with the Custodian on behalf of the Depositary. A holder of GDRs will have the rights set out in the terms and conditions of the GDRs, including: * the right to withdraw the Deposited Shares and all rights, interests and other securities, property and cash deposited with the Custodian which are attributable to the Deposited Shares; * the right to receive payment in U.S. dollars from the Depositary in an amount equal to cash dividends or other cash distributions received by the Depositary from the Company in respect of the Deposited Shares; * the right to receive from the Depositary additional GDRs representing additional Shares received by the Depositary from the Company by way of free distribution (or if the issue of additional GDRs is deemed by the Depositary not to be practicable and in certain other circumstances, the net proceeds in U.S. dollars from the sale of such additional Shares); * the right to instruct the Depositary regarding the exercise of any voting rights notiﬁed by the Company to the Depositary, subject to certain conditions; and * the right to receive from the Depositary copies received by the Depositary of notices provided by the Company to holders of Shares or other material information, in each case subject to applicable law and the detailed terms set out in the terms and conditions of the GDRs.

C.5 Restrictions on the free The Shares are freely transferable subject to selling and transfer restrictions under transferability of the the relevant laws in certain jurisdictions applicable to the transferor or transferee, securities. including the United States, the United Kingdom and the EEA and other jurisdictions. The GDRs are freely transferable, subject to certain transfer restrictions under the relevant laws in certain jurisdictions applicable to the transferor or transferee, including the United States, the United Kingdom, the EEA and other jurisdictions and the terms and conditions of the GDRs. The Depositary shall refuse to accept for transfer any GDRs if it reasonably believes that such transfer would result in a violation of any applicable laws. Each purchaser of the Securities, by accepting delivery of this Prospectus, will be deemed to make certain representations to ensure compliance with the applicable securities laws of the United States. In addition, following the Offering, the Selling Shareholder, Deutsche Telekom Europe B.V. and the Company will be subject to customary contractual lock-up provisions relating to the sale or issuance of additional Securities for 180 days following completion of the Offering, subject to certain customary exceptions or with the prior written consent of the Joint Global Coordinators.

C.6 Admission to trading on Application will be made to the: (1) Bratislava Stock Exchange for admission of the a regulated market Shares to trading on the Main Listed Market of the Bratislava Stock Exchange; and (2) (i) FCA in its capacity as competent authority under the FSMA, for up to 42,341,537 GDRs to be admitted to listing on the Ofﬁcial List of the FCA and (ii)

15 London Stock Exchange, for admission to trading of up to 42,341,537 GDRs on the London Stock Exchange’s main market for listed securities.

C.7 Dividend policy Dividends, if and when declared, are distributed to shareholders on a pro-rata basis proportionately to their participation in the paid-up share capital of the Company. Each fully paid-up Share gives its owner the right to receive dividends. The Company will pay any dividends in EUR. To the extent that the Company declares and pays dividends, holders of GDRs on the relevant record date will be entitled to receive dividends payable in respect of Shares underlying the GDRs. The Company has not adopted a formal dividend policy. Pursuant to the Memorandum of Understanding entered into in February 2014 between the Selling Shareholder, the Slovak Republic acting through the Ministry of Economy, Deutsche Telekom AG and the Company in connection with the Offering, the Company agreed to guidance that the dividends declared and paid in respect of any year following the year in which the Offering takes place are to be from 50% to 80% of the Company’s distributable profit determined in accordance with the Slovak Commercial Code from the immediately preceding year, provided that any annual dividend shall depend on the overall financial position of the Company and its working capital needs at the relevant time (including but not limited to the Company’s business prospects, cash requirements, financial performance, and other factors including tax and regulatory considerations, payment practices of other European telecommunications operators and the general economic climate). The Board of Directors shall consider all these conditions before deciding on any proposal for profit distribution and may determine that it is unable or elect not to propose dividends. Any final determination on distribution of profits is at the disposal of the General Meeting.

C.13 Information about the underlying shares

C.1 Type and class of the 42,341,537 ordinary shares in the Company, each fully paid-up with a nominal securities being offered value of 10 EUR per share. The Shares are ordinary shares in registered non-bearer and/or admitted to form. trading The security identiﬁcation number (ISIN) of Shares is: SK 1110017722 (series 1) The Bratislava Stock Exchange trading symbol for the Shares is: ‘‘STX’’

C.2 Currency of Shares The currency of the Shares is EUR.

C.3 Number of Shares As at the date of the Prospectus, the Company’s share capital is EUR 864,113,000 divided into 86,411,300 Shares, with a par value of EUR 10 per share and which are fully paid.

C.4 Rights attached to the Holders of the Shares have the right to vote at all General Shareholders’ Meetings Shares of the Company (General Shareholders’ Meetings), subject to certain Slovak law requirements. As required by the Slovak Commercial Code and the Company’s Articles of Association, all of the Shares have the same nominal value and grant to their holders identical rights. Each Share gives its holder the right to, inter alia: * the right to receive dividends if any when declared by the Company; * a right of pre-emption on subscription of new shares in the Company; * the right to receive a shareholding in the share capital of the Company in the case of a decrease in share capital equivalent in proportion to that owned immediately prior to the decrease in share capital; * the right to receive an amount of the Company’s liquidation proceeds after fulﬁlment of its obligations to creditors, proportionate to their shareholding; and * the right of shareholders subject to certain conditions to buy out their shares by the Company in case of change of legal form of the Company, merger of the Company or delisting of the Company’s shares; * the right to attend any General Meeting, submit proposals at General Meetings, take part in discussions and vote at General Meeting;

16 * the right to request certain information and explanations, including copies of certain documents relating to the business of the Company; * the right to challenge the decisions of the General Meeting in court proceedings subject to conditions set out in the Slovak Commercial Code.

C.6 Admission to trading on An application will be made for all the Shares, including the Shares underlying the a regulated market GDRs, to be admitted to trading on the main listed market of the Bratislava Stock Exchange.

C.7 Dividend policy Dividends, if and when declared, are distributed to shareholders on a pro-rata basis proportionately to their participation in the paid-up share capital of the Company. Each fully paid-up Share gives its owner the right to receive dividends. The Company will pay any dividends in EUR. The Company has not adopted a formal dividend policy. Pursuant to the Memorandum of Understanding entered into in February 2014 between the Selling Shareholder, the Slovak Republic acting through the Ministry of Economy, Deutsche Telekom AG and the Company in connection with the Offering, the Company agreed to guidance that the dividends declared and paid in respect of any year following the year in which the Offering takes place are to be from 50% to 80% of the Company’s distributable profit determined in accordance with the Slovak Commercial Code from the immediately preceding year, provided that any annual dividend shall depend on the overall financial position of the Company and its working capital needs at the relevant time (including but not limited to the Company’s business prospects, cash requirements, financial performance, and other factors including tax and regulatory considerations, payment practices of other European telecommunications operators and the general economic climate). The Board of Directors shall consider all these conditions before deciding on any proposal for profit distribution and may determine that it is unable or elect not to propose dividends. Any final determination on distribution of profits is at the disposal of the General Meeting. C.14 Information about the global depositary receipts

C.1 Type and class of the Up to 42,341,537 GDRs to be issued on the Closing Date by the Depositary against securities being offered the deposit of the Offer Shares with Citibank Europe plc, acting through its Slovak and/or admitted to branch, Citibank Europe plc, pobocˇka zahranicˇnej banky, as custodian for the trading Depositary. The GDRs are governed by English law and will be issued in registered form. The security code numbers and trading symbols of the GDRs are as follows: Rule 144A GDR Common Code: 122274519 Rule 144A GDR ISIN: US8315901046 Rule 144A GDR CUSIP: 831590 104 Rule 144A GDR SEDOL: BWFDGC1 Regulation S GDR Common Code: 122274756 Regulation S GDR ISIN: US8315902036 Regulation S GDR CUSIP: 831590 203 Regulation S GDR SEDOL: BWFDGD2 London Stock Exchange GDR trading symbol: ‘‘STXX’’

17 C.2 Currency of the GDRs The currency of the GDRs is U.S. dollars.

C.4 Rights attached to One GDR represents an interest in one Share on deposit with the Custodian on the GDRs behalf of the Depositary. A holder of GDRs will have the rights set out in the terms and conditions of the GDRs, including: * the right to withdraw the Deposited Shares (as deﬁned therein) and all rights, interests and other securities, property and cash deposited with the Custodian which are attributable to the Deposited Shares; * the right to receive payment in U.S. dollars from the Depositary of an amount equal to cash dividends or other cash distributions received by the Depositary from the Company in respect of the Deposited Shares; * the right to receive from the Depositary additional GDRs representing additional Shares received by the Depositary from the Company by way of free distribution (or if the issue of additional GDRs is deemed by the Depositary not to be practicable and in certain other circumstances, the net proceeds in U.S. dollars of the sale of such additional Shares); * the right to instruct the Depositary regarding the exercise of any voting rights notiﬁed by the Company to the Depositary subject to certain conditions; and * the right to receive from the Depositary copies received by the Depositary of notices provided by the Company to holders of Shares or other material information, in each case subject to applicable law and the detailed terms set out in the terms and conditions of the GDRs.

C.5 Restrictions on the free The GDRs are freely transferable, subject to certain transfer restrictions under the transferability of relevant laws in certain jurisdictions applicable to the transferor or transferee, the GDRs including the United States, the United Kingdom, the EEA and other jurisdictions, contractual lock-ups for certain shareholders and the Company and the terms and conditions of the GDRs. The Depositary shall refuse to accept for transfer any GDRs if it believes that such transfer would result in a violation of any applicable laws. Each purchaser of the Securities, by accepting delivery of this Prospectus, will be deemed to make certain representations to ensure compliance with the applicable securities laws of the United States. In addition, following the Offering, the Selling Shareholder, Deutsche Telekom Europe B.V. and the Company will be subject to customary contractual lock-up provisions relating to the sale or issuance of additional Security for 180 days following completion of the Offering, subject to certain customary exceptions or with the prior written consent of the Joint Global Coordinators.

— Exercise of and beneﬁt Cash Distributions from the rights attaching to the Shares. Whenever the Depositary shall receive from the Company any cash dividend or Description of the rights other cash distribution on or in respect of the Deposited Shares (including any attached to the GDRs. amounts received in the liquidation of the Company) or otherwise in connection with the Deposited Property (as deﬁned in the terms and conditions of the GDRs) in a currency other than U.S. dollars, the Depositary shall if practicable, convert or cause to be converted the same into U.S. dollars in accordance with the Deposit Agreements and shall promptly distribute any such amounts to the Holders in proportion to the number of Deposited Shares represented by the GDRs so held by them respectively, subject to and in accordance with the provisions of the Deposit Agreements.

Distributions of Shares Whenever the Depositary shall receive from the Company any distribution in respect of Deposited Shares which consists of a dividend in, or free distribution of, Shares, the Depositary shall cause to be distributed to the Holders entitled thereto, in proportion to the number of Deposited Shares represented by the GDRs held by them respectively, additional GDRs representing an aggregate number of Shares received pursuant to such dividend or distribution by an increase in the number of GDRs evidenced by the Master GDRs or by an issue of certiﬁcates in deﬁnitive registered form in respect of GDRs, according to the manner in which the Holders

18 hold their GDRs; provided that, if and insofar as the Depositary deems any such distribution to all or any Holders not to be practicable (including, without limitation, owing to the fractions which would otherwise result or to any requirement that the Company, the Custodian or the Depositary withhold an amount on account of taxes or other governmental charges) or to be unlawful, the Depositary shall sell such Shares so received (either by public or private sale and otherwise at its discretion, subject to applicable laws and regulations) and distribute the resulting net proceeds of such sale as a cash distribution pursuant to the Deposit Agreements to the Holders entitled thereto.

Distribution Other Than Cash or Shares Whenever the Depositary shall receive from the Company any distribution in securities (other than Shares) or in other property (other than cash) on or in respect of the Deposited Property, the Depositary shall distribute or cause to be distributed such securities or other property to the Holders entitled thereto, in proportion to the number of Deposited Shares represented by the GDRs held by them respectively, in any manner that the Depositary may deem practicable for effecting such distribution; provided that, if and insofar as the Depositary deems any such distribution to all or any Holders not to be practicable (including, without limitation, due to the fractions which would otherwise result or to any requirement that the Company, the Custodian or the Depositary withhold an amount on account of taxes or other governmental charges) or to be unlawful, the Depositary shall deal with the securities or property so received, or any part thereof in such manner as the Depositary may determine to be practicable, including, without limitation, by way of sale of the securities or property so received, or any part thereof (either by public or private sale and otherwise at its discretion, subject to applicable laws and regulations), and shall (in the case of a sale) distribute the resulting net proceeds of such sale as a cash distribution pursuant to the Deposit Agreements to the Holders entitled thereto.

Rights Issues If and whenever the Company announces its intention to make any offer or invitation to the holders of Shares to subscribe for or to acquire Shares by way of rights, the Depositary shall as soon as practicable give notice to the Holders in accordance with the terms and conditions of the GDRs of such offer or invitation specifying, if applicable, the earliest date established for acceptance thereof, the last date established for acceptance thereof and the manner by which and time during which Holders may request the Depositary to exercise such rights as provided below or, if such be the case, specify details of how the Depositary proposes to distribute the rights or the proceeds of any sale thereof. If, at its discretion, the Depositary shall be satisfied that it is lawful and practicable and to the extent that it is so satisfied, the Depositary shall distribute rights to the Holders entitled thereto in proportion to the number of Deposited Shares represented by the GDRs held by them respectively in such manner as the Depositary may at its discretion determine. If and insofar as the Depositary is not satisfied that any such arrangement and distribution to all or any Holders is lawful and practicable (including, without limitation, owing to the fractions which would otherwise result or to any requirement that the Company, the Custodian or the Depositary withhold an amount on account of taxes or other governmental charges) or is so satisfied that it is unlawful, or if the Company requests that the rights not be made available to Holders, the Depositary will, provided that Holders have not taken up rights through the Depositary as provided above, sell such rights (either by public or private sale and otherwise at its discretion subject to applicable laws and regulations and the Depositary shall, to the extent reasonably practicable, consult the Company in relation to the manner and terms of any such sale prior to such sale) and distribute the net proceeds of such sale as a cash distribution pursuant to the Deposit Agreements to the Holders entitled thereto except to the extent prohibited by applicable law.

Voting Rights The Company will notify the Depositary of any meeting at which the holders of Shares or other Deposited Property are entitled to vote, or of solicitation of consents or proxies from holders of Shares or other Deposited Property. As soon as reasonably practicable after receipt from the Company of such notice, the

19 Depositary shall ﬁx the record date (which shall be as close as possible to the corresponding record date set by the Company) in respect of such meeting or solicitation of consent or proxy. The Depositary shall, if requested by the Company in writing and not prohibited by applicable law, and at the Company’s expense, mail by regular, ordinary mail delivery (or by electronic mail or as otherwise may be agreed between the Company and the Depositary in writing from time to time) or otherwise, distribute to Holders as of the record date: (a) such notice of meeting or solicitation of consent or proxy, (b) a statement that the Holders at the close of business in New York City on the record date will be entitled, subject to any applicable law, the provisions of the Deposit Agreements, the terms and conditions of the GDRs, the Articles and the provisions of or governing the Deposited Property (which provisions, if any, shall be summarised in pertinent part by the Company), to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Shares or other Deposited Property represented by such Holder’s GDRs and (c) a brief statement as to the manner in which such voting instructions may be given . Voting instructions may be given to the Depositary only in respect of a number of GDRs representing an integral number of Shares or other Deposited Property in respect of which the requirements and conditions for voting as may be set forth under applicable law have been complied with by Holders. Upon the timely receipt from a Holder as of the record date of voting instructions in the manner speciﬁed by the Depositary, the Depositary shall endeavour, insofar as practicable and permitted under applicable law (including, but not limited to, any Slovak legal prohibitions or conditions to voting), the provisions of the terms and conditions of the GDRs, the Articles and the provisions of the Deposited Property, to vote or cause the Custodian to vote the Shares and/or other Deposited Property (in person or by proxy) represented by such Holder’s GDRs in accordance with such instructions.

— Description of the bank Not applicable. There are no bank or other guarantees attached to the GDRs. or other guarantee attached to the depositary receipt

Section D – Risks

D.1 Key information on the Risks Related to the Group’s Business and Industry key risks that are * specific to the issuer The Group is subject to significant competition from new and established competitors and to changing market conditions. * The businesses in which the Group operates are subject to rapid and significant changes in technology, and any failure to adapt to new technological developments, or the cost of doing so, may materially and adversely affect the Group’s business, financial condition and results of operations. * The Group enters into wholesale agreements offering fixed voice, broadband and certain mobile services to its competitors and is required under applicable regulations to offer such services on terms that may increase the ability of its competitors to compete with the Group. * The Group’s revenue from fixed and mobile voice and mobile messaging services has declined significantly in recent years, and the Group may not be able to offset these declines. * The Group’s revenue from fixed and mobile interconnection services and international mobile roaming has declined significantly in recent years and may continue to decline. * The Group relies on the integrity of its networks and its information technology systems for the operation of its business, and these systems may be disrupted by systems failures or security breaches. * The Group is reliant on third parties and suppliers for operation of part of its network and infrastructure, equipment and provisions of certain services. * The Group is reliant on specific third party suppliers and manufacturers to provide specialty, high-demand products to meet consumer expectations.

20 * The Group relies on its network infrastructure and platforms which are vulnerable to disruptive events. * The Group operates in a capital-intensive business, and any inability to meet its capital expenditure requirements or failure to invest in the continued upgrades of its network capabilities could materially and adversely affect its business, financial condition and results of operations. * Acquisitions or investments may not generate expected benefits or synergies and could disrupt the Group’s on-going business, distract its management or increase its expenses. * The Group competes in part by offering converged and bundled products, and it may not succeed in further developing such products or may be unsuccessful in marketing such products. * The Group collects and maintains data on its customers digitally and is therefore exposed to risks of unauthorised or unintended data release through system failures or hacking. * Any inability by the Group to obtain and maintain competitive content for its broadcast services on satisfactory terms may adversely affect the Group’s competitive position, business, financial condition and result of operations. * The Group depends on the image and recognition of its brands including ‘T’ or ‘Telekom’, Zoznam, PosAm and DIGI, and any failure to maintain the positive image and recognition of these brands could materially and adversely affect the Group’s business and results of operations. * The Group uses a number of retailers, franchise shops and other distributors to distribute or sell its products, and any interruption to these contractual relationships could increase the Group’s costs and/or have a material adverse effect on its business, financial condition and results of operations. * The Group may face difficulties in recruiting and retaining experienced personnel. * A significant event that exceeds the coverage limits of the Group’s insurance could result in substantial losses. Legal and Regulatory Risks * Investigations and litigation against the Group may lead to awards of damages, fines or other penalties, which may have a material adverse effect on the Group’s business, financial condition and results of operations. * The Group is subject to Slovak and European Union competition law regulations. * The Group’s ability to provide commercially viable telecommunications services depends in part upon various intellectual property rights it owns, and the Group may be subject to claims from third parties for infringement of intellectual property rights. * Spectrum limitations may adversely affect the Group’s ability to provide services to its customers. * Licences and authorisations material to the business of the Group may be difficult to obtain or may be withdrawn. * The Group may encounter difficulties in obtaining the required location, construction and use permits to build or renew its fixed and mobile infrastructure and/or the permits and approvals which the Company requires for its business may be missing, insufficient, defective or inadequate. * Any inability by the Group to provide emergency call service or interference with other radio equipment may result in financial and regulatory penalties, legal proceedings and damage to reputation. * Actual or perceived health risks or other problems relating to mobile handsets or base stations could lead to decreased mobile communications usage, significantly increased costs involved in offering mobile telephone services, litigation risk and/or difficulties in obtaining permits for base stations.

21 Risks Related to the Slovak Republic * The Group operates solely in the Slovak Republic, and its business, financial condition and the results of operations are dependent on economic conditions in the Slovak Republic. Investing in less developed markets, such as the Slovak Republic, entails certain risks, which may be greater than risks inherent in more developed markets. * Certain global events may indirectly affect the outlook for the Slovak Republic and adversely affect the Group. * The Group’s ability to conduct business and its financial condition, results of operations and prospects could be adversely affected by corruption and money laundering. * The Slovak legal system and Slovak legislation continue to develop, which may create an uncertain environment for investment and for business activity. * A special levy is imposed on regulated industries in the Slovak Republic, and the Slovak taxation system is subject to change and may issue inconsistent interpretations of tax legislation. Risks Related to the Group’s Relationship with Deutsche Telekom * The Group is dependent on its controlling shareholder, Deutsche Telekom, and a change in or loss of this relationship may adversely affect the Group’s business and results of operations. * Interests of Deutsche Telekom may differ from those of holders of the Securities. * The Company may decide not to, or may be unable to, pay dividends or other shareholder remuneration. * The Principal Shareholder will retain a significant percentage of the Company’s shares and future sales of substantial amounts of the Securities, or the perception that such sales could occur, could adversely affect the market value of the Securities.

D.3 Key information on the * The rights of minority shareholders will be governed by the laws of the key risks that are Slovak Republic, whose corporate governance standards differ from those of speciﬁc to the securities other jurisdictions. * There has been no prior public market for the Securities and an active and liquid market for the Securities may not develop. * Volatility in the price of the Securities may have an adverse impact on holders of the Securities. * The acquisition of a direct shareholding in the Company reaching or exceeding certain thresholds is subject to prior approval of the NBS and there are certain limitations regarding the cross-ownership of the Company as a licensed broadcaster. * The Selling Shareholder is a public law entity separated from the Slovak Republic which is not an obligor or guarantor of any liabilities of the Selling Shareholder. The Selling Shareholder may be dissolved in the future, which may cause issues with enforcing potential claims against the Selling Shareholder. * Trading in the Shares may be suspended or halted. * International investors may not be able to enforce judgments obtained in United States courts against the Company. * Shareholders in certain jurisdictions may not be able to participate in future equity offerings. * Capital gains from the sale of the Securities may be subject to Slovak income tax.

22 D.4 Information about the underlying shares

D.2 Key information on Please see risks in element D.1 above. the key risks that are specific to the issuer. D.5 Information about depositary receipts D.3 Key information on the In addition to the risks relating to the Shares specified in element D3 above, the key risks that are following risks are specific fro the GDRs: specific to the * securities. Voting rights with respect to the Offer Shares represented by the GDRs are limited by the terms of the Deposit Agreements for the GDRs and relevant requirements of Slovak law. * Holders of the GDRs may be subject to limitations or delays in repatriating their earnings from distributions made on the underlying Shares. * Income from GDRs may not qualify as dividends under Slovak tax law.

Section E – Offer

E.1 Net proceeds and The Company will not receive any proceeds from the sale of Securities by the expenses Selling Shareholder. The net proceeds received by the Selling Shareholder after deduction of its share of expenses relating to the Offering will be approximately EUR 855 million, assuming an offer price at the mid-point of the Share Offer Price Range and not applying the Retail Offering Discount. Expected fees and commissions payable by the Company in connection with the Offering and Admission are approximately EUR 2,500,000.

E.2a Reasons for the offer, The Offering is being conducted in order to allow the Selling Shareholder to dispose use of proceeds, of all of its Shares (subject to stabilisation arrangements), while raising the estimated net amount Company’s proﬁle with the international investment community and establishing a of the proceeds market for the Shares and GDRs which may beneﬁt the Company if it desires to access the equity capital markets in the future.

E.3 Description of the The Offer Securities are being offered to the public in the Slovak Republic and the terms and conditions Offer Shares are being offered to the public in the Czech Republic. The Offer of the offer Securities are being offered outside the United States in reliance on Regulation S and within the United States to QIBs in reliance on Rule 144A under the Securities Act. The Offering shall consist of the following: (a) an offering of the Offer Securities to Retail Investors in the Slovak Republic and an offering of the Offer Shares to Retail Investors in the Czech Republic (the Retail Offering); and (b) an offering of the Offer Securities to Institutional Investors (the Institutional Offering). For these purposes: * Institutional Investors means investors eligible to participate in the Offering pursuant to applicable laws and regulations and who are not Retail Investors (as defined below); and * Retail Investors means any individuals or legal entities who have residence or registered seat in the Slovak Republic or the Czech Republic and who are not persons falling within the definition of a qualified investor under the Prospectus Directive. The offer period in respect of the Institutional Offering shall commence on 21 April 2015 and end at 12:00 p.m. (Bratislava time) on 6 May 2015. The offer period in respect of the Retail Offering shall commence on 22 April 2015 and end on 5 May 2015 (which shall be included in the offer period). Offer Shares are offered at the Share Offer Price Range of EUR 17.70 to 23.60 per Offer Share. GDRs are offered at the GDR Offer Price Range of U.S.$ 19.00 to 25.30 per GDR. Subscription for GDRs will be expressed in U.S. dollars.

23 The ﬁnal offer price for the Offer Shares and the ﬁnal offer price for the GDRs will be determined by the Selling Shareholder in consultation with the Joint Global Coordinators and is expected to be determined on the business day following the last day of the Offer Period, which is expected to be 7 May 2015.

E.4 Material/conﬂicting Not applicable. There are no interests, including conﬂicting interests, that are interests. material to the Offering.

E.5 Name of the person or The Offer Securities are being offered by the Selling Shareholder. entity offering to sell the security / Lock-up In addition, following the Offering, the Selling Shareholder, Deutsche Telekom agreements Europe B.V. and the Company will be subject to contractual lock-up provisions relating to the sale or issuance of additional Securities for 180 days following completion of the Offering, subject to certain customary exceptions or with the prior written consent of the Joint Global Coordinators.

E.6 Dilution No new Company shares will be issued in connection with the Offering. Accordingly, there will be no dilution of the existing shareholdings.

E.7 Estimated expenses Not applicable. No commissions, fees or expenses in connection with the Offering charged to the investor will be charged to investors by the Company or the Selling Shareholder. The Depositary will be entitled to charge certain fees to the holders of GDRs.

24 RISK FACTORS

Investment in the Securities involves a high degree of risk. Investors may lose the value of their entire investment or part of it and should carefully review this Prospectus in its entirety. Investors should be aware that the value of the Securities may go down as well as up and that investors may not be able to realise their initial investment. These risk factors, individually or together, could have a material adverse effect on the Group (i.e., the Company together with its subsidiaries, taken as a whole), its business, results of operations, ﬁnancial condition, liquidity, cash ﬂows, prospects and/or the rights of the holders of such Securities.

Investors should note that the risks described below are not the only risks the Group faces. These are the risks that the Group currently considers to be material. There may be additional risks that the Group currently considers to be immaterial or of which it is currently unaware, and any of these risks could have similar effects to those set forth below.

Risks Related to the Group’s Business and Industry

The Group is subject to significant competition from new and established competitors and to changing market conditions. The telecommunications sector in the Slovak Republic is highly competitive. In its fixed voice and broadband service, as well as in the area of ICT services, the Group faces competition from UPC, Orange, SWAN, BENESTRA (formerly GTS) and Slovanet, among others. In the fixed-line business, the Group faces competition from both national telecommunications companies as well as specialised local and regional operators. In the mobile voice and data business, the Group faces significant competition from well-established telecommunications companies, including the local subsidiaries of major international operators, as well as prospective new entrants. For example, SWAN, a regional broadband and IPTV service provider which acquired two 15MHz blocks of spectrum in the 1,800MHz band at the end of 2013, is developing its own mobile network to start offering mobile data services, and reached 20% population coverage in December 2014. In March 2015, the Regulatory Authority for Electronic Communications and Postal Services (the Slovak NRA) issued interim measures ordering the Company, as well as Orange and O2, to provide national roaming services to SWAN in networks using 900MHz and 1,800MHz bands. Discussions on providing national roaming services are currently on-going with SWAN. See also ‘‘Business – Legal Proceedings – Regulatory proceedings concerning national roaming agreement with SWAN’’).

Entrance into the market of any new competitors has proven disruptive for market participants in the past, including O2’s market entrance in 2007. Such competition could be further compounded in the event of competitor consolidation or cooperation amongst existing competitors, such as through infrastructure sharing or wholesale agreements, or through the acquisition of additional spectrum licenses. These competitors may seek to offer services on different pricing or other terms, and may be subject to fewer regulatory requirements in the Slovak Republic than the Group, resulting from the regulator’s efforts to even the playing ﬁeld in the face of the Group’s perceived inherited dominant market position in the ﬁxed-line market.

The Group also faces significant competition in its Pay-TV business. Competition in this area has been driven by price, the range and quality of channels offered, the ability to offer digital TV services such as personal video recording (PVR), video-on demand (VOD), high definition TV (HDTV) and the level of customer service. Increased competition in the Slovak Pay-TV market may also arise from local players upgrading from basic internet services to DTH or IPTV services and internet-based content providers, such as Netflix, which could create significant price pressure and decrease demand for the Group’s Pay-TV services as internet-based providers continue to offer comparable content that is immediately accessible at low cost to consumers.

As a result of these and other competitive factors, the Group may face decreasing revenue and margin pressure, and its market share may decline. Such developments may adversely affect the Group’s profitability and cash flows. The Group’s future success in growing its business and market share will depend on its ability to maintain or achieve product and service offerings that are perceived as different, of higher quality, with better customer experience to its competitors. A failure to do so may affect the Group’s business, financial condition and results of operations.

25 The businesses in which the Group operates are subject to rapid and significant changes in technology, and any failure to adapt to new technological developments, or the cost of doing so, may materially and adversely affect the Group’s business, financial condition and results of operations. The markets in which the Group operates are characterised by rapid and significant changes in technology, customer demand and behaviour, and as a result are characterised by a changing competitive environment. New technologies and the Group’s timely implementation of such technologies, including those within broadband (e.g., FTTH (GPON) and VDSL2), mobile (e.g., LTE), ICT (e.g., IMS, Cloud Computing and metadata collection), television (e.g., VOD) and other developments, such as IP transport and aggregation, have had and are expected to continue to have a continued effect on the telecommunications industry and the Group’s business. Implementing these new and changing technologies requires significant levels of capital expenditure. Furthermore, these or other developments, new and established information and telecommunication technologies or products may not only fail to complement one another, but in some cases may even substitute or decrease demand for other products and services offered by the Group. In order to compete effectively, including retaining its market share and profitability, the Group is required to anticipate and react to technology changes in its industry by, among other things, developing new and enhanced products and services in a timely manner and offering these on attractive commercial terms. In addition, new technologies may become prevalent in the future, rendering the Group’s current technologies and systems obsolete. Future product offerings, new technological developments and the operation of the Group’s existing and future networks and technologies may also entail additional and potentially significant costs for the Group or require significant capital expenditures resulting from a range of factors, potentially at an increasing pace as compared to historic developments. Such factors may include increased customer demand for bandwidth, complexity of new solutions, potential incompatibility of new technology with the Group’s current systems and the cost of content. The level and timing of future operating expenses and capital requirements may differ materially from expectations due to various factors, many of which are beyond the Group’s control. If the Group is not able to fund these costs, or if it chooses not to fund these costs, then its business, financial condition and results of operations could be adversely affected. In recent years, a number of local and regional providers have rolled out fibre networks to offer broadband, TV products and landline telephony. Many local providers are able to offer only limited fibre coverage, but their networks are built in small and medium-sized cities, giving them access to a concentrated customer base. Such efforts may result in increased pressure on prices for the Group’s products, particularly in broadband and Pay-TV. Such price pressure could have an adverse effect on the Group’s customer base development, market shares and price levels, which could adversely affect its business, financial condition and results of operations. Any failure by the Group to effectively anticipate, react to or access technological changes in the telecommunications market, could cause the Group to lose customers, fail to attract new customers or to expand its current product lines, or incur substantial or unanticipated costs and investments in order to maintain its customer base, all of which could have a material adverse effect on its business, financial condition and results of operations.

The Group enters into wholesale agreements offering fixed voice, broadband and certain mobile services to its competitors and is required under applicable regulations to offer such services on terms that may increase the ability of its competitors to compete with the Group. The Group is required to offer certain fixed voice, fixed broadband and mobile services on a wholesale basis to other telecommunication providers that compete with the Group, and may be required to offer other services, such as IPTV, on a wholesale basis in the future. While the Group seeks to offer such services on market terms where it is permitted to do so, for example unregulated services such as its national roaming agreement with O2, it is in many instances required pursuant to applicable competition law and other regulations to offer fixed-line and broadband access and other services on terms that enable its competitors to offer lower prices to their customers than the Group is able or willing to offer. Key terms of such wholesale agreements including pricing are subject to regulation or regulatory intervention. For example, if the Group does not reach a commercial agreement with SWAN relating to the national roaming, the Slovak NRA will resolve the dispute by imposing terms for such an agreement. In such resolution, the Slovak NRA may impose terms which otherwise would not be acceptable to the Group, and which may be detrimental to the Group. For further information, see ‘‘Business – Key Sector-specific Regulations Applicable to the Group’’, ‘‘Business – Legal Proceedings – Regulatory

26 proceedings concerning national roaming agreement with SWAN’’ and ‘‘Telecommunication Regulation in Slovak Republic’’. Any inability of the Group to obtain favourable terms with respect to these agreements could have a material adverse effect on its business, ﬁnancial condition and results of operations. In addition, the European Commission strongly supports the implementation of Equivalence of Input (the EOI) or Equivalence of Output (the EOO) principles in regulated wholesale services to ensure effective non-discrimination. Compliance with these principles may require changes in the Group’s organization, processes or other aspects of the Group’s business. Imposition of EOI and EOO on the Group by the Slovak NRA could have a material adverse effect on its business, ﬁnancial condition and results of operations.

The Group’s revenue from fixed and mobile voice and mobile messaging services has declined significantly in recent years, and the Group may not be able to offset these declines. The Group has historically generated a significant portion of its revenue from fixed and mobile voice traffic and, to a lesser extent, mobile messaging services. Revenue from these services has declined in recent years. In mobile voice and messaging it is mainly attributable to significant price competition from O2. The decline in revenue from fixed voice reflects shifting customer preferences in favour of mobile communication. The share of fixed voice in total revenue decreased from 15.3% in 2012 to 12.5% in 2014, and of mobile voice in total revenue decreased from 28.9% in 2012 to 23.6% in 2014, in each case measured exclusive of interconnection revenue. The Group expects its revenue from mobile voice and messaging services to decline further as consumers increasingly migrate to data services and seek to optimise their consumption patterns. Increasingly, the Group also competes not only with other providers of telecommunications services, but also with alternative technologies that may adversely affect demand for the Group’s products and services. For example, in recent years, demand for alternative platforms and over-the-top (OTT) applications, including Skype, Viber and Whatsapp, has grown, decreasing or replacing demand for fixed and mobile voice services.

There can be no assurance that the Group will be able to offset these declines through increased data traffic or other services, or that, if realised, such increases will be sufficient to offset the reductions in revenue from fixed and mobile voice traffic through other sources of revenue. Any resulting reductions in the Group’s revenue could materially and adversely affect the Group’s financial condition and results of operations.

The Group’s revenue from fixed and mobile interconnection services and international mobile roaming has declined significantly in recent years and may continue to decline. The Group is party to interconnection and carrier services agreements with other operators that allow it to transmit local and long distance and international calls that originate on its fixed-line and mobile networks but terminate on other operators’ networks, and vice versa. Both fixed and mobile termination rates are regulated in the Slovak Republic in accordance with EU law, and the Slovak NRA has taken action to significantly reduce these rates in recent years. Fixed termination rates have declined from a blended rate of EUR 0.00801 per minute in 2011 to EUR 0.001234 per minute in 2014, and mobile termination rates have been reduced in line with recommendation from the European Commission from EUR 0.0635 per minute at the start of 2011 to EUR 0.01226 per minute in 2014. This level is broadly in line with median rates in Western and Central and Eastern Europe, which are EUR 0.0118 per minute and EUR 0.0168 per minute, respectively, according to BEREC MTR Report. Historically, the Group generated significant amounts of revenue from these interconnection fees, but these amounts have decreased significantly in recent years both absolutely and as a share of revenue and may continue to decline in the future. Revenue from interconnection fees amounted to EUR 21.1 million, EUR 36.0 million and EUR 47.9 million, or 2.7%, 4.5% and 5.8% of revenue for the years ended 31 December 2014, 2013 and 2012, respectively.

The Group also generates revenues from retail and wholesale international voice and data roaming charges. These charges consist of fees charged to customers who are travelling outside of their home network and fees charged to operators of visitors from abroad in the Group’s network. Applicable European Union regulations have required significant annual reductions in such fees. While, to date, the impact on revenue of reductions in regulated roaming rates has largely been offset by increases in volumes of roaming traffic, there can be no assurance that future reductions will be offset by increases in volume. Such reductions may have a material adverse effect on the Group’s financial condition, results of operations and prospects.

27 The Group relies on the integrity of its networks and its information technology systems for the operation of its business, and these systems may be disrupted by systems failures or security breaches. The Group relies on certain sophisticated critical systems, including (but not limited to) switching and service platforms, key active access and transport network elements with its key interconnection points, as well as the Group’s customer and service management, billing, Operations Support System (OSS), Enterprise Resource Planning (ERP) and other IT systems. The hardware supporting those systems is housed at relatively few locations, and damage to any of these locations could materially and adversely affect the Group’s business, financial condition and results of operations. Furthermore, the Group’s information technology system comprises numerous intra-linked systems that are periodically updated, upgraded, enhanced and integrated with new systems. Failure to maintain or update these systems, particularly where updates may be required to support new or expanded products or services, could result in their inability to support or expand the Group’s business. Such developments could materially and adversely affect the Group’s business, financial condition and results of operations. The Group also currently expects to switch from its current ERP system to ‘‘OneERP’’, developed to introduce standardised processes across the Deutsche Telekom Group. The costs of implementing this program may be significantly larger than anticipated and the implementation may not bring contemplated benefits for the Group. As a result, the Group’s business, financial condition and results of operations may be adversely affected.

The Group is reliant on third parties and suppliers for operation of part of its network and infrastructure, equipment and provisions of certain services. The Group purchases its network equipment, including its core, service and network (NT) management platforms, access active equipment, transmission equipment and the software required to operate such equipment from a concentrated number of key suppliers, including Ericsson Slovakia, Alcatel-Lucent Slovakia a.s., Cisco, Oracle Slovensko and NetCracker EMEA Ltd (see ‘‘Business – Key Suppliers’’). If it cannot obtain the equipment or ongoing maintenance it requires from these suppliers on commercially acceptable terms or at all, it may need to seek alternative suppliers, or it may incur additional costs or be subject to delays in its network expansion or upgrade plans. In addition, equipment from alternative suppliers may not be compatible with the Group’s existing equipment or the supplier may fail to integrate the equipment to the Group’s satisfaction. The Group’s employees also may not be familiar with the technical specifications and maintenance requirements of equipment from alternative suppliers. Any of the foregoing could result in a disruption of service or additional costs, which could have a material adverse effect on the Group’s business, financial condition and results of operations. The Group relies on third parties for the supply and maintenance of equipment and certain critical systems, such as satellite access for television transmission, NT platforms and elements, handsets, such as smart phones and other hardware, as well as certain value added services that the Group offers to its customers. The Group is also partially dependent on an external consultant for operation of its new Customer Relationship Management (CRM) system. Any failure to perform by such suppliers and operators or difficulties or delays in interconnecting with other networks and services may delay or prevent the Group from providing products and services to its customers, which may materially and adversely impact the Group’s business, financial condition and results of operations. Furthermore, the Group relies on the third parties that built the key elements of its fixed and mobile networks to provide ongoing upkeep and maintenance services. The Group can offer no assurance about the quality of these support services, or the level of control that the Group would have should such quality deteriorate. In the event that the Group’s current outsourcing arrangements become unsatisfactory, or their outsourcing partners fail to fulfil their obligations, the Group may not be able to find new outsourcing partners on economically attractive terms or on a timely basis or at all.

The Group is reliant on specific third party suppliers and manufacturers to provide specialty, high-demand products to meet consumer expectations. Key high-demand specialty handset products are provided by a limited number of suppliers, particularly Apple and Samsung. The Group is reliant on this limited number of suppliers to obtain these products and remain competitive in the market. The failure of the Group to procure these high- demand products from these suppliers on favourable terms, or to procure the models of these products at the level of quality and in the volumes the Group requires, could result in decreased revenues, a loss in market share, consumer confidence and loyalty and could materially and adversely affect the Group’s business, financial position and results of operations.

28 The Group relies on its network infrastructure and platforms which are vulnerable to disruptive events. The Group’s equipment and networks may be damaged, disrupted and service operation could be harmed by events such as fire, flood, lightning storms, heavy rain, snow and power outages and equipment or system failures, including those caused by terrorist attacks, malicious or unauthorised access, PC viruses, malware or targeted information technology based attack. Major damage or disruptions could result in failure of the Group’s networks or systems. In addition, the Group fully depends on electric power supplies by third parties and backup solutions available for critical systems can mitigate risk of power outage only for a limited time. Such developments could affect the quality of the Group’s services or cause service interruptions, and there can be no assurance that the Group’s business continuity plans, network security policies and monitoring activities may be sufficient to mitigate the impact of or prevent such disruptive events. Network or system failures could also harm the Group’s reputation or impair the Group’s ability to retain and attract new customers, which could have an adverse effect on the Group’s business, financial condition and results of operations.

The Group operates in a capital-intensive business, and any inability to meet its capital expenditure requirements or failure to invest in the continued upgrades of its network capabilities could materially and adversely affect its business, financial condition and results of operations. The Group requires substantial capital to build, maintain and operate its telecommunications networks, and to ensure their continued competitiveness. The Group also requires significant amounts of capital to develop, market and distribute its services and products. In particular, the Group expects to make significant investments in upgrading and expanding its broadband network and its mobile data services, in connection with its fibre and LTE rollout. The Group has made capital expenditures defined as additions to property, plant and equipment and intangible non-current assets of EUR 119.0 million, EUR 174.9 million (including the acquisition of spectrum licenses for EUR 63.5 million) and EUR 104.6 million (including the acquisition of spectrum licenses for EUR 1.8 million) for the years ended 31 December 2014, 2013 and 2012, respectively. Capital expenditures during these periods related primarily to roll-out of the LTE and 3G mobile networks, renewal of the 2G network, upgrades of the fixed-line network and fibre rollout and investment in new CRM systems, as well as acquisition of customer premises equipment (such as set-top-boxes, home access gateways and optical network terminations) and TV content. The Group has budgeted EUR 123.0 million for capital expenditures in 2015. The Group currently expects to fund its capital expenditure requirements from cash flows generated by its operations. However, if the Group is, for any reason, unable to obtain adequate funding as required, it may be required to limit its operations and its expansion plans, including plans to expand its network and service offering, which could have a material adverse effect on the Group’s business, financial condition and results of operations.

Acquisitions or investments may not generate expected benefits or synergies and could disrupt the Group’s on- going business, distract its management or increase its expenses. From time to time, the Group may consider additional opportunities for potential acquisitions. The Group may not be successful in its efforts to identify targets meeting its acquisition or investment criteria for inorganic growth, or accurately estimate the financial effects of any such transactions on its business. In addition, acquisitions may divert management attention or financial or other resources away from the Group’s existing business or require additional expenditures. Such developments could have a material and adverse effect on the Group’s business, financial condition and results of operations. The integration of any acquired operations into the Group’s existing business may also result in a failure to retain customers or management personnel or to align information technology systems, networks and supply chain arrangements. For example, the Group acquired a 51% interest in PosAm in 2010, but the remaining interest is owned by the Chief Executive Officer and other senior managers of PosAm, who are responsible for a number of key customer relationships. Although to date the Group believes relations with the PosAm management have been positive, if disagreements were to occur in the future, they could have an impact on PosAm customer retention or the business or operations of PosAm. In addition, the Group may not be able to capture the full benefit of, or expected synergy from, an acquisition unless and until it completes an integration process. For example, while the Group acquired control over DIGI in September 2013 it is still operated as a distinct business within the Group, separate from the Pay-TV services offered by the Group through its fixed-line business. A failure to capture the expected synergies from acquisitions or investments

29 through integration may have a material and adverse effect on the Group’s business, ﬁnancial condition and results of operations.

The Group competes in part by offering converged and bundled products, and it may not succeed in further developing such products or may be unsuccessful in marketing such products. Although the Slovak telecommunications market has traditionally been characterized by single-product offerings, in recent years the offering of multi-product packages has become increasingly popular amongst consumers, inﬂuenced by providers offering customers products and services bundles such as multi-play packages. Bundled services are typically offered to customers at a discount from the amount each service would have cost the consumer had it been purchased individually. Price competition has driven the price of bundled services down even further from the original discounted level, resulting in decreased services revenues. The Group believes that its ability to offer new converged and bundled products, either by enhancing existing products or developing new products, will continue to be an important factor in its business, contributing to reduced churn rates and stabilising the Group’s customer base. However, the offering of bundled products can be complex due to the technological, logistical and pricing challenges of combining two or more services in a competitively priced single offering. Furthermore, the Group faces limitations in its ability to offer bundled products, or the price at which such products can be offered, under applicable competition law and consumer protection regulation. A failure to offer attractive new bundled products in the future, or to successfully market such offerings to customers, or regulatory challenges or objections to creating such bundles could adversely affect the Group’s ability to leverage its multi-play platform to attract and retain customers. Any failure to attract and retain customers may materially and adversely affect the Group’s business, ﬁnancial position and results of operations.

The Group collects and maintains data on its customers digitally and is therefore exposed to risks of unauthorised or unintended data release through system failures or hacking. In the conduct of its business, the Group collects and maintains significant amounts of data on its customers which it is required to maintain and use in accordance with applicable regulations. See ‘‘Telecommunication Regulation in Slovak Republic – Further Applicable Regulation – Data protection’’. The telecommunications sector has become increasingly digitalised, automated and online-based in recent years, increasing the Group’s exposure to risks of unauthorised or unintended data release through hacking and general information technology system failures. Unanticipated information technology problems, system failures, computer viruses, intentional/unintentional misuses, hacker attacks or unauthorised access to the Group’s servers or other failures could result in a failure to maintain and protect customer data in accordance with applicable regulations and requirements and could affect the quality of the Group’s services, compromise the confidentiality of the Group’s customer data or cause service interruptions, and may result in the imposition of fines and other penalties. The occurrence of any of these events could harm the Group’s reputation and materially and adversely affect the Group’s business, financial condition or results of operations.

Any inability by the Group to obtain and maintain competitive content for its broadcast services on satisfactory terms may adversely affect the Group’s competitive position, business, financial condition and result of operations. The Group markets its product offerings in part on the basis of the content that it makes available to customers, including specialized sports video and music offerings. Any inability of the Group to obtain or retain attractive and competitively priced content offerings on its network could result in decreased demand for its existing and future TV and mobile services. If the Group is not able to secure a sufficient amount of attractive content on acceptable terms, sales of the Group’s products and services with a content component, such as Pay-TV, broadband and mobile data, could be adversely affected, which may have an adverse effect on the Group’s business, financial condition or results of operations. In particular, the Group’s Pay-TV business depends on the Group’s ability to source attractive TV content at competitive prices. Failure to extend or renew one or more of the Group’s agreements with key content providers, such as the Premier League (scheduled to expire in 2016), or the UEFA Champions League (scheduled to expire in 2018), upon expiry without substitution with comparably attractive content, or extension or renewal of such agreements on less advantageous terms, could adversely affect the Group’s competitive position, business, financial condition and result of operations, particularly if the rights to such content are subsequently acquired by the Group’s competitors.

30 The Group depends on the image and recognition of its brands including ‘T’ or ‘Telekom’, Zoznam, PosAm and DIGI, and any failure to maintain the positive image and recognition of these brands could materially and adversely affect the Group’s business and results of operations. The Group markets its product offerings in part on the basis of the content that it makes available to customers, including specialised sports and music offerings. The Group’s ability to attract new customers and retain existing customers depends in part on its ability to maintain favourable brand images. The Group seeks to maintain and improve the position of its brands in the market, including through advertising, sponsorship and ensuring that overall performance in terms of service provision and management are subject to regular review and improvement initiatives. In addition, the Group shares some of its branding with Deutsche Telekom, including ‘‘T’’ and ‘‘Telekom’’. Any failure to maintain and improve the Group’s brand image, or adverse publicity affecting the brands the Group shares with Deutsche Telekom, or relatively greater appeal of brands of the Group competitors, could have a material adverse effect on the Group’s business, ﬁnancial condition and results of operations.

The Group uses a number of retailers, franchise shops and other distributors to distribute or sell its products, and any interruption to these contractual relationships could increase the Group’s costs and/or have a material adverse effect on its business, financial condition and results of operations. The Group markets its products through door-to-door agents, telesales teams, retail shops, as well as franchise shops and other distributors in addition to its own channels. Approximately 14% of the Group’s total B2B customer sales transactions in 2014 were generated through third parties (dealers). The Group’s franchisees or other distributors may stop distributing the Group’s products to end customers, or terminate their relationship with the Group, for reasons beyond the Group’s control. A failure by the Group to maintain these distribution relationships, or a failure by distribution partners to provide sufficient customer intake for the Group, could have an adverse effect on the Group’s business, financial condition and results of operations.

The Group may face difficulties in recruiting and retaining experienced personnel. The Group depends on attracting and maintaining a labour force of experienced, qualified employees. Competition in the Slovak telecommunications industry for personnel with relevant expertise is intense due to the relatively small number of available qualified individuals. The Group seeks to offer compensation and benefits that are generally competitive on the Slovak labour market. Nevertheless, there are specific job positions in specific areas of the business where the Group may offer lower wages than its competitors, or where recruiting qualified and experienced employees could be more challenging due to the scarcity of qualified potential employees. Competition for qualified employees in these areas could lead to certain difficulties in recruiting qualified and experienced employees or can take greater length of time to recruit such employees, or resulting in a need to pay higher wages. In addition, the Group’s ability to maintain its competitive position and to implement its business strategy depends to a large extent on the services of its senior management teams. If one or more members of the Group’s management teams were unable or unwilling to perform or continue in their present positions, it may be difficult for the Group to replace those individuals in a timely manner, in some cases taking up to six months to find qualified personnel or even restructuring positions internally to cover all responsibilities if the position could not be filled. Any inability of the Group to retain, manage and/or recruit sufficient qualified and experienced personnel, or senior management could have an adverse effect on its business, financial condition and results of operations.

A significant event that exceeds the coverage limits of the Group’s insurance could result in substantial losses. The Group maintains insurance policies against certain losses, including property damage and business interruption (resulting from damage to property), third party liability and other, in accordance with the Deutsche Telekom Group policies. See ‘‘Business – Insurance’’. However, the Group’s policies may not be sufficient to provide protection against all losses. To the extent any loss is not covered by the Group’s insurance policies, or exceeds the coverage limits specified therein, the Group would not be able to obtain compensation for its losses from the insurer and may have to incur expenses to remedy the damage caused by relevant disruptions. In addition, depending on the severity of the property damage, it may not be able to rebuild damaged property in a timely manner or at all. The Group does not maintain separate funds or otherwise set aside reserves for these types of events or other insurable losses. Any such losses or third-party claims for damages not covered by

31 insurance may have a material adverse effect on the Group’s business, ﬁnancial condition and results of operations.

Legal and Regulatory Risks Investigations and litigation against the Group may lead to awards of damages, fines or other penalties, which may have a material adverse effect on the Group’s business, financial condition and results of operations. The Group is involved in legal proceedings from time to time, which may lead to the imposition of damages, fines or other penalties on the Group. As at the date of this Prospectus the total amount of claims against the Group is estimated at EUR 1.9 billion including the estimated default interest and costs of proceedings. However, out of that amount EUR 1.56 billion is related to two claims which the Company considers unfounded. See ‘‘Business – Legal Proceedings – Claims by Mr Jesˇko’’. The Group has made provisions against losses in the amount of EUR 32.1 million. The European Commission as well as the Antimonopoly Office of the Slovak Republic (the Slovak Competition Authority) have in the past found the Company to have infringed competition law by abusing its dominant position. In 2007, the Slovak Competition Authority imposed a fine of EUR 17.5 million for the Company’s abuse of its dominant position, in total of nine counts, committed by engaging in margin squeeze and tying on the markets of, fixed voice services, fixed data services and fixed telephone network access services (the Voice Case). In addition, in 2014, the European Commission imposed a fine of EUR 38.8 million jointly and severally on the Company and Deutsche Telekom for the Company’s alleged abuse of dominant position through margin squeeze and a refusal to supply in relation to unbundled local loops (the EC Case), which the Company paid in full in January 2015. In the same decision, the Commission imposed a separate fine of EUR 31.1 million solely on Deutsche Telekom. The decision of the Slovak Competition Authority in the Voice Case is currently being reviewed by the first instance review court, and the legal effect of the decision is suspended pending judicial review. Although the first instance review court initially annulled the decision in the Voice Case in its entirety in 2012, it did not uphold the Company’s argumentation in all nine counts of the abusive conduct described in the Slovak Competition Authority’s decision. In 2014, the annulment was reversed by the Supreme Court, and the case was returned for further proceedings before the first instance court. The Company is not obliged to pay the fine pending a final decision of the court. The decision of the European Commission in the EC Case has been appealed to the General Court of the European Union and is currently pending before it. The appeal did not suspend the enforceability of the Commission decision and, accordingly, as of 31 December 2014, the Company recognised the entire fine imposed jointly and severally on itself and Deutsche Telekom as a liability (EUR 38.838 million), and the Company paid this amount in January 2015. The Company has reserved its rights to determine and claim partial reimbursement of the fine from Deutsche Telekom. The Company and Deutsche Telekom are currently negotiating the reimbursement, including a suitable procedural framework to determine if and to what extent such reimbursement should be provided. There can be no assurance that Deutsche Telekom will reimburse any amount. The Company has also been informed by Deutsche Telekom that it may consider claiming from the Company partial reimbursement of the fine imposed solely on Deutsche Telekom. In addition to the fines paid by the Company, based on the Commission’s decision in the EC Case, other parties, such as competitors of the Group or consumers who consider that they may have been harmed by the anticompetitive behaviour, may bring material follow-on claims in the Slovak courts for damages caused by misconduct by the Group. In such follow-on actions, claimants can rely on the proof of existence of the anti-competitive conduct as established by the Commission decision and thus do not have to prove the existence of the anti-competitive conduct. The courts then only assess whether there is a causal link between the Company’s conduct and the harm allegedly suffered as well as the quantum of such harm. The number of follow-on claims has increased in the European Union in recent years and there is also a trend in EU legislation to facilitate such claims. In particular, Directive 2014/104 on actions for damages under national law for infringements of competition law enshrines the right of every person who has suffered harm caused by an infringement of competition law to obtain full compensation and establishes a favourable legal environment for claimants to enforce their claims more effectively. In addition, in 2013 the European Commission adopted a Communication on quantifying harm in actions for damages based on breaches of EU competition law which serves as important guidance not only to the claimants when calculating claims but also to national courts. In connection with existing EU case law, these developments will further facilitate the pursuit of follow-on damages claims. Accordingly, one or more claims may be brought against the

32 Company on the basis of the Commission’s decision in the EC Case, and these claims may be material. Two follow-on damages claims have already been brought against the Company in connection with the Slovak Competition Authority decision in the Voice Case in 2013, and the plaintiffs, SWAN and Slovanet, are currently seeking damages in the principal amount of approximately EUR 48.0 million and EUR 30.8 million, respectively, increased by costs of proceedings and default interest at the statutory rate. The Company currently estimates the aggregate value of both claims (including costs of proceedings and default interest) at approximately EUR 121.3 million. Proceedings in both cases have been suspended pending the court’s consideration of the underlying decision of the Slovak Competition Authority in the Voice Case; the claimants are seeking to overturn the suspension and have the proceedings resumed. The Group may be subject to further claims in respect of the Voice Case, the EC Case or other proceedings in which it may be involved from time to time. Any such claims, if determined adversely to the Group, may have a material adverse effect on the Group’s business, financial condition and results of operations. The Group is also subject to other claims before Slovak courts. These claims include proceedings for damages allegedly caused by the shutdown in the 1990s of Radio CD International broadcasting, a program of Slovak Radio directed to the territory of Austria and broadcast by the Company (the CDI Case), in which it is alleged that a predecessor of the Company improperly discontinued broadcasting Radio CD International’s programming. At first instance, the Company was ordered to pay damages in the principal amount of approximately EUR 32.2 million together with interest at an annual rate of 17.6% from 4 September 1996 until fully paid and costs of proceedings of EUR 3.7 million. The Company currently estimates the aggregate value of the claim (including default interest and costs of proceedings) at approximately EUR 141.1 million. Currently, the dispute is pending on appeal before the Supreme Court. In March 2015, the Company and the claimant entered into a settlement agreement providing for financial compensation by the Company in an amount not exceeding the Company’s prior provision in respect of such amounts and release of further claims. The settlement agreement has been filed with, and is subject to approval by, the relevant court. There is no statutory period for the court to grant such approval. The Group is subject to applicable consumer protection legislation, and may from time to time be subject to regulatory proceedings or legal disputes concerning its compliance with such legislation, such as with respect to whether its standard form consumer contracts contain unfair terms or are in accordance with applicable requirements. Any failure to comply with consumer protection legislation may result in the imposition of regulatory fines and/or damages in connection with claims brought by consumers or consumer associations. Moreover, it may also harm the Group’s reputation and result in negative public relations. Currently, the Group is facing several proceedings related to consumer protection, none of which is material; however, they may become material in the future, in particular if initiated by large numbers of other consumers or consumer associations. The Group believes it makes appropriate provisions where a loss or liability is probable in respect of particular litigation and proceedings and can be either quantified or estimated with reasonable precision, and reviews on a regular basis the level of provisioning it considers appropriate in respect of on-going litigation. There can be no assurance that any judgments against the Group will not be for amounts in excess of the levels provisioned, or that the Group may not be subject to additional, and potentially significant, claims. In addition, litigation may result in negative publicity for the Group. If the Group is unable to successfully manage the risks related to litigation, this could have a material adverse effect on the Group’s future results of operations and its financial condition.

The Group is subject to Slovak and European Union competition law regulations. The Group is subject to Slovak and European competition law regulation. These regulations prohibit agreements and practices, the purpose or result of which is to restrict competition as well as behaviour that constitute an abuse of a dominant position. Furthermore, both Slovak and European laws contain merger control regulation that may have an adverse impact on any acquisition or disposal activity by the Group. In certain markets where the Group is designated as an undertaking with signiﬁcant market power or where an acquisition would lead to signiﬁcant impediment of competition, primarily as a result of creation or strengthening of the dominant position on such market, the Group’s ability to make acquisitions may be restricted by regulatory and competition concerns. See ‘‘Telecommunication Regulation in Slovak Republic – Further Applicable Regulation – General Competition Law’’.

33 In light of the Group’s size and position in the markets in which it operates, particularly in fixed-line and broadband services, competition regulation significantly restricts the Group’s ability to operate. In particular, the Company must adhere to a number of ex ante regulatory obligations stemming from its position of a significant market power undertaking on multiple relevant markets in Slovak Republic (see ‘‘Telecommunication Regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – Obligations imposed on SMP Undertakings’’). Further, the Company’s practices and agreements have been, and will continue to be, subject to review by the European Commission and the Slovak Competition Authority for possible infringements of the European as well as Slovak competition regulations (which typically implement the requirements of EU competition law), and the Group has been subject to fines and penalties for violations of such requirements, such as in the Voice Case and EC Case. While the Group seeks to ensure that its operations are in compliance with applicable regulations, no assurance can be given that the relevant authorities will agree with the Group’s interpretation of such regulations. Any actions by Slovak or European Union competition authorities may limit the Group’s operations, including the prices that it may charge or the services that it may offer, which may have a material adverse effect on the Group’s business, financial condition and results of operations.

The Group’s ability to provide commercially viable telecommunications services depends in part upon various intellectual property rights it owns, and the Group may be subject to claims from third parties for infringement of intellectual property rights. The Group relies on third-party licences and other intellectual property arrangements to conduct its business. Intellectual property rights owned by the Group or its subsidiaries or licensed to any of them may be challenged or circumvented by competitors or other third parties. In addition, the relevant intellectual property rights may be or may become invalid, unenforceable or may not be broad enough to protect the interests of the Group or may not provide it with any competitive advantage. For example, the Group’s rights to broadcast exclusive content may be subject to infringement. Any loss or withdrawal of those intellectual property rights could adversely affect the Group’s ability to provide services and could adversely affect its business, ﬁnancial condition, results of operations and prospects. In addition, the Group may be subject to claims for copyright or trademark infringement in connection with content that it distributes through its broadband, mobile data, Pay-TV and other services such as its Internet portals, VOD and digital archiving services and broadcasting services. Any such claims or lawsuits could be time consuming, result in costly litigation and diversion of technical and management personnel, require payment of royalties or licence fees in respect of future periods and, potentially, for past violations, require the Group to develop non-infringing technology or to cease broadcasting or distribution of the infringing content or services and/or enter into royalty or licensing agreements. The Group is currently subject to nine disputes related to intellectual property rights and collective rights management societies, the total amount of which is estimated at EUR 6.2 million including the estimated default interest and costs of proceedings.

Spectrum limitations may adversely affect the Group’s ability to provide services to its customers. The number of customers that can be accommodated on a mobile network is constrained by the amount of spectrum allocated to the operator of the network and is also affected by customer usage patterns and network infrastructure. The spectrum is a continuous range of frequencies within which the waves have certain specific characteristics. The Group currently has spectrum assignments in key bands (450MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz and 2,600MHz) used for mobile communications across the EU, as well as assignments in less significant bands, such as 26 GHz. As the Group’s customer base grows and the Group offers a broader range of services, it may require additional capacity for mobile voice and data. However, the currently available spectrum may be limited by competition, regulation or financial constraints, and the Group may face a bottleneck, especially in metropolitan areas. In some important frequency bands the maximum amount of spectrum that can be allocated to one undertaking is or in the future may become limited by spectrum caps set by the Slovak NRA. The spectrum caps may limit the ability of the Group to acquire additional spectrum through tenders or by purchase from other licence holders. Moreover, the Group’s ability to acquire new spectrum licences may be limited by a maximum number of spectrum licences set by the Slovak NRA in a particular frequency band. For example, a frequency cap in the 1,800MHz band limits the amount of the spectrum which may be held by an individual operator to 2x20MHz, and accordingly the Group would not be allowed to acquire more than 2x4.8MHz spectrum in the 1,800MHz band in the

34 upcoming auction currently planned by the Slovak NRA for the second half of 2015. For more information on spectrum caps and limitations on number of licence holders see ‘‘Telecommunication Regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – The national licensing system’’. Were the Group to require additional spectrum permits, it would consider requesting additional assignments of radio frequencies, and it would consider submitting bids if additional spectrum permits were to be tendered in the future. Were the Group not successful in the pursuit of such permits for any reason, such as prohibitive cost or limited number of available licences, it could ﬁnd itself at a competitive disadvantage in the Slovak mobile market.

Licences and authorisations material to the business of the Group may be difficult to obtain or may be withdrawn. The Group’s telecommunications operations in the Slovak Republic are dependent upon and subject to concessions/licences/authorisations and approvals granted by the Slovak NRA. In particular, the Slovak NRA is responsible for granting licences for the provision of telecommunications services, allocating frequencies and assigning telephone numbers necessary for the Group’s operations. See ‘‘Telecommunication Regulation in Slovak Republic’’. Frequency allocation in some frequency bands is or in the future may become restricted by spectrum caps or by a maximum number of spectrum licences set by the Slovak NRA. These restrictions may limit the Group’s ability to acquire new frequency spectra either through tenders or through purchase from other operators. Some of these licences and other authorisations are particularly complicated and lengthy to obtain and may subject the Group to ongoing compliance obligations. Each licence can only be obtained after fulfilment of prescribed legal conditions. For example, in order to receive and maintain permission to provide payment services (which is granted by the NBS for an indefinite period), the stipulated conditions which the Group must fulfil includes, for example, professional competence and trustworthiness of natural persons, suitable organisational conditions for carrying on the business of a payment institution, appropriate financial background, risk management systems, internal control systems, prevention of money laundering and terrorist financing, suitable and adequate technical systems, resources and procedures for the proper provision of payment services, and material and equipment required for the payment institution’s operations. The Group’s key frequency spectrum licenses have scheduled expiration dates between 2025 and 2028, but the licences (as well as other authorisations and approvals) may, under certain circumstances specified in the applicable laws, be withdrawn prematurely by the competent authorities. Spectrum licences as well as some other licences are subject to payment of fees and other conditions and a failure to comply with these conditions may result in termination or withdrawal of the licences or other sanctions. For example, a failure to pay fees or other breach of conditions of a spectrum licence would lead to termination of the licence and it would disqualify the Group from spectrum tendering for three years following the termination. Spectrum licences that were awarded in a tender are not automatically renewed and the relevant spectrum will be allocated to a new user upon expiration of the licence based on a new regulated tender process. The Slovak NRA may decide on tender proceedings also in case of expiry of spectrum licences that were awarded without tender in the past. The most important frequencies held by the Company (including 4G licences) are determined to be re-allocated through tenders. The Slovak NRA is currently investigating compliance by the Group with a requirement to start using the frequencies under one of its key spectrum licences (4G license for the use of frequencies in the 800 and 2,600MHz bands) within six months from the legal effect of the decision on their allocation. No breach of licence conditions has been declared and no licence withdrawal proceedings have commenced as of the date of this Prospectus. The Company believes there is no legal basis for the Slovak NRA to determine that the Company has not complied with its licence obligations. However, if the Slovak NRA were to make a finding to the contrary, this could result in the withdrawal of the licence relating to these frequencies. Such a withdrawal, if it were to occur, could have a material adverse effect on the results of the operations and financial condition of the Company. Usage of spectrum is subject to recurring fees, set and modified from time to time by the Slovak NRA, which has a considerable amount of discretion in this matter. These fees may be increased in future, materially or adversely affecting the Group’s business. As technology develops and new and/or additional services are provided the Group may be required to obtain new licences from additional regulators depending on the relevant technology or service, such as the Regulatory Office for Network Industries, the NBS, the National Security Authority or

35 the Council for Broadcasting and Retransmission, which may be difﬁcult to obtain and/or be issued subject to conditions that the Group ﬁnds hard or costly to meet. In addition, the Group is periodically required to seek renewals of its licences and approvals.

A withdrawal or inability to renew licences and authorisations, whether as a result of alleged breaches of conditions or otherwise, or to obtain newly required licences and authorisations, could have a material adverse effect on the Group’s business, ﬁnancial condition and results of operations.

The Group may encounter difficulties in obtaining the required location, construction and use permits to build or renew its fixed and mobile infrastructure and/or the permits and approvals which the Company requires for its business may be missing, insufficient, defective or inadequate. The procedure for obtaining location, construction and use permits for the building of mobile and fixed-line infrastructure is a relatively slow process in the Slovak Republic, particularly in relation to the obtaining of permits in urban areas. Such permits are also subject to review by municipalities, architecture and environment protection authorities. Construction activities in protected areas may be subject to environmental or ecological construction disputes and protests, which may result in a temporary or permanent cessation of construction. The Group may also face difficulties in particular where it does not own or control the sites where its equipment is housed, potentially resulting in disputes with property owners. With respect to its fixed-line operations, the Group may encounter difficulties in obtaining the required permits to lay its ducts. In such cases the Group usually relies on statutory rights to use third party land or buildings. However, the Group may face difficulties in individual cases arising in particular from the fact that certain owners may refuse to accept statutory restrictions of their property rights or may dispute the fulfilment of statutory conditions for such restrictions.

The Group’s technology (fixed and mobile) is in many cases hosted in third party premises. The use of such premises in many cases has been acquired through a rental contract or through a ‘‘right to use’’ in buildings which have previously been owned by the Group and sold to third parties. There may be cases at these premises where the landlord (or, as the case may be, the tenant) changes or faces financial difficulties or where the owner disputes the Group’s ‘‘right to use’’. These cases could result in the need for expensive technology relocation processes or expensive modification of the site in order to secure access to and operation of technologies. For example, at one site in Bratislava, following the bankruptcy of the owner, the Group temporarily lost access to technology and electricity feeds due to the freezing of the owner’s assets, resulting in a temporary inability of the Group to provide services from that location. Such occurrences, if prolonged or not promptly remedied, could materially and adversely affect the Group’s business, financial condition and results of operations.

In addition, the permits and approvals (including permits and approvals granted by the owner of the relevant land, building or premises) which the Group requires for its business may be missing or deemed insufficient, defective or inadequate. If any permits or approvals are found to be missing, insufficient, defective or inadequate, the Group could be subject to certain sanctions. The delays associated with obtaining the required permits could have a material adverse effect on the services provided by the Group to its customers, its future results of operations and its financial condition. See ‘‘Telecommunication Regulation in Slovak Republic’’.

Any inability by the Group to provide emergency call service or interference with other radio equipment may result in financial and regulatory penalties, legal proceedings and damage to reputation. The Group is obliged to provide an emergency call service through its fixed and mobile voice services and the Group is also responsible for operation of the nationwide emergency call system. Any hazardous interference with providing such a service, as a result of the Group’s network or systems malfunctioning or otherwise, may result in severe consequences for the caller in the case of emergency (especially in areas where no other operators networks are available) and potential financial penalties or legal proceedings, which could have a material impact on the Group’s results of operations and/or reputation. In addition, regulation aimed at preventing hazardous interference with other radio equipment, as well as requirements stemming from international cross-border coordination agreements, technical standards and norms, and limitations towards the maximum amount of electromagnetic emissions may interfere with or add significant cost to the Group’s operation of its base stations.

36 Actual or perceived health risks or other problems relating to mobile handsets or base stations could lead to decreased mobile communications usage, significantly increased costs involved in offering mobile telephone services, litigation risk and/or difficulties in obtaining permits for base stations. The biological effects of radio frequency electromagnetic fields have been studied for more than 50 years. Public opinion is influenced by some studies that have shown that there may be regions within a few metres and directly in front of the antennas of base stations where radio wave levels can exceed recommended exposure levels. These regions are generally not accessible to the public, but members of the public may challenge plans by mobile operators to install base stations in their neighbourhoods. In addition, there are allegations that there may be health risks associated with the effects of electromagnetic signals from mobile telephone handsets. Actual or perceived health risks of mobile communications devices could adversely affect the Group through a reduction in subscribers, reduced usage per subscriber, and exposure to potential liabilities.

Risks Related to the Slovak Republic The Group operates solely in the Slovak Republic, and its business, financial condition and the results of operations are dependent on economic conditions in the Slovak Republic. Investing in less developed markets, such as the Slovak Republic, entails certain risks, which may be greater than risks inherent in more developed markets. All of the Group’s operations are located in the Slovak Republic, and as a result the Group’s business is highly dependent on economic conditions in the Slovak Republic. In particular, a slowdown in growth or deterioration of general economic conditions in the Slovak Republic may adversely affect demand for telecommunications services by the Group’s customers. Economic conditions in the Slovak Republic are in turn significantly influenced by economic conditions in the European Union, and particularly by conditions in Germany, the Slovak Republic’s primary trading partner. GDP growth in the Slovak Republic was 1.8%, 0.9% and 2.3% in 2012, 2013 and 2014, respectively, according to the IMF. Political conditions or other crises having an impact on the Slovak Republic, Germany or the European Union as a whole could in turn impact economic growth in the region. The Slovak economy is also characterized by significant regional differences, with wealth concentrated in Bratislava and declining with distance from the capital city. Therefore, declines in economy activity in Bratislava could greatly impact the Group’s operations as a whole. Furthermore, an investment in a country such as the Slovak Republic is subject to greater risks than an investment in a country with a more developed economy and more developed political and legal systems. The Slovak Republic joined the EU in 2004 and the Eurozone on 1 January 2009, but is still characterised by relatively less developed economic structures and markets. The development of the Slovak Republic’s legal infrastructure and regulatory framework is still on-going. An investment in the Slovak Republic therefore carries risks that are not typically associated with investing in more mature markets. Investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, in light of those risks, an investment in a Slovak company is appropriate. Generally, investments in less developed markets, such as the Slovak Republic, are only suitable for sophisticated investors who can fully appreciate the significance and consequences of the risks involved. Additionally, international investors’ reactions to events occurring in one country sometimes demonstrate a ‘‘contagion’’ effect, in which an entire region or class of investment becomes disfavoured by international investors. Accordingly, negative economic or financial developments in other countries could adversely affect investment in the Company. Conditions resulting from any crises similar to the Russian annexation of Crimea and ongoing conflict in Ukraine, the global financial and economic crisis that started in 2008, the European sovereign debt crisis or the recent political turmoil in Europe, the Middle East and Africa may also negatively affect the economic performance of, or investor confidence in, less developed markets, including the Slovak Republic.

Certain global events may indirectly affect the outlook for the Slovak Republic and adversely affect the Group. Starting in 2007 and continuing into 2009, the global economy experienced a significant downturn, the effects of which are on-going. Governments in the United States, Europe and elsewhere have implemented (and continue to implement) significant economic stimulus packages in response to this global financial crisis. Notwithstanding these actions, the volatility and market disruption in the global banking and other economic sectors have continued to a degree unprecedented in recent history. Like many other countries, during this period the Slovak Republic experienced contraction in

37 its economy and other adverse economic and financial effects as a result of the global financial crisis, including limited access to the international capital markets. In 2010, high budget deficits and rising direct and contingent sovereign debt in Greece, Ireland, Italy, Portugal and Spain resulted in concerns about the ability of these states to continue to service their sovereign debt obligations, triggering a sovereign financial crisis in Europe. These concerns impacted financial markets and resulted in high and volatile bond yields on the sovereign debt of many EU nations. There have been various national and supra-national responses to these concerns, including the creation of a joint EU-IMF European Financial Stability Facility in May 2010, assistance packages to Greece, Ireland and Portugal, and plans to expand financial assistance to Greece; although notwithstanding these, uncertainty over the outcome of the EU governments’ financial support programmes and worries about sovereign finances persisted and, despite increased purchases of sovereign bonds by the European Central Bank and measures taken by other central banks to enhance global liquidity, ultimately concerns spread from ‘‘peripheral’’ to ‘‘core’’ EU member states during the latter part of 2011. In December 2011, European leaders agreed to implement steps (and continue to meet regularly to review, amend and supplement such steps) to encourage greater long- term fiscal responsibility on the part of the individual member states and bolster market confidence in the euro and European sovereign debt. Since then, the financial support for stressed nations and financial institutions has continued, with a further offer of bail-out funds to Greece in the amount of EUR 130 billion in February 2012, a EUR 10 billion support package for Cyprus financed by the IMF and the European Stability Mechanism (ESM), and a support package of EUR 41.4 billion to Spain. Negotiations surrounding the Greek bailout following the newly elected Greek government’s position to end austerity measures connected to the bailout remain contentious, and any resolution, including the possibility of Greece’s exit from the Eurozone, could negatively impact the EU and Slovak economies. The Slovak economy remains vulnerable to external shocks and would be negatively affected by economic slowdown in the EU, particularly considering exports to the EU are a key driver of the Slovak economy. Public debt surpassed an important threshold of the national ‘‘Debt Brake’’ (55.7% of GDP in 2014 according to IMF) and if surpassing of the 55% threshold is confirmed by Eurostat for 2014 (publication is expected in late April 2015), certain austerity measures will be automatically imposed upon the government budget pursuant to applicable law. These measures can result in significant limitations with regard to the government’s ability to increase its spending or to decrease taxes. Investors should ensure that that they have sufficient knowledge and awareness of the global financial crisis, the Eurozone crisis and the economic situation and outlook in the Slovak Republic to enable them to make their own evaluation of the risks and merits of an investment in the Offer Securities. In particular, investors should take into account the current uncertainty as to how the global financial crisis, the Eurozone crisis and the wider economic situation will develop over time and how they will affect the Slovak economy.

The Group’s ability to conduct business and its financial condition, results of operations and prospects could be adversely affected by corruption and money laundering. Independent analysts and media reports have identified corruption and money laundering as problems in the Slovak Republic. In Transparency International’s Corruption Perceptions Index for 2014, which evaluated data on corruption as perceived by domestic and foreign analysts and managers in countries throughout the world and ranked countries from 1 (least corrupt) to 175 (most corrupt), the Slovak Republic was ranked 54. Efforts to reduce corruption, such as the law on the protection of whistleblowers, stricter rules for financing political parties and launching the e-marketplace for state orders, may be adversely affected by factors such as undeveloped or untested legislation, problems with legislation, the perceived lack of independence of parts of the judiciary, and close ties between the political and business elite. The European Commission has recommended that the Slovak Republic strengthen the independence of the judiciary, in particular by specifying criteria for when presidents and vice-presidents of courts can be removed from office, has suggested increasing the transparency of party funding at local and regional levels, and has recommended strengthening control mechanisms to prevent conflicts of interest. In August 2014, the Commission suspended the Slovak Republic’s ability to draw EU funding in the majority of operational programs due to previous errors made when drawing the funds and running the operational programs. The operational programs may be unblocked as the government progresses with addressing the identified shortcomings; however, the restricted ability to use EU funds in

38 particular in infrastructure development projects may have an adverse effect on the economy of the Slovak Republic, and in turn on the results of operation and prospects of the Group.

The Slovak legal system and Slovak legislation continue to develop, which may create an uncertain environment for investment and for business activity. The legal infrastructure and the law enforcement system in the Slovak Republic is less developed when compared to some western European countries. The average length of judicial proceedings in commercial matters in 2012 in the Slovak Republic was 14 months and may be longer when taken together with appeals, extraordinary remedial procedures or proceedings before the Slovak Constitutional Court. In some circumstances, it may not be possible to obtain legal remedies to enforce contractual or other rights in a timely manner or at all. The lack of an institutional history remains a problem in the Slovak Republic. As a result, shifts in government policies and regulations tend to be less predictable than in countries with more developed democracies. A lack of legal certainty or the inability to obtain effective legal remedies in a timely manner or at all may have a material adverse effect on the Group’s business, results of operations or financial condition. The uncertainties relating to the Slovak legal and judicial system could have an adverse effect on the economy. The Slovak Republic is a civil law jurisdiction and judicial decisions under Slovak law generally have no precedential effect. Courts are generally not bound by earlier court decisions taken under the same or similar circumstances, which can result in the inconsistent application of Slovak legislation to resolve the same or similar disputes. While the role of judicial decisions as guidelines in interpreting applicable Slovak legislation is generally limited, almost all decisions of all courts are now available on-line and judges and clerks are increasingly given access to court decisions from all other courts of the country, which may improve uniformity of decision making. Still, whilst the Slovak judicial system has gone through several reforms to modernise and strengthen the independence of the judiciary, these reforms may not be sufficient. In addition, the uniform application of law is hindered by the quality (particularly clarity and transparency) and stability of the legal framework. The credibility of the system may be put at risk by issues raised with respect to the integrity of public servants and officials, as well as by high level corruption cases. In addition, the shortcomings of the Slovak legal and judicial system could negatively affect the ability of the investors to enforce their rights against the Company, whether under corporate law or securities laws. Investors should be also aware that, in the Slovak Republic, there may be fewer judges specialised and experienced in complex matters involving investments in securities when compared to judges in western European countries. Therefore, the matters brought before the Slovak courts may be subject to delays and may not be conducted in a manner similar to more developed legal systems and may, as a result, lead to delays in proceedings or losses on the investments. Any or all of these factors could have a material and adverse effect on the Group’s business, financial conditions and results of operations.

A special levy is imposed on regulated industries in the Slovak Republic, and the Slovak taxation system is subject to change and may issue inconsistent interpretations of tax legislation. The legal and fiscal framework within the Slovak Republic is changing on a continuous basis. Due to the recent economic crisis, the Slovak Republic has faced significant budget deficits and, as a result, the government has implemented certain austerity measures and tight budgetary controls, resulting in the imposition of tax increases, the introduction of new taxes and the broadening of tax base. There can be no assurance that these austerity measures will not be continued or increased or that new taxes would not be imposed in the future, should the budgetary objectives under the EU rules or the national ‘‘Debt Brake’’ legislation be missed. Tax rules, including those relating to the telecom industry in the Slovak Republic, and their interpretation, may change, possibly with retrospective effect. Significant tax disputes with tax authorities, any change in the tax status of any member of the Group or any change in Slovak taxation legislation or its scope or interpretation could also affect the Group’s business and financial position. As part of the budget deficit control measure, the Slovak government has introduced a special levy at the rate of 4.356% per annum from profit before tax of certain regulated undertakings, which include telecom companies, from September 2012. The levy is payable if the revenues from regulated activities are at least 50% of the total revenues of the relevant entity. The Group incurred costs of EUR 2.5 million, EUR 3.1 million and EUR 2.1 million in respect of this levy in the years ended 31 December 2014, 2013 and 2012, respectively.

39 When enacted in 2012, the relevant legislation stated that the special levy should not apply after December 2013. However, an amendment to that legislation adopted in 2013 has extended the special levy to apply until December 2016. It is possible that the special levy will be further prolonged or additional similar taxes or levies could be imposed in the Slovak Republic in the future, although none are currently proposed by the government to be approved in the parliament. The imposition of any such new taxes or levies in the Slovak Republic could have an adverse effect on the Group’s business, results of operations and ﬁnancial condition.

Risks Related to the Group’s Relationship with Deutsche Telekom The Group is dependent on its controlling shareholder, Deutsche Telekom, and a change in or loss of this relationship may adversely affect the Group’s business and results of operations. The Company has entered into a number of agreements and arrangements with Deutsche Telekom, which indirectly owns a majority share of the Group, and its affiliates. These arrangements include shared accounting and procurement services across the Deutsche Telekom network, with plans to expand the scope of shared services in the near future. These arrangements also include a branding programme for the Group that is consistent with and based upon the Deutsche Telekom ‘‘T’’ brand branding model and utilising various trademarks and other intellectual property in the ownership of Deutsche Telekom. The Group also benefits from several of Deutsche Telekom’s preferential arrangements with a variety of suppliers and vendors, including a number of interconnection agreements with international operators which have been concluded by the Group pursuant to Deutsche Telekom’s Preferred Partners Agreement with such international operators. Were Deutsche Telekom’s shareholding in the Company to be reduced below 51%, Deutsche Telekom or some of its affiliates would have a right to terminate certain agreements concluded with the Group with an immediate effect. Furthermore, the Group outsources various functions to third parties as well as to its majority shareholder and its affiliates. Such functions include, but are not limited to, network maintenance, bill printing and distribution services, fleet management, accounting and technology logistics. See ‘‘Related Party Transactions’’. The termination of these arrangements or loss of support from Deutsche Telekom may impose additional costs and expenses on the Group, which may be significant, and result in the loss of the Group’s ability to use Deutsche Telekom branding, know- how, shared accounting, procurement or other services and otherwise to benefit from the Group’s relationship with Deutsche Telekom. Any such change may have a material and adverse effect on the Group’s business and results of operations.

Interests of Deutsche Telekom may differ from those of holders of the Securities. Following the Offering, Deutsche Telekom will continue indirectly to hold 51% of the Company’s share capital and voting rights, and it may acquire additional Shares in the future. The Supervisory Board and Board of Directors are both elected by a simple majority of the Company’s shares represented at the relevant General Meeting, and the members of the Executive Management Board are selected by the Board of Directors. As a result, following the Offering, Deutsche Telekom will continue to have effective control over the management of the Group, except for certain limited matters which require approval by qualiﬁed two-thirds majority of shareholders present at the General Meeting, such as changes to the Company’s Articles of Association. See ‘‘Management’’ and ‘‘Principal and Selling Shareholders – Principal Shareholder’’. The interests of Deutsche Telekom may differ from and, in some circumstances, conﬂict with, the interests of the holders of the Shares and GDRs, and Deutsche Telekom may be able to require the Company to enter into transactions that may not be in the best interests of minority shareholders, and its concentration of ownership may have the effect of delaying or deterring a change in control, which could deprive the minority shareholders of an opportunity to receive a premium for their shares as part of a future sale of the business. Any such divergence of interests may materially and adversely affect the value of an investment in the Securities.

The Company may decide not to, or may be unable to, pay dividends or other shareholder remuneration. The Company has not adopted a formal dividend policy and there can be no assurance that it will pay dividends. Pursuant to the Memorandum of Understanding entered into in February 2014 between the Selling Shareholder, the Slovak Republic acting through the Ministry of Economy, Deutsche Telekom AG and the Company in connection with the Offering, the Company agreed to guidance that the dividends declared and paid in respect of any year following the year in which the Offering takes place are to be from 50% to 80% of the Company’s distributable proﬁt determined in accordance with the Slovak Commercial Code from the immediately preceding year, provided that

40 any annual dividend shall depend on the overall financial position of the Company and its working capital needs at the relevant time (including but not limited to the Company’s business prospects, cash requirements, financial performance, and other factors including tax and regulatory considerations, payment practices of other European telecommunications operators and the general economic climate). The Board of Directors shall consider all these conditions before deciding on any proposal for profit distribution and may determine that it is unable or elect not to propose dividends in the future or otherwise return funds to holders of the Securities. In addition, any decision to pay dividends is subject to approval of a simple majority of shares represented at the General Meeting. As Deutsche Telekom will continue to be the beneficial owner of 51% of the Company’s shares following the Offering, the decision whether to pay dividends, and the level at which any dividends are paid, will be within the sole control of Deutsche Telekom. See also ‘‘– Interests of Deutsche Telekom may differ from those of holders of the Securities.’’ Should the Company or its Principal Shareholder decide in the future against remunerating the Company’s Security holders, or be unable to pay shareholder remuneration, the trading price of the Securities may be adversely affected.

The Principal Shareholder will retain a significant percentage of the Company’s shares and future sales of substantial amounts of the Securities, or the perception that such sales could occur, could adversely affect the market value of the Securities. The Offering consists solely of a sale of Securities by the Selling Shareholder, and the Principal Shareholder (indirectly wholly owned by Deutsche Telekom) is not selling shares in the Offering. Accordingly, immediately following the Offering, the Principal Shareholder will continue to hold 51% of the Company’s shares. In connection with the Offering, the Principal Shareholder and the Company have agreed with the Joint Global Coordinators on certain restrictions on the issue, sale or other disposition of the Securities for a period of 180 days after the Closing Date, except with the prior written consent of the Joint Global Coordinators, and subject to certain exceptions. See ‘‘Plan of Distribution (Terms of the Offer)’’. Subsequent to the expiration of the lock-up period, future sales of the Company’s shares could be made by the Principal Shareholder. This concentration of ownership in a single shareholder and the possibility that this shareholder may sell its shares could have a material adverse effect on the market price of the Securities. Furthermore, the market price of the Securities could be adversely affected if the Principal Shareholder were to sell, or the Company were to issue and sell, a substantial number of Shares either in the form of Shares or GDRs in the public market. Sales by the Principal Shareholder could also make it more difficult for the Company to raise proceeds by selling Shares either in the form of Shares or GDRs in the future at a time and price that it deems appropriate. The sale of a significant amount of Securities in the public market, or the perception that such sales may occur, could materially affect the market price of the Securities.

Risks Related to the Securities and the Offering The rights of minority shareholders will be governed by the laws of the Slovak Republic, whose corporate governance standards differ from those of other jurisdictions. The Company is a joint stock company organised under the laws of the Slovak Republic. The rights of holders of the Shares are governed by the Company’s Articles of Association and by Slovak law. These rights, including the rights of minority shareholders, may differ in some respects from the rights of shareholders in corporations organised outside of the Slovak Republic. In addition, the Company will be subject to the Corporate Governance Code for Slovakia published in 2008 (the Code). While based on OECD principles, the Code requires that the Supervisory Board includes independent directors without specifying their number (although it states that it is good practice for the Supervisory Board should be majority independent and it is best practice for all members of the Supervisory Board to be independent) and the Code does not require that the Board of Directors includes any independent directors. After the Offering, the Company’s Articles of Association will require one member of the Company’s Supervisory Board to be independent. In addition, under the Code, the employee representatives on the Supervisory Board may be considered to be independent. Accordingly, the rights of minority holders of the Shares or GDRs may differ materially from those applicable under the UK Corporate Governance Code or in other jurisdictions. In addition, it may be difﬁcult for investors to prevail in a claim against the Company under, or to enforce liabilities predicated upon, the securities laws of jurisdictions outside of the Slovak Republic.

41 There has been no prior public market for the Securities and an active and liquid market for the Securities may not develop. There has been no public market for the Securities before the Offering. Although the Company has applied for the Shares to be admitted to trading on the Main Listed Market of the Bratislava Stock Exchange and for the GDRs to be admitted to the Official List and to the London Stock Exchange to admit such GDRs to trading on its market for listed securities, an active liquid trading market may not develop or be sustained after the Offering on either or both of these markets. Due to the absence of a prior market, the Offer Price may not accurately reflect the market price of the Securities following the Offering and investors should not view the Offer Price as any indication of the price that will prevail in the trading market. If a market for the Securities does not develop, the price of the Securities and the ability to sell the Securities could be adversely affected. In addition, the securities market in the Slovak Republic is substantially smaller, less liquid and significantly more volatile than major securities markets in the United States or the United Kingdom. As at 31 December 2014, only 61 issuers had their shares traded on the regulated markets of the Bratislava Stock Exchange, total equity market capitalisation was only EUR 3.9 billion and share trading volume was EUR 56 million in the year 2014. The small number of listed companies and low trading volumes tend to decrease the liquidity and increase the volatility of the Slovak securities market. Accordingly, there may not be a liquid market for the Shares, the trading price of the Shares may be subject to significant volatility, and the trading price of the Shares may differ significantly from, and not be correlated with, that of the GDRs.

Volatility in the price of the Securities may have an adverse impact on holders of the Securities. The price of the Securities may be very volatile and may be influenced by various factors affecting the Group, its competitors or the financial markets generally, overall investor perceptions of emerging markets and the telecommunications industry in particular. The price of the Securities could be significantly affected by factors such as fluctuations in the operating results of the Group or its competitors from one period to another; announcements by the Group or its competitors regarding the launch of new products, offers or technologies; announcements by competitors, companies with similar business activities or that otherwise affect the telecommunications industry (including those relating to the operating or financial performance of those companies or those relating to technological changes); announcements regarding changes in the Group’s management team or key personnel; announcements concerning changes in the Group’s shareholding structure; changes in financial estimates by securities analysts; changes in the regulatory environment or in the Group’s litigation profile; changes to the Group’s credit rating and announcements regarding the Group’s asset perimeter (e.g. acquisitions, sales, etc.). Furthermore, international securities markets have experienced significant price and volume fluctuations in recent years. Such fluctuations in the future could adversely affect the market price of the Securities without regard to the results of operations or financial condition of the Company. Slovak law imposes restrictions and penalties on insider trading and price manipulation and the Slovak market is regulated and supervised by the NBS. However, the Slovak securities market and its regulation and supervision are still developing towards the standards in established securities markets, such as those in the United States and the United Kingdom. Liquidity and trading volumes on the Bratislava Stock Exchange are extremely low when compared to stock exchanges in more established securities markets. These factors may have impact on the volatility of the price of the Securities.

The acquisition of a direct shareholding in the Company reaching or exceeding certain thresholds is subject to prior approval of the NBS and there are certain limitations regarding the cross-ownership of the Company as a licensed broadcaster. The Company is active in the market of payments through telecommunication devices, where it acts as a payment services provider processing payments between customers and third party providers of services or goods. In connection with these activities, the Company is licensed as a ‘‘limited’’ payment institution under Section 79a of Slovak Act No. 492/2009 Coll. on payment services, as amended (the Payment Services Act), which implements Directive 2007/64/EC on payment services in the internal market and Directive 2009/110/EC on the taking up, pursuit and prudential supervision of the business of electronic money institutions. Under the Payment Services Act, the prior consent of the NBS is necessary for the acquisition of a direct share of registered capital or voting rights in the Company that would reach or exceed 10%, 20%, 30% or 50%, or whereby the Company would become a subsidiary of an entity. This

42 requirement applies to any acquisition of Shares that results in exceeding any of the relevant thresholds and including through cancellation of GDRs and receipt of Shares. The relevant provision of the Payment Services Act applies only with respect to direct shareholders, and accordingly GDR holders are not required to receive the prior consent of the NBS. Although there is no indication of such change as of the date of this Prospectus, there can be no assurance that the relevant law or regulatory approach may change in the future such that GDR holders may be considered direct shareholders who are required to obtain the prior consent of the NBS for acquisition of qualiﬁed interest in the Company. The Payment Services Act and applicable secondary legislation provide for review of the request by the NBS within up to three months from the submission of all required documents and information. Any acquisition of Shares made without prior approval of the NBS under the Payment Services Act or with an approval issued on the basis of false information provided to the NBS is deemed to be void as a matter of Slovak law. In such a case, any third party could claim that the acquirer had not obtained title to the Shares and has no ownership rights in respect of the Shares. In connection with the Offering, the Depositary has received prior approval under the Payment Services Act from the NBS to acquire up to 49% of the Shares. However, this approval is only valid for one year from the effective date. While in the Deposit Agreements the Depositary and the Company have agreed to take the required steps to maintain this approval so long as it is required, there can be no assurance that a timely application for renewal of the approval will be made, or that if such application is made, it will be granted in a timely manner or at all. Failure of such approval to be renewed would result in the prohibition of further deposits into the GDR facility against the issuance of GDRs if such deposits would result in the Depositary exceeding its shareholding above the applicable threshold. In such circumstances, holders of Shares would be unable to deposit Shares with the Depositary against issuance of GDRs. In addition, because the Company is a licensed television broadcaster in the Slovak Republic, no person already holding more than 25% of the share capital or voting rights in another Slovak nationwide or multiregional broadcaster or in a Slovak national press publisher is permitted to acquire more than 25% of the share capital or voting rights in the Company. There are certain additional limitations arising from Slovak regulation of cross ownership of media companies, see ‘‘Description of Share Capital and Summary of Articles of Association – Form, Ownership and Transfer of the Shares – Limitations on the Ownership of the Shares’’.

The Selling Shareholder is a public law entity separate from the Slovak Republic which is not an obligor or guarantor of any liabilities of the Selling Shareholder. The Selling Shareholder may be dissolved in the future, which may cause issues with enforcing potential claims against the Selling Shareholder. The Selling Shareholder is a legal entity established by law to perform public interest activities under the laws of the Slovak Republic, mainly in relation to transfer of interests in certain state-owned entities. The Selling Shareholder is neither a body of the Slovak Republic nor acting on its behalf. The Slovak Republic provides no guarantees for any actions or liabilities of the Selling Shareholder with regard to disposition of any of its property. In the event that the Selling Shareholder would not be able to meet any of its obligations, investors may likely not have any remedies under Slovak law against the Slovak Republic. Any enforcement action would be therefore limited to assets of the Selling Shareholder legally separated from assets of the Slovak Republic. There are on-going public discussions in the Slovak Republic about the future of the Selling Shareholder. Dissolution of the Selling Shareholder is listed as one of the government’s tasks for the election period of 2012 to 2016. According to available public information, it has been proposed that the dissolution should be completed in 2015; nevertheless, no speciﬁc government actions have been taken in this regard. The process of dissolution would have to be effected by a special legislation. While the rights and obligations of the Selling Shareholder may pass to another public entity via legal succession under such special legislation, it cannot be predicted whether they would be transferred to their full extent. There can be no assurance that investors will be able to pursue or enforce claims against any legal successor of the Selling Shareholder in the case it will be dissolved in the future.

Trading in the Shares may be suspended or halted. The Bratislava Stock Exchange may suspend or cease trading in the Shares in a number of circumstances, such as if the Company failed to comply with certain reporting obligations or in the event of market manipulation. Any such suspension should not exceed three months. If the trading of the Shares is suspended, this could also adversely affect the trading market the GDRs. If the Shares

43 cease to be traded on the Bratislava Stock Exchange and they are not traded on any other regulated market, the Company would be obliged to make a mandatory bid to purchase any outstanding Shares, including shares represented by GDRs. See ‘‘The Bratislava Stock Exchange and Slovak Securities Regulation – Suspension and Ceasing of Trading in the Shares’’.

Voting rights with respect to the Offer Shares represented by the GDRs are limited by the terms of the Deposit Agreements for the GDRs and relevant requirements of Slovak law. GDR holders have no direct voting rights with respect to the Offer Shares represented by the GDRs. GDR holders are able to exercise voting rights with respect to the Offer Shares represented by GDRs only in accordance with the provisions of the deposit agreements expected to be entered into on the Closing Date between the Company and the Depositary (the Deposit Agreements) and applicable law. Currently, Slovak law does not recognise the exercise of the voting rights by GDR holders and GDRs as ﬁnancial instruments are not regulated or recognised under Slovak corporate law. Therefore, there are practical limitations upon the ability of GDR holders to exercise their voting rights due to the additional procedural steps involved in communicating with such holders. Holders of the Shares will receive notice directly from the Company and will be able to exercise their voting rights either personally or by proxy. GDR holders, by comparison, will not receive notice directly from the Company. Rather, in accordance with the Deposit Agreements, the Company will provide notice to the Depositary. The Depositary then, as soon as practicable, at the Company’s expense, will distribute to GDR holders notices of meetings, copies of voting materials (if and as received by the Depositary from the Company) and a statement as to the manner in which GDR holders may give instructions.

In order to exercise their voting rights, GDR holders must then instruct the Depositary how to vote the Shares represented by the GDRs they hold. As a result of this additional procedural step involving the Depositary, the process for exercising voting rights may take longer for GDR holders than for holders of the Shares. The Company will use reasonable efforts to ensure the GDR holders receive voting materials in a timely manner, but the Company cannot assure GDR holders that they will receive voting materials in time to enable them to return voting instructions to the Depositary in a timely manner, and GDRs for which the Depositary does not receive timely voting instructions will not be voted. See ‘‘Description of Share Capital and Summary of Articles of Association – Summary of the Articles of Association – General Meeting of Shareholders and Voting Rights’’ and ‘‘Terms and Conditions of the Global Depositary Receipts – 16. Voting Rights’’.

Investors may not be able to enforce judgments obtained in United States courts against the Company. The Company is incorporated in the Slovak Republic, the Company’s directors and executive officers are non-residents of the United States and the Company’s assets, directors and officers are located outside of the United States. There is no treaty between the United States and the Slovak Republic providing for reciprocal recognition and enforcement of foreign court judgments in civil and commercial matters. As a result, investors in the Securities may be unable to effect service of process on the Company or on its directors and officers in the United States, and may be unable to enforce judgments against them obtained in the United States. A foreign court may not accept jurisdiction and impose civil liability if proceedings were commenced in a foreign jurisdiction predicated solely upon U.S. federal securities laws.

Holders of the GDRs may be subject to limitations or delays in repatriating their earnings from distributions made on the underlying Shares. The Company anticipates that any dividends that it may pay in respect of the Shares held by its shareholders or by the Depositary or its nominee on behalf of GDR holders will be declared and paid in euro, and in the case of the GDRs will be paid to the Depositary and, subject to the terms and conditions of the GDRs, will be converted into U.S. dollars by the Depositary and distributed to holders of the GDRs, net of all fees, taxes, duties, charges, cost and expenses which may become or have become payable under the Deposit Agreements or under applicable law in respect of such GDRs. Accordingly, the value of any dividends received by shareholders whose domestic currency is other than euro will be subject to ﬂuctuations in the relevant exchange rate. Similarly, the value of dividends received by holders of the GDRs will be subject to ﬂuctuations in the exchange rate between the euro and the U.S. dollar.

44 Shareholders in certain jurisdictions may not be able to participate in future equity offerings. Slovak law provides for pre-emption rights to be granted to existing shareholders in the Company in case of future issue of shares by the Company. However, securities laws of certain jurisdictions may restrict the Company’s ability to allow participation by shareholders in future offerings. In addition, pursuant to Condition 8 of the Terms and Conditions of the GDRs, the Company may, subject to applicable law, instruct the depositary not to subscribe for shares on behalf of holders of GDRs. In particular, holders of the Shares and GDRs in the United States may not be entitled to exercise these rights, unless either the Shares, GDRs and any other securities that are offered and sold are registered under the Securities Act, or the Shares, GDRs and such other securities are offered pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company cannot assure prospective investors that any exemption from such overseas securities law requirements would be available to enable U.S. or other shareholders, including holders of the GDRs, to exercise their pre-emption rights or, if available, that the Company will utilise any such exemption.

Capital gains from the sale of the Securities may be subject to Slovak income tax. The disposal of the Securities generally results in the recognition of a capital gain or loss equal to the difference between the sale price and the acquisition costs. Capital gains realized upon disposal of Securities by a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident should be subject to Slovak income tax. In addition, capital gains arising on a sale of Shares by a Slovak tax non-resident may be subject to tax in the Slovak Republic, depending on the tax residency status of the buyer of the Shares and other relevant criteria, unless relief is provided pursuant to an applicable double tax treaty. Capital gains arising on sale of GDRs by Slovak tax non-residents should not generally be subject to tax in the Slovak Republic. See ‘‘Taxation – Certain Slovak Tax Considerations’’.

Income from GDRs may not qualify as dividends under Slovak tax law. Slovak tax law provides that dividends distributed to a person with a share on the registered capital of the company which distributes the dividends are not subject to tax in the Slovak Republic. GDR holders do not directly participate in the registered capital of the Company, and dividends are paid to the Depositary and then, in accordance with the provisions of the Deposit Agreement, transferred to the GDR holders. As Slovak tax law does not explicitly regulate or recognise GDRs, such income of a GDR holder may not qualify as dividend income, and accordingly may be taxed in the Slovak Republic when paid to a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident. See ‘‘Taxation – Certain Slovak Tax Considerations – Income Tax on GDRs – Taxation on income arising from holding of GDRs’’.

45 IMPORTANT INFORMATION ABOUT THIS PROSPECTUS

Each investor, by accepting delivery of this Prospectus, agrees that this Prospectus is being furnished by the Company solely for the purpose of enabling investors to consider the purchase of the Securities which are subject to the Offering and for the purposes of admission of the Shares to trading on the main listed market of the Bratislava Stock Exchange and GDRs to trading on the main market for listed securities of the London Stock Exchange. Any reproduction or distribution of this Prospectus, in whole or in part, any disclosure of its contents or use of any information herein for any purpose other than considering an investment in the Securities is prohibited, except to the extent that such information is otherwise publicly available. This Prospectus, including the financial information included herein, is in compliance with the Prospectus Rules, which comply with the provisions of the Prospectus Directive for the purpose of giving information with regard to the Company, the Selling Shareholder and the Securities. The Company accepts responsibility for all the information contained in this Prospectus. See ‘‘Responsibility Statement and Signatures’’. None of Citigroup Global Markets Limited, J.P. Morgan Securities plc, Erste Group Bank AG and Wood & Company Financial Services, a.s. (together the Banks) nor the Depositary makes any representation or warranty, express or implied, nor accepts any responsibility, with respect to the accuracy or completeness or verification of any of the information in this Prospectus. This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company, the Selling Shareholder or the Banks that any recipient of this Prospectus should subscribe for or purchase the Offer Securities. Each subscriber for or purchaser of Securities should determine for itself the relevance of the information contained in this Prospectus, and its subscription for or purchase of Securities should be based upon such investigation, as it deems necessary, including the assessment of risks involved and its own determination of the suitability of any such investment, with particular reference to their own investment objectives and experience and any other factors that may be relevant to such investor in connection with the subscription for or purchase of the Offer Securities. Each subscriber for or purchaser of Offer Securities also acknowledges: (i) it has not relied on the Banks or any person affiliated with the Banks in connection with any investigation of the accuracy of any information contained in this Prospectus or their investment decision; and (ii) it has relied only on the information contained in this Prospectus, and that no person has been authorised to give any information or to make any representation concerning the Company or its subsidiaries or the Offer Securities (other than as contained in this Prospectus) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company, the Selling Shareholder or the Banks. This Prospectus relates to an offer to the public to purchase the Offer Securities in the Slovak Republic and the Offer Shares in the Czech Republic only. This Prospectus does not constitute an offer to the public generally to subscribe for or purchase or otherwise acquire the Offer Securities in any other jurisdiction. In making an investment decision regarding the Offer Securities, an investor must rely on its own examination of the Company and the terms of the Offering, including the merits and risks involved. Investors should rely only on the information contained in this Prospectus. None of the Company, the Selling Shareholder, the Banks has authorised any other person to provide investors with different information. If anyone provides any investor with different or inconsistent information, such investor should not rely on it. The information appearing in this Prospectus is accurate only as of its date. Every significant new factor, material mistake or material inaccuracy relating to information included in the Prospectus which is capable of affecting the assessment of the Securities and which arises or is noted between the time when the Prospectus is approved and the closing of the Offering or, as the case may be, the time when trading on a regulated market begins, whichever occurs later, shall be disclosed by the Company in a supplement to the Prospectus. The contents of the website of the Company, or the website of any other member of the Group, do not form any part of this Prospectus. This Prospectus refers to credit ratings of the Slovak Republic which have been rated by the credit rating agencies Standard & Poor’s Financial Services LLC, part of McGraw Hill Financial (S&P), Moody’s Investor Service, Inc. (Moody’s) and Fitch Ratings Limited (Fitch). Each of S&P, Moody’s and Fitch is established in the European Union and is registered under Regulation (EC) No. 1060/ 2009, as amended (the CRA Regulation).

46 Investors should not consider any information in this Prospectus to be investment, legal or tax advice. An investor should consult its own legal counsel, financial adviser, accountant and other advisers for legal, tax, business, financial and related advice regarding subscribing for and purchasing the Offer Securities. None of the Company, the Selling Shareholder or the Banks makes any representation to any offeree or purchaser of or subscriber for the Securities regarding the legality of an investment in the Securities by such offeree or purchaser or subscriber under appropriate investment or similar laws. The Banks are acting exclusively for the Selling Shareholder and no one else in connection with the Offering and will not be responsible to any other person for providing the protections afforded to their respective clients or for providing advice in relation to the Offering. Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Banks by applicable regulatory regime, none of the Banks accepts any responsibility whatsoever for the contents of this Prospectus or for any other statement made or purported to be made by it or any of them or on its or their behalf in connection with the Company or the Securities. Each of the Banks accordingly disclaims, to the fullest extent permitted by applicable law, all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Prospectus or any such statement. In connection with the Offering, the Banks and any of their respective affiliates acting as an investor for its or their own account(s) may subscribe for or purchase the Offer Securities and, in that capacity, may retain, subscribe for, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such securities, any other securities of the Company or other related investments and may offer or sell such Offer Securities or other investments in connection with the Offering or otherwise. Accordingly, references in this Prospectus to the Offer Securities being issued, offered, subscribed or otherwise dealt with should be read as including any issue or offer to, or subscription or dealing by, the Banks or any of their respective affiliates acting as an investor for its or their own account(s). The Banks do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so. In addition certain of the Banks or their affiliates may enter into financing arrangements (including swaps) with investors in connection with which such Banks (or their affiliates) may from time to time acquire, hold or dispose of the Offer Securities. The Selling Shareholder may withdraw the Offering at any time prior to Admission, the Selling Shareholder and the Banks reserve the right to reject any offer to subscribe for or purchase the Offer Securities, in whole or in part, and to sell to any investor less than the full amount of the Offer Securities sought by such investor. This Prospectus does not constitute or form part of an offer to sell, or a solicitation of an offer to subscribe for or purchase, any security other than the Offer Securities. The distribution of this Prospectus and the offer and sale of the Offer Securities may be restricted by law in certain jurisdictions. No action has been or will be taken by the Company, the Selling Shareholder and the Banks to permit a public offering of the Offer Securities or the possession or distribution of this Prospectus in any jurisdiction where action for that purpose may be required, except with respect to the public offer in the Slovak Republic. Any investor must inform themselves about, and observe any such restrictions. See ‘‘Terms and Conditions of the Global Depositary Receipts’’ and ‘‘Transfer Restrictions’’ elsewhere in this Prospectus. Investors must comply with all applicable laws and regulations in force in any jurisdiction in which it subscribes for, purchases, offers or sells the Offer Securities or possesses or distributes this Prospectus and must obtain any consent, approval or permission required for its subscription for, purchase, offer or sale of the Offer Securities under the laws and regulations in force in any jurisdiction to which such investor is subject or in which such investor makes such subscriptions, purchases, offers or sales. None of the Company, the Selling Shareholder or the Banks is making an offer to sell the Offer Securities or a solicitation of an offer to buy any of the Offer Securities to any person in any jurisdiction except where such an offer or solicitation is permitted or accepts any legal responsibility for any violation by any person, whether or not an investor, or applicable restrictions. The Offering does not constitute an offer to sell, or solicitation of an offer to buy, securities in any jurisdiction in which such offer or solicitation would be unlawful. Accordingly, the Offer Securities may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisements in connection with the Offer Securities may be distributed or published in or from any country or jurisdiction except under circumstances that would result in compliance with any applicable rules and regulations of any such country or jurisdiction. For further information on

47 restrictions on offers and sales of the Offer Securities, see ‘‘Plan of Distribution (Terms of the Offer)’’. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances imply that there has been no change in the Company’s affairs or that the information set forth in this Prospectus is correct as of any date subsequent to the date hereof. In connection with the Offering, Citigroup Global Markets Limited and Erste Group Bank AG as the Stabilising Managers will have the right to acquire Offer Securities on the Bratislava Stock Exchange and/or the London Stock Exchange representing not more than 4,234,153 Offer Securities by retaining the Stabilisation Proceeds (as deﬁned under ‘‘Plan of Distribution (Terms of the Offer) – Stabilisation’’, in order to stabilise the price of the Offer Securities at a level higher than that which may otherwise prevail if stabilisation actions were not taken. It is anticipated that under the Institutional Underwriting Agreement, the acquisition of the Offer Securities as part of stabilising transactions by the Stabilising Managers will be subject to the applicable provisions of the Stabilisation Regulation. The purchase transactions related to the Offer Securities may be effected during the period not longer than the Stabilisation Period at a price not higher than the Offer Price. The Stabilising Managers will not, however, be required to take any of the above stabilisation actions. If such actions are taken by the Stabilising Managers, they may be discontinued at any time, however, not later than before the end of the Stabilisation Period. At the end of the Stabilisation Period the Stabilising Manager(s) will return to the Selling Shareholder any Offer Securities which have been purchased in the market as a result of stabilisation activities and/or any remaining Stabilisation Proceeds which were not used for stabilisation activities. For the purposes of this Prospectus, the expression ‘‘Prospectus Directive’’ means Directive 2003/71/ EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in each relevant member state of the EEA), and includes any relevant implementing measure in each relevant member state of the EEA and the expression ‘‘2010 PD Amending Directive’’ means Directive 2010/73/EU.

NOTICE TO UNITED STATES INVESTORS

THE OFFER SECURITIES HAVE NOT BEEN REGISTERED WITH, OR APPROVED OR DISAPPROVED BY, THE U.S. SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER U.S. REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT PASSED ON OR ENDORSED THE MERITS OF THE OFFERING OR THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES. The Offer Securities have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, registration under the Securities Act and in compliance with any state securities laws. Investors are hereby notified that sellers of the Offer Securities may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a discussion of certain restrictions on transfers of the Offer Securities in other jurisdictions, see ‘‘Terms and Conditions of the Global Depositary Receipts’’ and ‘‘Transfer Restrictions’’. Recipients of this Prospectus in the United States are hereby notified that this Prospectus has been furnished to them on a confidential basis and is not to be reproduced, retransmitted or otherwise redistributed, in whole or in part, under any circumstances. Furthermore, recipients are authorised to use it solely for the purpose of considering a purchase of the Offer Securities in the Offering and may not disclose any of the contents of this Prospectus for any other purpose. This Prospectus is personal to each offeree and in the United States does not constitute an offer to any other person or the public generally to subscribe for or otherwise acquire the Offer Securities.

NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED

48 STATUTES (‘‘RSA 421-B’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY INVESTOR, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO UNITED KINGDOM AND OTHER EUROPEAN ECONOMIC AREA INVESTORS

Except in the Slovak Republic and the Czech Republic this Prospectus and the Offering are only addressed to and directed at persons in member states of the EEA (except for the Slovak Republic and the Czech Republic), who are ‘‘qualified investors’’ (Qualified Investors) within the meaning of Article 2(1)(e) of the Prospectus Directive (including any relevant implementing measure in each relevant member state of the EEA). In addition, in the United Kingdom, this Prospectus is only being distributed to and is only directed at (1) Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or high net worth entities falling within Article 49(2)(a)-(d) of the Order or (2) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons). The Offer Securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, (1) in the United Kingdom, relevant persons and (2) in any member state of the EEA other than the United Kingdom, the Slovak Republic and the Czech Republic, Qualified Investors. This Prospectus and its contents should not be acted upon or relied upon (1) in the United Kingdom, the Slovak Republic and the Czech Republic, by persons who are not relevant persons or (2) in any member state of the EEA other than the United Kingdom, by persons who are not Qualified Investors. This Prospectus has been prepared on the basis that all offers of the Offer Securities outside of the Slovak Republic following approval by the NBS will be made pursuant to an exemption under the Prospectus Directive, as implemented in the member states of the EEA, from the requirement to produce a Prospectus for offers of the Offer Securities. Accordingly, any person making or intending to make any offer within the EEA for the Offer Securities, other than in the Slovak Republic, should only do so in circumstances in which no obligation arises for the Company, the Selling Shareholder or any of the Banks to produce a Prospectus for such offer. None of the Banks, the Selling Shareholder or the Company has authorised or authorises the making of any offer of the Offer Securities through any financial intermediary, other than offers made by the Banks which constitute the final placement of the Offer Securities contemplated in this Prospectus. Each person in a member state of the EEA other than the Slovak Republic that has implemented the Prospectus Directive (a Relevant Member State) other than, in the case of (a) below, persons receiving offers contemplated in this Prospectus in the United Kingdom, who receives any communication in respect of, or who acquires any Offer Securities under, the offers contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with each Bank and the Company that: (a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and (b) in the case of any Offer Securities acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive: (i) the Offer Securities acquired by it in the Offering have not been acquired on behalf of, or with a view to the offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Bank has been given to the offer or resale; or (ii) where the Offer Securities have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Securities is not treated under the Prospectus Directive as having been made to such persons.

49 For the purposes of this provision, the expression an ‘‘offer to the public’’ in relation to any Offer Securities in any Relevant Member State means the communication in any form and by any means of sufﬁcient information on the terms of the Offering and any Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Offer Securities, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the Prospectus Directive includes any relevant implementing measure in each Relevant Member State.

AVAILABLE INFORMATION

For so long as any of the Offer Securities are restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which the Company is neither subject to Section 13 or Section 15(d) of the United States Securities Exchange Act of 1934, as amended, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted Securities or to any purchaser of such restricted Securities designated by such holder or beneficial owner upon the request of such holder, beneficial owner or purchaser, the information required to be delivered to such persons pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

The Company’s and the Selling Shareholder’s presence outside the United States and the United Kingdom may limit a foreign investor’s legal recourse against the Company and the Selling Shareholder. The Company is incorporated under the laws of the Slovak Republic, and the Selling Shareholder is a special public law entity established under the laws of the Slovak Republic. A majority of the directors and executive officers named in this Prospectus reside outside the United States and the United Kingdom, principally in the Slovak Republic and Germany. Substantially all of the Company’s and the Selling Shareholder’s assets and almost all of the assets of the directors and executive officers are located outside the United States and the United Kingdom, principally in the Slovak Republic. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions outside the United States liabilities predicated upon U.S. securities laws.

Recognition and Enforcement of U.S. and other Non-EU Judgements Judgments rendered by a court in any jurisdiction outside the Slovak Republic are likely to be recognised by courts in the Slovak Republic if an international treaty providing for the recognition and enforcement of judgments in civil cases exists between the Slovak Republic and the country in which the judgment is rendered, and/or law of the Slovak Republic provides for the recognition and enforcement of foreign court judgments. There is currently no treaty between the United States and the Slovak Republic providing for reciprocal recognition and enforcement of foreign court judgments (other than arbitration awards) in civil and commercial matters. Furthermore, under Slovak private international law there is no reciprocity principle applied in relation to civil and commercial foreign judgments. A ﬁnal and conclusive judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon US federal securities laws, therefore would not automatically be recognised or enforceable in the Slovak Republic. A judgment of a court of law of a non-EU member state made in personam for a certain sum, which is not impeachable as void or voidable under the internal laws of the foreign jurisdiction (the Non-EU Judgment) would be recognised in the Slovak Republic provided that the relevant conditions in respect of recognition and enforcement of foreign judgments set out in the Act No. 97/1963 Coll. on Private and Procedural International Law (the Private International Law Act) are met, which includes without limitation the following: (a) the Non-EU Judgment is ﬁnal and enforceable according to the law of the state where it was issued; (b) the matter is not within the exclusive jurisdiction of the Slovak Republic; (c) the Non-EU Judgment is a decision on the merits of the case; (d) a party to the dispute against whom an enforcement is sought was not denied access to the foreign court, mainly it must have been served with a statement of claim or summons for the hearing; (e) the Non-EU Judgment is not irreconcilable with a prior Slovak judgment or an earlier foreign judgment which may be recognised in the Slovak Republic; (f) the Non-EU Judgement is not against the public policy (ordre public) of the Slovak Republic; (g) the application for recognition before Slovak courts is duly

50 made according to the Private International Law Act procedural rules and encloses all the documentation thereby required.

Recognition and Enforcement of Judgements Obtained at English Courts and other EU Judgements A court judgment rendered in an EU member state other than the Slovak Republic (an EU Judgment) would be recognised in the Slovak Republic only if the relevant conditions provided by Council Regulation (EC) No 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Recast) are met, including: (a) such recognition is not manifestly contrary to public policy in the Slovak Republic; (b) where it was given in default of appearance, if the defendant was served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence and failing that, if the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; (c) it is not irreconcilable with a judgment given in a dispute between the same parties in the Slovak Republic; (d) it is not irreconcilable with an earlier judgment given in a EU member state (other than the Slovak Republic) or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Slovak Republic; and (e) the EU Judgment does not conflict with the provisions of the Brussels I Recast dealing with jurisdiction in matters relating to insurance, jurisdiction over customer contracts and exclusive jurisdiction. An EU Judgment can be enforced in the Slovak Republic based on a final decision of a Slovak competent court approving the enforcement, only if the provisions provided by the Brussels I Recast are met, including: (i) it is enforceable in the EU member state where the EU Judgment was made; (ii) the Slovak competent court is provided with a copy of the EU Judgment which satisfies the conditions necessary to establish its authenticity; (iii) the Slovak competent court is provided with an original certificate issued by the relevant EU member state’s court or other competent authority substantially in the form set out in Annex I of the Brussels I Recast and none of the conditions above preventing the recognition of an EU Judgment is applicable; (iv) where the EU Judgment orders a periodic payment by way of penalty (including, but not limited to, default interest), the amount of the payment has been finally determined by the courts of the EU member state of origin; and (v) the right to enforce the final judgment is not restricted by any limitation period. In addition to and independently from the procedure provided by the Brussels I Recast, EC Regulation No. 805/2004 of the European Parliament and of the European Council regulates the creation of a European enforcement order for uncontested claims in civil and commercial matters (the European Enforcement Order Regulation). Under the European Enforcement Order Regulation, a claim shall be regarded as uncontested if: (a) the debtor has expressly agreed to it by admission or by means of a settlement which has been approved by a court or concluded before a court in the course of proceedings; or (b) the debtor has never objected to it, in compliance with the relevant procedural requirements under the law of the EU member state of origin, in the course of the court proceedings; or (c) the debtor has not appeared or been represented at a court hearing regarding that claim after having initially objected to the claim in the course of the court proceedings, provided that such conduct amounts to a tacit admission of the claim or of the facts alleged by the creditor under the law of the EU member state of origin; or (d) the debtor has expressly agreed to it in an authentic instrument. A judgment that has been certified as a European Enforcement Order in the EU member state of origin shall be recognised and enforced in the other EU member states without the need for a declaration of enforceability and without any possibility of opposing its recognition. A judgment on an uncontested claim delivered in a EU member state shall, upon application at any time to the court of origin, be certified as a European Enforcement Order if: (a) the judgment is enforceable in the EU member state of origin; and (b) the judgment does not conflict with the rules on jurisdiction as laid down in the Brussels I Recast; and (c) the court proceedings in the EU member state of origin meet the minimum requirements as set out in the European Enforcement Order Regulation (where the claim is deemed uncontested because the debtor has never objected to the claim or has not appeared or been represented at a court hearing as detailed above); and (d) the judgment was given in the EU member state of the debtor’s domicile within the meaning of the Brussels I Recast, in cases where: (i) a claim is uncontested (where the debtor has never objected to the claim or has not appeared or been represented at a court hearing as detailed above); and (ii) it relates to a contract concluded by a person (a ‘‘consumer’’) for a purpose which can be regarded as being outside his trade or profession; and (iii) the debtor is the consumer.

51 The European Enforcement Order certificate shall take effect only within the limits of the enforceability of the judgment. The enforcement procedures shall be governed by the law of the EU member state of enforcement. A judgment certified as a European Enforcement Order shall be enforced under the same conditions as a judgment handed down in the EU member state of enforcement. Enforcement shall, upon application by the debtor, be refused by the competent court in the EU member state of enforcement if the judgment certified as a European Enforcement Order is irreconcilable with an earlier judgment given in any EU member state or in a third country, provided that: (a) the earlier judgment involved the same cause of action and was between the same parties; and (b) the earlier judgment was given in the EU member state of enforcement or fulfils the conditions necessary for its recognition in the EU member state of enforcement; and (c) the irreconcilability was not and could not have been raised as an objection in the court proceedings in the EU member state of origin. Under no circumstances may the judgment or its certification as a European Enforcement Order be reviewed as to its substance in the EU member state of enforcement.

Sovereign Immunity Important limitations exist in relation to enforcement proceedings against the Slovak Republic’s assets and such limitations may apply regardless of any contractual waiver of immunity. These limitations may be relevant in the event of enforcement of rights of investors against the Selling Shareholder. Even if a valid enforcement title exists (such as a final judgment of a Slovak court or other judgement recognised in the Slovak republic) certain assets of the Slovak Republic, including funds forming part of, or originating from, the state budget, are immune from attachment and from execution and are not available to creditors in any formal enforcement proceedings in the Slovak Republic. Furthermore, execution proceedings cannot be performed in respect of assets which the court will consider (after commencement of the execution proceedings) as necessary in order for the Slovak Republic to perform its functions as a sovereign state or if such assets are necessary for performance of public services (in Slovak: verejnoprospesˇneúćˇely).

52 FORWARD-LOOKING STATEMENTS

Some statements in this Prospectus may be deemed to be ‘‘forward-looking statements’’. Forward- looking statements include statements concerning the Company’s plans, objectives, goals, strategies and future operations and performance and the assumptions underlying these forward-looking statements. The Company uses the words ‘‘anticipates’’, ‘‘estimates’’, ‘‘expects’’, ‘‘believes’’, ‘‘intends’’, ‘‘plans’’, ‘‘may’’, ‘‘are expected to’’, ‘‘could’’, ‘‘will’’, ‘‘will continue’’, ‘‘should’’, ‘‘would be’’, ‘‘seeks’’, ‘‘approximately’’, ‘‘estimates’’, ‘‘predicts’’, ‘‘projects’’, ‘‘aims’’ or ‘‘anticipates’’, and other similar expressions to identify forward-looking statements. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding the Company’s business and management, the Company’s future growth or profitability and general economic and regulatory conditions and other matters affecting the Company. Forward-looking statements are contained in ‘‘Risk Factors’’, ‘‘Business’’, ‘‘The Slovak Telecommunications Market’’ and other sections of this Prospectus. Forward-looking statements reflect the Company’s current views of future events. They are based on the Company’s assumptions and involve known and unknown risks, uncertainties and other important factors that could cause circumstances or the Company’s results, performance or achievements to be materially different from any future circumstances, results, performance or achievements expressed or implied by such statements. The occurrence or non-occurrence of an assumption could cause the Company’s actual financial condition and results to differ materially from, or fail to meet expectations expressed or implied by, such forward looking statements. The Company’s business is subject to a number of risks and uncertainties that could also cause a forward looking statement, estimate or prediction to become inaccurate. These risks include, but are not limited to, the following: * overall business conditions; * changes in tax requirements (including tax rate changes, new tax laws and revised tax law interpretations); * economic and political conditions in the Slovak Republic, as well as inflation, interest rate fluctuations, foreign currency and exchange rate fluctuations and other capital market conditions in the Slovak Republic; * the timing, impact and other uncertainties of future actions; * the condition and performance of the Slovak economy, including the Slovak telecoms sector; * the effects of changes in laws, regulations and taxation or accounting standards or practices in the jurisdictions where the Company conducts its operations; * the effects of competition and the Company’s ability to maintain or increase market share for its products and services; * the Company’s ability to control expenses and to meet its funding obligations and develop and maintain additional sources of financing; * the Company’s ability to continue to diversify its client base; * acquisitions or divestitures by the Company or in the business areas in which the Company conducts its operations; * legal and regulatory developments and the outcome of legal proceedings to which the Company is or may become a party; * technological changes; and * the Company’s ability to manage the risks associated with the aforementioned factors. Additional factors that could cause the Company’s actual results, performance or achievements to differ materially include, but are not limited to, those discussed under ‘‘Risk Factors’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’. Forward-looking statements speak only as at the date of this Prospectus. Accordingly, except as required by the Prospectus Rules and other applicable regulations, the Company is not obliged to, and does not intend to, update or revise any forward-looking statements made in this Prospectus whether as a result of new information, future events or otherwise. All subsequent written or oral forward-looking statements attributable to the Company, or persons acting on the Company’s behalf, are expressly qualified in their entirety by the cautionary statements contained throughout this Prospectus. As a result of these risks, uncertainties and assumptions, a prospective purchaser of the Offer Securities should not place undue reliance on these forward-looking statements.

53 PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Presentation of Financial Information The Group’s consolidated financial information set forth herein has, unless otherwise indicated, been extracted, without material adjustment, from the Group’s audited consolidated financial statements as of 31 December 2014, 2013 and 2012 and for the years then ended (the Financial Statements) set forth on pages F-1 through F-60 of this Prospectus. The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted in the European Union and have been audited. Except for the information extracted from the Financial Statements this Prospectus does not include any audited financial information. The Euro is the presentation currency for the Financial Statements. The Financial Statements and financial information included elsewhere in this Prospectus have, unless otherwise noted, been presented in Euros.

The Company’s Independent Auditors The Financial Statements included in the Prospectus have been audited by PricewaterhouseCoopers Slovensko, s.r.o. as stated in their audit report appearing herein. PricewaterhouseCoopers Slovensko, s.r.o. have registered ofﬁces at Na´mestie 1. ma´ja 18, 815 32 Bratislava, Slovak Republic. PricewaterhouseCoopers Slovensko, s.r.o. is a corporate member of the Slovak Chamber of Auditors, licence number 161.

Certain Deﬁnitions In this Prospectus, all references to: * EU are to the European Union; * NBS are to the National Bank of Slovakia; and * Slovakia and Slovak pertain to the Slovak Republic. For a list of key deﬁned terms and abbreviations used in this Prospectus see ‘‘Glossary’’.

Certain Currencies In this Prospectus, the following currency terms are used: * U.S.$ or U.S. dollar means the lawful currency of the United States; and * EUR, Euro, euro or E means the lawful currency of the member states of the European Union that adopted the single currency in accordance with the Treaty of Rome establishing the European Economic Community, as amended.

Non-IFRS Information This Prospectus includes certain measures that are not measures defined by IFRS, namely, Adjusted EBITDA, Adjusted EBITDA margin and Operating Free Cash Flow. Information regarding Adjusted EBITDA, Adjusted EBITDA margin and Operating Free Cash Flow is sometimes used by investors to evaluate the efficiency of a company’s operations and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements. Adjusted EBITDA, Adjusted EBITDA margin and Operating Free Cash Flow alone do not provide a sufficient basis to compare the Group’s performance with that of other companies and should not be considered in isolation or as a substitute for operating income or any other measure as an indicator of operating performance or as an alternative to cash generated from operating activities as a measure of liquidity. In addition, these measures should not be used instead of, or considered as an alternative to, the Group’s historical financial results as reported in the Financial Statements. The Group presented these non-IFRS measures because it believes they are helpful to investors and financial analysts in highlighting trends in the Group’s overall business. In addition, investors should be aware that the Group is likely to incur expenses similar to the adjustments in this presentation in the future and that certain of these items could be considered recurring in nature. The Group’s presentation of Adjusted EBITDA and related margins should not be construed as an implication that its future results will be unaffected by unusual or non-recurring items. Investors are encouraged to evaluate these items and the limitations for purposes of analysis in excluding them. For a definition of non-IFRS measures and a reconciliation of non-IFRS measures to operating profit, see ‘‘Consolidated Historical Financial Information’’.

54 Rounding Certain figures included in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Exchange Rate Information The table below sets forth, for the periods and dates indicated, the high, low, period end and period average exchange rate between the euro and the U.S. dollar. Fluctuations in the exchange rate between the euro and the U.S. dollar in the past are not necessarily indicative of ﬂuctuations that may occur in the future. These rates may also differ from the actual rates used in the preparation of the Financial Statements and other ﬁnancial information presented in this Prospectus.

EUR per U.S.$1.00

Period Period High Low end average(1)

Year 2010 ...... 0.837 0.687 0.748 0.756 2011 ...... 0.776 0.672 0.773 0.719 2012 ...... 0.827 0.743 0.758 0.779 2013 ...... 0.783 0.724 0.725 0.753 2014 ...... 0.824 0.717 0.824 0.754 January 2015...... 0.893 0.830 0.885 0.861 February 2015...... 0.890 0.879 0.890 0.881 March 2015...... 0.947 0.891 0.930 0.923 April 2015 (through 16 April) ...... 0.948 0.921 0.934 0.934

Source: European Central Bank Note: (1) The average rates are calculated as the average of the daily exchange rates on each business day.

No representation is made that the euro or U.S. dollar amounts referred to herein could have been or could be converted into euros or U.S. dollars, as the case may be, at these rates, at any particular rate or at all. The rate on 16 April 2015 was EUR 0.934 = U.S.$1.00.

Foreign Language Terms This Prospectus is drawn up and approved in the Slovak language and translated into the English language. Certain legislative references and technical terms in the English version have been cited in their original Slovak language in order that the correct technical meaning may be ascribed to them under applicable law.

Information Derived from Third Parties The Company has obtained certain statistical and market information that is presented in this Prospectus, in particular in sections ‘‘Risk Factors’’, ‘‘Business’’, ‘‘Slovak Telecommunications Market’’ and ‘‘The Bratislava Stock Exchange and Slovak Securities Regulation’’ on such topics as the Slovak telecoms sector and market, trading on the Bratislava Stock Exchange, Slovak population and unemployment statistics and the Slovak economy in general and, in some instances, the Group’s competitors from the following third-party sources: * AIMmonitor website; * Bratislava Stock Exchange: 2014 Factbook; * International Monetary Fund: World Economic Outlook Database – October 2014 (IMF); * Economist Intelligence Unit (EIU); * TeleGeography’s Global Comms: Slovakia Country Report, March 2014 (TGC); * Analysys Mason: Data Hub (February 2015) (Analysys Mason); * BEREC Reports: MTR Benchmark Snapshot (January 2005 – January 2014) (BEREC MTR Report);

55 * International Data Corporation: CEE + WE database (4Q 2014) (IDC); * Ovum: Pay-TV & FTA Forecasts, CEE 2005-2019 (September 2014), Pay-TV & FTA Forecasts, WE 2005-2019 (December 2014) (Ovum); * Pyramid Research: Mobile Data (Feb 2015) (Pyramid); * World Cellular Information Service: Smartphone Connections Data (Aug 2014) (WCIS); * European Communications Office Report: The licensing of mobile bands’’ (23 June 2014) (ECO Report); * Gartner’s 30 Leading Locations for Offshore Services, 2014 (Gartner); * The World Bank Data: Slovak Republic; * business and financial reports and announcements published by Deutsche Telekom AG, Orange Slovensko a.s., O2 Slovakia s.r.o. and France Telekom on their respective websites; * GfK Slovakia’s Advertising Tracking Study; and * TREND TOP v infotechnolo´giaćh, May 2014. The Company has accurately reproduced such information and, as far as it is aware and is able to ascertain from information published by such third parties, no facts have been omitted that would render the reproduced information inaccurate or misleading. Nevertheless, prospective investors are advised to consider this data with caution. Market studies are often based on information or assumptions that may not be accurate or appropriate, and their methodology is inherently predictive and speculative. Prospective investors should note that the Company’s estimates are based on such third-party information. Neither the Company nor the Joint Global Coordinators have independently verified the figures, market data or other information on which third parties have based their studies. In addition, the official data published by Slovak governmental agencies is substantially less complete or researched than that of more developed countries. Official statistics may also be produced on different bases than those used in more developed countries. Any discussion of matters relating to the Slovak Republic in this Prospectus must, therefore, be subject to uncertainty due to concerns about the completeness or reliability of available official and public information.

56 THE OFFERING

This part of the Prospectus provides certain general information on the Company, Offer Securities and the Offering and it should be read in conjunction with other information included elsewhere in this Prospectus. The Company Slovak Telekom, a.s., a joint-stock company incorporated under the laws of the Slovak Republic and registered in the Commercial Register maintained by the Bratislava I District Court, Identiﬁcation No.: 35 763 469, Section: Sa, Insert No.: 2081/B. Its registered seat is at Bajkalska´ 28, 817 62 Bratislava, Slovak Republic, and its telephone number is +421 2 5881 1111. The Company was incorporated (registered in the Commercial Register) on 1 April 1999. For more information on the Company and the Group, its business and results of operation see ‘‘Business’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’. The Selling Shareholder The National Property Fund of the Slovak Republic with registered address at Trnavska´ cesta 100, 821 01 Bratislava, Slovak Republic. For more information on the Selling Shareholder see ‘‘Principal and Selling Shareholders – Selling Shareholder’’. The Shares 86,411,300 ordinary shares, each fully paid-up with a nominal value of 10 EUR, comprising 100% of the registered capital of the Company issued under the laws of the Slovak Republic (the Shares). The shares are book-entered non-bearer shares registered with Centra´lny depozita´r cenny´ch papierov SR, a.s. (Slovak Central Depository). Each Share is the part of single issue with ISIN SK 1110017722 (series 1). Bratislava Stock Exchange trading symbol for the Shares will be: ‘‘STX’’. For more information on the Shares and the rights attached to them see ‘‘Description of Share Capital and Summary of Articles of Association’’. The Offer Shares 42,341,537 Shares, each fully paid-up with a nominal value of EUR 10 per share being offered by the Selling Shareholder through the Offering (the Offer Shares). GDRs One GDR will represent one Offer Share on deposit with the Custodian, as custodian for the Depositary. The GDRs will be issued by the Depositary pursuant to the Deposit Agreements and shall be governed by English law. The currency of the GDRs is U.S. dollars and the GDRs have no nominal value. The Rule 144A GDRs will be evidenced initially by the Master Rule 144A GDR and the Regulation S GDRs will be evidenced initially by the Master Regulation S GDR and each such Master GDR will be issued pursuant to the relevant Deposit Agreement. Pursuant to the Deposit Agreements, the Offer Shares represented by the GDRs will be held by the Depositary or by the Custodian for the account and to the order of the Depositary in one or more separate accounts maintained by the Custodian.

57 From time to time the Depositary may deduct per-GDR fees and other fees, charges and expenses as well as taxes and governmental charges from dividend distributions and may otherwise assess other per-GDR fees and other fees, charges and expenses to the GDR holders. See ‘‘Terms and Conditions of the Global Depositary Receipts – 19. GDR Fees and Charges’’. Except in the limited circumstances described herein, definitive GDR certificates will not be issued to holders in exchange for interests in the GDRs represented by the Master GDRs. Subject to the terms of the Deposit Agreements, interests in the Master Regulation S GDR may be exchanged for interests in the corresponding number of GDRs represented by the Rule 144A Master GDR, and vice versa. The security identification numbers for the GDRs offered hereby are as follows:

Regulation S GDRs: CUSIP: 831590 203 ISIN: US8315902036 Common Code: 122274756 SEDOL: BWFDGD2 Rule 144A GDRs: CUSIP: 831590 104 ISIN: US8315901046 Common Code: 122274519 SEDOL: BWFDGC1 London Stock Exchange GDR trading symbol: STXX

For more information on the GDRs see ‘‘Terms and Conditions of the Global Depositary Receipts’’. The Offering The Offering consists of an offering by the Selling Shareholder of up to 42,341,537 Offer Shares, in the form of Offer Shares and GDRs, with one GDR representing an interest in one Offer Share. The Offering is structured as an offering of the Offer Securities (i.e., the Offer Shares and GDRs) to the public in the Slovak Republic, an offering of the Offer Shares to the public in the Czech Republic as well as an institutional offering. The Offer Securities are being offered in the United States to QIBs in reliance on Rule 144A, and outside the United States in offshore transactions in reliance on Regulation S. For more information about the Offering see ‘‘Plan of Distribution (Terms of the Offer)’’. Offer Structure The Offering shall consist of the following: 1) an Offering of the Offer Securities to retail investors (the Retail Offering). It is intended that up to 10% of the Offer Securities may be allocated to retail investors. The number of Offer Securities allocated to the Retail Offering may be increased as described in ‘‘Plan of Distribution (Terms of the Offer) – Allocation of the Offer Securities’’; and 2) an Offering of the Offer Securities to institutional investors (the Institutional Offering). For more information about the Offering see ‘‘Plan of Distribution (Terms of the Offer)’’. Joint Global Coordinators Citigroup Global Markets Limited with registered address at Citigroup Centre, Canada Square, London E14 5LB, United Kingdom.

58 J.P. Morgan Securities plc. with registered address at 25 Bank Street, London E14 5JP, United Kingdom. Retail Offering Coordinator Erste Group Bank AG with its registered address at Graben 21, 1010 Vienna, Austria. Joint Lead Managers WOOD & Company Financial Services a.s., with its registered address at Palladium, Nam. Republiky 1079/1a, 110 00 Prague 1, Czech Republic. Offer Period The offer period in respect of the Institutional Offering shall commence on 21 April 2015 and end at 12:00 p.m. (Bratislava time) on 6 May 2015. The offer period in respect of the Retail Offering shall commence on 22 April 2015 and end on 5 May 2015 (which shall be included in the offer period). Offer Price Range EUR 17.70 to EUR 23.60 per Offer Share. U.S.$ 19.00 to U.S.$ 25.30 per GDR. Institutional Investors may submit orders in respect of the Offer Securities at any price within the Offer Price Range and the GDR Offer Price Range, respectively. Retail Investors must place orders for Offer Shares and GDRs at the top of the relevant Offer Price Range. By submitting an order, a Retail Investor will have agreed to subscribe for, or purchase, the relevant number of Offer Securities at the Offer Price determined as set forth below, subject to any applicable Retail Offering Discount (as defined below). Retail Investors will not be eligible to submit limit orders. Retail Offering Discount Each Retail Investor who is resident or has a registered seat (as applicable) in the Slovak Republic and who submits to the Retail Offering Coordinator or to a Retail Offering Selling Agent (as defined below) an order for Offer Shares during the period starting from 22 April 2015 and ending (i) at 8:00 a.m. (Bratislava time) on the day immediately following after the day on which the total number of Offer Securities, in respect of which orders eligible for the Retail Offering Discount (as defined below) are placed as part of the Retail Offering, reaches or exceeds 10% of the total number of Offer Securities, or (ii) at 18:00 p.m. (Bratislava time) on 5 May 2015 (the Preferential Retail Offer Period), whichever is earlier, will be eligible for a 5% discount from the price payable by such Retail Investor in respect of up to 423 Offer Shares purchased by such Retail Investor. Occurrence of termination of the Preferential Offer Period as a result of the total number of Offer Securities in respect of which orders are placed as part of the Retail Offering reaching or exceeding 10% of the total number of Offer Securities shall be announced by the Selling Shareholder and/or the Company by way of a press release. See ‘‘Plan of Distribution (Terms of the Offer) – Offer Price’’. Share Capital The Company’s issued share capital consists of 86,411,300 Shares, which are fully paid-up and issued. As the Offering comprises an offering of existing Shares by the Selling Shareholder and does not include an issuance of new shares, following the Offering the Company’s issued share capital will continue to consist of 86,411,300 Shares, which are fully paid-up and issued. The nominal value of each Share is EUR 10. No dilution will result from the Offering. For more information on the share capital see ‘‘Description of Share Capital and Summary of Articles of Association’’.

59 Depositary Citibank, N.A. with registered address at 388 Greenwich Street, 14th Floor, New York, NY 10013, United States of America. For more information on the Depositary see ‘‘Information Relating to the Depositary’’. Custodian Citibank Europe plc, acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky, with principal office address at Mlynske´ nivy 43 (Apollo Business Center I), 825 01 Bratislava. Stabilising Managers Citigroup Global Markets Limited and Erste Group Bank AG Stabilisation In connection with the Offering the Stabilising Managers will have the right to acquire Offer Securities on the Bratislava Stock Exchange and/or the London Stock Exchange pertaining to not more than 4,234,153 Offer Securities by retaining the Stabilisation Proceeds in order to stabilise the price of the Offer Securities at a level higher than that which may otherwise prevail if stabilisation actions were not taken. It is anticipated that under the Institutional Underwriting Agreement, the acquisition of the Offer Securities as part of stabilising transactions by the Stabilising Managers will be subject to the applicable provisions of the Stabilisation Regulation. The purchase transactions related to the Offer Securities may be effected during the period not longer than the Stabilisation Period at a price not higher than the Offer Price. The Stabilising Managers will not, however, be required to take any of the above stabilisation actions. If such actions are taken by the Stabilising Managers, they may be discontinued at any time, however, not later than before the end of the Stabilisation Period. At the end of the Stabilisation Period the Stabilising Manager(s) will return to the Selling Shareholder any Offer Securities which have been purchased in the market as a result of stabilisation activities free and clear of all encumbrances and/or any remaining portion of the Stabilisation Proceeds which was not used for the stabilisation activities, as well as any interest that has accumulated for the amounts corresponding to the Stabilisation Proceeds. Closing Date The Offer Shares and GDRs are expected to be delivered to purchasers in the Offering in exchange for payment therefor on 12 May 2015. Listing and Trading Prior to the Offering, there has been no market for the Offer Securities. An application will be made for the Shares to be admitted to trading on the main listed market of the Bratislava Stock Exchange. Trading in the Shares on the Bratislava Stock Exchange is expected to commence on 12 May 2015. Prices for the Shares traded on the Bratislava Stock Exchange may not reflect the value of the GDRs. An application will be made (A) to the UKLA for a listing of up to 42,341,537 GDRs to be issued on the Closing Date against the deposit of Offer Shares with the Custodian to be admitted to listing on the Official List and (B) to the London Stock Exchange for such GDRs to be admitted to trading on the London Stock Exchange’s main market for listed securities through its IOB. It is expected that the Admission will become effective and that unconditional dealings in the GDRs will commence on the London Stock Exchange at 8:00 a.m. (London time) on 12 May 2015. For more information on admission to trading see ‘‘Plan of Distribution (Terms of the Offer) – Admission to Trading’’.

60 Lock-Up Each of the Company and the Selling Shareholder will agree that neither it, nor any of its afﬁliates or subsidiaries, nor any person acting on its or their behalf will and the Principal Shareholder will agree that subject to certain exceptions including transfers between existing shareholders at the date of this Prospectus, from the date hereof until 180 days after the Closing Date, without the prior written consent of the Joint Global Coordinators: (i) issue, offer, sell, lend, mortgage, assign, charge, pledge, contract to sell, sell or grant any option or contract to purchase, purchase any option or contract to sell or issue, grant any option, right or warrant or contract to purchase, lend, or otherwise transfer or dispose of (or publicly announce any such action), directly or indirectly, any Securities or any securities convertible or exchangeable into or exercisable for, or substantially similar to, any Securities or any security or ﬁnancial product whose value is determined directly or indirectly by reference to the price of the underlying securities, including equity swaps, forward sales and options or global depositary receipts representing the right to receive any such securities; (ii) enter into any swap or other agreement that transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership of Securities; or (iii) enter into any transaction with the same economic effect as, or agree to, or publicly announce any intention to enter into any transaction described above, subject to certain limitations. See ‘‘Plan of Distribution (Terms of the Offer) – Lock-up Provisions’’. Use of Proceeds The Selling Shareholder will receive all of the net proceeds from the Offering. The Company will not receive any proceeds from the sale of Securities by the Selling Shareholder. For more information see ‘‘Use of Proceeds’’. Taxation For a discussion of certain United States, United Kingdom, Slovak and Czech tax consequences of subscribing for or purchasing of and holding the Securities, see ‘‘Taxation’’. Dividends Subject to applicable Slovak law, purchasers of the Shares and the GDRs will be entitled to dividends declared, if any, in respect of any record date which falls after the date of the completion of the Offering. The decision on distribution of dividends is in the sole discretion of the General Meeting. To the extent that the Company declares and pays dividends, holders of GDRs on the relevant record date will be entitled to receive dividends payable in respect of Shares underlying the GDRs. See ‘‘Terms and Conditions of the Global Depositary Receipts – 5. Cash Distributions’’. For more information on dividends see ‘‘Dividends’’. Voting Rights Shareholders are generally entitled to one vote per Share at a shareholders’ meeting. See ‘‘Description of Share Capital and Summary of Articles of Association – Summary of the Articles of Association – General Meeting of Shareholders and Voting Rights’’. Under the Deposit Agreements, one GDR carries the right to instruct the Depositary to vote one Share, subject to the terms and conditions of the GDRs described under ‘‘Terms and Conditions of the Global Depositary Receipts’’ and provisions of applicable Slovak law. See ‘‘Risk Factors – Risks Related to the Securities and the Offering – Voting rights with respect to the Offer Shares represented by the GDRs are limited by the terms of the Deposit Agreements for the GDRs and relevant requirements of Slovak law.’’

61 The Depositary will endeavour to exercise or cause to be exercised on behalf of holders of GDRs, at any meeting of holders of the Shares of which the Depositary receives timely notice, the voting rights relating to the Shares underlying the GDRs in accordance with instructions it receives from holders of GDRs, subject to the terms and conditions of the GDRs. See ‘‘Terms and Conditions of the Global Depositary Receipts – 16. Voting Rights’’. Transfer Restrictions The Securities will be subject to certain restrictions as described under ‘‘Transfer Restrictions’’ and ‘‘Description of Share Capital and Summary of Articles of Association – Form, Ownership and Transfer of the Shares – Limitations on the Ownership of the Shares’’. Settlement Procedures – Offer Payment for the Offer Shares is expected to be made in EUR Shares through the facilities of the Slovak Central Depository on the Closing Date. Transfers of Offer Shares within the Offering and secondary market sales of Offer Shares will be settled and cleared through the settlement system managed by the Slovak Central Depository, in accordance with applicable Slovak regulations. For more information see ‘‘Clearing and Settlement’’. Settlement Procedures – GDRs Payment for the GDRs is expected to be made in U.S. dollars in same-day funds through the facilities of DTC, Euroclear and Clearstream on the Closing Date. The Company has applied to DTC to have the Rule 144A GDRs accepted for clearance through DTC and to Euroclear and Clearstream to have the Regulation S GDRs accepted for clearance through the systems of Euroclear and Clearstream. Upon acceptance by DTC, a single Master Rule 144A GDR will be issued and registered in the name of Cede & Co, as nominee for DTC. The Master Regulation S GDR will be registered in the name of Citivic Nominees Limited, as nominee for Citibank Europe plc as common depositary for Euroclear and Clearstream, Luxembourg. Except in limited circumstances described herein, investors may hold beneﬁcial interests in the GDRs evidenced by the corresponding Master GDRs only through DTC, Euroclear or Clearstream, as applicable. Transfers within DTC, Euroclear and Clearstream will be in accordance with the usual rules and operating procedures of the relevant system. For more information see ‘‘Clearing and Settlement’’. Risk Factors Investors should consider carefully certain risks discussed under ‘‘Risk Factors’’.

62 USE OF PROCEEDS

The Offering is being conducted in order to allow the Selling Shareholder to dispose of and transfer its shareholdings in the Company, while raising the Company’s proﬁle with the international investment community and establishing a market for the Securities which may, amongst other things, beneﬁt the Company if it desires to access the equity capital markets in the future. The Company will not receive any of the proceeds from the sale of Securities offered by the Selling Shareholder. The Selling Shareholder will receive all of the net proceeds from the Offering, which will amount to approximately EUR 855 million million, assuming an offer price at the mid-point of the Share Offer Price Range and not applying the Retail Offering Discount. The net proceeds to the Selling Shareholder will be reduced to the extent that the Stabilising Managers exercise the Put Option. The total commissions payable by the Selling Shareholder in connection with the Offering will be approximately EUR 19 million, assuming a offer price at the mid-point of the Share Offer Price Range. The Selling Shareholder’s proceeds from the Offering are intended to be used for general budgetary purposes of the Slovak Republic. The total fees and expenses payable by the Company in connection with the Offering and Admission are expected to amount to approximately EUR 2.5 million.

63 EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The following table sets out the expected timetable of principal events:

Event Time and Date Prospectus published 21 April 2015 Commencement of the Institutional Offer Period 21 April 2015 Commencement of the Retail Offer Period 22 April 2015 Commencement of the Preferential Retail Offer Period 22 April 2015 End of the Preferential Retail Offer Period The earlier of (i) 7:00 a.m. (London time) / 8:00 a.m. (Bratislava time) on the day immediately following after the day on which the total number of Offer Securities in respect of which orders eligible for the Retail Offering Discount are placed as part of the Retail Offering reaches or exceeds 10% of the total number of Offer Securities, or (ii) 5 May 2015 (such date to be included in the Preferential Retail Offer Period). End of the Retail Offer Period 5 May 2015 (such date to be included in the Retail Offer Period) End of the Institutional Offer Period 11:00 a.m. (London time) / 12:00 p.m. (Bratislava time) on 6 May 2015 Announcement of results of the Offer and notiﬁcation of 7 May 2015 allocations Publication of the pricing notiﬁcation containing the Share 7 May 2015 Offer Price and the GDR Offer Price Admission and commencement of dealings in the Shares 7:30 a.m. (London time) / 8:30 a.m. on the Bratislava Stock Exchange (Bratislava time) on 12 May 2015 Admission and commencement of dealings in the GDRs 8:00 a.m. (London time) / 9:00 a.m. on the London Stock Exchange (Bratislava time) on 12 May 2015

The Selling Shareholder shall have the right to change all dates and times concerning the Offering subject to applicable Slovak law.

64 DIVIDENDS

The procedure for determining the dividends that the Company may distribute on Shares is set forth in Section 178 of the Slovak Commercial Code and the Company’s Articles of Association. Before the winding-up of the Company, shareholders are only entitled to the distribution of ‘‘distributable profit’’ (as defined in the Slovak Commercial Code), which is net profit that has been: (i) reduced by contributions to the reserve fund, or any other funds if applicable, created by the Company under the law and by the accumulated loss of previous years; and (ii) increased by the retained profit of previous years and other of the Company’s own resources whose utilisation is not stipulated by law. Furthermore, the Company may not distribute net profit or other of its own resources among shareholders if the equity stated in the approved annual financial statements is, or would be in consequence of the profit distribution, lower than the value of the registered capital increased by the reserve fund, or any other funds if applicable, created by the company which must not be, under the law or the Articles of Association, used for payments to shareholders, reduced by the value of unpaid registered capital, provided this value has not yet been included in the assets reported in the balance sheet under a special Act. The Company’s profit must be used primarily to pay the taxes and other fiscal obligations vis-a-vis the state. It then must be used for contributing to the reserve fund, which is a mandatory fund that each joint-stock company incorporated under Slovak law must establish. Currently, the Company has accumulated the reserve fund in the maximum amount of 20% of its registered capital as set out in the Articles of Association in accordance with the Slovak Commercial Code. Therefore, as long as the reserve fund is not used, the Company is not required to make contributions to the reserve fund in the future. Deciding on the use of the reserve fund is within the competence of the General Meeting. Once all mandatory payments have been made from the Company’s net profit, the distribution of dividends is decided on by the General Meeting. The law does not stipulate when or how often the dividends must be distributed and the decision on dividends is in the sole discretion of the General Meeting. The relevant record date (rozhodny´ denˇ) determined by the General Meeting must be a date which is not earlier than fifth and not later than the thirtieth day after the date of the General Meeting. The shareholder’s claim for dividends becomes due on the day determined by the General Meeting but not later than on the sixtieth day after the relevant record date. The shareholder’s entitlement to dividends becomes statute-barred four years after it became due. After the lapse of the four-year period, the Company may invoke statute of limitations and refuse to pay dividends to the shareholder. The method of payment of the dividends is determined by the General Meeting and falls within its sole discretion provided that the principle of equal treatment of all shareholders is adhered to. There are no dividend restrictions or special procedures for non-resident shareholders, including the Depositary, with respect to dividend rights. Subject to the principle of equal treatment there are no mandatory rules on rates of dividends, methods of their calculation, their periodicity, or their cumulative or non-cumulative nature. The Company has historically paid dividends on its shares. Dividends paid to shareholders have amounted to EUR 16.4 million, EUR 70.6 million, EUR 92.0 million, EUR 130.0 million and EUR 132.9 million in the years ended 31 December 2014, 2013, 2012, 2011 and 2010, respectively. Dividends paid per share calculated on the basis of the new number of shares in issue as at the date of this Prospectus (i.e., 86,411,300) were EUR 0.19 per share in 2014, EUR 0.82 per share in 2013, EUR 1.06 per share in 2012, EUR 1.50 per share in 2011 and EUR 1.54 per share in 2010. The pay- out ratio (measured as the ratio of the total amount of paid dividends to the Company’s distributable profit for the prior period) was 80%, 34.4%, 113.4%, 80.7% and 45.4% in 2014, 2013, 2012, 2011 and 2010, respectively. In the General Meeting held on 31 March 2015, the shareholders approved a dividend of 80% of the Company’s distributable profit in respect of 2014, amounting to EUR 0.38 per share and an aggregate of EUR 32.5 million. Purchasers of the Offer Securities in the Offering will not be entitled to this dividend. The Company has not adopted a formal dividend policy. Pursuant to the Memorandum of Understanding entered into in February 2014 between the Selling Shareholder, the Slovak Republic acting through the Ministry of Economy, Deutsche Telekom AG and the Company in connection with the Offering, the Company agreed to guidance that the dividends declared and paid in respect of any year following the year in which the Offering takes place are to be from 50% to 80% of the Company’s distributable profit determined in accordance with the Slovak Commercial Code from the immediately preceding year, provided that any annual dividend shall depend on the overall financial

65 position of the Company and its working capital needs at the relevant time (including but not limited to the Company’s business prospects, cash requirements, financial performance, and other factors including tax and regulatory considerations, payment practices of other European telecommunications operators and the general economic climate). The Board of Directors shall consider all these conditions before deciding on any proposal for profit distribution and may determine that it is unable or elect not to propose dividends. Any final determination on distribution of profits is at the disposal of the General Meeting. Any decision to pay dividends is subject to approval of a simple majority of shares represented at the General Meeting. As Deutsche Telekom will continue to be the beneficial owner of 51% of the Company’s shares following the Offering, the decision whether to pay dividends, and the level at which any dividends are paid, will be within the sole control of Deutsche Telekom. See ‘‘Risk Factors – Risks Related to the Group’s Relationship with Deutsche Telekom – Interests of Deutsche Telekom may differ from those of holders of the Securities’’ and ‘‘– The Company may decide not to, or may be unable to, pay dividends or other shareholder remuneration.’’ To the extent that the Company declares and pays dividends, holders of GDRs on the relevant record date will be entitled to receive dividends payable in respect of Shares underlying the GDRs. See ‘‘Terms and Conditions of the Global Depositary Receipts – 5. Cash Distributions’’.

66 CAPITALISATION

The following table sets forth the Group’s total capitalisation as at 31 December 2014 and is extracted from the Financial Statements. For further information regarding the Group’s ﬁnancial position, see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the Financial Statements included elsewhere in this Prospectus.

As at 31 December 2014

EUR million Equity Issued capital ...... 864.1 Share premium ...... 386.1 Statutory reserve fund ...... 172.8 Other...... (1.9) Retained earnings and proﬁt for the year...... 187.6

Total equity...... 1,608.7

Total capitalisation...... 1,608.7

In the General Meeting held on 31 March 2015, the shareholders approved a dividend of 80% of the Company’s distributable proﬁt in respect of 2014, amounting to EUR 0.38 per share and an aggregate of EUR 32.5 million. These dividends are expected to be paid in late April 2015. The following table sets forth the Group’s total capitalisation as at 31 March 2015 as extracted from the Company’s accounting records and is not audited:

As at 31 March 2015

EUR million Equity Issued capital ...... 864.1 Share premium ...... 386.1 Statutory reserve fund ...... 172.8 Other...... (1.9) Retained earnings and proﬁt for the three months...... 176.6

Total equity...... 1,597.7

Total capitalisation...... 1,597.7

As of the date of this Prospectus there are no restrictions on the use of capital resources that have materially affected, or could materially affect, directly or indirectly, the Group’s operations. As of 31 December 2014 and 31 March 2015 the Group had no indebtedness. The group is ﬁnanced from its own funds. Since 31 March 2015 there have been no material changes in the total capitalisation and indebtedness of the Group.

67 CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

Complete historical financial information for the years ended 31 December 2014, 2013 and 2012 is provided in the Financial Statements attached to this Prospectus. The selected consolidated financial information set forth below as at and for the years ended 31 December 2014, 2013 and 2012 has been extracted without material adjustment from the Financial Statements. The financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Financial Statements and related notes attached to this Prospectus and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’.

Selected Consolidated Income Statement Information

Year ended 31 December

2014 2013 2012

(EUR million) Revenue ...... 767.6 809.0 826.8 Staff costs ...... (130.1) (132.4) (129.8) Material and equipment ...... (101.2) (104.5) (92.6) Depreciation, amortisation and impairment losses ...... (195.0) (236.9) (236.4) Interconnection and other fees to operators ...... (65.7) (70.5) (87.0) Other operating income...... 12.6 10.9 10.5 Other operating costs...... (218.9) (206.2) (181.1) Operating proﬁt...... 69.3 69.3 110.5 Financial income...... 2.9 2.6 4.9 Financial expense...... (1.2) (1.8) (1.8)

Proﬁt before tax...... 71.0 70.2 113.6

Taxation...... (27.4) (20.9) (50.5)

Proﬁt for the year ...... 43.6 49.3 63.1

Selected Consolidated Statement of Comprehensive Income Information

Year ended 31 December

2014 2013 2012

(EUR million) Proﬁt for the year ...... 43.6 49.3 63.1

Other comprehensive income Gain on remeasurement of available-for-sale investments ...... 0.1 — — Deferred tax income/(expense)...... — — —

Net other comprehensive income to be reclassiﬁed to proﬁt or loss in subsequent periods ...... 0.1 — —

(Loss)/gain on remeasurement of deﬁned beneﬁt plans ...... (1.8) 1.4 (2.1) Deferred tax (expense)/income...... 0.4 (0.3) 0.4

Net other comprehensive income not to be reclassiﬁed to proﬁt or loss in subsequent periods...... (1.4) 1.1 (1.8)

Total comprehensive income for the year, net of tax ...... 42.2 50.5 61.4

68 Selected Consolidated Statement of Financial Position Information As at 31 December 2014 2013 2012 (EUR million) ASSETS Non-current assets Property and equipment ...... 792.2 817.6 918.5 Intangible assets...... 404.4 443.0 358.1 Available-for-sale investments ...... 32.1 176.6 — Deferred tax...... 0.8 0.9 0.2 Term deposits ...... — 1.1 — Trade and other receivables...... 1.7 9.1 9.1 Prepaid expenses and other assets ...... 13.2 12.8 14.2 1,244.4 1,461.2 1,300.2 Current Assets Inventories ...... 12.1 14.2 14.0 Investments at amortized cost ...... 3.1 3.1 74.3 Available-for-sale investments ...... 172.0 49.9 — Term deposits ...... 219.6 142.3 106.0 Loans ...... 150.0 — — Escrow ...... 1.0 13.0 — Trade and other receivables...... 112.1 130.7 110.5 Prepaid expenses and other assets ...... 6.5 7.8 9.8 Current income tax receivables...... 10.0 0.8 4.0 Cash and cash equivalents...... 93.1 229.1 371.5 779.5 590.9 690.1 Assets held for sale ...... 8.6 19.8 — 788.1 610.7 690.1 TOTAL ASSETS ...... 2,032.5 2,071.9 1,990.3

EQUITY AND LIABILITIES Shareholders’ equity Issued capital ...... 864.1 864.1 864.1 Share premium...... 386.1 386.1 386.1 Statutory reserve fund ...... 172.8 172.8 170.6 Other...... (1.9) 1.8 0.6 Retained earnings and proﬁt for the year ...... 187.6 160.4 183.8 1,608.7 1,585.3 1,605.4 Non-current liabilities Deferred tax...... 115.9 128.3 150.5 Provisions ...... 25.8 16.9 18.2 Trade and other payables...... 0.6 1.1 0.3 Other liabilities and deferred income ...... 3.5 2.8 4.8 145.8 149.1 173.8 Current liabilities Provisions ...... 37.4 34.3 5.2 Trade and other payables...... 129.0 225.2 133.5 Other liabilities and deferred income ...... 110.6 74.0 72.2 Current income tax liabilities ...... 0.9 4.0 0.1 278.0 337.6 211.1 Total liabilities ...... 423.8 486.7 384.9 TOTAL EQUITY AND LIABILITIES ...... 2,032.5 2,071.9 1,990.3

69 Selected Consolidated Statements of Cash Flows Information

Year ended 31 December

2014 2013 2012

(EUR million) Net cash ﬂows from operating activities ...... 265.0 290.4 293.1 Net cash used in investing activities ...... (375.5) (357.9) (7.6) Net cash used in ﬁnancing activities...... (25.4) (74.8) (92.7)

Net increase/(decrease) in cash and cash equivalents...... (136.0) (142.4) 192.9 Cash and cash equivalents at the beginning of the period...... 229.1 371.5 178.6

Cash and cash equivalents at the end of the period ...... 93.1 229.1 371.5

Other Financial Information(1)

Year ended 31 December

2014 2013 2012

(EUR million) Adjusted EBITDA(2)...... 310.7 337.3 353.4

Adjusted EBITDA margin(3) ...... 40.5% 41.7% 42.7%

Operating Free Cash Flow(4) ...... 194.9 226.4 250.8

Notes: (1) This Prospectus contains certain measures that are not measures defined by IFRS, namely, Adjusted EBITDA, Adjusted EBITDA margin and Operating Free Cash Flow. These measures were calculated by the Company using the data in the Financial Statements and have not been audited. Information regarding Adjusted EBITDA, Adjusted EBITDA margin and Operating Free Cash Flow is sometimes used by investors to evaluate the efficiency of a company’s operations and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements. Adjusted EBITDA, Adjusted EBITDA margin and Operating Free Cash Flow alone do not provide a sufficient basis to compare the Group’s performance with that of other companies and should not be considered in isolation or as a substitute for operating income or any other measure as an indicator of operating performance or as an alternative to cash generated from operating activities as a measure of liquidity. In addition, these measures should not be used instead of, or considered as an alternative to, the Group’s historical financial results as reported in the Financial Statements. These non-IFRS measures have been presented because the Group believes that they are helpful to investors and financial analysts in highlighting trends in the Group’s overall business. In addition, investors should be aware that the Group is likely to incur expenses similar to the adjustments in this presentation in the future and that certain of these items could be considered recurring in nature. Presentation of Adjusted EBITDA and related margins, should not be construed as an implication that the Group’s future results will be unaffected by unusual or non-recurring items. Investors are encouraged to evaluate these items and the limitations for purposes of analysis in excluding them. For a reconciliation of Operating profit and Adjusted EBITDA to Operating Free Cash Flow, please see the following page. (2) The Group’s Adjusted EBITDA (for the financial years ended 31 December 2014, 2013 and 2012) is calculated as operating profit plus depreciation, amortisation and impairment losses adjusted for special factors which include severance payments and provisions for legal and regulatory cases. Adjusted EBITDA is not defined under IFRS and should not be treated as an alternative for the profit/(loss) categories defined under IFRS, either as a measure of the operating result or as a measure of cash flows from operating activities under IFRS. Moreover, it cannot be treated as a liquidity ratio. (3) The Group’s Adjusted EBITDA margin (for the financial years ended 31 December 2014, 2013 and 2012) is calculated as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin is not defined under IFRS and should not be treated as an alternative for the profit/(loss) categories defined under IFRS, either as a measure of the operating result or as a measure of cash flows from operating activities under IFRS. (4) The Group’s Operating Free Cash Flow (for the financial years ended 31 December 2014, 2013 and 2012) is calculated as Adjusted EBITDA less recurring cash capital expenditure (defined as payments to acquire intangible assets and property, plant and equipment) less cash capital expenditure related to payments for acquired spectrum licenses. Operating Free Cash Flow is not defined under IFRS and should not be treated as an alternative for the profit/(loss) categories defined under IFRS, either as a measure of the operating result or as a measure of cash flows from operating activities under IFRS.

70 Reconciliation of Operating proﬁt to Adjusted EBITDA and Operating Free Cash Flow

Year ended 31 December

2014 2013 2012

(EUR millions) Operating proﬁt...... 69.3 69.3 110.5 Depreciation, amortisation and impairment losses ...... 195.0 236.9 236.4 Special factors...... 46.4 31.1 6.5 Severance payments...... 4.3 5.4 6.5 Provisions for legal and regulatory cases...... 42.1 25.7 —

Adjusted EBITDA...... 310.7 337.3 353.4

Payments to acquire intangible assets and PPE ...... 178.3 111.9 104.5 Cash capital expenditure related to payments for acquired spectrum licenses ...... (62.5) (1.0) (1.8)

Recurring cash capital expenditure...... 115.8 110.9 102.6

Adjusted EBITDA...... 310.7 337.3 353.4 Recurring cash capital expenditure ...... (115.8) (110.9) (102.6)

Operating Free Cash Flow ...... 194.9 226.4 250.8

71 BUSINESS

Overview The Group is the largest multimedia and telecommunications operator in the Slovak Republic by revenue, offering a full range of broadband, fixed telephony, Pay-TV, mobile data and voice services as well as a comprehensive suite of ICT services. The Group is part of the Deutsche Telekom Group and markets most of its services under the Deutsche Telekom ‘‘T’’ brand. Before liberalisation of the Slovak telecommunication market in 2002, it was the only provider of fixed telephony services in the Slovak Republic. The Group carries out substantially all its activities in the Slovak Republic. The Group owns and operates the largest fixed and a high quality mobile telecommunications network, covering almost the entire territory of the Slovak Republic. As of 31 December 2014 the Group had 628,953 fixed-line voice accesses (excluding VoIP accesses), 422,091 broadband internet accesses (including those of DIGI) and 467,547 TV accesses (including those of DIGI) and served 2,219,913 mobile customers expressed as number of active SIM cards. The Group reported full-year revenues of EUR 767.6 million for the year ended 31 December 2014. In terms of market position the Group is the market leader (measured by revenue) in fixed voice, fixed broadband and Pay-TV for the year ended 31 December 2014. It is also the second largest provider of mobile telecommunication services by service revenue. See ‘‘Slovak Telecommunications Market – General Overview of Slovak Telecommunications Market’’. Fixed-line services provided by the Group consist mainly of core fixed voice and broadband internet complemented by a range of value-added services offered through the Group’s extensive fixed-line telecommunications network benefiting from an on-going roll-out of modern fibre optic technology. The Group provides comprehensive and premium content through its Pay-TV services, including a high definition and interactive IPTV platform. The Group is also a leading provider of ICT services and offers wholesale services to a number of retail Internet service providers (ISPs) and other licensed operators in the Slovak Republic and abroad. The Group also offers a full range of voice and data mobile services, including traditional and value- added voice services, international roaming services, interconnection services with other mobile operators in the Slovak Republic and abroad, messaging and data services using 2G (GSM), 3G (UMTS) and 4G (LTE) network technologies. As the first multimedia operator in the Slovak Republic, the Group offers television services via both cable and satellite technology. Except for standard TV channels, the Group offers premium and exclusive sports content. High-end TV service with interactive features (VOD, catch-up TV functions, recording) supported by IPTV technology are offered under TV Magio brand, while linear mass market television services mostly provided via satellite technology are offered under the DIGI brand operated through the Group’s wholly owned subsidiary DIGI SLOVAKIA s.r.o. (DIGI). The Group considers itself to be the leader in the Slovak market for ICT solutions. The Group’s ICT solutions are provided through the Company and its subsidiary PosAm. The Group’s ICT business consists primarily of cloud-based services (private as well as public), tailor-made IT solutions, mobile device management and car monitoring, offering customers both cost efficiency and flexibility with higher security and service availability. The Group also introduced a cloud application platform in 2014, and offers applications focused on providing a quality customer experience tailored to the Slovak market. The Group operates modern data centres across the Slovak Republic. The Group also offers virtual servers (IaaS), web hosting services, M2M (Machine-to-machine) & IoT (Internet of Things) solutions, and healthcare information systems for hospitals. For management and financial reporting purposes, the Group’s businesses are organised in the following segments: * Fixed-Line Business. This segment includes fixed-line services provided to business and residential customers such as voice, broadband (excluding DIGI), Pay-TV (excluding DIGI) and ICT (excluding PosAm), as well as the Company’s role as wholesale provider for other telecommunication operators in the Group’s fixed network. The fixed-line segment generated 43% of the Group’s total revenues in 2014. * Mobile Business. This segment includes mobile voice, SMS, MMS and mobile data services provided to business and residential customers, as well as the Company’s role as wholesale provider for other telecommunication operators in the Group’s mobile network. The mobile segment generated 49% of the Group’s total revenues in 2014.

72 * Other Businesses: This segment includes the following services provided by separate subsidiaries of the Group which, together, generated 8% of the Group’s total revenues in 2014: * DIGI. This sub-segment includes digital television and broadband services provided mainly to residential customers focusing on value-for-money as compared to the Group’s premium Pay-TV offering under the ‘‘Magio’’ brand, which is included in the ﬁxed-line business segment. DIGI generated 46% of the Group’s television revenues and 4% of the Group’s total revenues in 2014. * PosAm. This sub-segment includes ICT services provided by PosAm, an established IT company with a focus on bespoke solutions for corporate clients, which has been active in the Slovak market for more than 20 years, It has more than 200 employees working on IT projects and solutions geared towards the Group’s B2B customers. PosAm revenues generated 61% of the Group’s ICT revenues and 4% of the Group’s total revenues in 2014. * Zoznam. This sub-segment includes online services provides through subsidiaries Zoznam and Zoznam Mobile. The Group offers over 40 online products through Zoznam.sk, one of the Slovak Republic’s most-visited internet portals during the year ended 31 December 2014 according to AIMmonitor, as well as mobile internet content services. Diverse revenue streams consist of display advertisement, web directory and e-commerce services. Zoznam accounted for 1% of the Group’s total revenue in 2014.

Strengths Management believes that the Group beneﬁts from the following key strengths:

Attractive Slovak market fundamentals with significant growth opportunities The Slovak Republic, where the Group operates, benefits from strong macroeconomic and market fundamentals, with significant potential for medium-term growth. Slovak economy is export-driven, supported by foreign investment inflows and private consumption, and benefiting from Eurozone membership and associated monetary policy stability. As at 31 December 2013, population of the Slovak Republic was approximately 5.4 million, and it had a nominal GDP per capita of EUR 13,643. Real GDP in the Slovak Republic grew by 2.3%, 0.9% and 1.8% in 2014, 2013 and 2012, respectively, based on data from the IMF. IMF is forecasting Slovakia’s GDP growth to outpace the median GDP growth of CEE and Western European peers from 2014 through 2018, supported by growing private consumption and foreign direct investment at levels above the median for other CEE countries and inflation expected to be approximately at the median level of other CEE countries, according to the EIU. The Slovak Republic also benefits from low debt to GDP levels compared to the median level in Western Europe, which provides support to Slovak Republic’s robust credit rating of A+ from Fitch, A by S&P and A2 by Moody’s. The Group believes that these underlying economic conditions create a favourable environment for the growth of demand for telecommunications services in the Slovak Republic. Fixed-line market Broadband penetration in the Slovak Republic, expressed as a percentage of households, was below the median for Western Europe and other CEE countries in 2014, according to Analysys Mason, while fiber penetration of broadband in the Slovak Republic is above the levels of most European countries. The Group believes that there is a potential for increased penetration of Pay-TV, with ‘‘traditional’’ Pay-TV (as compared to services such as SkyLink, which offer low-price connections with limited offerings) penetration in the Slovak Republic, expressed as a percentage of households, is below the median for CEE countries and ARPA of the ‘‘traditional’’ Pay-TV operators is below the median for other CEE countries, according to Ovum. Mobile market While wireless penetration rates in the Slovak Republic are high, as with most of Europe, they are nevertheless below the median of Western Europe and other CEE countries according to IDC, suggesting some potential for further increases in penetration. In addition, following significant reductions in recent years, from EUR 0.1101 per minute in 2005 to EUR 0.0551 per minute in 2012 and EUR 0.0123 per minute in 2014, the mobile termination rates (MTRs) have stabilized in-line with the Western European median of EUR 0.0118 per minute (calculated as the median of rates in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom according to BEREC MTR Report) and the median in other CEE countries is EUR 0.0168 per minute (calculated as the median of rates

73 in Croatia, Czech Republic, Hungary, Poland, Romania and Slovenia, according to BEREC MTR Report). Consumers in the Slovak mobile telephone market have historically favoured post-paid mobile contracts over pre-paid services. The higher proportion of post-paid customers in turn supports relatively lower churn rates than the Western European or CEE median, according to Pyramid and IDC. The share of mobile data revenue in total mobile revenue in the Slovak Republic is also below median levels in CEE and, in particular, Western Europe, representing only 22% of the total mobile revenues in 2014 according to IDC, as compared to a CEE median of 28% and a Western European median of 29%. Management believes there is signiﬁcant potential for the share of mobile data revenues to increase with the further deployment of 4G LTE technology and growing wireless penetration.

Market leading integrated telecommunications operator The Group is the only fully integrated telecommunication operator in the Slovak Republic. The Group has market leading positions in fixed voice (by revenue, according to IDC), fixed broadband (by revenue, according to Analysys Mason) and, since the acquisition of DIGI in 2013, Pay-TV services (by revenue, based on management estimates) as well as ranking second in mobile (by service revenue, based on the Company’s and competitors’ public data). The Group is also a leading provider of cloud services and mobile device management. The Group’s status as an integrated telecommunication operator with leading positions across the major product segments strongly positions the Group to capitalize on trends in the Slovak telecommunications market towards bundled and combined product offerings containing fixed voice, fixed broadband, mobile and Pay-TV. By combining its network with the Group’s product differentiation based on premium and exclusive content, the Group believes that there are significant opportunities to increase revenue generating units and, ultimately, revenues, by cross-selling premium and bundled services. At present, in the fixed-line business approximately 68% of the Group’s customers currently only subscribe for a single service (generally fixed voice), and only approximately 21% of the more than 364,000 homes passed with fiber to the home (FTTH) as of 31 December 2014 are customers of the Group, offering significant opportunities for increased sales.

Fixed-line business The Group is a clear leader in the fixed voice and broadband markets in the Slovak Republic, with a market share of 84% in fixed voice (expressed as percentage of revenue), according to IDC market and Company financial data and 38% in fixed broadband, according to Analysys Mason market and Company financial data. In addition, following the acquisition of DIGI in September 2013, the Group became the largest Pay-TV operator in the Slovak Republic, and estimates that it accounts for 37% of total Pay-TV revenue. The Group’s Pay-TV market position is supported by access to premium and exclusive sports content.

Mobile business The Group has a well-established position as the second largest mobile operator in the Slovak Republic, with a market share of 33% of total service revenue. The Group is a leader in LTE (4G) technology in the Slovak market, which is increasingly demanded by and necessary to attract and retain high-value customers. The Group was the ﬁrst mobile operator in the Slovak Republic to launch commercial LTE services in November 2013, giving it a ‘‘ﬁrst mover’’ advantage, and has the largest 4G network outdoor coverage in the Slovak Republic, covering approximately 52% of the population in January 2015.

Best-in-class network providing superior customer experience Fixed-line network The Group offers a leading fixed-line network in the Slovak Republic, across all product areas, with broadband coverage reaching 93% of households. The Group is rolling out advanced broadband technology, providing fibre to the home (FTTH) coverage offering download speeds of up to 300 Mbps to approximately 364,000 subscribers (as of 31 December 2014), more than any other provider in the Slovak Republic. During 2014 the Group switched to an all-IP fixed network, offering significant operational benefits, including improved efficiency, reduced electricity consumption, reduced maintenance expenses, and a

74 scalable infrastructure capable of being readily adapted to new product offerings. The Group’s network offerings are further enhanced by its leading Pay-TV network consisting of both the premium Magio product and DIGI, which it offers to 100% of Slovak households through satellite technology (both DIGI and Magio satellite products), as well as to approximately 44% of households through IPTV (assuming current status of active technology with coverage calculations based on the number of households with ability to receive multicast products) and approximately 4% of households through cable technology.

Mobile network The Group operates what it believes to be the quality leading nationwide mobile network in the Slovak Republic. The Group was the first mobile operator in the Slovak Republic to offer high speed packet access and dual carrier (HSPA+/DC) service with speeds of up to 42 Mbps, and has continued to be a first mover in the market with the first commercial introduction of LTE (4G) technology in November 2013 and outdoor coverage of 52% of the Slovak population as of 31 December 2014. According to independent benchmarks performed in the last two years and recently in February 2015, the Group’s network performed best in many of the key performance indicators among Slovak operators. Network testing in February 2015 conducted by P3 communication, taking into account both mobile voice and data factors such as speech quality, voice call success ratios, smartphone file upload transfer speeds, Web Browsing and YouTube Video performance, resulted in a network ranking ahead of both O2 and Orange. The Group offers a broad spectrum portfolio, with less fragmented spectrum that facilitates offering higher-speed services, including nationwide LTE (4G). Complementing its broad geographic coverage, the Group has licenses for the LTE (4G) 2,600MHz spectrum and other key spectrum elements necessary to offer superior speed and high coverage in the Slovak Republic’s largest cities, Bratislava and Kosˇice, both of which are near international borders, without interference with other local or foreign operators.

Attractive product offering supported by established brand and distribution network The Group seeks to offer a superior customer experience, through its integrated network and innovative service offering across its product lines. The Group seeks to leverage the superior parameters of its network through offering premium and exclusive content, such as HBO and Cinemax, as well as a range of exclusive sports content, including Digi Sport, Premier League, Champions League, Series A (Italy), Fortuna Liga (Slovakia) and Ligue 1 (France). The Group also seeks to offer own innovative services to its mobile customers or solutions developed through key partnerships, such as offerings of digital music, smartphone security, smartphone insurance and content organisers. As the incumbent telecommunications operator, the Group has a long and well-known history in the Slovak Republic with strong brand recognition based on the ‘‘Telekom’’ and ‘‘T’’ brands that the Group licenses from the Deutsche Telekom Group. The Group boasts the highest brand awareness among telecommunications provider in the Slovak Republic, with 99% of the population aware of the Group in October 2014 according to GfK Slovakia. The Group seeks to leverage this strong brand perception and recognition through its nationwide multichannel distribution network, seeking to target a wide range of customer segments and demographics through branded stores and resellers. The Group operates 23 ﬂagship stores in prime locations throughout major urban centres that focus on quality and care transactions, accompanied by 91 franchise stores to provide a supplementary footprint in smaller towns and less central locations. The Group also engages in internal and external telesales, direct B2B account managers, door to door sales, partnerships with retail chains and a web portal for both sales and care transactions.

Sustainable cash flow generation The Group has exhibited strong financial performance based on positive cash flows and prudent management policies. The Group has exhibited consistently high Adjusted EBITDA margins (calculated as percentage of Adjusted EBITDA from total revenues), of 40.5%, 41.7% and 42.7% for the years ended 31 December 2014, 2013 and 2012, respectively, contributing to strong operating free cash flow conversion (calculated as percentage of Operating Free Cash Flow from Adjusted EBITDA) of 62.7%, 67.1% and 71.0% for the years ended 31 December 2014, 2013 and 2012, respectively. See ‘‘Consolidated Historical Financial Information – Reconciliation of Operating profit to Adjusted EBITDA and Operating Free Cash Flow’’. The Group expects that improvements such as shifting to an all-IP based fixed-line network will result in further efficiencies, leading to reduced expenses for maintenance and electricity.

75 Committed and high-calibre management team and continued support from DT The Group is managed by an experienced team combining international and regional talent. Its key personnel have significant experience in the telecommunications and service industries in the Slovak Republic and CEE, including the Group’s Chief Executive Officer, who has over 30 years of industry experience. Management performance is aligned with the Group’s interests through annual performance targets. As a member of the Deutsche Telekom Group, the Group benefits from Deutsche Telekom’s technical and operational excellence and experience. In particular, the Group benefits from the access to Deutsche Telekom Group’s scale and reach, offering benefits such as international know-how and expertise, brand and marketing arrangements, global product and service offerings, handset procurement and other equipment and shared services, as well as preferential roaming rates. In addition, the Group follows Deutsche Telekom Group policies in areas such as transaction execution, management best practices and corporate governance.

Strategy The key focus of the Group’s strategy is to operate as a leading telecommunications company, using leading technology to generate the best possible customer experience. The strategy, which is aligned with that of the Deutsche Telekom Group, is based on the following pillars: (i) integrated IP networks, (ii) best customer experience, (iii) winning with partners, and (iv) leading in business. In order to implement the Group’s strategy and maintain and develop its market position, the Group intends to execute the following principal elements of its strategy:

Reinforce market leadership on the ground of superior customer experience The Group seeks to provide a superior customer service in order to secure its position as the leading integrated telecommunications service provider in the Slovak Republic. The Group seeks to achieve this objective by offering a best-in-class integrated network and systems platform. In order to do so, it seeks to leverage its leading positions in ﬁbre and differentiated spectrum ownership, enabling it to offer superior speeds, particularly in urban areas, as well as the widest 4G coverage. This platform has been enhanced by the migration to an all-IP based ﬁxed-line network by December 2014, enabling the Group to offer the best time to market and a superior customer experience. The Group also seeks to offer its customers simple, easy to understand packages that are free of hidden charges. The Group intends to further differentiate its offerings by following global trends and innovations in the industry and by providing premium and exclusive content to its customers. The Group aims to complement this superior quality of service by promoting best-in-class customer care and actively use its customer relationship management systems in order to maximize customer satisfaction and loyalty. The Group believes this focus on technology, quality of service and customers’ service will increase customer loyalty and ensure a positive experience for its customers.

Maintain competitive edge through fixed-mobile convergence supported by technological leadership The Group aims to enhance its fixed broadband network by continuing to roll out its optical network to increase the number of households covered, building on the current position as the market leader. Expansion of the LTE network (which already has the broadest 4G coverage in Slovakia) will position the Group to monetise the increasing demand for mobile broadband services. The Group’s acquired spectrum bands provide it with a significant technological advantage in major cities close to Slovakia’s borders, where the 2,600MHz spectrum in particular limits cross-border interference, and the 2x40MHz (FDD) spectrum 2,600MHz band offers superior speeds of up to 300 Mbps in urban areas. Unique spectrum ownership is one of prerequisite for better customer experience while using ICT solutions e.g. cloud applications on mobile devices. The Group believes that fixed mobile convergence, defined as bundling or packaging fixed and mobile services together into a single customer package, will result in significant opportunities for the Group to enhance its competitive position and to maintain its market leadership. The Group increasingly focuses on offering of bundled products, as opposed to individual products, targeting whole families and customer segments in order to meet complex customer requirements. The Group completed its transition to an all-IP network in December 2014, driving network simplification, cost reduction and efficiency. The Group plans to leverage this network to support fixed-mobile convergence by utilizing its fixed transport technologies to support mobile network backhauling needs, boosting data bandwidth by employing mobile and fixed access networks and off- loading mobile data networks by utilizing more efficient fixed networks, and to implement the

76 Deutsche Telekom Group’s Pan-IP system of access to standardized IP platform offerings in order to further increase efficiency of service provision and to leverage the innovative and technical abilities of the Deutsche Telekom Group. The Group also intends to engage in a significant simplification of its product portfolio, making product offers more understandable and transparent for customers and thereby increasing customer satisfaction and loyalty.

Capture growth in new business areas and innovations The Group is well-positioned to capitalize on new developments in the telecommunications market as a source of continued growth. It is already one of the leading ICT services providers in the Slovak Republic focused on managed solutions, cloud solutions, development of customer tailored applications and solution implementations. The Group believes that signiﬁcant opportunities exist for expanding its business into new areas with innovative product offerings, and intends to focus on capturing opportunities in big data, cloud, M2M, insurance, ﬁnancial services, localization services, smart home solutions, security services, health services, e-commerce and e-entertainment services such as cloud family solutions. The implementation of new services is facilitated by the Group’s own solutions or via strong partnerships with developers of innovative solutions, based on the Group’s introduction of products such as the ‘‘mWallet’’ mobile payment system; the ‘‘Poˆjde to’’ smartphone, tablet, computer and television advisory, support and repair system; insurance services; cloud virtual servers and application shops; and mobile device management. In addition, the Group seeks to expand its existing ICT services, consolidating its position as the leading provider of cloud solutions, data centres and managed solutions. The Group will do this with a focus on bringing secure and affordable cloud services to small, medium as well as large enterprises and providing custom-tailored solutions that enable the Group to leverage the breadth and capabilities of its network an experienced IT professionals. Finally, the Group intends to make disciplined and targeted mergers and acquisitions, particularly in any relevant areas (including ICT), in order to gain additional product capabilities and technological expertise.

Drive agility and operating efficiency through eCompany initiatives The Group plans to implement an extensive eCompany transformation that would enable the Group to be leaner, more agile and responsive by transferring all customer facing processes online. Key initiatives include semi-automated online shopping, as well as online helpdesks and services, as well as digitizing the procurement process. These changes will also help the Group to respond more rapidly and efficiently to changes in its operating environment. As part of becoming an eCompany, the Group is focused on simplifying and automating internal processes, enabling it to offer integrated fixed and mobile solutions, consolidated fixed and mobile billing and CRM, and consolidated solutions for system and hardware diagnosis. The operating efficiencies generated by the eCompany initiatives are expected to result in reduced operating costs for services, increased efficiency of capital investments in technologies and networks, and allow for the development of fixed and mobile networks in accordance with the Pan-IP integration framework.

Group Structure The Group consists of the Company, which is the parent entity, and its wholly owned subsidiaries Zoznam, s.r.o., Zoznam Mobile, s.r.o., Telekom Sec, s.r.o. (which does not engage in significant activities), and DIGI SLOVAKIA, s.r.o., as well as PosAm, spol. s r.o., in which the Company holds a 51% share. All subsidiaries are incorporated in the Slovak Republic and are fully consolidated. Except for these subsidiaries the Company has no shareholdings in any other undertakings that could have a significant effect on the assessment of its own assets and liabilities, financial position or profits and losses. The majority of the Group’s business, including provision of fixed and mobile services, is conducted through the Company.

77 The following chart presents the Group’s structure; the percentages show shares in the registered capital and voting rights:

Slovak Telekom, a.s.

DIGI SLOVAKIA, Telekom Sec, s.r.o. Zoznam, s.r.o. Zoznam Mobile, s.r.o. PosAm, spol. s.r.o. s.r.o.

100% 100% 100% 100% 51% Established 2006 Acquired in 2013 Acquired in 2005 Acquired in 2005 Acquired in 2010 Main activities: Main activities: Main activities: Main activities: Main activities:

History Historically, the fixed-line telephony business in the Slovak Republic was conducted by Spra´va poˆsˇt a telekomunikaćiı´(PTA), a state-owned enterprise. In November 1990, PTA entered into a joint venture agreement with Atlantic West, a joint venture of the U.S.-based mobile telephone operators Bell Atlantic (now Verizon Communications Inc.) and AT&T Wireless Services, Inc., to form EuroTel, the first mobile operator in the Slovak Republic. EuroTel was awarded a license for construction and operation of the public telephone network and the public data network, and launched mobile telecommunications services in September 1991. In January 1993, PTA’s fixed-line telephone business and interest in EuroTel were transferred to the newly formed state enterprise Slovenske´ telekomunikaćie sˇ. p., which was subsequently later transformed into state-owned joint stock company Slovenske´ telekomunikaćie a.s. In July 2000, the Slovak state entered into a privatisation agreement with Deutsche Telekom AG, resulting in the transfer of a 51% interest in Slovenske´ telekomunikaćie, a. s. to Deutsche Telekom and the Company becoming part of the Deutsche Telekom Group. In 2004, Slovenske´ telekomunikaćie, a.s. was renamed ‘‘Slovak Telecom, a.s.’’, concurrently with the launch of the new corporate identity, logo, vision, mission and corporate culture. With effect from 31 December 2004, the Company purchased a 49% interest in Eurotel from Atlantic West B.V., as a result of which Eurotel became wholly-owned by the Company. In 2005, the Company acquired Zoznam business and EuroTel was renamed T-Mobile Slovensko a.s. and began to operate under the T-Mobile brand. The Company changed its business name to current ‘‘Slovak Telekom, a.s.’’ in 2006 and fixed-line activities were re-branded. T-Mobile Slovensko was merged into Slovak Telekom in 2010 to facilitate offering integrated and bundled services and to increase operational efficiency. In the same year, the Group also acquired a 51% interest in PosAm, thus expanding its ability to offer bespoke IT and infrastructure solutions to corporate customers. In 2011, the Group opened its largest and most modern data centre. The Company acquired DIGI in September 2013, significantly increasing the Group’s Pay-TV subscriber base and evolving into the largest Pay-TV operator in the Slovak Republic. In the same year, it launched its nationwide 4G/LTE network strengthening its position as a mobile provider. In 2014, the Group launched its fixed-mobile convergence offerings to focus on cross-selling to fixed voice and fixed broadband customers to decrease monthly churn rates.

Fixed-line Business The Group’s ﬁxed-line services consist of voice, broadband, Pay-TV (excluding DIGI), ICT (excluding PosAm) and data network and the Company’s role as wholesale provider for other telecommunication operators. The Group’s basic telephony services are primarily provided via its widespread metallic and

78 optic fibre networks connecting each customer’s premises to the Group’s network. As at 31 December 2014, the Group had approximately 0.93 million physical fixed-line accesses in service, with capability to provide multiple type of service through most of them The Group offers services through a modern fibre optic network, VDSL, ADSL and other technology. In the past seven years, the Group has focused on expanding service accessibility to its customers, with fibre (FTTH/B) connections technology available to approximately 364,000 households (representing the number of households where at least the basement of building is reached by fibre) by the end of 2014. In the fixed-line business, the Group seeks to increase the number of revenue generating units (RGUs) through a new integrated powerplay portfolio and continue to benefit from being an integrated player. Under this powerplay portfolio, the Group aims to offer simple, technology independent services that are easy to understand and communicate and limited in number of rate plans (maximum three). The offerings are also flexible, with transparent pricing and simple discounting schemes, are easy to up-sell and cross-sell, and are concentrated under a single contract. The competitive edge is provided by focusing on integrated offerings and bundling, offerings with premium content and maintaining a leading position in network quality. The Group seeks to maximise the number of RGUs by bundling fixed broadband services together with its premium TV service and high quality fixed voice service, and by exploiting the potential of rural areas outside the existing fixed network footprint through expanded coverage, including offering combined solutions such as satellite TV service. Selected key performance parameters for the Group’s retail fixed-line business are listed in the following table:

For the year ended 31 December

2014 2013 2012

Total physical accesses (million)(1) ...... 0.93 0.96 1.00 Fixed voice accesses ...... 0.63 0.68 0.74 Broadband accesses...... 0.41 0.40 0.40 Pay-TV accesses ...... 0.24 0.20 0.18 Fixed coverage (% households passed) Broadband (total) ...... 93% 92% 90% Broadband (ﬁbre)...... 19% 18% 18%

(1) The number of physical accesses is different from the total of ﬁxed voice accesses, broadband accesses and television accesses because duo play and triple play overlaps are excluded. For example, one triple play offer is counted as one ﬁxed voice, one television and one broadband access, but at the same time only as one physical access.

Fixed Voice The Group benefits from its status as the traditional provider of fixed voice services in the Slovak Republic, with the strongest and broadest coverage, reliable network with high sound quality and a loyal customer base. The Group also offers a broad service portfolio including voice over IP and can rely on its significant sales force and top quality customer service. The Group serves both consumer and business customers, offering a variety of tariffs tailored to each segment. The Group’s strategy for the fixed voice services is to promote customer loyalty by active customer relationship management and supporting customers’ positive experience, and expanding the portfolio with converged fixed-mobile voice services, traffic stimulation within the Group’s network, and gradual migration to voice services via broadband. The innovation and enhanced service offering is supported by the all-IP transition of the Group’s network, which was completed in 2014. The Group has sought to limit the decline in fixed voice traffic and its impact on fixed voice revenue through the development of retention and relevance programs, such as minute-bundle campaigns and strategic up-sell efforts to convert subscribers to all-inclusive and bundled packages. See ‘‘– Marketing and Distribution – Bundling’’. Such offerings also have a positive effect on reducing churn rates. The Group currently offers various tariff packages to B2C customers, individuals and small enterprises. These packages generally involve a trade-off between higher fixed monthly charges and per call charges, such as choosing between paying one monthly rate for unlimited calls to both fixed and mobile lines across the Slovak Republic and the EU, or paying for a package ranging from 50- 400 minutes, with an additional rate for each additional minute depending on the plan. Each B2C

79 tariff package includes a period of free calls within the Group’s own network from 19:00 – 07:00. Small business customers may also choose from packages that include calls to the USA and Canada. The Group also offers fixed voice packages for B2B customers. Service offerings include basic offerings and complex offerings, and either single access and branch access (private branch exchange, or PBX) offerings. Customers may choose between tariffs with a package of minutes to fixed or mobile networks, tariffs with a shared volume of minutes, semi-flat tariffs offering flat rates for certain type of calls, and tariffs with unlimited minutes to networks in Slovakia and other selected countries subject to fair use policy. Add-ons to these packages include intra-company calls (with VPN) and advanced features that are useful mostly for large enterprises and call centres. The Group offers also services based on IP voice and hosted PBX.

Broadband The Group is focused on horizontal growth by increasing its broadband customer base through further expanding its fibre penetration, and vertical growth through cross-selling products to current customers. In providing services to both new and existing customers, the Group intends to emphasize its value for price, network quality, broad coverage, broadband speed and quality customer service. The Group provided high-speed internet access through its optical and metallic network under the FTTH (GPON), ADSL and VDSL standards through approximately 0.41 million accesses as at 31 December 2014. The Group’s network covered 93% of Slovak households and approximately 19% of Slovak households had access to optical connection as of 31 December 2014. The Group’s broadband services are priced based on download speeds, which range from 2 Mbps for the cheapest offering to 300 Mbps supported by the Group’s optical network for the premium service. In 2012, the Group increased the download speeds of its existing metallic network and the upload speed of its existing fibre optic networks. In 2013, the Group further increased its broadband download speeds on its metallic connections with the introduction of new VDSL technology, offering speeds ranging up to 50 Mbps. In 2014, the Group introduced a simplified portfolio of three broadband plans of speeds ranging up to 300 Mbps as part of its Chytry´ balı´k (Smart Pack) offering for B2C consumers, individuals and small enterprises. Such simplified portfolios are competitively priced so as to push up-sell and cross- sell to customers. The broadband plans offer unlimited data transfers and are marketed under the ‘‘Magio Internet’’ brand. The optic offering consists of ‘‘Magio Internet M’’ with 6 Mb/s download and 0.5 Mb/s upload speed, ‘‘Magio Internet L’’ with 40 Mb/s download and 4 Mb/s upload speed and premium ‘‘Magio Internet XL’’ with 300 Mb/s download and 30 Mb/s upload speed. The Group offers a full spectrum of B2B fixed internet services, including ‘‘Firemny Internet’’ as a service targeted at mainstream business customers with standard requirements including Wi-Fi router and mobile backup capabilities. There are also other dedicated business offerings, such as ‘‘Business Internet’’ with symmetrical accesses and value-added data network services such as hardware, consultancy and virtual LANs. The most advanced business services are provided on data network services, either on the MPLS or Ethernet line for connecting different localities of the customer into a single network. Advanced features include the option to access to the Internet, network monitoring, advanced backups (fixed, mobile, radio), advanced SLA, and web filtering. The Group also provides certain top customers with specialized leased lines.

Television The Group offers a variety of television programming options within its ﬁxed-line business through its ﬂagship Magio TV digital offering. Magio TV Go and Magio TV Go Plus allow customers to watch selected TV programs on any mobile device with internet access. Magio branded products and IPTV transmissions offer higher-end segments of the market a variety of content, with focus on premium quality and interactive services. As of 31 December 2014, Magio TV was used by approximately 0.24 million customers, including approximately 0.16 million IPTV and 0.08 million satellite accesses. The Group’s Magio TV services are priced based on the number of channels on offer, starting at 57 channels up to 112 channels. The main features of the Magio IPTV service include VOD and DVR services, realtime TV controller, picture-on-picture functionality and mobile OTT offerings. Through VOD, over 600 movies are available, primarily in Slovak or Czech, and new movies are accessible three to six months after theatre release. In cooperation with Film Europe Cinema, some new releases are available the day the

80 ﬁlm premieres. DVR programs contain up to 250 hours of SD content, and up to 110 hours of HD content. Mobile OTT offerings through Magio Go include offerings include the opportunity to watch TV on multiple screens with interactive functions and VOD with HBO Go. Through its acquisition of DIGI SLOVAKIA in September 2013, the Group expanded its reach into more basic television services. Since then, the Group has been working to integrate the Magio HD interactive platform with DIGI TV’s exclusive premium content, which includes broadcasts of Premier League and Champions League football matches. The premium content also includes HBO. As of 31 December 2014, DIGI was used by approximately 0.23 million customers. The DIGI acquisition captured economy of scale advantages which have driven unit costs down, provided access to enhanced television content and helped to protect its price premium in case of Magio. Due to DIGI’s sport capabilities and its professional staff, the Group is now able to broadcast as many as three live matches simultaneously (which is unprecedented in Slovak sport broadcasting history). The Group has also seen increases in customer satisfaction since 2010 (as measured by a TRI*M survey conducted in 2014) in its optic, metallic and satellite TV services, primarily due to good customer service and technical support, comprehensive instruction manuals and expertise.

ICT In the information and communication technology (ICT) services market, the Group focuses on providing broad, comprehensive standardized services rendered by the Company or customized ICT services for corporations, which it complements through its IT solutions for large or multinational business customers through its subsidiary PosAm. See ‘‘– Other Businesses – PosAm’’. The Group’s ICT department maintains up-to-date processes and the Group has deployed a highly experienced group of specialists fully dedicated to the development of ICT solutions. In 2013, the Group started offering its ‘‘TelekomCloud’’ virtual server infrastructure offering and currently has more than 100 corporate customers. The Group has responded to the growing demand for transmitting an increasingly larger volume of data with its introduction of a secure tool for sharing corporate documents on Telekom Drive, which offers storage for company documents, enabling users to access documents from any device (PC, smartphone or tablet) and facilitating the secure sharing of documents with colleagues as well as external partners. Over 8TB of HDD is currently in use. It also provides automatic backup of important documents and password encoding. In 2014, the Group also introduced its TelekomCloud application marketplace which offers growing numbers of applications that provide high quality services focused on the Slovak market. The Group maintains strict selection criteria for its apps and targets B2B customers for sales. The Group has intensified cooperation with other important vendors of information systems where the Group is the main supplier of cloud infrastructure. The vast majority of the Group’s banking sector customers and other large enterprises use the Telekom’s mobile device management solution which provides on-premise and cloud solutions and advanced customer service. The Group also operates main IT data centres in Bratislava, Kosˇice and Presˇov, with approximately 1,300 square meters of total capacity for external customers, which can be further increased to 1,700 square meters. In recent periods the occupancy of the Group’s modern data centre in Bratislava, which was built exclusively for its B2B customers, has increased. These data centres feature modern technology and offer very high security, availability and connectivity parameters supported by the Group’s more than 10 years of experience in providing data centre services. The aggregate occupancy rates of the Group’s data centres increased from 66% in 2012 to 71% in 2014 and the increase presents the opportunity to grow margin through improved capacity utilization. The Group also offers webhosting and security services. Other areas of focus include healthcare information systems for healthcare professionals and hospitals. In addition, the Group operates Telekom Fleet, which represents a new generation system for management, control and monitoring of vehicle fleets and fuel balance. The service uses a GPS monitoring system to monitor fuel flow combined with Telekom mobile data services. The Group’s innovative machine to machine communication (M2M) allows data, calls and/or messages to be sent automatically without human involvement as a growing trend of the ‘‘Internet of things’’ (i.e., the network of physical objects embedded with electronics, software, sensors and connectivity to enable it to achieve greater value and service by exchanging data with the manufacturer, operator and/or other connected devices). The service is primarily used for the purposes

81 of ﬂeet management, security, remote administration, smart metering and various industry speciﬁc solutions with a focus on providing connectivity, service management and custom solutions for customers. The Group also provides related consultancy and project management services.

Wholesale Wholesale services in the fixed-line segment consist primarily of the fixed interconnection services and data services provided to national and international partners. In recent years, the Slovak NRA has taken action to significantly reduce fixed termination rates. The rate has declined from a blended rate of EUR 0.00801 per minute in 2011 to EUR 0.001234 per minute in 2014.

In cooperation with wholesale partners, in 2013, the Group contributed to the expansion of broadband services and access in the Slovak Republic, with a year-on-year increase in the number of accesses of 45% and reaching a year-end total of more than 87 thousand accesses. During 2014, the Group continued in support of spreading broadband services in the Slovak Republic via wholesale partners. The Group achieved annual growth of nearly 27% in 2014, reaching more than 111 thousand accesses sold to wholesale partners by year end.

The Group also achieved signiﬁcant success in the ﬁeld of providing access to the international IP network, with its wholesale offerings within IP transit. New solutions brought almost a 20% increase of sold IP transit capacity which exceeded 11 Gbps at the year end 2013 and more than 50% increase in year 2014 reaching 17 Gbps of sold IP transit capacity by 31 December 2014.

The Group also provides voice connectivity services to wholesale customers, including access and interconnection products. In 2013, the Group introduced a simplified Reference Interconnection Offer for mutual voice networks interconnection with alternative operators, including interconnection network topology, traffic routing procedures and provisioning processes. The Group further upgraded the Reference Interconnection Offer in 2014 based on IP technology interconnection, implementing the new interconnection regime with all existing fixed interconnection partners, which allowed the Group’s wholesale partners to use the Group’s existing infrastructure. The Group also increased the number of sold unbundling of the local loop accesses (ULL accesses) by 24% from the year ended 31 December 2012 to the year ended 31 December 2013, and by a more than 200% increase from the year ended 31 December 2013 to the year ended 31 December 2014, in order to provide their own voice, data and broadband services to their end users.

The international hubbing service represents the transit of incoming voice traffic from networks of other operators (both fixed and mobile) that is terminated in networks of other operators in the Slovak Republic or abroad. Despite decreases in termination rates, annual international hubbing revenues have remained stable primarily due to an increasing number of hubbing partners and a growing proportion of mobile traffic in total hubbing traffic.

Mobile Business The Group provides traditional mobile communications services through its mobile voice and mobile data product lines and operates a network with 2G (GSM), 3G (UMTS) and 4G (LTE) technologies. The Group is currently focused on expanding its mobile data offerings, leveraging its ﬁrst mover advantage in the commercial launch of a 4G (LTE) network and its strategic spectrum resources. The Group believes that it has the most extensive 4G coverage in the Slovak Republic.

In its mobile business, the Group seeks to maintain the value of subscribed mobile service customers against a competitive market background. To this end, the Group seeks to expand the scope and number of mobile services used by each customer. A key strategy for the Group in growing its mobile segment involves promoting and expanding fixed-mobile convergent offerings to maximize cross-selling opportunities and customer loyalty. The Group aims to focus on cross-selling to new and existing fixed voice and fixed broadband customers and providing combined family offers to reduce churn rates and increase revenue. Customers can then receive fixed and mobile services from one easy platform. The Group seeks to offer accessibility through hardware (reflected in attractive handset subsidies), providing high-quality and available (24/7) support, and seeking to build a user community by offering specific benefits such as flat tariffs within the Group’s network and ‘‘user get user’’ offers to support inter-network communication. The Group is focused on monetizing the mobile data growth opportunity, increasing sales of preferably 4G smartphones with internet access, optimizing its product portfolio and effectively using an integrated customer approach in sales.

82 Selected performance parameters for the Group’s mobile business are listed in the following table:

For the year ended 31 December

2014 2013 2012

Total number of active SIMs (million) ...... 2.2 2.3 2.3 Prepaid(1)...... 0.8 0.8 0.8 Postpaid(2) ...... 1.4 1.5 1.5 Mobile Coverage (% population, outdoor) 2G ...... 99% 99% 99% 3G ...... 81% 81% 77% 4G LTE...... 52% 24% — Blended mobile ARPU (EUR per month)(3)...... 11.9 12.9 13.9

(1) Active prepaid SIMs deﬁned as activated SIMs that have been topped up in the last 12 months. (2) Active postpaid SIMs deﬁned as SIMs with valid contracts that have not been de-activated or suspended. (3) Including visitors’ roaming revenues.

B2C Tariffs The Group seeks to attract mobile voice postpaid customers via subsidies on new handsets or discounted prices for services, thereby reducing the up-front cost to its customers and providing more value for price. Through offering these beneﬁts the Group also seeks to convert its existing pre-paid customers into postpaid customers. With respect to its product offerings, the Group offers unlimited data plan volumes as well as unlimited voice and SMS trafﬁc. Unlimited data offers include speed step down feature depending on tariff plan. The Group also offers mobile data volumes (up to 10 GB) on mobile internet plans.

Postpaid tariffs The Group’s post-paid ‘Happy’ plans were first introduced in August 2012, and the Group continues to develop its post-paid offerings, tailored for various segments of the post-paid subscriber market. Post-paid customers choose a basic voice tariff from a range of nine ‘Happy’ plans, which include a certain number of minutes for voice usage and unlimited calls during designated periods. Data offerings within the ‘Happy’ plans vary according to the selected package. In addition to the ‘Happy’ plans, the Group also offers Neobmedzeny´ mobilny´ internet (Unlimited mobile internet) plans for mobile internet to tablets and notebooks, and value-added services, including Navigaćia Sygic GPS (Sygic GPS Navigation), which offers customers one of two map packages that can be downloaded to a phone or tablet and used for a low monthly fee, and other applications such as Deezer and ESET Mobile Security. The Group also seeks to offer attractive handset pricing, in which the price is divided into a flat initial payment combined with monthly instalments in order to expand the range of phones available to customers. Since 2013 customers have had the option to purchase insurance when purchasing a new phone, tablet or modem, covering, water, fire or flood damage, as well as manufacturing defects or a direct lighting strike.

Prepaid tariffs In October 2014, the Group introduced the new tariff Easy Pecka which replaced older tariffs including Easy Free, Easy Time and Easy Fix in an effort to simplify prepaid portfolios through a single tariff. Calls to all Slovak networks cost with Easy Pecka EUR 0.09 per minute, SMS costs EUR 0.06 and data EUR 0.1 per MB. The main beneﬁts of Easy Pecka are daily caps of 50 cents for usage, including 50 cents per day for calls and SMS to Telekom network, 50 cents for calls and SMS to Orange network and 50 cents for calls and SMS to O2 network. There is also 50 cent daily cap for data usage. Heavy data users may choose to buy data packages of 1000 MB that is valid over a 30 day period. Such packages are available for users of Easy Pecka as well as for users of older tariffs. Add-on packages are available for all tariffs, including Surf 1000.

83 Three unit bundles are available exclusively for Easy Pecka customers, Mix S, M, L, through which customers receive a mix of free calls, SMS and data.

B2B Tariffs The Group offers special tariffs to cover the requirements of a variety of business customers. Customers may sign a framework contract that provides them with additional benefits (including discounts and a budget for ordering new mobile devices) in exchange for a commitment to the contract duration and minimal monthly spend. Strong emphasis is placed on monetizing mobile data. Value-added services dedicated to business customers include intra-company calls/VPN, custom APN, and custom IP addresses, among others. Newly introduced tariffs for the segment’s small and medium companies are provided as a fixed combination of voice, messaging and data services with additional value added services via Firma Profi. Larger enterprises are using MT Professional Plus tariffs, which is a modular approach with more options and flexibility. Business customers may also choose a shared pool of data via Biznis Data Share.

Wholesale Wholesale services in the mobile segment consist primarily of interconnection services provided to national and international partners as well as roaming services such as the national roaming agreement with O2 Slovakia, s.r.o. The Group offers international roaming agreements in order to enable Slovak Telekom customers traveling outside of the Slovak Republic to use their mobile telephones, and provides roaming services to customers of foreign mobile operators while in the Slovak Republic. These roaming agreements include arrangements with providers in certain jurisdictions that may be affiliated with persons or entities that are subject to United States and/or EU sanctions; the Group’s annual revenues related to ordinary traffic from, and costs associated with, such arrangements, have been less than EUR 0.1 million for each of the years ended 31 December 2014, 2013 and 2012, and these arrangements are not material to the Group’s business, financial condition or results of operations. Due to regulatory changes, both domestic and international interconnection fees have been decreasing in recent years. Increases in total number of minutes have only partially offset decreases in revenue caused by decreases in fees. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group’s revenue from fixed and mobile interconnection services and international mobile roaming has declined significantly in recent years and may continue to decline’’.

Other Businesses DIGI SLOVAKIA DIGI provides digital satellite television and internet services as well as cable television, and offers premium and exclusive TV content such as DIGI Sport and HBO channels. It has operated in the Slovak Republic since 2006 and became part of the Group in September 2013. As at 31 December 2014, DIGI had approximately 0.23 million TV subscribers. DIGI focuses on mass market value-for-money Pay-TV offerings, which makes it distinct from the premium offerings under the Group’s ﬂagship Magio brand while still allowing for potential content sharing and synergies between DIGI and Magio in the future. Its services are characterised by favourable pricing, easy installation, unlimited availability of satellite broadcasting and industry standard sound and video quality. These characteristics currently position Digi TV service amongst the leaders in the direct-to-home market in the Slovak Republic. In addition to digital satellite television, DIGI provides cable TV and internet in Bratislava and nine Slovak towns: Handlova´, Koma´rno, Kosˇice, Prievidza/Bojnice, Ruzˇomberok, Senica, Sˇal’a, Zˇ iar nad Hronom and Brezno. It also maintains strong coverage of Hungarian speakers in the Slovak Republic, reaching up to 30% of the customer base. The DIGI service options include: * Satellite: Satellite based DIGI service (DTH) offers simple installation and wide satellite coverage in the Slovak Republic. There are two DIGI program packages, with the basic package covering 65 channels, along with a broader offering including channels in several different languages, HBO offerings and exclusive sport channels. In May 2014, DIGI launched a new DTH service based on MPEG4 technology, enabling distribution of HD content. The new service can be added on to DIGI’s existing packages.

84 * Cable television and internet: DIGI SLOVAKIA provides cable television and internet services in ten Slovak towns and cities. As is the case with the DTH business, there are two offerings: basic and the more expansive as well as the HBO package. There are also two internet offerings, differentiated by speed. DIGI launched three new sport channels in the Slovak Republic at the end of August 2014: DIGI Sport 2, DIGI Sport 3 and DIGI Sport 4. Running the four channels makes it possible to broadcast three matches of the UEFA Champions League live, which the Group believes is a unique service offering in Central and Eastern Europe.

PosAm PosAm has been active in the Slovak market since 1990 and became part of the Slovak Telekom group in 2010. The main goal of the company is to provide partners and customers with unique solutions using the potential of a broad spectrum of information technologies. PosAm concentrates its efforts on the provision of bespoke ICT services and bespoke solutions for corporate customers. As part of its portfolio, PosAm offers individual software development, its own application solutions, system integration, consultation services, outsourcing and infrastructure solutions. It benefits from partner relations with world leaders in technologies, combined with innovative management and a strong local team. It has made substantial investments in employee education and training. PosAm provides services for the Group’s large or multinational customers from segments such as banking, insurance, financial institutions, industry, utilities, telecommunications, media, state administration and local government. PosAm’s customer base includes key blue chip, best-in class customers. PosAm is certified by ISO 9001: 2008, ISO/IEC 20000-1: 2011, ISO/IEC 27001: 2005, OHSAS 18001: 2007 and ISO 14001: 2004. PosAm is the holder of the Slovak National Quality Award (Na´rodna´ cena SR za kvalitu), and was the first Slovak-based enterprise to receive the ‘‘Recognised for Excellence in Europe’’ award in 2005 from the European Quality Management Foundation (EFQM). PosAm has been a full EFQM member since 2007. PosAm was also awarded the ITAPA (Information Technologies and Public Administration) award for the Register of Financial Statements in 2014. The system reduces the administrative burden for businesses, removes duplicate submission of data to state authorities, improves the business environment and increases its transparency.

Zoznam Zoznam, s.r.o. operates one of the Slovak Republic’s most-visited and comprehensive Slovak internet portals, Zoznam.sk. Zoznam specialises in Slovak internet website search as well as more than 40 other on-line products, including the news server Topky.sk. Zoznam also offers additional content through specialised magazines focused on various areas such as Moˆjdom.sk, Dromeda´r.sk, oPeniazoch.sk, Podkapotou.sk, Feminity.sk, Sˇpuntı´k.sk, Urobsisa´m.sk, PC.sk, PlnıÉlańu.sk, Vysˇetrenie.sk, Karie´rainfo.sk, as well as the mail.zoznam.sk free mail service, Pauzicka.sk entertainment portal, Rexı´k.sk website for children, Free.sk community portal for multimedia content sharing, and Kariera.sk job portal. A directory of companies (Katalo´g firiem) offers small companies opportunities to present themselves and their contact details on the internet in a professional way. In addition, the ticket sale platform Predpredaj.sk is an important e-ticketing platform, combining promotion of events and concerts and sale of tickets on a single site. In July 2013 a new cloud data storage service, Moja U´ schovnˇa, was added to the U´ schovnˇa.sk service. In 2014, Zoznam has launched the new online TV guide Telkaćˇ.sk and AndroidPortal.sk magazine, which provides mobile technology news. The Group also offers mobile internet content such as logos, MMS and ringtones through Zoznam Mobile. An independent internet visit audit by AIMmonitor showed 2,237,930 real users of the Zoznam.sk portal and its products (excluding the news server Topky.sk; which posted an additional 1,544,531 real users, according to AIMmonitor) in December 2014.

Marketing and Distribution Bundling The Group believes that bundled offerings within the fixed-line business will help it to increase its appeal to customers by offering a combination of high-quality products and services. The launch of its new fixed portfolio in April 2014 both simplified and greatly reduced the number of the Group’s fixed-line products and bundles on offer. Its new collection of fixed-line bundles, Chytry´ balı´k (Smart

85 Pack), have been designed to increase the cross-sell and up-sell potential of the Group’s fixed-line business offerings. Cross-selling opportunities exist as customers are offered marginal discounts on additional services as they add additional services from the Group’s fixed-line offerings to their bill. At the same time, the Group exploits up-selling potential by offering customers the flexibility to add more minutes to their fixed-line voice service, channels to their television service or speed to their broadband for an additional cost. Early sales results have surpassed internal forecasts of cross-sell success and customer retention. The Group credits Chytry´ balı´k bundles with improving trends within its fixed-line customer base. The portfolio is modular and flexible, allowing the combination of any of the services (rateplans) with each other. Three product lines (TV, BB, Fixed voice) have the same monthly fees on each level which is defined as basic (M) EUR 10, medium (L) EUR 15 and Premium (XL) EUR 20. When put into bundles, each bundle is discounted, offering the additional product for a lower incremental price than were the products purchased separately. The higher level of the plan taken, the lower the incremental fee charged. The same applies to cross-selling (the more products taken, the lower the incremental monthly fee). The majority (68% as of 31 December 2014) of the fixed-line segment customers subscribed in the past through ‘‘single play’’ packages, 25% through duo play and approximately 7% triple play which the Group believes offers significant opportunities for shifting an increased proportion of its customers to bundled plans.

New products A new product called Magenta 1 has been introduced by the Group in February 2015, as a part of its strategy of marketing bundled offerings. It is a bundled offering of TV, broadband internet and advantageous mobile calling plans, targeting family communication and entertainment needs. The offering ﬁrst became available to customers in March 2015.

Marketing The Group enters into partnerships designed to enhance its appeal to consumers. These generally consist of sponsorships and partnerships that provide additional value to customers or deeper integration into the Group’s systems, and partnerships that serve to differentiate the Group’s overall service offerings. For example, the Group partnered with the Slovak Olympic Committee and the Slovak Olympic Team at the XXII Winter Olympic Games at Sochi, and currently sponsors the Telekom Night Run and Magio Beach, a city beach in Bratislava and Kosˇice. The Group has also partnered with ESET, an Internet security company, for over ﬁve years, resulting in the Group becoming the largest distributor of the ESET software in the Slovak Republic. This partnership provides the Group with additional revenue through ESET licensing fees, increases security within the Group’s network and decreases spam, resulting in higher customer satisfaction. More recently, in 2014 the Group partnered with Deezer music to bundle its music service with the Group’s mobile and ﬁxed services. PosAm maintains partnerships with several technology providers including Bull, Cisco Systems, Citrix, Dell, Desko, ESET, Hitachi Data Systems, Hewlett-Packard, IBM, Konica-Minolta, Lenovo, Microsoft, OKI, Oracle, SAP, VMware and Xyzmo. The Group has also sought out exclusive partnerships and offerings within its DIGI offerings, see ‘‘– Other Businesses – DIGI SLOVAKIA’’.

B2C Marketing The Group regularly assesses its B2C marketing campaigns, with the goals of increasing customer satisfaction and customer loyalty, decreasing churn rates, and enhancing cross-selling and upselling opportunities. It also runs device campaigns, such as tablet or notebooks campaigns, soliciting marginally higher service fees from customers in exchange for a new tablet or notebook.

B2B Marketing The Group categorises its B2B customers as top accounts, consisting of its more than 200 largest customers; large accounts, consisting of more than one thousand customers; and small and medium enterprises, consisting of almost six thousand customers. These categories are based on a combination of actual spend and the perceived potential for future business. The Group allocates a dedicated sales and marketing team accompanied with a dedicated administrative support to each category of customers. The remaining part of the smallest business customers (VSE/SoHo) is serviced by B2C channels.

86 Brands Each of the ‘‘T’’, Magio, PosAm, DIGI and Zoznam brands plays a distinct role in covering key market segments in which the Group operates. The Group leverages each of its brands, promoting the individual brand characteristics and using differentiated strategies to reach customers. According to GfK Slovakia’s Advertising Tracking Study, as at October 2014 Slovak Telekom had the highest brand awareness among telecoms in the Slovak Republic. The ‘T’ brand is the Group’s core brand, maintaining premium positioning through promotion in sponsorships and sports afﬁliations, including the Slovak Olympic Team in the XXII Winter Games in Sochi, and sponsoring the ‘Magio Beach’ city beaches and the Telekom Night Run.

Distribution Channels The Group’s fixed and mobile services and products are marketed and distributed through a variety of channels, enabling the Group to target a wide range of customer segments across all of its product offerings. * Own stores. The Group runs branded flagship stores in shopping malls and the centres of large cities. As at 31 December 2014, the Group had 23 such stores. * Franchise shops. To supplement its flagship stores, the Group also operates out of smaller shops in less populated locations with lower capacity of agents and a higher focus on sales. As at 31 December 2014, the Group’s services and products were sold in 91 franchise shops in leading retailers across the country. * Telesales and call centre. Telesales concentrate mainly on service prolongation for existing customers as well as the acquisition of additional services for existing customers. To a lesser extent telesales acquires new customers. Own and external telesales and call centres together include approximately 50 sales representatives in telesales and 150 FTEs in call centres. External telesales aim to increase proactive activations out of the Slovak Telekom customer database, and maintains approximately 70 FTEs. * Internet. The Group operates an online portal with integrated social media apps for sales and customer selfcare transactions. * Door-to-Door. Door-to-door sales are primarily focused on the Group’s fixed offerings. The channel operates through six branches and approximately 50 sales representatives. * Own direct sales person. A dedicated sales force is used to target the Group’s B2B customers. * Retail chains. Strategic partnerships with retail chains generated customer transactions through the sale of pre-paid mobile offerings.

Customer Service The Group has harmonised the customer care processes for its fixed and mobile customers, such that all voice (mobile and fixed), internet and Pay-TV customers can be assisted through one customer service line, apart from DIGI which maintains its own line. Call centres operate several toll free numbers where customers can receive any necessary information on the Group’s services and products. Customers’ technical issues, outages and malfunctions are handled on a dedicated toll free line, where emphasis is placed on customer satisfaction and efficiency. Assistance is also offered in 114 ‘‘Telekom Centres’’ across the Slovak Republic. These sites offer features such as free water and coffee, a kids’ corner and gifts for the customers, and they host small regional events for visiting customers. Product and service issues, claims and technical questions can also be fielded electronically, such as by email, chat on the Company’s web sites or on its Facebook page, or through the new Telekom application for mobile phones, which allow customers to direct processes such as service activation or deactivation, usage and spending controls, invoice control and payments, and updates to the customer’s profile. The Company measures customers’ satisfaction across all channels, frequently through surveys such as an NG ICCA or TRI*M system survey. An NG ICCA survey is an automated customer based survey which can be executed via SMS or automated phone calls, that covers a range of relevant issues, and are offered to customers the day after they have had contact with the Company. The TRI*M system measures retention levels for both business and customer segments in certain product areas, tracking of changes in retention over time. This system enables the Group’s results to be

87 compared with those of other telecommunications providers from Europe and other developed international markets, and is undertaken annually through phone interviews and random sampling. Dissatisﬁed customers may also provide immediate feedback via SMS or phone calls. A dedicated Group team is responsible for collection of this feedback, and internal initiatives may be employed to address shortcomings. According to NG ICCA surveys conducted for customer interactions through call centers, points of sale, automated calls and technical support, overall customer satisfaction has increased by 11.9 points, or 3%, from 2013 to 2014.

Networks The fixed-line and mobile networks of the Group support a wide range of voice, data and wholesale services for various traffic types, from basic voice calls to bandwidth intensive data applications. The Group owns the core elements of its network free from major encumbrances. Fixed-line Networks The Group has an extensive fixed-line network, covering the vast majority of the Slovak Republic measured by households passed. The Group’s access network is mainly used to offer voice, Internet access, Pay-TV and data services to its customers through an array of different technologies. The Group provides symmetric and asymmetric solutions (which concern the ratio between upload and download capacity) mainly based on IP-MPLS, SHDLS, VDSL and ADSL technologies. In recent years, the Group has implemented a significant upgrade of its fixed-line technology active infrastructure, changing to an IP-based network. This process has involved customer migration from the legacy PSTN, SDH and ATM technologies by the end of 2014. The full IP transition provides costs saving and operational efficiency opportunities for the Group and will also support more advanced product offerings in the future. The Group’s optical network covered approximately 364,000 households (representing the number of households where at least the basement of building is reached by fibre) reaching coverage of 19% of all Slovak households, the most extensive coverage in the Slovak Republic. The Group believes that the current household coverage levels provide for growth opportunities’ as the number of fibre connected subscribers was only approximately 78 thousand as of 31 December 2014. Further development of the fibre network is subject of the Integrated Network Strategy project. Mobile Network The Group holds licences from various radio frequency spectrums, including for the prime communications bands from 450MHz to 2.6GHz (including 50MHz TDD), with its holdings at the higher end of the spectrum offering better capacity and speed while the lower end provides coverage. Its licenses for these frequencies expire between 2025 and 2028. Some spectrum licences have coverage and minimum throughput obligations imposed by the regulator, and are subject to a new tendering process upon expiration. The Group’s 2G network is a digital mobile network based on GSM technology. It is a dual-band network, operating on two frequencies (1,800MHz and 900MHz) and offering voice, short message service (SMS), multimedia service (MMS), value-added service (VAS) and data services. The data services on the 2G network are provided with full EDGE support. Compared to circuit-switched data, which offers a maximum transmission speed of 9.6 Kbps, EDGE enables data transmission speeds of up to 236 Kbps, allowing for mobile internet access. The Group’s 3G network is based on UMTS Technology operating in 2,100MHz frequency spectrum band with high speed packet access (HSPA+) technology (single of dual carrier installed), which can support download speeds of up to 42 Mbps. The Group was the first Slovak operator to launch LTE technology into full-scale commercial operation. As at 31 December 2014, the Group had 936 LTE standing base stations, offering up to 150 Mbps. The deployment involved specific functionalities such as ‘‘CSFB’’ voice service functionality enabling voice calls switch between 2G/3G and 4G networks. The Group believes that its LTE offerings enable it to meet growing customer demands for the high-speed mobile internet necessary to use multifunctional mobile applications. As of 1 January 2015, the Group operated 2,066 mobile sites, including 936 sites with LTE technology installed. Many of the sites use a combination of different bands of 2G, 3G and 4G, but these different broadcasts are not considered separate technology sites. As at January 2015, the Group’s mobile network provides outdoor population coverage of 99% by 2G, 81% by 3G and 52% by 4G-LTE.

88 Mobile backhaul technology of the sites is either IP based microwave connections or increasingly fibre optics dedicated IP connection. The sites backhauling connectivity through fibre optics in 2014 was 34.9%, up from 25.4% in 2013 and 15.3% in 2012. The Group’s mobile network coverage across most data speeds is broad, with a growing presence in 4G coverage as well. See ‘‘– Mobile Business’’. Network testing in October 2013 conducted by the International Wholesale Business Unit, and taking into account both mobile voice and data factors such as 2G speech quality, smartphone file transfer speeds and voice call success ratios resulted in a Group network ranking ahead of both O2 and Orange. A survey by P3 communications conducted in 2013 (commissioned by the Group) found the Slovak Telekom network to excel in these key parameters.

Billing and Collections Over 57% of monthly payments are realized by cashless transactions via bank payment orders or direct debit. The remaining payments are cash transactions at local post offices (36%), with a small proportion of payments directly at the Group’s points of sale (6%). The Group has a strict arrears management process. This process includes a standard set of customer-facing communications which are sent out according to the severity of the status of a late payment, including notices for overdue payments, first and second reminders and more formal collection letters. As a result of the rental collection and arrears management process, the Group has a low level of bill payments that are in arrears or classified as bad debt. The Group has an established process for managing its customers which fall into arrears and operates in close cooperation with external legal counsel. The standard billing frequency for both fixed and mobile customers is monthly, although a small portion of fixed customers are billed on a bi-monthly basis. There is one bill cycle for fixed customers and four bill cycles for mobile customers. On average, the Group issues 1.6 million invoices of which an increasing share is in electronic format. More than 57% of customers obtain their invoice electronically. Paper invoices are printed by an outsourced printshop and delivered by post. The Group’s collection process is supported by software that assists with payment allocation and collection for both fixed and mobile customers. All IT platforms are operated by internal IT located in the Group’s data centre.

Information Technology The Group’s IT portfolio consists of over 220 software applications, modules and platforms designed to support functions such as customer relations management, billing, service and resource management, unified communication and integration, production, enterprise support, product, service and resource lifecycle management, supply and partner management and strategic management. The Group also expects to switch from its current ERP system to a ‘OneERP’ solution, developed to introduce standardised processes across the Deutsche Telekom Group. Implementation of the program has started in 2014, with planned go-life in 2017. The Group collects and maintains significant amounts of data on its customers which it is required to maintain and use in accordance with applicable regulations. As the telecommunications sector has become increasingly digitalised, automated and online-based in recent years, the Group has also had to increase measures preventing the exposure to risks of unauthorised or unintended data release through hacking and general information technology system failures. The Group has launched advanced implementation of identity management to improve information access control, introduced advanced encryption GEA3 in the mobile network to improve customer privacy, and implemented a security monitoring system based on emerging technology. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group collects and maintains data on its customers digitally and is therefore exposed to risks of unauthorised or unintended data release through system failures or hacking’’ and ‘‘Telecommunication Regulation in Slovak Republic – Further Applicable Regulation – Data protection’’. In 2014, as part of its IT Transformation Program, several data centre and physical infrastructure consolidation activities resulted in a significant reduction of physical servers and enterprise storages. Various governance and vendor management improvements were introduced in order to reduce development costs. The Group expects its improved development methodology to increase customer

89 satisfaction and decrease delivery times. The Group has also improved its demand management and continued to optimise S&M costs.

Key Suppliers Throughout its operations, the Group is dependent on several vendors in the key supply areas of network services and IT services. The supplies include equipment and services that the Group has used and uses to build, develop, maintain and roll-out its networks and IT infrastructure. The vendors also provide maintenance support for the relevant networks as well as software and hardware solutions. The procurement process is managed by the Company’s procurement and logistics section in line with Detsche Telekom Group practices. The key network and IT vendors are Ericsson Slovakia, Alcatel-Lucent Slovakia a.s., Cisco, Oracle Slovensko and NetCracker EMEA Ltd. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group is reliant on third parties and suppliers for operation of part of its network and infrastructure, equipment and provisions of certain services.’’

Intellectual Property The Group believes it takes appropriate steps to protect its intellectual property rights and to generate value from these rights where appropriate. In order to protect these rights, the Group uses a combination of patents, trademarks, service marks, trade secrets, copyrights, database protection, conﬁdentiality agreements with its employees and third parties and protective contractual provisions. It has also registered various domain names, including ‘‘www.telekom.sk.’’ The Group owns one utility model, two designs and 114 trademarks registered at the Industrial Property Ofﬁce of the Slovak Republic. Six trademarks are also registered internationally through the Madrid International Trademark System in the neighbouring countries such as the Czech Republic, Hungary and Austria and the Group has seven additional trademark applications pending. The Group licenses the key ‘‘Telekom’’ and ‘‘T’’ brands from the Deutsche Telekom Group. See ‘‘Related Party Transactions – Deutsche Telekom Related Parties – Licensing Agreements’’. The Group has no material research and development policies.

Quality Control The Company has been developing an integrated management system since 2004 starting with quality management system ISO 9001. The current final report prepared by TU¨ VSU¨ D Slovakia (10/2013) recommended issuing EN ISO 9001: 2008 quality management system certificates, EN ISO 14001: 2004 environmental management system certificates and ISO/IEC 27001: 2005 information security management system certificate. The integrated management system is complemented with an occupational health and safety protection management system in compliance with OHSAS 18001 standard. PosAm also maintains certifications from the International Organization for Standardization and is the holder of the National Quality Award (Na´rodna´ cena SR za kvalitu) in the Slovak Republic. It was the first Slovak-based enterprise to receive the ‘‘Recognised for Excellence in Europe’’ award in 2005 from the European Quality Management Foundation (EFQM), and has been a full EFQM member since 2007.

Insurance The Group buys insurance coverage in amounts it believes are consistent with its risk management policies and with customary industry practices. The Group maintains insurance policies against certain losses, including property damage and business interruption (resulting from damage to property), third party liability and other, in accordance with the Deutsche Telekom Group’s policies. The Group intends to maintain insurance coverage consistent with its risk management policies and industry standards, although the coverage may change and insurance premiums may increase. In addition to its own polices, losses of the Group exceeding the local limit or local insurance coverage are insured also by Deutsche Telekom global insurance programs to the extent that the risk is not otherwise insured or damage exceeds the limits of the Group’s own policies. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – A signiﬁcant event that exceeds the coverage limits of the Group’s insurance could result in substantial losses’’ and ‘‘Related Party Transactions – Deutsche Telekom Related Parties – Provision of Services among Related Parties – Insurance agreement’’.

90 Employees In December 2014, the Group had 3,646 internal employees and 537 external employees employed via personnel agencies and temporarily assigned to work for the Group, in each case measured as full- time equivalents (FTEs). Internal head count of the Group was 3,649 as at 31 December 2014. According to internal calculations, monthly average voluntary attrition rate of internal employees of the Group from January 2012 through December 2014 averaged 0.3%.

The following table sets forth a breakdown of Group employees from December 2012 through December 2014:

Year ended 31 December

2014 2013 2012 (FTE) (FTE) (FTE)

Internal External Internal External Internal External employees employees Total employees employees Total employees employees Total

Slovak Telekom ...... 3,078 500 3,577 3,307 544 3,852 3,511 479 3,990 PosAm...... 249 12 262 260 10 270 259 8 267 Zoznam ...... 59 0 59 65 0 65 70 0 70 DIGI ...... 260 25 285 258 22 280 000

Group Total...... 3,646 537 4,183 3,889 577 4,466 3,840 486 4,326 As at 31 December 2014, FTEs decreased by 283, or 6.3% to 4,183 from 4,466 as at 31 December 2013. FTEs increased by 140, or 3.2%, to 4,466 from 4,326 as at 31 December 2012. The increase in the number of FTEs in 2013 is attributable to the Group’s acquisition of DIGI.

In recent years, the Group has promoted activities and projects focused on improving employees performance and drive, talent management and professional development, engagement, motivation, satisfaction and retention, working and social conditions. Focus has also been place on strengthening employer branding, as well as on reorganisation activities.

From January 2011 to January 2015, the Group eliminated 157 organisation units and managerial positions. In fact, managerial positions decreased by a higher percentage than employees. The Group has a personnel restructuring plan under which it expects a headcount reduction of approximately 241 employees in 2015.

Collective Labour Agreement The current collective labour agreement between Slovak Telekom and its employees, represented by the Telekom Trade Union and the Slovak Trade Union of Posts and Telecommunications came into force on 1 April 2015 and is valid through 31 March 2017. It embodies an agreed set of conditions which covers a broad ranging of topics, from negotiation and information rights to health care and work protection. No average salary increase for employees was agreed for 2015, but in 2016 there will be further negotiation on this topic. The collective labour agreement also covers a change in the Group’s beneﬁt schemes. Collective labour agreements are typically concluded on an annual or biennial basis.

Beneﬁt Plans For a discussion of the beneﬁt plans provided to employees, see Note 29 to the Financial Statements.

Health and safety The Group pays careful attention to the working conditions of its employees, and to occupational health and safety in particular, and attributes its relatively low, and declining, rate of working accidents to its efforts in this regard. Individual health and safety activities are carried out in accordance with international standards (OHSS 1800). To support employees’ health care, the Group offers a comprehensive health program. The Group also allows using flexible forms of work (including telecommuting and flexible working hours). Since 2010, the Group has ranked amongst the top three finishers in the annual ‘‘Healthy Company of the Year’’, in which several dozen manufacturing and non-manufacturing companies compete.

91 Corporate Responsibility The Group runs several community outreach and public service programs and as part of its corporate responsibility initiative. On ‘‘Safer Internet Day’’, the Group provides webcasts aimed at teaching how to use the internet safely with respect to children’s exposure. The Group also gives customers the option to increase their invoice for ﬁxed and mobile services by one euro which will then be donated to the organization ‘‘Good Angels’’ which is geared toward aiding sick members of the community. Each July, the Group provides activities to the visitors of Magio Beach, and in September, the Group broadcasts special commercials in sign language to support the International Week of the Hearing Impaired. The Group also partnered with Open Door Day at the School for Children with Hearing Impairment which helps families with deaf or hearing impaired children. Finally, the Group supports higher education and students from Slovak technical universities through its 9th Annual Telekom Day Student Conference.

Principal Tangible Fixed Assets The principal tangible fixed assets of the Group are mainly the components of the Group’s network and IT infrastructure and include (i) ducts, cable and other outside plants, (ii) telephone exchanges, multiservice broadband equipment, service platforms, servers and related equipment, (iii) radio and transmission equipment such as routers and switches, (iv) land and buildings and (v) other property and equipment. The Group leases the building in which it has its principal office and registered seat. There are no major encumbrances on the Group’s fixed tangible assets. The Group is not aware of any environmental issues that may substantially affect the utilisation of its tangible fixed assets. For more information on principal tangible fixed assets of the Group, see Note 13 to the Financial Statements.

Material Contracts The Group has an obligation under a put option related to the remaining 49% PosAm stake, recognized as ﬁnancial liability with a fair value of EUR 11.6 million as of 31 December 2014. The Group has not entered into any other material contracts outside of its ordinary course of business. See Note 16 to the Financial Statements for information on the DIGI acquisition.

Legal Proceedings From time to time the Group has been, and expects to continue to be, subject to legal, regulatory and tax proceedings and claims, including those described below. As at the date of this Prospectus the total amount of claims against the Group is estimated at EUR 1.9 billion including the estimated default interest and costs of proceedings, of which EUR 1.56 billion relates to two claims which the Company considers unfounded, see ‘‘– Claims by Mr Jesˇko’’ below. This total amount does not account for any potential follow-on claims related to the EC case described below. The Group has made provisions against losses in the amount of EUR 32.1 million. Other than the proceedings described below, there are no, and have not been any, governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware), which may have, or have had during the 12 months prior to the date of this Prospectus, a significant effect on the financial position or profitability of the Company. See also ‘‘Risk Factors – Legal and Regulatory Risks – Investigations and litigation against the Group may lead to awards of damages, fines or other penalties, which may have a material adverse effect on the Group’s business, financial condition and results of operations’’.

EC Case In April 2009, the European Commission opened proceedings against the Company for alleged abuse of its dominant position in connection with a potential refusal to supply and margin squeeze on the markets for unbundled local loops and regional as well as national wholesale broadband access. Margin squeeze refers to a speciﬁc type of abusive conduct by a vertically integrated undertaking active both on the upstream and the downstream market that charges excessive wholesale prices to other operators thereby ‘squeezing’ their margins on the retail market and thus making their retail offer uncompetitive with its own retail offer. Allegations of misconduct in the markets for regional and national wholesale broadband access were subsequently dropped in the course of the proceedings. In October 2014, the Commission issued a decision holding the Company and Deutsche Telekom jointly and severally liable for the Company having abused its dominant position in refusal to supply and margin squeeze in relation to unbundled local loops during the period from August 2005 through

92 December 2010. The Commission imposed a fine of EUR 38.8 million on the Company and Deutsche Telekom, jointly and severally, and an additional fine of EUR 31.1 million on Deutsche Telekom. In December 2014, the Company lodged an appeal against the decision with the General Court of the European Union. A decision of the General Court can be further appealed to the Court of Justice of the European Union. The appeal did not suspend the enforceability of the Commission decision and, accordingly, as of 31 December 2014, the Company recognised the entire fine imposed jointly and severally on itself and Deutsche Telekom as a liability (EUR 38.838 million), and the Company paid this amount in January 2015. The Company has reserved its rights to determine and claim partial reimbursement of the fine from Deutsche Telekom. The Company and Deutsche Telekom are currently negotiating the reimbursement, including a suitable procedural framework to determine if and to what extent such reimbursement should be provided. There can be no assurance that Deutsche Telekom will reimburse any amount. The Company has also been informed by Deutsche Telekom that it may consider claiming from the Company partial reimbursement of the fine imposed solely on Deutsche Telekom. In addition to the fines paid by the Company, based on the Commission’s decision in the EC Case, other parties, such as competitors of the Group or consumers who consider that they may have been harmed by the anticompetitive behaviour, may bring material follow-on claims in the Slovak courts for damages caused by misconduct by the Group. In such follow-on actions, claimants can rely on the proof of existence of the anti-competitive conduct as established by the Commission decision and thus do not have to prove the existence of the anti-competitive conduct. The courts then only assess whether there is a causal link between the Company’s conduct and the harm allegedly suffered as well as the quantum of such harm.

Voice Case The Company has been subject to several investigations by the Slovak Competition Authority for alleged abuse of dominant position in connection with its practices vis-a`-vis its competitors, in particular by margin squeeze and not offering access to unbundled local loops and telephone network termination points. In all of these cases, save one, known as the Voice Case, the Slovak Competition Authority closed the proceedings without an infringement decision being issued after the infringement decisions originally issued by the Slovak Competition Authority were overturned by the courts. In the Voice Case, which is based on the abuse of dominant position by margin squeeze and tying on several markets (fixed voice services, fixed data services and fixed telephone network access services), comprising, in total nine counts of abusive conduct, the Slovak Competition Authority issued an infringement decision imposing a fine of EUR 17.5 million on the Company. The decision, issued in 2007, was affirmed by the Slovak Competition Authority’s appellate body in 2009. The Company then challenged this decision in courts. The first instance review court suspended the legal effects of the contested decision pending judicial review; therefore, the Company is not obliged to pay the fine imposed in the Voice Case pending a final court decision. The first instance review court subsequently annulled the decision in its entirety in 2012; however, the court did not uphold the Company’s argumentation in all nine counts of conduct described in the Competition Authority’s decision. In 2014, the annulment was reversed by the Supreme Court, and the case was returned for further proceedings where it is currently pending before the first instance court. The Supreme Court did not assess and address the merits of the case, but merely confirmed that the Slovak Competition Authority had jurisdiction to issue the decision, and stated that if the first instance court holds a different view on the jurisdiction issue, it should make a preliminary reference to the Court of Justice of the European Union. No hearing has taken place since the case was returned to the first instance court. Should the courts ultimately annul the decision of the Competition Authority, the latter will have to reconsider the case and rule again being bound by the court’s legal interpretation. The practices sanctioned by the Slovak Competition Authority are no longer being pursued by the Company following the introduction of specific wholesale regulation by the Slovak NRA that resulted in a change of the Company’s operating practice in 2012. Following the Slovak Competition Authority’s decision in the Voice Case, two alternative operators, SWAN, a.s. and Slovanet, a.s., filed claims against the Company in 2013, asserting that they incurred losses as a result of the Company’s anti-competitive conduct. The principal value of the SWAN claim is approximately EUR 48 million and the principal value of the Slovanet claim is approximately EUR 30.8 million. Both claims are increased by costs of proceedings and default interest at the statutory rate. The Company currently estimates the aggregate value of both claims (including costs of proceedings and default interest) at approximately EUR 121.3 million. In both cases the claimants

93 indicated that they intend to extend their claims, which are currently based only on the Company’s conduct on the voice services markets and telephone network access services, to include losses they incurred on data services markets. The Company believes that a part of the claim corresponding to the loss of profit regarding voice services for the years 2005 through 2008 is time-barred on the basis that the statute of limitations commenced when the claimants learned of their loss. SWAN and Slovanet have also both quantified their claims on the basis of internal calculations of counterfactual market scenarios based on numerous assumptions. Under Slovak procedural law, if the quantification of a claim is very cumbersome or impossible, the court may determine the quantum based on its own assessment. Both of these proceedings have been suspended pending the judicial review of the Slovak Competition Authority’s underlying infringement decision. The claimants are seeking to overturn the suspension and have the proceedings resumed; no decision has been rendered so far. If the courts reviewing the Voice Case decision will ultimately uphold the decision, both claimants in the damages claims will not be obliged to prove the existence of the anti-competitive conduct of the Company, as this will already be considered established by the Slovak Competition Authority’s decision.

CDI Case The CDI dispute is a legacy case, dating back as early as 1989. In the 1990s, CDI Holding AG (CDI) jointly operated a radio station under a contract with the Slovak Radio (Slovensky´ rozhlas); the Company’s legal predecessor, Ra´diokomunikaćie odsˇtepny´za´vod, was sub-contracted to broadcast the station. Broadcasts were intermittently shut down during 1993 and 1994 and then permanently discontinued from 1996. After broadcasts were discontinued, CDI entered into liquidation proceedings and claimed that the liquidation was the result of the unlawful termination of broadcasting by the Company’s legal predecessors. In 1999 CDI filed a claim for damages in the amount of CDI’s alleged enterprise value at the time of the broadcast shutdown in 1996. The claim was later assigned to CDI’s founder, Mr. Schuster, and in 2010 to the company Candelar Limited. The case has already been heard by several courts in the Slovak Republic, and CDI has filed two complaints with the European Court for Human Rights. In 2007 a first instance court dismissed CDI’s claim. On appeal the Supreme Court set aside the first instance judgment and returned the case to the lower court. In 2011 the first instance court upheld CDI’s claim and ordered the Company to pay damages in the principal amount of approximately EUR 32.2 million together with interest at an annual rate of 17.6% from 4 September 1996 until fully paid. The Company filed an appeal against that judgment, on the basis that the opinion that the first instance court did not address a number of evidence and assertions provided by Company, and that the first instance court made a number of errors. During 2012 the first instance court made a decision on trial costs, and required the Company to pay the plaintiff EUR 3.7 million; the Company appealed to the Supreme Court against the decision on additional trial costs, and the Company is not obliged to pay at least until the Supreme Court renders a decision on the appeal. The case is currently pending at the Supreme Court. The Company currently estimates the aggregate value of the claim (including default interest and costs of proceedings) at approximately EUR 141.1 million. In March 2015, the Company and the claimant entered into a settlement agreement providing for financial compensation by the Company in an amount not exceeding the Company’s prior provision in respect of such amounts and release of further claims. The settlement agreement has been filed with, and is subject to approval by, the relevant court. There is no statutory period for the court to grant such approval.

Claims by Telink / Control Solutions The Company is party to three disputes arising out of a contract for works entered into by and between the Company and TELINK, spol. s r.o. (Telink) entered into in 2000. Telink was to provide an integrated management system designed for the centralization of operation and maintenance of the connection and transmission technologies and access networks, to have been performed from 2000 to 2004. The Company discontinued the performance of the contract in 2002, and ceased to place orders for the remaining parts of the works. Telink claimed that the Company was obliged to make such orders; the Company argued that the contract was merely a framework agreement and individual orders were at its discretion. Telink’s shareholders have also made parallel claims for the diminution in the value of their shares in Telink and forgone dividends. These claims have been assigned to Control Solutions, s.r.o. (Control Solutions) and are being pursued in Slovak courts against the Company as well as Deutsche Telekom. Originally, three claims for losses suffered by the shareholders were initiated, but one action was dismissed on procedural grounds.

94 The principal amount of Telink’s claim is approximately EUR 2.3 million, and Control Solutions’ claims are in the amount of EUR 2.1 million and EUR 4.7 million, respectively, increased by costs of proceedings and default interest at the statutory rate. The Company currently estimates the aggregate value of all three claims (including default interest and costs of proceedings) at approximately EUR 16.8 million. The Company believes that the claims made by Control Solutions are unfounded, because they refer to indirect shareholder losses. The Company also believes that the substantial majority of the claim made by Telink is unfounded, and it will continue to defend the claims. All three proceedings are currently pending at the ﬁrst instance. In February 2015, Telink assigned its claim to Control Solutions and in March 2015, Control Solution petitioned the court to replace Telink as the claimant in the proceedings; the petition is currently pending before the court. Following the court’s approval, Control Solutions will be acting as the claimant in relation to all three claims.

Claims by Mr Jesˇko The Company is aware of two claims by a dissatisfied customer for reimbursement of lost time due to defects in his mobile phone. The aggregate amount of both claims is approximately EUR 1.56 billion, consisting of original claims of approximately EUR 3,000 together with default interest apparently calculated by applying an annual default interest rate of 20% on a monthly basis. Although the actions were filed in 2008, they have not been served on the Company and no hearings have been held. The court has requested the claimant to supplement his submissions as they failed to satisfy essential procedural requirements, and the claimant has filed numerous procedural requests, in particular for being relieved from the requirement to pay court fees. The Company considers the claims to be unfounded.

Claims by Slovenska´ produkcˇna´ In 2014 Slovenska´ produkcˇna´, a.s., the exclusive seller of advertising space of two Slovak TV channels, JOJ and JOJ PLUS, brought an unfair competition claim against DIGI in Slovak courts, alleging that DIGI’s satellite and cable packages include certain Czech TV channels (PRIMA Family, PRIMA Cool and NOVA) and that DIGI has not obtained the consent of the relevant broadcasters, and that as a result DIGI is engaged in unfair competition. The plaintiffs petitioned the court to order DIGI to refrain from such conduct. Although no monetary claim is being made, an unfavourable outcome may require DIGI to exclude these channels from its packages, which could adversely impact the appeal of these plans to customers, having also indirect adverse effect on the Group, notably on the Group’s TV products.

Claims against Zoznam Zoznam is a party to two matters relating to the website bleskovky.sk. The website was previously operated by Zoznam and Ringier Slovakia, a.s., the publisher of the Slovak daily Novyćˇas, under a co-operation agreement entered into in 2004. In 2008 Zoznam rescinded the agreement due to alleged competitive conduct by Ringier outside the cooperation agreement. Ringier contested the validity of the rescission and filed two actions against Zoznam. In the first action, Ringier petitioned the court to order Zoznam to transfer the domain to Ringier and to pay a contractual penalty of approximately EUR 166,000. In the second action, Ringier claims approximately EUR 4.6 million in damages. The Company currently estimates the aggregate value of both claims (including costs of proceedings; default interest was not claimed by the claimant) at EUR 4.8 million. Ringier’s claim was upheld at first instance, but the appellate court reversed the decision due to procedural irregularities in February 2015 and the case has been remanded to the first-instance court. Proceedings regarding the damages claim have been suspended pending a final decision in the first proceedings.

Regulatory proceedings concerning national roaming agreement with SWAN In December 2014, SWAN has initiated dispute resolution proceedings at Slovak NRA concerning alleged breach by the Company of the obligation to provide national roaming services to SWAN, see ‘‘– Key Sector-specific Regulations Applicable to the Group’’. The Company as well as O2 and Orange are currently negotiating the terms of a national roaming agreement with SWAN. In March 2015, the Slovak NRA issued an interim measure ordering the Company to provide SWAN with national roaming services in networks using 900 MHz and 1,800MHz bands under such conditions that SWAN’s end-users could benefit from the same range and quality of electronic communication services as the end-users of Slovak Telekom pending the outcome of the dispute resolution proceedings. In April 2015, the Company filed an appeal against the interim measure; however, the

95 measure remains in force pending a decision on the appeal. It is expected that the ﬁrst-instance decision of the Slovak NRA on the merits of the dispute resolution proceedings could be rendered in the second half of 2015 (the ﬁrst-instance decision will be appealable). National roaming services are to be provided at SWAN’s request. The price for such services is either to be agreed between the parties or, in the absence of an agreement, it will be set by the Slovak NRA. The Slovak NRA may set the price in an amount which may not be acceptable to the Group. The price will then be payable retrospectively as from the commencement of providing national roaming services. Interim measures of this sort have also been issued against Orange and O2.

Other The Group is also facing other claims in various areas such as customer disputes, human resources, suppliers, dealers, real estate and other. In relation to intellectual property rights and collective rights management societies, the Group is subject to nine disputes, the total aggregate amount of which is currently estimated at EUR 6.2 million including the estimated default interest and costs of proceedings. This includes the above mentioned claims against Zoznam and a claim by the Slovak Audiovisual Producers’ Association (SAPA), a collective rights organisation claiming to represent foreign ﬁlm producers and requesting the Company to pay fair compensation (levies) for using audiovisual works in the Company’s Magio products. The Company currently estimates the aggregate value (including costs of proceedings) of the claim by SAPA at approximately EUR 1.3 million.

Key Sector-specific Regulations Applicable to the Group Public Service and Public Network Provider As providers of public services and public networks, the Company and DIGI are subject to a number of obligations under the Act on Electronic Communications and the General Authorisation No. 1/2014 to Provide Networks and Services. The General Authorisation No. 1/2014 was adopted in October 2014 (see ‘‘Telecommunication regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – The national licensing system – General authorisation to provide networks and services’’). The Group does not expect that the new General Authorisation will have any material impact on its operations, however, the Company has challenged the General Authorisation for lack of clarity of certain provisions by an action filed with the Supreme Court of the Slovak Republic. The court’s decision is currently pending. The Company and DIGI are subject to the following main obligations stemming from their position of providers of public services and public networks: * to conclude a contract on provision of public services (e.g. public telephone services) with each person interested in the services subject to certain exceptions stipulated by the Act on Electronic Communications, e.g. when it is reasonable to assume that the person will not fulfil its obligations under the contract (it owes money to the provider or to other undertaking, etc.); * to meet certain transparency requirements, such as publishing standard business terms and conditions, standard prices and complaints procedure; * to comply with the basic standards of itemised invoicing prescribed by the Slovak NRA; * to inform the subscriber at least one month in advance about a substantial change of contractual conditions in a written form, by electronic mail, SMS or by telephone and at the same time inform him about his right to withdraw from the contract of the provision of public services without sanctions in the event that he does not accept such changes; * to interconnect its public network with public networks of other operators, if practicable; * to enable co-location and sharing of its facilities to other undertakings under certain circumstances; * to take appropriate technical and organisational measures to protect security of its networks and services which having regard to the state of technology shall ensure a level of security adequate to the risk posed (measures shall be taken in particular to prevent and minimise impact of security incidents on end-users and interconnected networks); * to maintain integrity of its networks in order to ensure the continuity of the services provided via the networks; * to comply with technical standards and technical specifications for networks or services; * to avoid harmful interference when operating networks and equipment;

96 * to enable interception and recording of network operation on legal request of the Police Force and the Slovak Information Service; and * to respect various end-user rights set out in the Act on Electronic Communications (e.g. right to withdraw from a contract on provision of public services without sanctions if an end-user does not accept a substantial change in contractual terms and conditions). In addition, the Company, as a provider of public services and public networks meeting the relevant criteria under the Act on Electronic Communications, is also subject to the obligation to keep separate accounting of costs and revenues relating to the provision of electronic communications networks or services to the extent necessary for a structurally separated and legally independent undertaking, so that it is possible to identify all costs and revenues from these activities with their respective calculation supporting materials and detailed calculation methods, including a detailed breakdown of ﬁxed assets and structured costs. Furthermore, the Company as the provider of public telephone services is obliged for example to: * ensure number portability; * provide free-of-charge access to emergency services by means of the single European emergency call number ‘‘112’’ and other national emergency call numbers to all end-users; * handle all calls to and from the European telephony numbering space at rates similar to those applied for calls to and from other Member States; * provide its subscribers with access to the telephone directory enquiry service; and * prior to connecting a call to a premium-rate service provide the caller, in the form of an automatic free voice notiﬁcation in the Slovak language, with the information that the caller is calling the service with premium rate tariff.

Obligations of the Company as an SMP Undertaking The Company must adhere to a number of obligations stemming from its position of a significant market power undertaking (SMP Undertaking) (see ‘‘Telecommunication Regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – Obligations imposed on SMP Undertakings’’). On 18 November 2014 the Slovak NRA issued a new decision on determination of relevant markets which formally replaced the seven relevant markets determined under the previously applicable Slovak NRA decision on determination of relevant markets dated 20 January 2011 by a new set of relevant markets. Nevertheless, the decision did not bring any dramatic changes in the market definitions (see ‘‘Telecommunication Regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – Market analyses conducted by the Slovak NRA and definitions of relevant markets’’ below for description of the respective relevant markets). The change in the relevant markets was prompted by the adoption of a new Commission Relevant Markets Recommendation 2014/710/EU of 9 October 2014 (see ‘‘Telecommunication Regulation in Slovak Republic – EU Telecom Regulatory Framework – SMP Undertakings’’). Despite the adoption of the new decision on relevant markets, the existing obligations imposed on the Company on the old relevant markets remain valid until they are replaced by new obligations reflecting the changed list of relevant markets. Before the Slovak NRA decides on imposition of new obligations on the Company, it has to carry out new market analyses and issue new decisions on determination of SMP Undertakings on the respective newly defined markets. The market analyses are currently on-going and their results are expected by the end of 2015. As no obligations on the new relevant markets have been issued to date, this section further focuses on the old obligations imposed on the old relevant markets. Hence, unless stated otherwise, all references to relevant markets in this section below are references to the relevant markets defined in the Slovak NRA decision on determination of relevant markets dated 20 January 2011. The Company has originally been designated as having significant market power (SMP) in all seven relevant markets regulated by the Slovak NRA which are listed below. This is mainly due to the fact that the Company enjoys the position of incumbent as a result of its having been a former state- owned monopoly, which still controls crucial parts of the network infrastructure including, most importantly, local loops (i.e. physical links connecting network termination points at the subscribers’ premises to the main distribution frames or equivalent facilities in the fixed public telephone network). Fixed voice services are subject to rigorous regulation exercised through relevant markets No. 1, 2 and 3 including access obligations and wholesale price control imposed by the Slovak NRA which limit the Company’s pricing flexibility both on the retail voice market and in the case of retail

97 bundles containing fixed voice services mainly because it is necessary to maintain sufficient margin between wholesale and retail prices to avoid margin squeeze. Wholesale fixed broadband services are currently regulated through relevant markets No. 4, 5 and 6 (see ‘‘– Wholesale Physical Access’’, ‘‘– Wholesale Broadband Access’’ and ‘‘– Wholesale Terminating Segments of Leased Lines’’ below). The obligations limit the Company’s pricing flexibility both on retail broadband market and in case of retail bundles containing fixed broadband services mainly because it is necessary to maintain sufficient margin between wholesale and retail prices to avoid margin squeeze. Mobile voice services are currently regulated through relevant market No. 7. In 2013 the Slovak NRA introduced price regulation of MTRs based on the pure LRIC approach as recommended in the Commission Recommendation on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU No. 2009/396/EC (see ‘‘Telecommunication Regulation in Slovak Republic – EU Telecom Regulatory Framework – SMP Undertakings’’ below), which led to further decrease of MTRs. The obligations imposed by the Slovak NRA on the Company in the respective relevant markets include the following (for more details regarding general content of the obligations also refer to ‘‘Telecommunication Regulation in Slovak Republic – EU Telecom Regulatory Framework – SMP Undertakings’’ below): Retail Fixed Telephone Access The Company must ensure non-discriminatory treatment of end-users and is subject to a ban on unjustified bundling of services with provision of other services or goods if they can be provided separately. At present, there is no price control on this market. Wholesale Fixed Call Origination The Company must ensure non-discrimination and transparency by way of mandatory publication of reference offers. The Company must also provide access to specific network facilities and keep separate accounting. The Company is obliged to follow a binding pricing methodology issued by the Slovak NRA. The currently applicable controlled price calculated by the Company in accordance with the methodology and subsequently approved by the Slovak NRA is EUR 0.003454 per minute set as the maximum wholesale price for conveyance of a call or a call to the Internet network from a termination point in the Company’s fixed public telephone network to the point of interconnection with other fixed or mobile network. Wholesale Fixed Call Termination The Company must ensure non-discrimination and transparency by way of mandatory publication of reference offers. The Company must also provide access to specific network facilities. The Company is obliged to adhere to a binding price cap set by the Slovak NRA in the amount of EUR 0.001234 per minute set as the maximum wholesale price for a call terminated in the Company’s fixed public telephone network that had originated in other domestic or foreign fixed or mobile network. On 12 February 2014 the Company filed for judicial review of the decision on price caps on the grounds of non-inclusion of a part of effectively spent costs in the price calculation. The case, heard before the Supreme Court, is currently pending. Wholesale Physical Access The Company must provide access to specific network facilities, including full unbundled and shared access to metallic local loops or their parts; full unbundled access to fibre lines; and access to ducts and infrastructure for drawing metallic or blowing fibre cables. The Company must also ensure non- discrimination and transparency by way of mandatory publication of reference offers and keep separate accounting for the relevant activities. The Slovak NRA has imposed price regulation of: (1) establishment and use of full unbundled or shared access to a metallic local loop or its part, (2) establishment and use of full unbundled access to fibre lines, (3) establishment and use of access to ducts and infrastructure for drawing metallic or blowing fibre cables and (4) co-location. In all these areas, the Company is obliged to follow a binding pricing methodology issued by the Slovak NRA. The decision on binding pricing methodology concerning access to metallic lines, fibre lines and access to ducts and infrastructure was issued on 17 December 2014. The Slovak NRA examined the maximum prices calculated by the

98 Company as per the binding pricing methodology and subjected the proposed prices to the mandatory public consultation procedure and consultation with the Slovak Competition Authority. The decision of the Slovak NRA on approval or change of the maximum prices is expected in the second quarter of 2015. The binding pricing methodology for co-location was issued by the Slovak NRA on 30 May 2013. Co-location prices calculated by the Company as per the pricing methodology were already approved by the Slovak NRA and consists of different maximum one-off prices for different co-location related services and monthly prices for use and lease of different parts of the Company’s physical infrastructure.

Wholesale Broadband Access The Company was originally designated as having SMP on this market and obligations were imposed on it by a decision issued in January 2009 (Please note that at the time when the decision was issued, a former decision of the Slovak NRA on determination of relevant markets dated 28 January 2004 was still valid. Nevertheless, the January 2009 decision is still relevant as the deﬁnition of relevant market No. 5 remained unchanged in the new decision on determination of relevant markets of 20 January 2011). In 2012 the Slovak NRA carried out a new market analysis on this relevant market and subsequently commenced new proceedings on designation of SMP Undertaking and on imposition of obligations. The new decision on designation of the Company as an SMP Undertaking and on imposition of obligations on this market was issued in February 2013 (it repealed the original decision of January 2009). The Company challenged the decision by an action for judicial review ﬁled with the Supreme Court of the Slovak Republic. In September 2014 the court reversed the February 2013 decision and remanded the case back to the Slovak NRA for new proceedings. In December 2014, the Slovak NRA terminated the proceedings on the grounds that due to the fact that in the meantime the relevant market at issue was abolished by the new decision on determination of relevant markets of 18 November 2014 it can no longer introduce new obligations on SMP Undertakings on this relevant market.

The Company is of the view that as a result of the cancellation of the February 2013 decision repealing the January 2009 decision by the Supreme Court of the Slovak Republic and the termination of the proceedings by the Slovak NRA, previous obligations imposed on it by the January 2009 decision continue to apply. The obligations in particular include the duty of transparency (obligation to issue a binding reference offer and to disclose to the Slovak NRA all agreements on provision of wholesale broadband access entered into by the Company), the duty of non-discrimination, the duty of accounting separation and the duty to provide access (e.g. obligation to provide wholesale broadband access to third parties, obligation not to withdraw wholesale broadband access already granted, obligation to negotiate in good faith with undertakings requesting access, duty to enable co-location, etc.). Moreover, the Company must follow a binding pricing methodology set by the Slovak NRA requiring it to charge only cost-oriented prices for various types of wholesale broadband access determined in accordance with principles set by the Slovak NRA. Please note that in contrast to the currently applicable legislation, under the relevant legislation applicable at the time when the January 2009 decision was adopted, the Company had to follow the binding pricing methodology immediately after the January 2009 decision on designation of SMP Undertaking and on imposition of obligations became ﬁnal and binding (see ‘‘Telecommunication Regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – Obligations imposed on SMP Undertakings – Price control’’).

The Company expects that Slovak NRA will set aside the January 2009 decision by means of a new decision on designation of SMP undertaking and on imposition of obligations on the newly defined relevant market No. 3 (b) (‘‘Wholesale central access services provided at a fixed location for products intended for mass market.’’) after the new round of market analyses expected in the last quarter of 2015 and it is likely that the Slovak NRA will re-introduce similar obligations for the Company as described above following analysis of relevant market No. 3 (b) either on whole territory of the Slovak Republic (in case of nation-wide market definition) or in some regions/municipalities (in case of local markets definition).

Wholesale Terminating Segments of Leased Lines On this relevant market the Company has been designated as having SMP only in ‘‘segment A’’, i.e. terminating segments of leased lines with capacity up to and including 2 Mbit/s. Thus, all obligations listed below concern only this particular segment of the market.

99 The Company must ensure non-discrimination and transparency by way of mandatory publication of reference offers. The Company must also provide access to speciﬁc network facilities and keep separate accounting for the relevant activities. The Slovak NRA has also imposed price regulation of (1) lease of terminating segments of leased lines and (2) co-location. In both areas of price control on this market the Company is obliged to follow a binding pricing methodology set by the Slovak NRA. Price control of lease of terminating segments currently entails EUR 746.62 set as a maximum wholesale price for establishing access to terminating segments of leased lines; and EUR 44.71 per month set as a maximum wholesale price for the use of terminating segments of leased lines. Price control of co-location on this market currently entails regulation of maximum one-off prices for different co-location services and maximum monthly prices for use and lease of different parts of the Company’s physical infrastructure.

Wholesale Mobile Termination The Company must ensure non-discrimination and transparency by way of mandatory publication of reference offers. The Company must also provide access to specific network facilities. The Company is also obliged to adhere to a binding price cap set by the Slovak NRA in the amount of EUR 0.01226 per minute for all calls terminated in the Company’s public mobile network that had originated in other domestic or foreign mobile or fixed networks. The decision on determination of the Company as an SMP Undertaking and on imposing obligations as well as the decision setting binding price cap were challenged by the Company. On 2 January 2014 the Company filed for judicial review of both decisions at the Supreme Court of the Slovak Republic. On 25 February 2015 the Supreme Court dismissed the Company’s action relating to the SMP decision. As for the action filed against the price cap decision, the court has not rendered its decision yet.

Obligations set out in the individual authorisations for the use of frequencies The Company is subject to obligations stemming from the individual authorisations for the use of frequencies such as duty to pay respective recurring fees and one-off fees for the allocated frequencies, duty to conform to the rules of use of the frequency spectrum in the border areas set out in international agreements concluded between the Slovak NRA and foreign administrations and other duties. Non-compliance with the obligations set out in individual authorisations for the use of frequencies can lead to withdrawal of the respective authorisations or to withdrawal of the frequencies allocated to the Company by the Slovak NRA. The most important frequency spectrum bands in the Company’s portfolio are the following: 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,100MHz (TDD), 2,600MHz (FDD) and 2,600MHz (TDD). Upon expiration of the individual authorisations allocating frequencies that have been granted to the Company through tenders, the respective frequencies will be re-allocated through new tenders and the Company will have to compete with other bidders to re- attain them. If the Slovak NRA considers it necessary to restrict the number of rights for the use of frequencies or if it follows from the Plan of Use of the Frequency Spectrum, tender proceedings may be ordered by the Slovak NRA also for frequency bands allocated to the Company on the basis of applications (see ‘‘Telecommunication Regulation in Slovak Republic – Slovak National Telecom Regulatory Framework – The national licensing system – Individual authorisations for the use of frequencies’’). In December 2013 the Company won an important tender for the allocation of frequency bands of 800MHz and 2,600MHz used for high-speed mobile internet services (4G LTE). The frequencies were allocated to the Company until the end of 2028 for a one-off fee of EUR 60.8 million. The Company is obliged to pay a quarterly recurring fee of EUR 69,999.99 for the use of the allocated frequencies in the 800MHz band and a quarterly recurring fee of EUR 351,000 for the use of the allocated frequencies in the 2,600MHz band. In both cases the recurring fees are payable as from 1 January 2016. Furthermore, the decision on allocation of the frequency bands set out other important obligations for the Company including a minimum coverage obligation, minimum transmission speed requirements and the obligation to provide national roaming (see below). Under the frequency allocation decision in question, the Company must ensure minimum coverage by mobile services in the 800MHz frequency band of at least 25% of the Slovak population by the end of 2015, 50 % of the Slovak population by the end of 2017 and 70% of the Slovak population by the end of 2018, as well as minimum coverage by mobile services in the 2,600MHz frequency band of at least 10 % of the Slovak population by the end of 2015 and 25% of the Slovak population by the end of 2018.

100 Moreover, the Company is obliged to provide national roaming to the fourth Slovak mobile operator SWAN (new entrant) for networks in 900MHz and 1,800MHz frequency bands as from the date when SWAN reaches the coverage of at least 20% of the Slovak population by services provided in the 800MHz and/or 1,800MHz frequency bands. SWAN has reached 20% population coverage using frequencies in the 1,800MHz frequency band as of 15 December 2014 according to the Slovak NRA see ‘‘– Legal Proceedings – Regulatory proceedings concerning national roaming agreement with SWAN’’. Obligation of the Company to provide national roaming to SWAN will expire at the end of 2018. The obligation to provide SWAN with national roaming applies also to other two Slovak telecom operators, Orange and O2. Finally, according to the frequency allocation decision the company must secure minimum transmission rates for end users of 2 Mbit/s for downlink and 256 Kbit/s for uplink in both frequency bands. SWAN claims that it has reached the prescribed minimum coverage in December 2014, which was also conﬁrmed by the Slovak NRA. On that basis, SWAN demands the provision of national roaming from all three operators, including the Company. Negotiations between the Company and SWAN regarding the provision of the national roaming are currently on-going with the involvement of the Slovak NRA. In December 2014, SWAN has also initiated dispute resolution proceedings before the Slovak NRA. In March 2015, the Slovak NRA issued interim measures ordering the Company, as well as Orange and O2, to provide national roaming services to SWAN at its request, see ‘‘– Legal Proceedings – Regulatory proceedings concerning national roaming agreement with SWAN’’.

Universal service provider Since 4 April 2006 the Company acts as the sole provider of the universal service in the Slovak Republic. The decision of the Slovak NRA No. 3125/OTR/2012 applicable from August 2012 reduced the scope of the universal service obligations previously imposed on the Company. The universal service obligations currently imposed on the Company only include services for disabled users with hearing, speech and visual impairments, in particular the obligation: * to provide for equivalent access and availability of public telephone service, telephone directory service and comprehensive telephone directory enquiry service, including the possibility of carrier selection for disabled users; and * to lease or sell, if requested by a disabled user, a specially equipped telecommunications terminal equipment appropriate to the disability for the same price as standard telecommunications terminal equipment. The Company currently fulfils its stipulated obligations by means of: * a text to speech relay service and text phones provided for users with hearing impairments or serious speech impairments; and * free access to telephone directory enquiry service and mobile phone with special application for users with visual impairments. To date, the Company has filed several requests for compensation of net costs incurred for the provision of universal service for the years 2005 to 2006, 2007 to 2008, 2009 to 2010 and most recently for years 2011 to 2012, amounting to EUR 158.39 mil. in total. The first three requests for compensation were dismissed by the Slovak NRA on the ground that the costs did not represent an unfair burden on the Company (under the Act a universal service provider may claim the compensation only if the costs represented an unfair burden). The Company filed for judicial review of the first three decisions of the Slovak NRA. The decisions were subsequently overturned by the Supreme Court, remanded back to the Slovak NRA for further proceedings and are currently pending. The decision regarding compensation for 2005 to 2006 is expected to be issued by 1 July 2015. The decisions on compensation for 2007 to 2008, 2009 to 2010 and for 2011 to 2012 are expected by the end of 2015.

TV broadcasting, on-demand audiovisual media services and retransmission provider Television Broadcasting The Company and DIGI are active in the ﬁeld of television broadcasting in the Slovak Republic (for a description of the applicable regulatory environment see ‘‘Telecommunication Regulation in Slovak

101 Republic – Further Applicable Regulation – Broadcasting, retransmission and provision of on-demand audiovisual media services’’). The Company holds a license for multiregional television broadcasting for programme service Magio Infokana´l issued by the Council for Broadcasting and Retransmission for a period of 12 years until 12 August 2020. The licence can be extended upon application from the Company for additional 12 years. DIGI holds a licence for multiregional television broadcasting of the programme service Infokana´l DIGI issued by the Council for Broadcasting and Retransmission. The license is effective until 16 August 2019 and can be extended on application by DIGI by additional 12 years. Moreover, DIGI holds the following digital broadcasting licences: * licence No. TD/35 issued for an indefinite period of time for nationwide digital broadcasting of television programme service DIGI SPORT 1; * licence No. TD/127 issued for an indefinite period of time for nationwide digital broadcasting of television programme service DIGI SPORT 3; * licence No. TD/128 issued for an indefinite period of time for nationwide digital broadcasting of television programme service DIGI SPORT 4; and * licence No. TD/129 issued for an indefinite period of time for nationwide digital broadcasting of television programme service DIGI SPORT 2. Retransmission The Company and DIGI also provide retransmission services in the Slovak Republic. In both cases the services are provided on the basis of a simple notification and registration by the Council for Broadcasting and Retransmission. The registration is valid for an indefinite period of time. The Company is registered as a nationwide retransmission provider since 18 May 2006. DIGI is registered as a multiregional retransmission provider since 20 March 2002. Retransmission of programme services is subject to consent of the original content providers (broadcasters) with whom the Company and DIGI have separate agreements. On-demand Audiovisual Media Services The Company and some of its subsidiaries provide on-demand audiovisual media services such as Magio / Domaća videopozˇicˇovnˇa (in English: Magio/Home Video Rental) on the basis of a simple notification and registration by the Council for Broadcasting and Retransmission. The registration is valid for an indefinite period of time.

102 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Group’s ﬁnancial condition and results of operations should be read in conjunction with the Financial Statements and the other information included elsewhere in this Prospectus. This section contains forward-looking statements that involve risks and uncertainties. The Group’s actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including those described under ‘‘Risk Factors’’ and ‘‘Forward-Looking Statements’’. Financial information in this section which does not appear in the Financial Statements has been extracted from the Company’s accounting records and has not been audited. Audited and not audited ﬁnancial information is indicated in each table used below.

Overview The Group is the largest multimedia and telecommunications operator in the Slovak Republic by revenue, offering a full range of broadband, fixed telephony, Pay-TV, mobile data and voice services as well as a comprehensive suite of ICT services. The Group is part of the Deutsche Telekom Group and markets most of its services under the Deutsche Telekom ‘‘T’’ brand. Before liberalisation of the Slovak telecommunication market in 2002, it was the only provider of fixed telephony services in the Slovak Republic. The Group carries out substantially all its activities in the Slovak Republic. In terms of market position the Group is the market leader (measured by revenue) in fixed voice, fixed broadband and Pay-TV for the year ended 31 December 2014. It is also the second largest provider of mobile telecommunication services by service revenue. See ‘‘Slovak Telecommunications Market – General Overview of Slovak Telecommunications Market’’. Fixed-line services provided by the Group consist mainly of core fixed voice and broadband internet complemented by a range of value-added services offered through the Group’s extensive fixed-line telecommunications network benefiting from an on-going roll-out of modern fibre optic technology. The Group provides comprehensive and premium content through its Pay-TV services, including a high definition and interactive IPTV platform. The Group is also a leading provider of ICT services and offers wholesale services to a number of retail Internet service providers (ISPs) and other licensed operators in the Slovak Republic and abroad. The Group also offers a full range of voice and data mobile services, including traditional and value- added voice services, international roaming services, interconnection services with other mobile operators inside and outside the Slovak Republic, messaging and data services using 2G (GSM), 3G (UMTS) and 4G (LTE) network technologies. As the first multimedia operator in the Slovak Republic, the Group offers the television services via both cable and satellite technology. Except for standard TV channels, the Group offers premium and exclusive sports content. High-end TV service with interactive features (VOD, catch-up TV functions, recording) supported by IPTV technology are offered under TV Magio brand, while linear mass market television services mostly provided via satellite technology are offered under DIGI brand operated through the Group’s wholly-owned subsidiary DIGI SLOVAKIA s.r.o. (DIGI). The Group considers itself to be the leader in the Slovak market for ICT solutions. The Group’s ICT solutions are provided through the Company and its subsidiary PosAm. The Group’s ICT business consists primarily of cloud-based services (private as well as public), tailor-made IT solutions, mobile device management and car monitoring, offering customers both cost efficiency and flexibility with higher security and service availability. The Group introduced a cloud application platform in 2014, and offers applications focused on providing a quality customer experience tailored to the Slovak market. The Group operates modern data centres across the Slovak Republic and offers virtual servers (IaaS), web hosting services, M2M (Machine-to-machine) & IoT (Internet of Things) solutions, and healthcare information systems for hospitals.

Recent Developments and Trends Over the medium term, Management expects the Group’s revenues to stabilise, with further decreases in ﬁxed and mobile voice revenues expected to be largely offset by growth in mobile data revenues and revenues from ICT services. As a result, Management expects that, assuming a three-player mobile market in the Slovak Republic, the Adjusted EBITDA trend should ﬂatten and stabilise over the next two years. Management expects that the Group’s net income will be positively affected as depreciation associated with historical investments decreases, particularly starting in 2016 (as discussed under ‘‘– Key Factors Affecting Results of Operations – Depreciation and amortisation’’). Over the

103 medium term capital expenditures are expected to average approximately EUR 110 – 130 million annually and be focused on investments in network and content, although special factors such as licence payments and inorganic growth may lead to higher levels of capital expenditure. During the first quarter of 2015, the Group’s business has generally performed in line with Management’s expectations. In particular, the decline in revenue observed over the past several years has abated, resulting in a slight decline in revenue in the three months ended 31 March 2015 as compared to the three months ended 31 March 2014. The continuing decline of voice revenues, both fixed and mobile, was partially offset by increasing revenues from Pay-TV as well as mobile data. Moreover, there were no further regulatory decreases in MTRs and FTRs during the first quarter of 2015, contributing to stabilisation of revenue. The overall number of Pay-TV accesses and fixed broadband accesses both increased during the period. While the contribution of increased revenue from mobile data during the quarter was insufficient to offset fully the decline in mobile voice revenues, the overall revenue decline in the mobile segment slowed. Revenue from ICT services, which are included in both the fixed-line business and PosAm, remained comparable to the three months ended 31 March 2014 notwithstanding that revenues at PosAm decreased, reflecting seasonal fluctuations associated with variations in the timing of customer orders and the recognition of associated revenue. Revenues from DIGI were positively impacted by a migration of customers to a set-top-box rental model as well as sales of DIGI’s sport channels to Czech households through an agreement with O2 Czech Republic. Direct costs varied in line with revenue, and indirect costs declined as compared to the first quarter of 2014, reflecting in large part efficiency improvements in connection with the Group’s ongoing cost management. Overall, the Group’s Adjusted EBITDA for the three months ended 31 March 2015 decreased slightly as compared to the three months ended 31 March 2014, in line with Management’s expectations. At the General Meeting held on 31 March 2015, the shareholders approved a dividend of 80% of the Company’s distributable profit in respect of 2014, amounting to EUR 0.38 per share and an aggregate of EUR 32.5 million. These dividends are expected to be paid in late April 2015. In January 2015, the Company paid the fine of EUR 38.838 million in connection with the EC Case. In March 2015, the Company and the claimant in the CDI Case entered into a settlement agreement providing for financial compensation by the Company in an amount not exceeding the Company’s prior provision in respect of such amounts and release of further claims, and subject to approval by the court. There is no statutory period for the court to grant such approval. See ‘‘– Other provisions and contingencies’’ and ‘‘Business – Legal Proceedings’’. Except as described above, no significant change in the financial or trading position of the Group has occurred between 31 December 2014 and the date of this Prospectus. See also ‘‘Capitalisation’’.

Key Factors Affecting Results of Operations The Group’s results of operations are affected by a number of factors, including those set out under the captions ‘‘Risk Factors’’, ‘‘Business – Key sector-speciﬁc regulations applicable to the Group’’ and ‘‘Telecommunication Regulation in the Slovak Republic’’. Management believes that the items below have had the most signiﬁcant impact on the Group’s results of operations during the period under review and may continue to have an impact on future results.

Pricing and competition The Group is subject to significant competition for its products and services. In light of this competition, overall prices for most products and services offered to customers in the telecommunications markets in the Slovak Republic have steadily decreased in recent years. The Group seeks to maintain and improve its competitive position by offering products and services that it believes are more appealing to customers than those of its competitors. The Group seeks to provide customers with access to premium and exclusive content, high levels of customer support, leading network infrastructure and superior mobile spectrum portfolio. In addition, the Group benefits from having a relatively higher proportion of post-paid customers, accounting for approximately 64% of total mobile customers as of 31 December 2014. Management believes that post-paid customers generate greater revenues, measured by ARPU, and tend to be more loyal and less likely to switch providers. Nevertheless, the overall pricing environment may be disturbed by the entry of a significant new operator or competitor, such as when O2 started offering mobile services in 2007. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group is subject to significant competition from new and established competitors and to changing market conditions’’.

104 Bundling of products and services Telecommunication service providers, including the Group, increasingly seek to offer bundled offerings of multiple products. These offerings combine fixed and/or mobile services and allow for differentiation based on quality and value of service provided. In addition, bundled offerings generally drive and support telephony and broadband internet products and often help to reduce customer churn as compared with individually sold products and services. Management believes that offering an integrated mobile and fixed service portfolio with high quality and reliability enables it to sell additional as well as premium versions of existing services, such as internet in mobile data packages or data consuming premium services, such as Magio Go, while also reducing churn because customers often prefer bundled products due to the convenience and cost savings that are available when acquiring fixed-line and mobile telephony, fixed and mobile broadband internet and television services from a single provider for one price. Product bundles also provide opportunities for the Group to cross-sell services to customers, thereby encouraging them to procure additional services from the Group, such as by encouraging broadband customers to acquire pay-TV services from the Group, as well as increase network utilisation. The Group offers its customers fixed voice, fixed broadband internet and television on a stand-alone basis and in the form of duo-play or triple-play packages. As of 31 December 2014, approximately 68% of the Group’s fixed-line customers purchased only a single product, most commonly fixed voice (approximately 50% of total fixed-line customers); approximately 25% purchased two products, and only 7% purchased three products. The Group’s product bundles typically offer customers a discount to the aggregate price compared to the sum of stand-alone products’ fair values, which management believes makes the product bundles more attractive for customers. In addition, bundled product offerings are often associated with reduced rates of customer churn, as customers seeking to change providers must change providers for multiple services, increasing both the inconvenience associated with a switch as well as the difficulty of finding a superior alternative product. For example, in 2014, the bundle Chytry´ balı´k was launched, contributing to reduced churn of B2C customers in 2014 as compared to 2013. For business customers, combined offerings are focused on providing more value via new services or add-on services, such as the ‘‘mobile voice + fixed broadband’’ cross-sell offer with complementary access to entry-level file storage and sharing service. More than 75% of B2B customers are using a combination of the Group’s mobile, fixed voice and fixed broadband services. Revenue growth from B2B customers has been achieved through organic increases in the number of active accesses and cross-selling of new services. Bundled services also facilitate the Group’s ability to capitalise on developing market trends, such as the emergence of fixed-mobile convergence in the Slovak Republic, which is the bundling or packaging of fixed-line and mobile services together into a single customer package. Accordingly, starting in 2015 the Group has offered product bundles that combine both fixed-line and mobile services. Management believes that fixed-mobile cloud convergence, which is an advanced B2B version of fixed-mobile convergence, will become increasingly important for business customers, not only in terms of product bundling, but also in terms of integrated and cross-functioning services. Such services include fixed connectivity with integrated mobile backup, cloud applications and call handover between fixed and mobile networks. Management also believes that its ability to compete effectively will depend on its ability to offer more attractive bundled offerings than other market participants, many of whom are pursuing similar strategies. See also ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group competes in part by offering converged and bundled products, and it may not succeed in further developing such products or may be unsuccessful in marketing such products’’.

Macroeconomic conditions in the Slovak Republic The Group’s results of operations have been and will continue to be inﬂuenced by macro-economic conditions in the Slovak Republic, including trends in real GDP and private consumption. As real GDP increases, the Group generally experiences an increase in demand for its telecommunications services. In particular, increased domestic consumption tends to result in increased spending on telecommunications services, particularly by consumers. For example, consumers may be more likely to subscribe for broadband or pay-TV packages, or may subscribe to higher-cost packages, during periods of relatively favourable economic conditions. Conversely, during periods of low or negative growth in GDP or consumer spending, both B2C and B2B customers tend to reduce their expenditures on telecommunications services. Moreover, such reductions may not be fully offset

105 during subsequent periods of improved economic conditions. Real GDP in the Slovak Republic grew by 2.3%, 0.9% and 1.8% in 2014, 2013 and 2012, respectively, based on data from the IMF. The IMF has forecasted Slovak GDP growth to outpace the median GDP growth of both CEE and Western European peers from 2014 through 2018, supported by growing private consumption and foreign direct investment at levels above the median for other CEE countries, and inﬂation is expected to be below the median for other CEE countries, according to the EIU. As at 31 December 2013, the population of the Slovak Republic was approximately 5.4 million, and in 2014 it had a nominal GDP per capita of EUR 13,643. See ‘‘Risk Factors – Risks Related to the Slovak Republic’’.

Interconnection and roaming charges and competition regulations The Group generates revenues from other network operators in the form of access and interconnection fees for voice calls terminated on the Group’s networks, and is required to pay access and interconnection fees to other network operators for calls terminated on their networks, in each case both domestic and international. These access and interconnection fees are based on set termination rates for both fixed and mobile voice calls. In recent years, the Slovak NRA has taken action to significantly reduce these termination rates. In line with 2009 recommendations from the European Commission, the mobile termination rate (MTR) has been significantly reduced, from EUR 0.0635 per minute at the start of 2011 to EUR 0.01226 per minute in 2014. The fixed termination rate (FTR) has also declined, from a blended rate of EUR 0.00801 per minute in 2011 to EUR 0.001234 per minute in 2014. Historically, the Group has generated significant amounts of revenue from these interconnection fees. While the introduction of unlimited calling plans has generally resulted in increased call volumes, these increases have been outweighed by the decrease in termination rates and the Group’s revenue from MTRs has declined. The reductions in FTRs and MTRs have significantly affected the Group’s revenue in recent periods. Revenue attributable to FTRs has declined from EUR 6.7 million in the year ended 31 December 2012 to EUR 3.1 million in the year ended 31 December 2014, and revenue attributable to MTRs declined from EUR 41.2 million in the year ended 31 December 2012 to EUR 18.0 million for the year ended 31 December 2014. As a share of revenue, fixed termination fees amounted to 0.9%, 1.6% and 1.9% of fixed-line revenue and mobile termination fees amounted to 4.8%, 7.4% and 9.4% of mobile revenue in the years ended 31 December 2014, 2013 and 2012, respectively. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group’s revenue from fixed and mobile interconnection services and international mobile roaming has declined significantly in recent years and may continue to decline.’’ Management believes that there is limited scope for further reductions in interconnection rates, as MTRs are generally in-line with EU and regional medians and FTRs are already at low levels, such that the impact on the Group’s revenues in future periods is likely to be more limited. The Group also generates revenues from retail and wholesale international voice and data roaming charges for calls and SMS made by visitors to the Slovak Republic using the Group’s mobile network, and incurs costs associated with the Group’s access and interconnection expenses for calls and SMS made by the Group’s subscribers who are abroad and have to rely on other network operators for fulfilment of their calls. Applicable European Union regulations have required significant reductions in such fees. The Group’s revenue from these roaming charges, including charges for visitors in the Group’s network, amounted to EUR 30.4 million, EUR 32.3 million and EUR 37.6 million, or 9.1%, 8.9% and 9.5% of mobile service revenue in the years ended 31 December 2014, 2013 and 2012, respectively. While reductions in roaming charges reduce the revenue or cost associated on a per call, message or data unit basis, these reductions also tend to result in increased usage of roaming services by both the Group’s customers (when abroad) as well as by visitors to the Slovak Republic. See ‘‘ Risk Factors – Risks Related to the Group’s Business and Industry – The Group’s revenue from mobile and fixed interconnection services and international mobile roaming has declined significantly in recent years, and may continue to decline.’’ In addition, the Group has been designated as having significant market power in fixed voice and fixed broadband markets in the Slovak Republic. The Slovak NRA has imposed certain obligations on the Group relating to, among other things, access and use of specific network facilities, non- discrimination, transparency or the level of tariffs at the regulated wholesale or retail markets. As a result, the Group is required to provide certain services to customers, and it may be limited in its ability to adjust pricing in order to maintain regulatory required margins. The Group is also required to make fixed voice, fixed broadband and mobile roaming services available on a wholesale basis. While the Group seeks to charge market prices for these services, in some cases it is requested to offer the services below cost. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry –

106 The Group enters into wholesale agreements offering ﬁxed voice, broadband and certain mobile services to its competitors and is required under applicable regulations to offer such services on terms that may increase the ability of its competitors to compete with the Group’’.

Cost reduction program In order to maintain its competitive position and its financial performance, the Group has undertaken a number of initiatives in order to reduce its costs and improve its operating efficiencies. A cost reduction program undertaken by the Group from 2010 through 2014 included: headcount reductions; technology improvements and modernisation; rationalisation of the Group’s real estate; energy efficiency improvements; improving operational efficiency; and implementing electronic billing and other systems. Measures introduced since 2014 have sought to further the transformation of the Group into an ‘‘eCompany’’ by reducing the use of paper, streamlining and simplifying support processes, including customer payment methods, using more online channels for sales and focusing on an omni-channel approach to customers through a stable and developed online platform. In March 2015 the Group launched a new web platform that allows customers to manage fixed-line and mobile services through a responsive web interface. The Group aims to become the first telecommunications operator in the Slovak Republic to offer self-care troubleshooting of outages on fixed-line access points and mobile handsets, allowing customers to carry out diagnostics and even repair the outages remotely. In addition, as a member of the Deutsche Telekom group, the Group participates in a number of cost-reduction programs, which complement the programs adopted at the Group level. Key accomplishments during the period under review include switching its fixed-line network to all-IP, which was completed in December 2014, as well as a headcount reduction program led by Deutsche Telekom, which is expected to be finalised by 2016. During the period under review Group has also undertaken other initiatives to reduce costs, such as the combination of its fixed-line and mobile businesses resulting from the merger with T-Mobile Slovakia, which previously operated as a separate legal entity within the Group, and which was largely finalised by the end of 2012. Between 1 January 2012 and 31 December 2014 the Group achieved net savings of EUR 17.9 million for maintenance related costs, which include energy costs, rent, building maintenance, network and IT maintenance and frequency related costs, EUR 12.4 million for personnel related costs (excluding severance payments for staff downsizing in the ongoing personnel restructuring), EUR 1.5 million for marketing related costs, and EUR 12.2 million for other costs, including costs of materials and office supplies, postage and bank fees, consultancy, outsourcing, and other operating expenses (excluding provisions for legal and regulatory cases) compared to the indirect costs reported for the year ended 31 December 2011. These saving are largely attributable to the achievements of the Group’s cost reduction program.

Capital expenditures and investments in network The Group’s ability to provide fixed and mobile telephony, fixed and mobile broadband internet and Pay-TV to retail customers as well as telecommunications and ICT solutions to business customers depends in large part on its ability to provide attractive and competitive product offerings to its customers by upgrading and maintaining its fixed and mobile networks. In light of the growing penetration of smartphones and the increasing demand for data services, upgrading and maintaining the Group’s networks is key to the provision of services to its customers and meeting the increasing needs of the customers for high-quality fixed and mobile data services. Perception of network quality and speed are important factors in the Group’s ability to be able to attract and retain its customers, and therefore minimise churn. In particular, in recent years the Group has invested in rolling-out a fixed-line fibre network, and its LTE mobile network. For example, in recent years the Group has expanded its fibre to the home (FTTH) coverage (with speeds up to 300 Mbps) to approximately 0.364 million subscribers, more than any other provider in the Slovak Republic, and plans to invest in further expanding its FTTH network. The Group was the first mobile operator in the Slovak Republic to launch LTE technology into a full-scale commercial operation, in November 2013, giving it a ‘‘first mover’’ advantage, and has the largest outdoor LTE network coverage in the Slovak Republic, covering 52% of the population of the Slovak Republic in January 2015. During the years ended 31 December 2012, 2013 and 2014, the Group has made capital expenditures, defined as additions of property, plant and equipment and intangible non-current assets (excluding amounts in respect of business combinations and spectrum acquisitions), of 15.5%, 13.8% and 12.4% of revenue, respectively. In addition, capital expenditures for the years ended 31 December 2013 and 2012 included costs of acquired spectrum licences in the amounts of EUR 63.5 million and

107 EUR 1.8 million, respectively. The Group has budgeted EUR 123.0 million for capital expenditures during 2015 of which EUR 22.9 million had been made through 31 March 2015. Capital expenditures for 2015 are expected to be primarily for further rollout of fixed-line optical and metallic coverage, LTE coverage and consolidation of IT platforms, individual solutions for business customers as well as acquisition of customer premises equipment (such as set-top-boxes, home access gateways and optical network terminations) and TV content for which the broadcasting rights meet the criteria for recognition as intangible assets, amounting to a total of EUR 70.7 million. All of such principal investments were in progress as of 31 March 2015 and are financed using internal sources of the Group. See ‘‘Risk Factors – Risks Related to the Group’s Business and Industry – The Group operates in a capital-intensive business, and any inability to meet its capital expenditure requirements or failure to invest in the continued upgrades of its network capabilities could materially and adversely affect its business, financial condition and results of operations’’. Depreciation and amortisation Depreciation, amortisation and impairment, which relates to goodwill, intangible assets including customer relationships, licences, software development costs, broadcasting rights recognised as intangible assets and property, plant and equipment, has had a significant impact on the Group’s results of operations, and is expected to continue to have a significant impact for the foreseeable future. A significant portion of the Group’s depreciation charge relates to depreciation on the Group’s property, plant and equipment, primarily reflecting past investments. As a consequence of these high levels of investment in the past, the current level of depreciation is relatively high and is expected to decrease, particularly starting in 2016. In addition, the Group recognises amortisation charges for intangible assets, in particular in respect of customer relationships, software and licences. Notably, customer relationships with post-paid customers that were recognised at the acquisition of T-Mobile in December 2004 had a net book value of EUR 57.6 million and remaining useful life of three years, as of 31 December 2014. Depreciation and amortisation charges during a period may be affected by additional factors such as reassessment of expected useful life of an asset or the pattern of consumption of future economic benefits embodied in the asset, such as technology transformation (i.e., accelerated replacement of property, plant and equipment, thereby reducing the useful life of the asset), as well as impairment due to external factors. Segmentation The Group divides its operations into the following three segments, on the basis used by the Executive Management Board to manage the Group’s business, allocate resources and make strategic and operating decisions. The Group’s operating segments are: * Fixed-line Business. The fixed-line business includes fixed-line services provided to business and residential customers such as voice, broadband (excluding DIGI), Pay-TV (excluding DIGI) and ICT (excluding PosAm), wholesale services provided for other telecommunication operators in the Group’s fixed network. Various non-recurring revenues, including sales of hardware and activation and installation fees relating to fixed-line services, are also reported within this segment. * Mobile Business. The mobile business includes mobile voice, SMS, MMS and mobile data services provided to business and residential customers by the Group, as well as wholesale services provided for other telecommunication operators in the Group’s mobile network. Non- recurring revenues from sales of subsidised and non-subsidised handsets, activation and prolongation fees charged for mobile services and similar charges are also reported within the mobile segment. * Other Businesses include services provided by separate subsidiaries of the Group: * PosAm. This sub-segment includes ICT services provided by PosAm, an established IT Company with a focus on bespoke solutions for corporate clients, which has been active in the Slovak market for more than 20 years. It has more than 200 employees working on IT projects and solutions geared towards the Group’s B2B customers. * DIGI. This sub-segment includes digital television (satellite and cable) and broadband services provided mainly to residential customers. The Group acquired control over DIGI with effect from 1 September 2013, for aggregate consideration of EUR 51.4 million. See Note 16 to the Financial Statements for additional information on the DIGI acquisition. * Zoznam. The sub-segment includes online services provided through Zoznam and Zoznam Mobile, the Company’s subsidiaries engaged in the internet search and portal business.

108 For more information regarding the Group’s ﬁnancial segment reporting, see Note 4 to the Financial Statements.

Seasonality Seasonal effects have a relatively limited impact on the Group’s fixed-line business, reflecting that a substantial proportion of revenue arises from monthly access fees, which are fixed, rather than variable usage payments. While the mobile business has historically experienced seasonal fluctuations in revenue, based on changing trends in usage, the increasing popularity of semi-flat and flat tariff plans has significantly reduced the impact of seasonality on the Group’s revenue. Nevertheless mobile roaming usage and revenues still peak in the traditional summer vacation months of June, July, August and September. Revenues from mobile messaging (SMS and MMS) services also tend to be highest in December and January, reflecting the large volumes of message sent during the Christmas and New Year period. Both fixed and mobile contract renewals and new customer acquisitions also tend to be greatest during the Christmas sale period, generally from mid-October through the end of January or February of the following year, as seasonal offers for service plans as well as for new hardware (including personal computers and tablet devices) are perceived as more advantageous for customers. Accordingly, the Group incurs a substantial portion of its subscriber acquisition and retention costs during this period, as these are accounted with the new contracts with the customers. Revenue from sales of ICT services tend to fluctuate throughout the year, due to variations in the timing of customer contracts and the recognition of associated revenue. In particular, revenue from ICT contracts with public sector organisations is often recognised only in the fourth quarter of the year, as public sector customers seek to utilise state and/or municipal budgetary funds by the end of the relevant year.

Restatement of Presentation of Certain Hardware Delivery Transactions and Internal Controls Improvements In connection with the preparation of the Group’s ﬁnancial statements as at and for the year ended 31 December 2014, the Group, in consultation with its auditors, determined that certain transactions relating to the delivery of hardware in the Group’s ICT business where the Group was acting as agent rather than principal were incorrectly accounted for on a gross, instead of net, basis during the periods ended 31 December 2013 and 31 December 2012. As a result, the Group had recorded revenue and the related costs, instead of only the Group’s commission from the transaction. In accordance with IFRS, in connection with preparing the Financial Statements the Group restated the presentation of the affected transactions for the years ended 31 December 2013 and 2012. The impact on the Group’s income statement is set forth below. For the year ended 31 December

2013 2012

(EUR million) Revenue ...... (18.6) (11.0) Material and equipment ...... 14.2 11.0 Other operating costs...... 4.4 — The change in presentation did not have an impact on the Group’s profit, other comprehensive income, statement of financial position, retained earnings, cash flow or earnings per share. See also Note 2.21 to the Financial Statements. The Group’s internal audit and compliance departments undertook an investigation of the procedures and processes in its ICT business, and determined that there had been certain deficiencies in the design and effectiveness of internal controls when entering into the relevant transactions. The Group identified the relevant process and control gaps and has undertaken remedial measures.

109 Description of Key Income Statement Line Items Revenue Revenue is recognised upon the delivery of services and products and customer acceptance thereof, and to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue from rendering of services and from sales of equipment is shown net of value added tax and discounts, and is measured at the fair value of consideration received or receivable. The Group categorises its revenue as service revenue; terminal equipment revenue; systems solutions/ IT revenue; and other revenue. Revenue from multiple revenue arrangements is considered as comprising identifiable and separable components, to which general revenue recognition criteria can be applied separately. For example, numerous service offers are made up of two components, a product and a service. When separable components have been identified, an amount received or receivable from a customer is allocated to individual deliverables based on each component’s fair value. The amount allocable to a delivered item(s) is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (the non-contingent amount). The revenue relating to the item(s) is recognised when risks and rewards are transferred to the customer, which occurs on delivery. Revenue relating to the service element is recognized on a straight-line basis over the service period. Revenue from sale of hardware and software is recognised when risks of ownership are substantially transferred to a customer, provided there are no unfulfilled obligations that affect the customer’s final acceptance of the arrangement. Telephone, Internet and Television services (fixed-line and mobile). Service revenue from provision of fixed-line, mobile and television services is recognised when the services are provided in accordance with contractual terms and conditions. Airtime revenue is recognised based upon minutes of use and contracted fees less credits and adjustments for discounts, while subscription and flat rate revenue is recognised in the period to which it relates. Revenue from prepaid cards is recognised when credit is used by a customer, or after a period of limitation when unused credit elapsed. Interconnection revenue. The Group collects a fee from other operators for calls and other traffic that originates in other operators’ networks. These amounts are recognised as revenue at the time when the call is received in the Group’s network. Revenue from interconnection fees is recognised gross of the fees that the Group pays to other operators for calls and other traffic that originate in the Group’s network but use other operators’ networks. Content revenues. The Group recognises content revenue based on the agreement between the Group and the content providers. Where the Group is acting as a principal in the transaction, the revenue received from the subscribers is presented on gross basis and the portion paid to the content providers is recognised as an operating expense. Where the Group acts as an agent, meaning that the content provider is responsible for the service content and the Group does not assume the risks and rewards of ownership, the revenue is presented net. Sales of equipment. Revenue from sales of equipment is recognised when the equipment is delivered and installation is completed. Completion of an installation is a prerequisite for recognizing revenue on such sales of equipment where installation is not simple in nature and functionally constitutes a significant component of the sale. Activation fees. Costs directly related to the activation of a customer, such as SIM card costs and commissions, are recovered as activation fees. These amounts are deferred over an expected customer retention period. This period is estimated on a basis of an anticipated term of customer relationship under the arrangement which generated the activation fee. Systems Solutions/IT revenue. Contracts on network services, which consist of installations and operations of communication networks for customers, have an average duration of two to three years. Revenue from voice and data services is recognised under such contracts when voice and data are used by a customer. Revenue from system integration contracts comprising delivery of customised products and/or services is recognised when the customised complex solution is being delivered and accepted by a customer. Contracts are usually separated into distinct milestones which indicate completion, delivery and acceptance of a defined project phase. Upon completion of a milestone the Group is entitled to issuing an invoice and to payment. Revenue from maintenance services, which is generally a fixed fee per month, is recognised when the services are provided. Revenue from repairs

110 that are not part of a maintenance contract but billed on the basis of time and material used is recognised when the services are provided.

Staff costs Staff costs consist primarily of wages and salaries, as well as social security contributions.

Material and equipment A portion of the Group’s subscriber acquisition and retention costs are included within cost of materials, particularly handset and other hardware costs such as televisions, tablets and personal computers, as well as SIM card costs. The write-down of inventories is also recognised within material and equipment cost.

Depreciation, amortisation and impairment losses Depreciation, amortisation and impairments relate to goodwill, intangible assets including customer relationships, licences, software development costs, broadcasting rights recognised as intangible assets and property, plant and equipment, including customer-driven equipment such as IPTV set-top-boxes, modems and handsets.

Interconnection and other fees to operators The Group is required to pay access and interconnection fees to other network operators for calls terminated on their networks, in each case both domestic and international. These access and interconnection fees are based on set termination rates for both ﬁxed-line calls (FTRs) and mobile calls and SMS (MTRs). This item also includes international interconnection and other mobile roaming charges.

Other operating costs Other operating expenses primarily comprise costs relating to repairs and maintenance, dealer commissions paid to agents in connection with acquiring new customers and/or prolonging existing contracts, as well as marketing and promotional expenditures, content fees (where the rights do not meet the criteria for recognition as intangible assets), rentals and leases, energy costs, bad debts expenses and services related to delivery of solutions for customers, consisting of costs of complex IT solutions incurred in connection with the work of ICT project subcontractors. Other operating costs also include own work capitalised, consisting of staff costs incurred in direct connection with the creation, development, acquisition and deployment of non-current assets.

Results of Operations Profit forecasts There are no profit forecasts or profit estimates included in this Prospectus, and no profit forecast or estimate has been published by the Company.

111 Years ended 31 December 2014, 2013 and 2012 The following table presents the Group’s results of operations for the years ended 31 December 2014, 2013 and 2012: Year ended 31 December

2014 2013 2012

(EUR million, audited) Revenue, of which...... 767.6 809.0 826.8 Fixed-line Business...... 326.4 355.5 361.0 Mobile Business ...... 372.8 414.4 437.4 Other Businesses ...... 68.4 39.1 28.4 Staff costs ...... (130.1) (132.4) (129.8) Material and equipment ...... (101.2) (104.5) (92.6) Depreciation, amortisation and impairment losses ...... (195.0) (236.9) (236.4) Interconnection and other fees to operators ...... (65.7) (70.5) (87.0) Other operating income...... 12.6 10.9 10.5 Other operating costs...... (218.9) (206.2) (181.1) Operating proﬁt...... 69.3 69.3 110.5 Financial income...... 2.9 2.6 4.9 Financial expense...... (1.2) (1.8) (1.8)

Proﬁt before tax...... 71.0 70.2 113.6 Taxation...... (27.4) (20.9) (50.5) Proﬁt for the year ...... 43.6 49.3 63.1

Revenue Revenue decreased by EUR 41.4 million, or 5.1%, to EUR 767.6 million for the year ended 31 December 2014 from EUR 809.0 million for the year ended 31 December 2013, and decreased by EUR 17.8 million, or 2.2%, from EUR 826.8 million for the year ended 31 December 2012. The decrease in revenue for the year ended 31 December 2014 was attributable to a decline in ﬁxed-line business revenue of EUR 29.1 million, or 8.2%, and of mobile business revenue by EUR 41.6 million, or 10.0%, partially offset by an increase in other segment revenue of EUR 29.3 million, or 74.9%. The decrease in revenue for the year ended 31 December 2013 was attributable to a decline in ﬁxed- line business revenue of EUR 5.5 million, or 1.5%, and in mobile business revenue of EUR 23.0 million, or 5.3%, partially offset by an increase in other businesses revenue of EUR 10.7 million, or 37.7%.

The Group reports its segmental revenue for the purposes of preparing its IFRS ﬁnancial statements as presented in ‘‘– Segmental comparison of results of operations for the years ended 31 December 2014, 2013 and 2012’’. The following table presents a further breakdown by product line of the Group’s segmental revenue for the years ended 31 December 2014, 2013 and 2012. Year ended 31 December

2014 2013 2012

(EUR million, unaudited) Fixed-line Business ...... 326.4 355.5 361.0 Voice ...... 96.2 110.7 126.9 Broadband and Pay-TV...... 90.2 91.5 91.3 ICT ...... 21.8 26.3 12.9 Other (including Wholesale) ...... 118.2 127.0 130.0 Mobile Business...... 372.8 414.4 437.4 Voice ...... 181.3 205.9 239.1 Data and Messaging...... 104.9 100.1 90.4 Other (including Wholesale) ...... 86.5 108.4 108.0 Other Businesses ...... 68.4 39.1 28.4 DIGI (external, i.e., consolidated)...... 27.7 9.1 — PosAm (external, i.e., consolidated) ...... 34.5 24.2 22.8 Zoznam (external, i.e., consolidated)...... 6.2 5.8 5.6

Group (consolidated) ...... 767.6 809.0 826.8

112 Fixed-line Business Fixed-line business revenue decreased by EUR 29.1 million, or 8.2%, to EUR 326.4 million for the year ended 31 December 2014 from EUR 355.5 million for the year ended 31 December 2013, and decreased by EUR 5.5 million, or 1.5%, for the year ended 31 December 2013 compared to EUR 361.0 million for the year ended 31 December 2012.

Voice. Voice revenue decreased by EUR 14.5 million, or 13.1%, to EUR 96.2 million for the year ended 31 December 2014, from EUR 110.7 million for the year ended 31 December 2013 and decreased by EUR 16.2 million, or 12.8%, to EUR 110.7 million for the year ended 31 December 2013 compared to EUR 126.9 million for the year ended 31 December 2012. The decrease in Voice revenue during the periods under review mainly resulted from a decrease in the number of Voice accesses by approximately 45 thousand, or 6.7%, during the year ended 31 December 2014 and by approximately 66 thousand, or 8.9%, during the year ended 31 December 2013. In addition, average revenue per access (ARPA) for fixed-line voice services, which is defined as monthly service revenue from provision of fixed-line voice services divided by the average number of accesses for fixed-line voice services reported in the respective calendar month, declined by 6.4% during 2014 and 4.0% in 2013, reflecting reduced demand for fixed-line voice telephone services, and contributing to the decrease in Voice revenue. The reduced demand for fixed-line telephony reflects the tendency of users to shift voice usage from traditional fixed-line telephony to mobile telephony.

Broadband and Pay-TV. Broadband and Pay-TV revenue decreased by EUR 1.3 million, or 1.4%, to EUR 90.2 million for the year ended 31 December 2014, from EUR 91.5 million for the year ended 31 December 2013, and increased slightly by EUR 0.2 million, or 0.2%, for the year ended 31 December 2013 from EUR 91.3 million for the year ended 31 December 2012. The decrease in Broadband and Pay-TV revenue during the year ended 31 December 2014 was mainly due to a decline in Broadband ARPA, which is defined as monthly service revenue from provision of broadband services divided by the average number of accesses for broadband services reported in the respective calendar month, by EUR 1.0 per access, or 7.1%, which was largely attributable to strong competition, particularly from smaller operators, and corresponding pressure to reduce retail prices. The Group is also subject to significant regulation, in order to prevent abuse of dominant position on the market and/or margin squeeze. The Group seeks to offset decreases in Broadband and Pay-TV revenue by bundling of broadband and Pay-TV services with fixed-line voice services, which contributes towards an increase in premium Pay-TV accesses.

ICT. ICT revenue decreased by EUR 4.5 million, or 17.1%, to EUR 21.8 million for the year ended 31 December 2014 from EUR 26.3 million for the year ended 31 December 2013, and increased by EUR 13.4 million, or 103.9%, for the year ended 31 December 2013 from EUR 12.9 million for the year ended 31 December 2012. The decrease in ICT revenue during the year ended 31 December 2014 and the increase in ICT revenue during the year ended 31 December 2013 were attributable to the fact that in 2013 the Group contracted a major one-off transaction relating to development work on a new CRM system and its sale to a subsidiary of Deutsche Telekom. The aggregate occupancy rates of the Group’s data centres increased from 66% in 2012 to 71% in 2014.

Other revenues. Other revenues, comprising business data, wholesale, equipment and other non- recurring revenues, decreased by EUR 8.8 million, or 6.9%, to EUR 118.2 million for the year ended 31 December 2014, from EUR 127.0 million for the year ended 31 December 2013, and decreased by EUR 3.0 million, or 2.3%, for the year ended 31 December 2013 from EUR 130.0 million for the year ended 31 December 2012. The decrease in other revenues during the year ended 31 December 2014 was mainly due to the fact that in 2013 there was a one-off resale of Premier league TV broadcasting rights for the Czech Republic in the amount of EUR 3.9 million. Moreover, revenue from business data, where the Group formerly beneﬁted from the ability to charge higher prices due to limited competition, decreased by EUR 2.5 million in the year ended 31 December 2014 as compared to the year ended 31 December 2013 due to strong price pressure from business customers. The decrease in other revenues during the year ended 31 December 2013 was partly the result of lower revenues from business data due to price competition from the Group’s competitors. In addition, revenues from installation decreased by EUR 2.5 million for the year ended 31 December 2013 from the preceding year as a result of changes in accounting estimates. During 2012, the expected lifetime of major contracts with business customers, over which activation revenues are deferred, was reassessed. As a result of this reassessment, the corresponding share of deferrals for such activation fees were partially released, creating a one-off favourable effect on 2012 revenues.

113 Mobile Business Mobile business revenue decreased by EUR 41.6 million, or 10.0%, to EUR 372.8 million for the year ended 31 December 2014 from EUR 414.4 million for the year ended 31 December 2013, and decreased by EUR 23.0 million, or 5.3%, for the year ended 31 December 2013 compared to EUR 437.4 million for the year ended 31 December 2012. Voice. Mobile voice revenue decreased by EUR 24.6 million, or 11.9%, to EUR 181.3 million for the year ended 31 December 2014 from EUR 205.9 million for the year ended 31 December 2013, and decreased by EUR 33.2 million, or 13.9%, for the year ended 31 December 2013 from EUR 239.1 million for the year ended 31 December 2012. The decrease in mobile voice revenue during the periods under review was mainly due to strong competition in the local market, as well as ongoing severe reductions of the MTR in the Slovak Republic following recommendations from the European Commission adopted in 2009, both of which created a push for lower retail prices of voice plans. In addition, as semi-flat and flat voice plans have become increasingly common, the correlation between the volume of minutes of use and revenue has declined. Data and messaging. Non-voice revenue from mobile data and messaging increased by EUR 4.8 million, or 4.8%, to EUR 104.9 million for the year ended 31 December 2014 from EUR 100.1 million for the year ended 31 December 2013, and increased by EUR 9.7 million, or 10.7%, for the year ended 31 December 2013 from EUR 90.4 million for the year ended 31 December 2012. The increase in revenue from mobile data and messaging during the period under review was attributable to an increase in mobile data revenue, which increased by EUR 6.5 million, or 10.4%, in 2014 and increased by EUR 13.2 million, or 26.7%, in 2013, partially offset by a decline in messaging revenue by EUR 1.7 million, or 4.5%, in 2014 and by EUR 3.5 million, or 8.6% in 2013. The increase in mobile data revenue reflected the growing number of subscribers with monthly plans with bundled internet as well as higher usage due to the increasing popularity and spread of smart phones. This decrease in messaging revenues was mainly due to the increasing popularity of tariffs with unlimited SMS volume included in the monthly subscription fee, notwithstanding growth in SMS traffic by 19% and 16% in 2014 and 2013, respectively. Other revenues. Other revenue, comprising wholesale, equipment sales and other non-recurring revenues, decreased by EUR 21.9 million, or 20.2%, to EUR 86.5 million for the year ended 31 December 2014 from EUR 108.4 million for the year ended 31 December 2013, and increased by EUR 0.4 million, or 0.4%, for the year ended 31 December 2013 from EUR 108.0 million for the year ended 31 December 2012. Wholesale revenues, which decreased by EUR 11.8 million, or 20.2%, in 2014 and decreased by EUR 9.6 million, or 14.1%, in 2013, were adversely affected by reductions in voice termination rates. Wholesale revenues also comprise visitors’ roaming revenue, which decreased by EUR 1.1 million, or 19.3%, in 2014, and decreased by EUR 1.7 million, or 23.0%, in 2013, reflecting reductions in roaming rates required by EU regulation. Equipment sales comprise sale of terminal equipment to the Group’s customers and sale of handsets to other resellers. Revenues from equipment sales decreased by EUR 8.5 million, or 25.6%, in 2014, and increased by EUR 10.7 million, or 47.6%, in 2013. The decrease of equipment sales revenues during the year ended 31 December 2014 was attributable to the fact that the Group collected revenues from instalment sales of mobile handsets in the amount of EUR 10.5 million in 2013, which did not occur in 2014. In an instalment sale, as handset revenue is not contingent upon delivery of the service, the Group is entitled to recognise the handset’s fair value as revenue, whereas in a traditional subsidised sale, the revenue from sale of handsets is limited to the upfront fee paid by the customer, which is generally substantially lower than the stand-alone fair value of the handsets. The increase of equipment sales revenue during the year ended 31 December 2013 was mainly attributable to sales to other handset resellers, which increased by EUR 7.2 million as compared to 2012. Other Businesses Other business revenue increased by EUR 29.3 million, or 74.9%, to EUR 68.4 million for the year ended 31 December 2014 from EUR 39.1 million for the year ended 31 December 2013, and increased by EUR 10.7 million, or 37.7%, for the year ended 31 December 2013 compared to EUR 28.4 million for the year ended 31 December 2012. DIGI. Revenue from DIGI accounted for 3.6% of total revenue for the year ended 31 December 2014, up from 1.1% in the previous year. This increase was due to the fact that DIGI was acquired and its revenues consolidated into the Group’s results since 1 September 2013. The consolidation of DIGI contributed EUR 27.7 million and EUR 9.1 million to the increase in revenues of other business in the years ended 31 December 2014 and 2013, respectively.

114 PosAm. Revenue from PosAm accounted for 4.5% of total revenue for the year ended 31 December 2014, compared to 3.0% for the year ended 31 December 2013 and 2.8% for the year ended 31 December 2012. Revenue from PosAm increased by EUR 10.3 million, or 42.6%, to EUR 34.5 million for the year ended 31 December 2014, from EUR 24.2 million for the year ended 31 December 2013, and increased by EUR 1.4 million, or 6.1%, for the year ended 31 December 2013 compared to EUR 22.8 million for the year ended 31 December 2012. The revenue growth in both years is largely attributable to the acquisition of a major public sector contract in 2013 relating to the supply and implementation of large cloud and storage solutions. Zoznam. Revenue from Zoznam, which runs one of the most popular internet portals in Slovakia and engages in online advertising activities, only accounted for 0.8%, 0.7% and 0.7% of total revenue for the years ended 31 December 2014, 2013 and 2012, respectively. Staff costs Staff costs decreased by EUR 2.3 million, or 1.7%, to EUR 130.1 million for the year ended 31 December 2014 from EUR 132.4 million for the year ended 31 December 2013. The decrease in staff costs for the year ended 31 December 2014 reflected the decline of 283 full-time equivalents (FTEs) as part of ongoing personnel restructuring and a one-off curtailment gain on provisions for defined benefit plans in accordance with IAS 19. This decrease in staff costs was partially offset by the cost increase of EUR 3.1 million resulting from the full-year consolidation of DIGI and an increase of EUR 2.7 million as a result of annual salary increase in accordance with collective agreement provisions. Staff costs increased by EUR 2.6 million, or 2.0%, to EUR 132.4 million for the year ended 31 December 2013 from EUR 129.8 million for the year ended 31 December 2012. The increase in staff costs during the year ended 31 December 2013 was primarily due to an increase of social security contributions of EUR 3.2 million in line with changes in local legislation, increased staff costs of EUR 1.8 million resulting from increased headcount following the acquisition of DIGI and EUR 4.2 million due to salary increases stipulated by the collective agreement. These increases were offset by a headcount reduction in connection with the on-going personnel restructuring, as average headcount decreased from 3,893 in 2012 to 3,800 in 2013, though total headcount increased from 3,835 as of 31 December 2012 to 3,890 as of 31 December 2013, reflecting the acquisition of DIGI. Material and equipment Material and equipment costs decreased by EUR 3.3 million, or 3.2%, to EUR 101.2 million for the year ended 31 December 2014 from EUR 104.5 million for the year ended 31 December 2013 and increased by EUR 11.9 million, or 12.9%, for the year ended 31 December 2013 compared to EUR 92.6 million for the year ended 31 December 2012. The decrease in material and equipment costs for the year ended 31 December 2014 was attributable to lower costs incurred for subsidised handsets sold with contracts with a 24-month commitment, one-off costs incurred in connection with delivery of hardware to a major business customer and the resale of Premier league TV broadcasting rights for the Czech Republic during the year ended 31 December 2013. The Group also reduced material and equipment costs by EUR 1.1 million for overhead costs such as fuel, consumption of low-value assets and stationary as a result of efficiency improvements. These cost reductions were partially offset by increased costs of IT hardware sold as part of ICT contracts, which increased by EUR 8.2 million from 2013. The increase in material and equipment costs during the year ended 31 December 2013 was primarily due to higher mobile equipment costs (by EUR 8.4 million) in connection with higher mobile handset sales as well as the one-off costs associated with the resale of the Premier league TV broadcasting rights for the Czech Republic. This was partially offset by declining costs of goods sold, primarily for equipment in the in the fixed-line business, reflecting management’s efforts to curtail subsidies for expensive equipment such as TVs, notebooks and tablets. As the accounting treatment for the resale of Premier league TV broadcasting rights was the same as that for the sale of merchandise, the costs associated with the resale of the Premier league TV broadcasting rights were disclosed in the same category as costs for other items of merchandise, such as mobile handsets and other equipment sold in the fixed-line business. Depreciation, amortisation and impairment losses The Group’s depreciation, amortisation and impairment losses decreased by EUR 41.9 million, or 17.7%, to EUR 195.0 million for the year ended 31 December 2014 from EUR 236.9 million for the year ended 31 December 2013, and increased by EUR 0.5 million, or 0.2%, for the year ended 31 December 2013 compared to EUR 236.4 million for the year ended 31 December 2012. The significant decrease in depreciation, amortisation and impairment losses for the year ended

115 31 December 2014 is attributable to impairment losses of EUR 16.7 million recorded in 2013 against property classified as assets held for sale in connection with management’s intention to sell real estate in the foreseeable future pursuant to IFRS requirements, and the completion of amortisation of retail customer contracts which were initially recognised as intangible non-current assets in connection with the Group’s acquisition of the remaining 49% interest in EuroTel Bratislava from Atlantic West in 2004. Interconnection and other fees to operators The Group’s interconnection and other fees to operators decreased by EUR 4.8 million, or 6.8%, to EUR 65.7 million for the year ended 31 December 2014 from EUR 70.5 million for the year ended 31 December 2013, and 16.5 million, or 19.0%, to EUR 70.5 million for the year ended 31 December 2013 from EUR 87.0 million for the year ended 31 December 2012. The decrease during the year ended 31 December 2014 was primarily due to a decrease in national voice interconnection costs by 44.8% (by 46.8% in year 2013) in the fixed-line business and by 39.1% (by 36.1% in year 2013) in the mobile business, reflecting the impact of the regulation of the mobile termination rate. Roaming costs, which are also subject to EU regulation, decreased by 20.6% in 2014 and 18.2% in 2013. During the year ended 31 December 2014, international interconnection costs in the fixed-line business increased by 3.0% in line with higher international transit traffic. International interconnection costs in the mobile business decreased by 11.6%, reflecting the decrease in the MTR by approximately 22%. Other operating income The Group’s other operating income increased by EUR 1.7 million, or 15.6%, to EUR 12.6 million for the year ended 31 December 2014 from EUR 10.9 million for the year ended 31 December 2013, and increased by EUR 0.4 million, or 3.8%, to EUR 10.9 million for the year ended 31 December 2013 from EUR 10.5 million for the year ended 31 December 2012. The increase in other operating income during the year ended 31 December 2014 was primarily due to a reversal of impairment of property and equipment of EUR 2.5 million pursuant to the decision of management to continue to use certain buildings and related land previously designated for sale, and corresponding reversal of the prior impairment of these assets.

116 Other operating costs Other operating costs increased by EUR 12.7 million, or 6.2%, to EUR 218.9 million for the year ended 31 December 2014 from EUR 206.2 million for the year ended 31 December 2013, and increased by EUR 25.1 million, or 13.9%, to EUR 206.2 million for the year ended 31 December 2013 from EUR 181.1 million for the year ended 31 December 2012. The following table presents the Group’s other operating costs for the years ended 31 December 2014, 2013 and 2012:

Year ended 31 December

2014 2013 2012

(Share of (Share of (Share of (EUR total other (EUR total other (EUR total other million operating million operating million operating audited) costs) audited) costs) audited) costs) Legal and regulatory claims...... 42.3 19.3% 26.1 12.7% — 0.0% Services related to delivery of solutions for customers ...... 24.0 11.0% 25.4 12.3% 16.0 8.8% Repairs and maintenance...... 21.4 9.8% 22.8 11.1% 25.5 14.1% Marketing costs...... 20.7 9.5% 22.4 10.9% 23.1 12.8% Content fees ...... 19.9 9.1% 15.3 7.4% 13.8 7.6% Rentals and leases ...... 18.6 8.5% 18.6 9.0% 18.2 10.0% Dealer commissions ...... 17.4 7.9% 19.1 9.3% 23.8 13.1% Energy ...... 16.3 7.4% 17.4 8.4% 18.0 9.9% IT services ...... 7.3 3.3% 8.5 4.1% 8.5 4.7% Bad debts expenses...... 6.2 2.8% 5.6 2.7% 4.5 2.5% Installation services ...... 4.9 2.2% 3.7 1.8% 3.1 1.7% Printing and postage ...... 4.6 2.1% 4.6 2.2% 4.9 2.7% Fees paid to Deutsche Telekom AG ...... 4.2 1.9% 4.4 2.1% 4.7 2.6% Consultancy...... 3.0 1.4% 4.0 1.9% 9.2 5.1% Frequency and other fees to Slovak NRA...... 2.8 1.3% 2.5 1.2% 3.5 1.9% Logistics ...... 2.3 1.1% 2.8 1.4% 3.3 1.8% Other ...... 20.0 9.1% 20.2 9.8% 19.1 10.5% Own work capitalised ...... (17.2) (7.9)% (17.2) (8.3)% (18.1) (10.0)%

Total other operating costs ...... 218.9 100.0% 206.2 100.0% 181.1 100.0%

Expenses for legal and regulatory claims increased by EUR 16.2 million, or 62.1%, to EUR 42.3 million for the year ended 31 December 2014 from EUR 26.1 million for the year ended 31 December 2013, and from nil for the year ended 31 December 2012. These amounts reflected mainly provisions for the penalty in the EC case in the amount of EUR 38.8 million, recorded in 2013 and 2014 and paid in January 2015, as well as provisions for other legal and regulatory cases recorded in 2014. Services related to delivery of solutions for customers costs consist of costs charged to the Group by subcontractors cooperating with the Group on ICT projects. Services related to delivery of solutions for customers costs decreased by EUR 1.4 million, or 5.5%, to EUR 24.0 million for the year ended 31 December 2014 from EUR 25.4 million for the year ended 31 December 2013, and increased by EUR 9.4 million, or 58.8%, for the year ended 31 December 2013, from EUR 16.0 million for the year ended 31 December 2012. The decrease in services related to delivery of solutions for customers costs during the year ended 31 December 2014 was attributable to lower costs in the fixed-line business, which in turn was in line with lower ICT revenues in 2014 as compared to 2013. The increase in cost of services related to delivery of solutions for customers during the year ended 31 December 2013 was primarily attributable to the growth of the Group’s ICT revenues in both the fixed-line business and PosAm compared to the year ended 31 December 2012. Repairs and maintenance costs decreased by EUR 1.4 million, or 6.1%, to EUR 21.4 for the year ended 31 December 2014 from EUR 22.8 million for the year ended 31 December 2013, and

117 decreased by EUR 2.7 million, or 10.6%, to EUR 22.8 million for the year ended 31 December 2013 from EUR 25.5 million for the year ended 31 December 2012. The decrease in repairs and maintenance costs during the periods under review was primarily due to re-negotiated contract prices and reduced scope for network support and maintenance of approximately EUR 2.0 million each year in connection with the Group’s focus on cost efficiency. Marketing costs decreased by EUR 1.7 million, or 7.6%, to EUR 20.7 million for the year ended 31 December 2014 from EUR 22.4 million for the year ended 31 December 2013, and decreased by EUR 0.7 million, or 3.0%, from EUR 23.1 million for the year ended 31 December 2012. The decrease in marketing costs during the period under review was primarily due to a reduction in the number of advertising campaigns and sponsoring activities. Content fees increased by EUR 4.6 million, or 30.1%, to EUR 19.9 million for the year ended 31 December 2014 from EUR 15.3 million for the year ended 31 December 2013, and increased by EUR 1.5 million, or 10.9%, for the year ended 31 December 2013 from EUR 13.8 million for the year ended 31 December 2012. The increase in content fees for the year ended 31 December 2014 was due to incremental TV content costs in connection with the full-year consolidation of DIGI. The increase in content fees during the year ended 31 December 2013 was due to an increase of EUR 2.9 million associated with costs for DIGI following its acquisition during 2013, largely offset by the elimination of excess accruals for royalties, which are levied on the Group for re-transmission of TV content and which are collected by several copyright administrations in accordance with local legislation. In addition, the Group incurred EUR 1.2 million in one-off costs in connection with the Group’s participation in a TV game, which were also reflected in higher mobile content revenues booked in 2013. The majority of the Group’s content costs are incurred in the fixed-line business. Costs of rentals and leases remained stable at EUR 18.6 for the years ended 31 December 2014 and 2013, and increased by EUR 0.4 million, or 2.2%, for the year ended 31 December 2013 from EUR 18.2 million for the year ended 31 December 2012. The increase in rentals and lease costs during the year ended 31 December 2013 was due to change of the Group’s car policy, as starting in 2013 the Group changed to leasing its fleet under operational lease arrangements, whereas previously motor vehicles had been acquired as non-current assets pursuant to finance lease arrangements. Effects of the changes in car policy are partially offset by savings in terms of rent of administrative premises, which is attributable to consolidation of Group’s headquarter function in single location, as well as reduction in the number of own shops. Dealer commissions, which consist of fees paid to operators of franchise shops, decreased by EUR 1.7 million, or 8.9%, to EUR 17.4 million for the year ended 31 December 2014 from EUR 19.1 million for the year ended 31 December 2013, and decreased by EUR 4.7 million, or 19.7%, for the year ended 31 December 2013 from EUR 23.8 million for the year ended 31 December 2012. The decrease in dealer commissions during the year ended 31 December 2014 was mainly achieved in the mobile business and reflects fewer sales transactions via indirect sales channels, as well as efforts to optimise the sales channels structure and decrease the average cost per transaction across all channels. The decrease in dealer commissions for the year ended 31 December 2013 was primarily due to the Group’s efforts to optimise the sales channels structure and to decrease average costs per transaction across all channels. Dealer commissions were also affected by a significant decrease in sales transactions through indirect sales channels, particularly in the fixed-line business during 2013. Energy costs decreased by EUR 1.1 million, or 6.3%, to EUR 16.3 million for the year ended 31 December 2014 from EUR 17.4 million for the year ended 31 December 2013, and decreased by EUR 0.6 million, or 3.3%, to EUR 17.4 million for the year ended 31 December 2013 from EUR 18.0 million for the year ended 31 December 2012. The decrease in energy costs for the year ended 31 December 2014 reflected ongoing saving initiatives, mainly in connection with the migration to all-IP and related dismantling of old technology. The decrease in energy costs during the year ended 31 December 2013 reflected the Group’s efforts to negotiate more favourable energy prices as well as the reduction of energy consumption, focused on sustainable cost and energy efficiency, achieved mainly through continuing efforts aimed to reduce complexity of the Group’s applications and systems and replacement of the Group’s network components with cost efficient upgrades. IT services costs decreased by EUR 1.2 million, or 14.1%, to EUR 7.3 million for the year ended 31 December 2014 from EUR 8.5 million for the year ended 31 December 2013, and remained stable at EUR 8.5 million in the year ended 31 December 2013 and the year ended 31 December 2012. The decrease in IT services costs for the year ended 31 December 2014 reflected renegotiation of several

118 support contracts and SLAs targeted to reduce charges and lower costs for implementation of the CRM system, which was upgraded during 2013. Bad debt expenses increased by EUR 0.6 million, or 10.7%, to EUR 6.2 million for the year ended 31 December 2014 from EUR 5.6 million for the year ended 31 December 2013, and increased by EUR 1.1 million, or 24.4%, for the year ended 31 December 2013 from EUR 4.5 million for the year ended 31 December 2012. The increase in bad debt expenses for the year ended 31 December 2014 reflected bad debt provisions of EUR 0.2 million for outstanding bills for roaming services in the Slovak Republic provided to the Group’s Iranian roaming contract counterparty arising in connection with fraudulent call activity, specific provisions of EUR 0.2 million for outstanding receivables of business customers and a one-off expense of approximately EUR 0.2 million resulting from methodological changes in the hard suspend process. The increase in bad debt expenses during the year ended 31 December 2013 was attributable to re-assessment of the collectability of trade receivables and unification of the provisioning policy for the fixed-line and mobile business, which resulted in a one-time increase of bad debt expenses in 2013. In addition, in 2013, bad debt expenses were affected by the creation of provisions for outstanding receivables from instalment sales of mobile handsets, which were first introduced in December 2012. Installation services costs increased by EUR 1.2 million, or 32.4%, to EUR 4.9 million for the year ended 31 December 2014 from EUR 3.7 million for the year ended 31 December 2013, and increased by EUR 0.6 million, or 19.4%, from EUR 3.1 million for the year ended 31 December 2012. The increase in installation costs during the year ended 31 December 2014 was primarily due to the Group’s decision to migrate its satellite Pay TV customers to a new platform, which required outsourcing of services to re-position the customers’ satellite dishes. The increase in installation services during the year ended 31 December 2013 primarily reflects a higher number of fixed-line accesses in 2013 than in 2012 that were installed through a third party vendor rather than by internal staff at the Company. Printing and postage costs remained stable at EUR 4.6 million for the year ended 31 December 2014 and the year ended 31 December 2013, and decreased by EUR 0.3 million, or 6.1%, from EUR 4.9 million for the year ended 31 December 2012. The decrease in printing and postage costs reflected the increasing share of e-bills of total bills issued, to 45% during 2013 from 40% in 2012, resulting in a significant reduction in the number of paper invoices and associated costs. Costs for fees paid to Deutsche Telekom decreased by EUR 0.2 million, or 4.5%, to EUR 4.2 million for the year ended 31 December 2014 from EUR 4.4 million for the year ended 31 December 2013, and decreased by EUR 0.3 million, or 6.4%, for the year ended 31 December 2013 from EUR 4.7 million for the year ended 31 December 2012. A significant proportion of the fees paid to Deutsche Telekom represents licences fees for using the ‘‘T’’ brand and are calculated as a percentage of external revenues of the Group for the given year. Consultancy costs decreased by EUR 1.0 million, or 25%, to EUR 3.0 million for the year ended 31 December 2014 from EUR 4.0 million, and decreased by EUR 5.2 million, or 56.5%, for the year ended 31 December 2013 from EUR 9.2 million for the year ended 31 December 2012. The decrease in consultancy costs during the year ended 31 December 2014 was primarily due to re-classification of costs of outsourcing accounting services, which were reported as consultancy costs in 2013 but since 2014 have been classified as Other costs. The decrease in consultancy costs during the year ended 31 December 2013 was primarily due to lower legal advisory costs related to the litigation and regulatory proceedings. See ‘‘Business – Legal Proceedings’’. Costs for frequency and other fees paid to the Slovak NRA, including recurring fees paid for utilisation of frequency bands, increased by EUR 0.3 million, or 12%, to EUR 2.8 million for the year ended 31 December 2014 from EUR 2.5 million for the year ended 31 December 2013, and decreased by EUR 1.0 million, or 28.6%, for the year ended 31 December 2013 compared to EUR 3.5 million for the year ended 31 December 2012. The increase in frequency and other fees for the year ended 31 December 2014 mainly reflected higher fees imposed by Slovak NRA for microwave connectivity and fees related to point-to-point accesses used for LTE. The decrease in frequency fees during the year ended 31 December 2013 mainly relates to lower fees imposed by Slovak NRA for utilisation of the 450MHz, 900MHz, 1,800MHz and 2,100MHz frequency bands and also lower fees for point-to-point accesses. Other costs decreased by EUR 0.2 million, or 1.0%, to EUR 20.0 million for the year ended 31 December 2014 from EUR 20.2 million for the year ended 31 December 2013, and increased by

119 EUR 1.1 million, or 5.8%, for the year ended 31 December 2013 compared to EUR 19.1 million for the year ended 31 December 2012. Own work capitalised, which represents the share of staff costs incurred in connection with the creation, development and acquisition of non-current assets, remained flat at EUR 17.2 million for the years ended 31 December 2014 and 31 December 2013, and decreased by EUR 0.9 million, or 5.0%, for the year ended 31 December 2013 compared to a credit of EUR 18.1 million for the year ended 31 December 2012. The decrease in own work capitalised during the year ended 31 December 2013 was primarily due to downsizing of the Group’s staff, including employees engaged in the Group’s development projects that are being capitalised as part of the cost of non-current assets. Financial income Financial income increased by EUR 0.3 million, or 11.5%, to EUR 2.9 million for the year ended 31 December 2014 from EUR 2.6 million for the year ended 31 December 2013, and decreased by EUR 2.3 million, or 46.9%, to EUR 2.6 million for the year ended 31 December 2013, from EUR 4.9 million for the year ended 31 December 2012. The increase in financial income for the year ended 31 December 2014 was mainly due to higher interest earned from term deposits and available for sale investments in 2014. The decrease in financial income for the year ended 31 December 2013 reflected an overall decrease in interest rates on the financial markets as well as decreased interest earned on loans that had been granted to Deutsche Telekom as the loan was repaid. Financial expense Financial expense decreased by EUR 0.6 million, or 33.3%, to EUR 1.2 million for the year ended 31 December 2014 from EUR 1.8 million for the year ended 31 December 2013, and remained stable at EUR 1.8 million for the year ended 31 December 2013 and the year ended 31 December 2012. The decrease in financial expense for the year ended 31 December 2014 was mainly due to a decrease in foreign exchange losses as a result of foreign exchange rate fluctuations between the years. Taxation Income tax expense increased by EUR 6.5 million, or 31.1%, to EUR 27.4 million for the year ended 31 December 2014 from EUR 20.9 million for the year ended 31 December 2013, and decreased by EUR 29.6 million, or 58.6%, for the year ended 31 December 2013 compared to EUR 50.5 million for the year ended 31 December 2012. The Group’s effective tax rate was 39%, 30% and 44% for the years ended 31 December 2014, 2013 and 2012, respectively, as compared to a Slovak corporate tax rate for the years ended 31 December 2014, 2013, and 2012 of 22%, 23% and 19% respectively. The effective tax rates for the years ended 31 December 2013 and 31 December 2014 were significantly higher than the nominal tax rates primarily due to non-tax deductible legal and regulatory expenses in 2013 and 2014. Moreover, the changes in corporate tax rates for the years 2014 and 2013 (enacted in 2013 and 2012, respectively) significantly affected the recalculation of deferred taxes resulting in an income of EUR 5.8 million in 2013 and expense of EUR 26.3 million in 2012. In addition, the Group made payments pursuant to a levy of 4.356% imposed by the Slovak government on regulated industries, which went into effect on 1 September 2012. This resulted in an additional tax expense of EUR 2.5 million, EUR 3.1 million and EUR 2.1 million for the years ended 31 December 2014, 31 December 2013 and 31 December 2012, respectively.

120 Segmental comparison of results of operations for the years ended 31 December 2014, 2013 and 2012 The following table presents a breakdown of the Group’s results of operations by segment for the years ended 31 December 2014, 2013 and 2012: Year ended 31 December

2014 2013 2012

(EUR Share of (EUR Share of (EUR Share of million, segment million, segment million, segment audited) revenue audited) revenue audited) revenue Fixed-line Business Total external revenue, of which 326.4 100.0% 355.5 100.0% 361.0 100.0% Service revenue ...... 276.1 84.6% 294.0 82.7% 314.9 87.2% Terminal equipment ...... 11.3 3.5% 11.3 3.2% 11.5 3.2% System solutions/IT ...... 21.8 6.7% 26.3 7.4% 12.8 3.5% Other ...... 17.2 5.3% 23.9 6.7% 21.9 6.1% Revenues within ST Group (eliminated in consolidation)...... 0.7 0.2% 0.7 0.2% 0.3 0.1% Bad debts expenses...... (2.0) (0.6)% (1.5) (0.4)% (1.2) (0.3)% Content fees ...... (11.0) (3.4)% (9.6) (2.7)% (12.0) (3.3)% Customer solutions ...... (12.3) (3.8)% (20.5) (5.8)% (12.0) (3.3)% Dealer commissions ...... (6.4) (2.0)% (6.6) (1.9)% (10.1) (2.8)% Interconnection and other fees to operators ...... (32.3) (9.9)% (31.0) (8.7)% (35.6) (9.9)% Material and equipment...... (14.3) (4.4)% (13.1) (3.7)% (9.6) (2.7)% Other direct costs ...... (0.2) (0.1)% (0.1) 0.0% (0.2) (0.1)% Fixed segment gross margin...... 248.6 76.2% 273.6 77.0% 280.7 77.7% Mobile Business Total external revenue, of which 372.8 100.0% 414.4 100.0% 437.4 100.0% Service revenue ...... 332.8 89.3% 364.5 88.0% 397.6 90.9% Terminal equipment ...... 24.9 6.7% 33.3 8.0% 22.7 5.2% Other ...... 15.1 4.1% 16.6 4.0% 17.1 3.9% Revenues within ST Group (eliminated in consolidation)...... 0.3 0.1% 0.2 — 0.2 — Bad debts expenses...... (4.0) (1.1)% (4.0) (1.0)% (3.3) (0.8)% Content fees ...... (3.3) (0.9)% (2.7) (0.7)% (1.8) (0.4)% Customer solutions ...... (0.1) 0.0% — 0.0% — 0.0% Dealer commissions ...... (9.7) (2.6)% (11.5) (2.8)% (12.7) (2.9)% Interconnection and other fees to operators ...... (33.5) (9.0)% (40.0) (9.7)% (51.6) (11.8)% Material and equipment...... (72.8) (19.5)% (78.8) (19.0)% (70.3) (16.1)% Other direct costs ...... (1.8) (0.5)% (2.0) (0.5)% (2.2) (0.5)% Mobile segment gross margin 247.8 66.5% 275.6 66.5% 295.6 67.6% Other Businesses Total external revenue, of which . 68.4 100.0% 39.1 100.0% 28.4 100.0% Service revenue ...... 23.4 34.2% 9.1 23.3% — 0.0% System solutions/IT ...... 34.4 50.3% 24.2 61.9% 22.8 80.3% Other ...... 10.6 15.5% 5.8 14.8% 5.6 19.7% Revenues within ST Group (eliminated in consolidation)...... 8.7 12.7% 7.0 17.9% 7.9 27.8% Bad debts expenses...... (0.2) (0.3)% — 0.0% — 0.0% Content fees ...... (9.9) (14.5)% (3.3) (8.4)% — 0.0% Customer solutions ...... (11.9) (17.4)% (5.2) (13.3)% (4.0) (14.1)% Dealer commissions ...... (1.3) (1.9)% (1.1) (2.8)% (1.2) (4.2)% Interconnection and other fees to operators ...... (0.5) (0.7)% (0.2) (0.5)% — 0.0% Material and equipment...... (10.6) (15.5)% (7.3) (18.7)% (8.2) (28.9)% Other direct costs ...... (2.3) (3.4)% (0.8) (2.0)% (0.5) (1.8)% Other segment gross margin ...... 40.5 59.1% 28.3 72.1% 22.4 78.9%

121 Liquidity and Capital Resources The Group’s primary uses of cash are financing its operations, capital investments in maintaining its network and infrastructure, spectrum licence and content acquisition, investments in financial instruments and dividends paid to its shareholders. Dividends paid to shareholders have amounted to EUR 16.4 million, EUR 70.6 million and EUR 92.0 million in the years ended 31 December 2014, 2013 and 2012, respectively. See ‘‘Dividends.’’ The Group’s primary sources of liquidity are, and following the Offering are expected to be, cash flows generated from its operations. In the opinion of the Company, its working capital, including cash-like items, is sufficient for and is expected to be used as a primary source for the Group’s present requirements at least twelve months after the date of this Prospectus, including the Group’s capital expenditures planned for 2015 as well as for all principal future investments on which the respective Group management bodies have already made firm commitments. Capital Expenditures The Group defines capital expenditures as additions to property, plant and equipment and intangible non-current assets. Capital expenditures were EUR 119.0 million, EUR 174.9 million and EUR 104.6 million in the years ended 31 December 2014, 2013 and 2012, respectively. In addition, the Group had capital expenditures of EUR 63.5 million in the year ended 31 December 2013 and EUR 1.8 million in the year ended 31 December 2012 for acquisition of spectrum licences. Capital expenditures during these periods related primarily to roll-out of the LTE and 3G mobile networks, renewal of the 2G network, upgrades of the fixed-line network and fibre rollout, investments in new CRM as well as acquisition of customer premises equipment (such as set-top-boxes, home access gateways and optical network terminations) and TV content. The Group has approved a capital expenditure budget of EUR 123.0 million for the year ended 31 December 2015, of which EUR 22.9 million had been made through 31 March 2015. Capital expenditures for 2015 are expected to be primarily for further rollout of fixed-line optical and metallic coverage, LTE coverage and consolidation of IT platforms, individual solutions for business customers as well as acquisition of customer premises equipment and TV content for which the broadcasting rights meet the criteria for recognition as intangible assets, amounting to a total of EUR 70.7 million. All of such principal investments are in progress as of 31 March 2015 and are financed using cash flows generated from the Group’s operations and are made principally in the Slovak Republic. The Group’s purchase commitments as of 31 December 2014 were EUR 79.1 million. The Group regularly revises its planned capital expenditures based on developments in the market, and accordingly actual capital expenditures for any future period may vary from capital expenditures as previously budgeted or disclosed by the Group.

122 Statements of Cash Flows The following table presents the Group’s consolidated cash ﬂows for the years ended 31 December 2014, 2013 and 2012:

Year ended 31 December

2014 2013 2012

(EUR million, audited) Operating activities Proﬁt for the year ...... 43.6 49.3 63.1 Adjustments for: Depreciation, amortisation and impairment losses...... 195.0 236.9 236.4 Income tax expense...... 27.4 20.9 50.5 Other ...... 28.3 29.6 (2.3) Changes in working capital: Change in trade and other receivables...... 20.4 (15.9) (8.1) Change in inventories ...... 2.5 0.2 (2.5) Change in trade and other payables...... (1.4) 13.4 13.5 Cash ﬂows from operations ...... 315.8 334.3 350.6 Income taxes paid ...... (50.8) (43.9) (57.4)

Net cash from operating activities ...... 265.0 290.4 293.1

Investing activities Purchase of property and equipment and intangible assets .... (178.3) (111.9) (104.5) Proceeds from disposal of property and equipment and intangible assets ...... 2.7 2.1 1.9 Acquisition of interest in subsidiaries...... 1.6 (52.7) (2.4) Acquisition of investments at amortised cost ...... — — (70.6) Proceeds from disposal of investments at amortised cost ...... — 70.6 78.1 Acquisition of available-for sale investments ...... (32.9) (231.5) — Proceeds from disposal of available-for sale investments...... 50.0 1.9 — Disbursement of loans ...... (150.0) — (140.0) Repayment of loans ...... — — 330.0 Acquisition of term deposits...... (423.5) (207.5) (136.0) Termination of term deposits ...... 348.3 169.7 30.0 Interest received ...... 6.6 1.5 6.0

Net cash used in investing activities...... (375.5) (357.9) (7.6)

Financing activities Dividends paid ...... (16.4) (70.6) (92.0) Other ...... (9.0) (4.3) (0.7)

Net cash used in ﬁnancing activities ...... (25.4) (74.8) (92.7)

Net increase/(decrease) in cash and cash equivalents...... (136.0) (142.4) 192.9 Cash and cash equivalents at the beginning of the period...... 229.1 371.5 178.6

Cash and cash equivalents at the end of the period...... 93.1 229.1 371.5

Net cash ﬂows from operating activities Net cash ﬂows from operating activities primarily result from net income, adjusted for non-cash items such as depreciation and amortisation, movements in provisions, income tax expense, changes in working capital and income taxes paid.

Net cash ﬂows from operating activities decreased by EUR 25.4 million, or 8.7%, to EUR 265.0 million for the year ended 31 December 2014, from EUR 290.4 million for the year ended 31 December 2013. The principal movements were a decrease in proﬁt for the year by EUR 5.7 million, or 11.6%, from EUR 49.3 million to EUR 43.6 million for the year ended 31 December 2014, a decrease in

123 depreciation, amortisation and impairment losses by EUR 41.9 million, or 17.7%, to EUR 195.0 million for the year ended 31 December 2014 from EUR 236.9 million for the year ended 31 December 2013, an increase in provision charge of EUR 2.7 million to EUR 28.2 million for the year ended 31 December 2014 from EUR 25.5 million for the year ended 31 December 2013, and an increase in income tax expense of EUR 6.5 million to EUR 27.4 million for the year ended 31 December 2014 from EUR 20.9 million for the year ended 31 December 2013. Working capital improved, as trade and other receivables increased by EUR 15.9 million for the year ended 31 December 2013 but decreased by EUR 20.4 million for the year ended 31 December 2014 as a result of higher receivables towards the end of 2013 related to the billing of finalised ICT transactions and better cash collection. Cash from change in inventories increased from EUR 0.2 million for the year ended 31 December 2013 to EUR 2.5 million for the year ended 31 December 2014 as a result of improved logistics processes and optimisation of inventory stock. These amounts were offset by changes in trade and other payables, which increased by EUR 13.4 million for the year ended 31 December 2013 but decreased by EUR 1.4 million for the year ended 31 December 2014, reflecting primarily higher payables towards the end of 2013 related to subcontractors of the billed ICT transactions and higher other liabilities in 2014 related to legal and regulatory fines. Income tax paid increased to EUR 50.8 million for the year ended 31 December 2014, from EUR 43.9 million for the year ended 31 December 2013, reflecting higher income tax expense for 2013 mainly due to the increase in tax rate from 19% to 23%. In general, cash taxes for the year are derived from current income tax expense of the previous year. Net cash flows from operating activities decreased by EUR 2.7 million, or 0.9% to EUR 290.4 million for the year ended 31 December 2013, from EUR 293.1 million for the year ended 31 December 2012. The principal movements were a decrease in profit for the year by EUR 13.8 million from EUR 63.1 million for the year ended 31 December 2012 to EUR 49.3 million for the year ended 31 December 2013 and a decrease in income tax expense by EUR 29.6 million from EUR 50.5 million for the year ended 31 December 2012 to EUR 20.9 million for the year ended 31 December 2013, reflecting the effect of re-calculation of deferred tax, partially offset by an increase in provision charges by EUR 26.9 million from EUR 1.4 million for the year ended 31 December 2012 to EUR 25.5 million in connection with increased provisions for legal and regulatory cases for the year ended 31 December 2013. In the Group’s working capital, trade and other receivables increased by EUR 8.1 million for the year ended 31 December 2012 and further increased by EUR 15.9 million for the year ended 31 December 2013 as a result of the introduction of instalment sales of mobile handsets and higher receivables towards the end of 2013 related to the billing of finalised ICT transactions. Inventories increased by EUR 2.5 million for the year ended 31 December 2012 and decreased by EUR 0.2 million for the year ended 31 December 2013 as a result of improved logistics processes and optimisation of inventory stock. Change in trade and other payables remained approximately constant, increasing by EUR 13.5 million for the year ended 31 December 2012 and further increasing by EUR 13.4 million for the year ended 31 December 2013, mainly as a result of working capital steering and higher payables towards the end of 2013 related to subcontractors of the billed ICT transactions. Income taxes paid decreased by EUR 13.5 million to EUR 43.9 million for the year ended 31 December 2013, from EUR 57.4 million for the year ended 31 December 2012, reflecting the fact that income tax paid in 2012 was significantly higher due to payment of current tax for 2011, in which year tax prepayments were very low as a result of the merger between the Company and T-Mobile, a.s., in 2010.

Net cash used in investing activities Net cash used in investing activities increased by EUR 17.6 million to EUR 375.5 million for the year ended 31 December 2014, from EUR 357.9 million for the year ended 31 December 2013. The increase in net cash used in investing activities during the year ended 31 December 2014 reﬂected primarily an increase in purchase of property and equipment and intangible assets to EUR 178.3 million for the year ended 31 December 2014 from EUR 111.9 million for the year ended 31 December 2013 due to payment for LTE licences in 2014; disbursement of loans to the Principal Shareholder in the amount of EUR 150 million, as compared to EUR nil for the year ended 31 December 2013; an increase in net acquisitions and terminations of term deposits to EUR 75.2 million for the year ended 31 December 2014 from EUR 37.8 million for the year ended 31 December 2013, in connection with the Group’s cash management activities; and a reduction in

124 cash generated from disposal of investments at amortised cost to EUR nil for the year ended 31 December 2014 from EUR 70.6 million for the year ended 31 December 2013 in connection with maturing government bonds in 2013, offset by a reduction in cash used for acquisition of available for sale investments to EUR 32.9 million for the year ended 31 December 2014 from EUR 231.5 million for the year ended 31 December 2013 in connection with the Group’s cash management activities; an increase in proceeds from disposal of available for sale investments to EUR 50.0 million for the year ended 31 December 2014, from EUR 1.9 million for the year ended 31 December 2013 in connection with maturing government bonds in 2014; and net cash generated from acquisition of subsidiaries of EUR 1.6 million for the year ended 31 December 2014, as compared to a use of cash of EUR 52.7 million for the year ended 31 December 2013 in connection with the acquisition of DIGI. Net cash used in investing activities increased by EUR 350.3 million to EUR 357.9 million for the year ended 31 December 2013, from EUR 7.6 million for the year ended 31 December 2012. The significant increase in net cash used in investing activities during the year ended 31 December 2013 reflected primarily the acquisition of DIGI, in which the Group paid EUR 53.0 million into a separately established escrow account and EUR 40.0 million of this amount was paid to the seller as the first part of the consideration; and an increase of net cash used in acquisition of bonds (classified as available-for-sale investments) by EUR 231.5 million from EUR nil for the year ended 31 December 2012, offset by a decrease in the net acquisition of term deposits by EUR 68.2 million from net payments for acquisition of term deposits of EUR 106.0 million for the year ended 31 December 2012 to net payments for acquisition of term deposits EUR 37.8 million for the year ended 31 December 2013. The lower net cash used in investing activities for the year ended 31 December 2012 was also positively affected by EUR 190 million in net repayment of loans provided to Deutsche Telekom AG.

Net cash used in financing activities Net cash used in financing activities decreased by EUR 49.4 million, or 66.0%, to EUR 25.4 million for the year ended 31 December 2014 from EUR 74.8 million for the year ended 31 December 2013, and decreased by EUR 17.9 million, or 19.3%, for the year ended 31 December 2013 compared to EUR 92.7 million for the year ended 31 December 2012. The changes in net cash used in financing activities primarily reflected the payment of dividends in the aggregate amount of EUR 16.4 million, EUR 70.6 million and EUR 92.0 million in the years ended 31 December 2014, 2013 and 2012, respectively.

Contractual Obligations The Group has various contractual obligations and commercial commitments to make future payments, primarily lease obligations and other contractual commitments.

Lease obligations During 2014, the Group entered into a new finance lease agreement with respect to purchase of hardware. For periods through 2014, the Group entered into finance lease contracts with respect to vehicles, secured by the lessor’s title to the leased assets. These vehicles were leased for an average term of four years, and the Group has an option to purchase the vehicles for the residual value at the end of the lease term. The leases terminated during 2014, and the Group purchased the vehicles for the residual value. The table below presents the Group’s finance lease obligations, based on the present value of payments. As at 31 December

2014 2013 2012

(EUR million, audited) Within 1 year...... 0.3 — 0.1 Between 1 and 3 years ...... 0.3 — —

Total ...... 0.6 — 0.1

During 2013, the Group entered into an operating lease contract for ten years with respect to an administrative building in Bratislava, with an option to extend for two years on up to ﬁve occasions.

125 Starting in 2015, payments are to increase annually by reference to the Eurozone consumer price index, up to an annual maximum of 3.5%. The table below presents the Group’s future minimum operating lease payments as of the dates indicated. As at 31 December

2014 2013 2012

(EUR million, audited) Within 1 year...... 12.4 12.9 10.6 Between 1 and 5 years ...... 24.7 23.1 12.4 After 5 years ...... 18.9 19.8 6.0

Total...... 56.0 55.8 29.0

Purchase commitments The Group has entered into purchase commitments in relation to contracts of acquisition of property and equipment, intangible assets, services and inventory. For the year ended 31 December 2014, service contracts included those for rental of shops, legal services, media agency services and the T- brand licence fee for 2015. Inventory contracts were mainly related to purchases of Apple equipment. The table below presents the Group’s purchase commitments as of the dates indicated.

As at 31 December

2014 2013 2012

(EUR million, audited) Acquisition of property and equipment ...... 14.6 15.3 10.7 Acquisition of intangible assets ...... 1.8 1.3 14.9 Purchase of services and inventory...... 62.7 97.3 74.4

Total...... 79.1 113.9 100.0

Other provisions and contingencies Provisions The Group is subject to obligations for dismantlement, removal and restoration of assets associated with its cell site operating leases. Cell site lease agreements may contain clauses requiring restoration of the leased site at the end of the lease term, creating an asset retirement obligation. As of 31 December 2014, the Group had made a provision of EUR 12.5 million in respect of such obligations. The Group recognised a provision related to unpaid part of the purchase price for the acquisition of DIGI, in the amount of EUR 1 million. This amount is payable, net of any indemnity payments by the former owner of DIGI to the Group, on 31 August 2015. The restructuring of the Group’s operations resulted in a headcount reduction of 285 employees in 2013, and further headcount reduction of 269 employees in 2014 in connection with its ongoing restructuring program. A detailed formal plan that specifies the number of staff involved and their locations and functions was defined and authorised by management and announced to the trade unions. The amount of compensation to be paid for terminating employment was calculated by reference to the collective agreement, and included within staff costs. The termination payments are expected to be paid within twelve months of the statement of financial position date and are recognised in full in the relevant period. The Group recognised an expense resulting from termination benefits in amount of EUR 4.4 million, EUR 5.4 million and EUR 6.1 million in staff costs for the years ended 31 December 2014, 2013 and 2012, respectively. The Group expects a further headcount reduction of 241 employees during 2015. As of 31 December 2014, the Group had made a provision of EUR 2.7 million in respect of such costs. The group provides benefit plans for all its employees, and makes provisions for benefits payable in respect of retirement and jubilee benefits. One-off retirement benefits are dependent on employees fulfilling the required conditions to enter retirement and jubilee benefits are dependent on the number

126 of years of service with the Group. The benefit entitlements are determined from the respective employee’s monthly remuneration or as a defined particular amount. The principal actuarial assumptions used in determining the defined benefit obligation and the curtailment effect in 2014 include the discount rate of 1.84%. The expected expense for 2014 has been determined based on the discount rate as at the beginning of the period of 3.25%. The average retirement age is 62 years, with expected growth of nominal wages over the long term of 2.2% with minor adjustments for the first two years and a weighted average duration of the defined benefit obligation is 13.4 years. As of 31 December 2014, the Company had made a provision of EUR 11.9 million in respect of retirement benefits, and an additional EUR 0.2 million with respect to jubilee benefits.

Contingencies The Group is a defendant in a number of lawsuits and regulatory proceedings. When considering the recognition of a provision, management judges the probability of future outflows of economic resources and its ability to reliably estimate such future outflows. If these recognition criteria are met a provision is recorded in the amount of the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Such judgments and estimates are continually reassessed taking into consideration the developments of the legal cases and proceedings and opinion of lawyers and other subject matter experts involved in resolution of the cases and proceedings. As at 31 December 2014, the Group recognised provision for known and quantifiable risks related to proceedings against the Group, which represent the best estimate of the amounts, which are more likely than not to be paid, in the aggregate amount of EUR 32.1 million. The actual amounts of penalties, if any, are dependent on a number of future events the outcome of which is uncertain, and, as a consequence, the amount of provision may change at a future date. See ‘‘Business – Legal Proceedings’’ as well as Notes 29 and 36 to the Financial Statements for further information on these proceedings.

Risk Management Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group is exposed to credit risk from its operating activities and certain financing activities. The Group’s credit risk policy defines products, maturities of products and limits for financial counterparties. The Group manages its credit risk exposure both internally and based on the recommendations of the Deutsche Telekom Group Treasury. The Group limits credit exposure to individual financial institutions and securities issuers on the basis of the credit ratings assigned to these institutions by reputable rating agencies and these limits are reviewed on a regular basis. The Group is exposed to concentration of credit risk as at 31 December 2014 from holding state bonds in the principal amount of EUR 103.0 million issued by the Netherlands; EUR 53.0 million issued by the Slovak Republic; and EUR 52.1 million issued by Finland; and a loan receivable from the Principal Shareholder’s group in the amount of EUR 150.0 million provided to Deutsche Telekom (Germany). The Group’s counterparty credit limits and maximum maturity can be decreased based on recommendation by the Principal Shareholder’s group treasury in order to manage the Principal Shareholder group’s overall risk exposure. The Group’s credit risk management takes into account various risk indicators including, but not limited to CDS level, rating and negative movement of the share price of the counterparty. The Group establishes an allowance for impairment that represents its estimate of losses incurred in respect of trade and other receivables. Impairment losses are recognised to cover both individually significant credit risk exposures and a collective loss component for assets that are assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables includes the Group’s past experience of collecting payments, as well as changes in the internal and external ratings of customers. In respect of financial assets, which comprise cash and cash equivalents, loans, escrow, term deposits, investments at amortised cost, available-for-sale investments, trade and other receivables, the Group’s exposure to credit risk arises from the potential default of the counterparty, with a maximum exposure equal to the carrying amount of the financial assets. In April 2012 the Group and Posˇtova´ banka, a.s. (Posˇtova´ banka) signed an agreement about granting the Group a lien on certain securities, to secure Posˇtova´ banka’s obligations in respect of certain payments it accepts on behalf of

127 the Group up to EUR 15.0 million, through a pledge of Slovak state bonds in the nominal value of EUR 17.5 million. In the first quarter of 2015, this pledge was decreased to EUR 15.0 million. The Group assesses its financial investments at each reporting date to determine whether there is any objective evidence that they are impaired. A financial investment is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that investment. Significant financial investments are tested for impairment on an individual basis. The remaining financial investments are assessed collectively in groups that share similar credit risk characteristics. An impairment loss in respect of a financial investment is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. The reversal of the impairment loss is recognised in profit or loss.

Receivables The Group establishes an allowance for impairment that represents its estimate of losses incurred in respect of trade and other receivables based on historical experience. Impairment losses are recognised to cover both individually signiﬁcant credit risk exposures and a collective loss component for assets that are assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables includes the Group’s past experience of collecting payments, as well as changes in the internal and external ratings of customers. The following table summarises the ageing structure of the Group’s trade and other receivables as at the dates indicated.

Past due but not impaired (audited)

Neither past due nor impaired 5 30 31-90 91-180 181-365 4 365 (audited) days days days days days

At 31 December 2014 ...... 94.9 0.3 0.0 0.1 0.1 0.1 At 31 December 2013 ...... 121.4 0.3 0.1 0.0 0.1 0.1 At 31 December 2012 ...... 101.3 1.1 0.1 0.1 0.1 0.2 No signiﬁcant individually impaired trade receivables were included in the allowance for impairment losses during the period under review. Trade receivables that are past due as at the statement of ﬁnancial position date, but not impaired, are from creditworthy customers who have a good track record with the Group and, based on historical default rates, management believes that no additional impairment allowance is necessary.

Liquidity Risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group’s seeks to manage liquidity risk by defining the level of cash and cash equivalents, marketable securities and the credit facilities available to the Group to allow it to meet its obligations on time and in full. The Group does not currently have any credit facilities in place. The funding of liquidity needs is based on comparisons of income earned on cash and cash equivalents and available- for-sale investments with the cost of financing available on credit facilities, with the objective of holding predetermined minimum amounts of cash and cash equivalents and credit facilities available on demand.

128 The table summarises the maturity proﬁle of the Group’s ﬁnancial liabilities based on contractual undiscounted payments as at the dates indicated:

As at 31 December

2014 2013 2012

(EUR million, audited) On demand ...... 6.4 13.7 13.0 Less than 3 months...... 106.7 196.8 108.3 3 to 12 months...... 15.8 14.6 12.3 Over 1 year ...... 0.6 1.2 0.3

Foreign currency risk Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in foreign exchange rates. The Group is exposed to transactional foreign currency risk arising from international interconnectivity. In addition, the Group is exposed to risks arising from capital and operational expenditures denominated in foreign currencies.

The Group can use forward currency contracts, currency swaps or spot-market trading to eliminate the exposure towards foreign currency risk. It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximise hedge effectiveness. Such a hedge however does not qualify for hedge accounting under the speciﬁc rules of IAS 39.

For all planned, but not yet determined, foreign currency denominated cash ﬂows (uncommitted exposure) of the following 12 months (rolling 12 month approach) a hedging ratio of at least 50% is applied. The Group uses term deposits in foreign currencies to hedge these uncommitted exposures. Short-term cash forecasts are prepared on a rolling basis to quantify the Group’s expected exposure. The Group’s risk management policy requires the hedging of every cash ﬂow denominated in foreign currency exceeding the equivalent of EUR 250,000.

The Group’s foreign currency risk relates mainly to the changes in U.S. dollar foreign exchange rates, with immaterial risk related to ﬁnancial assets and ﬁnancial liabilities denominated in other foreign currencies.

Management estimates that an appreciation or depreciation of 10% in the exchange rate of the EUR against the U.S. dollar, with all other variables held as constant, would affect each of proﬁt before tax and equity by less than EUR 1.0 million.

Critical Accounting Policies The preparation of the Group‘s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent liabilities reported at the end of the period and the reported amounts of revenue and expenses for that period. Actual results may differ from these estimates. In the process of applying the Group‘s accounting policies, management has made the following judgements, estimates and assumptions described below, which have the most significant effect on the amounts recognised in the financial statements. See also Note 2.20 to the Financial Statements.

Useful lives of non-current assets The estimation of the useful lives of non-current assets is a matter of judgment based on the Group’s experience with similar assets. The Group reviews the estimated remaining useful lives of non-current assets annually. Changes in the expected useful life or the expected pattern of consumption of future economic beneﬁts embodied in the asset are accounted for by changing the depreciation or amortisation period, as appropriate, and are treated as changes in accounting estimates. Management’s estimates and judgments are inherently prone to inaccuracy for those assets for which no previous experience exists.

The Group reviewed useful lives of non-current assets during 2014 and changed accounting estimates where appropriate.

129 Customer relationships The Group maintains records of customer relationships obtained during the acquisition of control of T-Mobile, DIGI and PosAm and regularly evaluates appropriateness of useful lives used to amortise these intangible assets on the basis of churn of customers acquired through the business combination. No changes to useful lives were necessary in 2014. If the useful lives of customer relationships were shortened by one year, the amortisation would increase by EUR 8.1 million, and if the useful lives were shortened by two years, amortisation would increase by EUR 21.3 million.

Activation fees and subscriber acquisition and retention costs The Group defers activation, non-refundable up-front fees in cases when the delivery of products or rendering of services does not present a separate earnings process and the activation fees are not offset by a delivered product or rendered services. This period is estimated on a basis of an anticipated term of customer relationship under the arrangement which generated the activation fee. The estimated customer relationship period is reassessed at each ﬁnancial year-end. Costs incurred in direct relation to customer activation (such as SIM card costs and commissions) are deferred to the extent of activation revenue and amortised in the same manner as the activation fees. Other subscriber acquisition costs, which primarily include losses on subsidised handsets and hardware, are expensed as incurred.

Easements On disposal of certain properties where technological equipment is sited and required for the Group’s operations, the Group enters into certain agreements to obtain easement rights to continue to use and access this equipment for extended periods. Management has determined, based on an evaluation of the terms and conditions of these sales agreements, that the Group does not retain the signiﬁcant risks and rewards of ownership of the properties and accounts for easements as a prepaid expense.

Assessment of impairment of goodwill Goodwill arises on the acquisition of subsidiaries and represents an excess of consideration transferred over Group’s interest in net fair value of the net identiﬁable assets acquired, liabilities and contingent liabilities of the acquiree and the fair value of non-controlling interest in the acquiree. Following initial recognition, goodwill is carried at cost less any accumulated impairment losses. Goodwill is not amortised but it is reviewed for impairment annually or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired. The carrying value of goodwill is compared to its recoverable amount, which is the higher of value in use and fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

Estimated impairment of trade and other receivables The Group calculates impairment for doubtful accounts receivable based on estimated losses resulting from the inability of its customers to make required payments. It is estimated on the basis of the nature of the business (ﬁxed-line, mobile, prepaid, etc.), for which the estimate is based on the aging of the accounts receivable balance and the historical write-off experience, customer credit-worthiness as well as changes in the internal and external ratings of customers. These factors are reviewed annually and changes are made to the calculations when necessary.

130 present obligation at the end of the reporting period. Such judgments and estimates are continually reassessed taking into consideration the developments of the legal cases and proceedings and opinion of lawyers and other subject matter experts involved in resolution of the cases and proceedings. See ‘‘– Other provisions and contingencies – Contingencies’’ and ‘‘Business – Legal Proceedings’’.

131 SLOVAK TELECOMMUNICATIONS MARKET

The Group performs substantially all of its activities in the Slovak Republic. No other geographic market is relevant for the Group.

Slovak Macro Environment

Slovak Geography and Demographics The Slovak Republic is situated in the centre of the European continent and is bordered by Poland to the north, Ukraine to the east, Hungary to the south, and Austria and the Czech Republic to the west. The population of the Slovak Republic as of 2013 was 5.4 million, comprising approximately 1.9 million households, with the urban population comprising 53.9% of the total population. The Slovak Republic has a population density of 113 inhabitants per km2, compared to a 102 per km2 median for Central and Eastern European countries (CEE)1 and a 118 per km2 median for Western European countries (WE)2 (Sources: Company’s estimate for the number of households in the Slovak Republic and the World Bank).

Slovak Economy The Slovak Republic has been a member of the European Union since May 2004 and part of the Eurozone since January 2009. Key macroeconomic data for the Slovak Republic are presented in the following table:

The Slovak Republic macroeconomic data 2012 2013 2014 2015 2016 2017 2018

Real GDP growth...... 1.8% 0.9% 2.3% 2.7% 2.9% 3.1% 3.1% Private consumption growth...... (0.4%) (0.7%) 2.8% 3.3% 1.7% 1.9% 1.9% Volume of exports of goods and services growth (%) ...... 9.9% 4.5% 6.3% 6.4% 6.0% 5.7% 5.7% FDI / GDP (%)...... 1.9% 2.2% 2.3% 3.2% 4.0% 3.7% 3.7% Inﬂation (%)...... 3.6% 1.4% 0.3% 0.7% 2.0% 1.9% 2.0% Public debt / GDP (%)...... 52.7% 55.4% 55.7% 55.7% 54.5% 52.7% 50.9% Unemployment...... 13.6% 14.1% 12.6% 12.1% 11.8% 11.1% 10.5%

Note: 2012 and 2013 actual data, 2014 to 2018 estimates, sources IMF and EIU (Data reused by permission of The Economist Intelligence Unit)

Nominal GDP has increased from EUR 45.2 billion in 2004 to EUR 73.9 billion in 2014, a 5.0% annual compound growth rate, while real GDP has grown at a 3.8% annual compound growth rate over the same period. Growth in real GDP in Slovakia is expected to primarily be driven by stronger exports, rising domestic demand and falling unemployment.

Foreign direct investment levels have ﬂuctuated, but generally support GDP growth, a trend that is expected to continue The Slovak economy is characterised by high volumes of exports, and these volumes are expected to continue to increase in excess of CEE and WE averages, according to the IMF.

Public debt in the Slovak Republic has recently increased and reached 55.7% in 2014, which is higher than the CEE median of 49.4%, and lower than the WE median of 86.0%, according to the IMF. The Slovak Republic’s credit ratings A (Positive), A2 (Stable) and A+ (Stable) from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, respectively.

In 2013, the Slovak government cut spending and reformed its ﬁscal policy to narrow the budget deﬁcit to below 3% of GDP, in order to meet EU requirements. In the same year, the corporation tax rate was increased from 19% to 23%, and from 2014 decreased to 22%. The government also introduced an additional levy on regulated industries, including telecommunications in 2012. The average corporate tax rate in the Slovak Republic remains below the OECD average of 24.1%, although above the EU average of 21.3%.

1 Unless otherwise stated hereunder all references to CEE include Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania and Slovenia and exclude the Slovak Republic 2 Unless otherwise stated hereunder all references to WE include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

132 General Overview of Slovak Telecommunications Market The principal market participants include the Group, Orange Slovensko, O2 Slovakia and UPC Slovakia. Orange Slovensko (formerly known as Globtel GSM) was the first telecommunication company to launch digital mobile services in the Slovak Republic in 1997, and became the country’s largest mobile operator in terms of subscribers. The company took on its current name in 2002 when it became a part of France Telecom Group. O2 Slovakia was awarded the country’s third GSM/UMTS mobile license in 2006 and became the third mobile network operator in the Slovak Republic (after Orange Slovensko and the Group), which entered the mobile market in 2007. O2 Slovakia was originally part of Telefonica Group, and was acquired by Czech investment group PPF in January 2014. UPC Slovakia launched its first residential broadband services in November 2003. It is the largest cable operator in the Slovak Republic and the second-largest fixed broadband operator in the country. The Slovak telecommunications sector generated estimated service revenues of EUR 1.4 billion during 2014. Of this amount, approximately EUR 980 million, or 70%, is derived from mobile services, including voice and data, and the balance from fixed-line services.

Annual compound growth rate Slovak telecommunications market size 2012 2014E 2012-2014E

(service revenues, EUR million) Fixed, of which ...... 439 419 (2.3%) Fixed voice3 ...... 143 114 (10.8%) Fixed broadband ...... 172 168 (1.1%) Pay-TV...... 123 136 5.2% Mobile4 ...... 1,149 983 (7.5%)

Total ...... 1,588 1,401 (6.1%)

Source: Company estimates for Pay-TV; IDC for ﬁxed voice; Analysys Mason for ﬁxed broadband; Company’s and competitors’ public data for mobile.

3 Service revenues, including VoIP. 4 Service revenues;, including voice, messaging and data.

133 The Group has an 84% revenue market share in ﬁxed-line telephony according to IDC market data and the Company’s information, 38% revenue market share in ﬁxed broadband according to Analysys Mason and the Company’s information and 37% revenue market share in Pay-TV (including DIGI) according to the Company’s information and estimates for competitors. In the mobile market, with a 33% revenue market share the Group is the second operator after Orange Slovensko according to the Company’s and competitors’ public data.

The Group The Group accesses/ Total market revenues market subscribers 2014 Penetration rate size share market share

(% of households for ﬁxed and Pay- TV, % of population for (EUR million, (estimate) mobile) service revenues) (%) (%)

Fixed voice5 ...... 52% 114 84% 85% Fixed broadband ...... 60% 168 38% 35% Pay-TV6 ...... 95% 136 37% 26% Mobile7 ...... 125% 983 33% 33%

Source: Company information for the Group; Company’s estimate of competitors for Pay-TV; IDC for ﬁxed voice; Analysys Mason for ﬁxed broadband, Company’s and competitors’ public data for mobile; IDC for SIM penetration; Company estimates for number of households in the Slovak Republic.

Consistent with European and global trends, the Slovak telecommunications market is experiencing an increased tendency towards bundled product offerings, such as subscriptions of ﬁxed-line telephony, broadband and Pay-TV and mobile services from one integrated operator. This trend is driven by factors including saturation in the broadband and Pay-TV market limited capacity for horizontal consolidation in the mobile segment, technological evolution including IP migration and the appearance of new media and business models, for example services such as WhatsApp, Viber, Twitter and Netﬂix.

Telecommunications Market Segments in the Slovak Republic Slovak fixed-line market The principal participants in the fixed-line market are the Group, Orange Slovensko and UPC. The fixed-line market is split between fixed voice, fixed broadband and Pay-TV. As in many other European markets, Pay-TV and fixed broadband are seen as the key growth sectors in the fixed market, while fixed voice is a declining business, reflecting the global tendency to shift voice usage from traditional fixed-line telephony to mobile telephony. The wholesale fixed-line market in the Slovak Republic was fully liberalised on 1 January 2003. The Group is the incumbent fixed-line operator, with a market share of approximately 84% by revenue in 2014 according to the Company’s estimate. Bundling is an increasingly important factor in the fixed-line market. For example, penetration of triple play products (defined as digital cable TV triple-play subscribers and IPTV triple-play households) have increased by an average 20.4% each year between 2012 and 2014, compared to 20.4% in CEE and 9.5% in WE according to Ovum.

Slovak fixed voice market Consistent with the trend in other European fixed-line markets the market for traditional circuit- switched fixed-line telephony is expected to continue to decline in the Slovak Republic. The estimated total fixed voice market revenues decreased from EUR 143 million in 2012 to EUR 114 million in 2014, or 10.8%, and the total number of fixed voice connections including VoIP

5 Including VoIP (penetration excluding VoIP – 38%). 6 Pay-TV penetration including Skylink subscribers, paying only service fee; Pay-TV penetration excluding such Skylink subscribers is 65%. 7 Mobile penetration based on number of active SIMs in line with Group’s methodology, including Sky Toll SIMs.

134 decreased from approximately 1,069 thousand in 2012 to 1,009 thousand in 2014. Fixed voice penetration has accordingly decreased from 55% of total households in 2012 to 52% in 2014, based on the Company’s estimate for the number of households and IDC data. The number of analogue PSTN line and ISDN connections declined from approximately 869 thousand in 2012 to approximately 737 thousand in 2014, while household penetration decreased from 45% to 38% during the same period. In contrast, the number of VoIP subscribers increased at an annual compound growth rate of 17% from 2012 to 2014, from approximately 199 thousand in 2012 to approximately 271 thousand in 2014, and VoIP penetration increased from 10% to 14%, based on the Company’s estimate for the number of households and IDC data.

Principal market trends in the Slovak fixed voice market The key trend on fixed-line telephony throughout Europe, including the Slovak Republic, is the shift of voice usage from traditional fixed-line telephony to mobile telephony. According to IDC, from 2008 to 2014 total minutes used in the fixed-line network, excluding VoIP, decreased by 6% on average per annum, from 2,054 million minutes in 2008 to 1,437 million minutes in 2014, while total mobile minutes increased by 8% on average per annum, from 7,120 million in 2008 to 11,387 million in 2014. Total fixed-line network minutes decreased by a median rate of 13% in WE and 11% in CEE from 2008 to 2013, and total mobile minutes increased by a median rate of 4% per annum in WE and 8% in CEE, according to IDC.

VoIP allows users to speak to other users over internet protocol-based connections. VoIP represents an attractive proposition for many end-users, especially in the B2B segment, as well as operators as the underlying technology is much less expensive than running operations over traditional voice platforms.

Slovak ﬁxed broadband market By the end of 2014, the household ﬁxed broadband penetration rate reached approximately 60% in the Slovak Republic, as compared to the median level for CEE countries of 62% and to the median level for WE countries of 76%, based on the Company’s estimate for the number of households and Analysys Mason data. Fixed broadband penetration is relatively lower, in part because the xDSL network in the Slovak Republic is not as wide spread as in other European countries.

Fixed broadband penetration in the Slovak Republic is facilitated by relatively high fibre penetration of 15%, compared to the median of 10% for the CEE region and the median of 3% for the WE region, based on the Company’s estimate for the number of households and Analysys Mason data. Relatively high fibre penetration provides solid platform for growth in broadband and IPTV. The high fibre penetration in part reflects that market participants have tended to enter the market by building their own local/regional fixed wireless access networks and FTTx networks, without using the Group’s xDSL infrastructure, contributing to broad development of FTTx services and infrastructure. The Group believes that fixed broadband trends in the Slovak Republic will be further driven by coverage extension and the conversion of metallic to fibre networks by operators.

Estimated consumer monthly ARPA in the Slovak Republic was EUR 12.3 in 2014, as compared to consumer monthly ARPA for WE countries was EUR 21.1 and EUR 8.3 for CEE countries according to Analysys Mason.

The Group is the main player in the Slovak Republic’s fixed broadband market, with approximately 0.41 million (without DIGI) accesses at the end of 2014 and a 35% share of the fixed broadband accesses and 38% revenue market share by the end of 2014, according to the Company’s Analysys Mason market data. The Group’s key competitors in fixed broadband market are UPC and Orange. The Group also faces increasing levels of competition from local alternative network operators both utilising its infrastructure and developing their own fixed broadband networks.

In the wholesale fixed business, the Group used to have a monopoly over unbundled local loop (ULL) services, as an incumbent operator. The Group published its first reference unbundling offer (RUO) for access to ULL in 2005, and GTS Slovakia became the first company in the Slovak Republic to launch commercial ULL services over the Company’s network in 2010.

In 2006, the Group started offering a wholesale ADSL product that bundled ADSL access with a ﬁxed-line phone service followed by the unbundled product, offering just the ADSL access. Number of provided wholesale xDSL accesses as of 31 December 2014 reached approximately 111 thousand.

135 Principal market trends in the Slovak ﬁxed broadband market Broadband penetration in the Slovak Republic is expected to increase, as only 60% of the total Slovak households had access to broadband services as of 31 December 2014, compared to approximately 76% in WE and 62% in CEE (Source: Company’s estimate for the number of households in the Slovak Republic, Analysys Mason – ‘‘DataHub’’ (Feb – 2015)). The growth is expected to be facilitated by continuous roll-out of ﬁbre network in the country.

Slovak Pay-TV market The Group estimates that the Slovak TV market had a Pay-TV penetration rate of 95% of households in 2014. There are four Pay-TV distribution platforms in the Slovak Republic: cable, satellite, IPTV and digital terrestrial. The market can be divided into ‘‘traditional’’ providers, offering service package for subscription fee, and Skylink which charges a lower band subscription fee with additional charge for access to content. The traditional Slovak Pay-TV market (i.e., excluding basic service fee payers of Skylink) had estimated penetration of 65% of TV households in 2014, compared to a 72% median in CEE and a 65% median in WE countries. ARPU for the total market in 2014 is EUR 6.2, while excluding Skylink is EUR 8.9, compared to EUR 10.4 for CEE, according to Company’s estimates for the Slovak Republic and Ovum for CEE and WE. The Group’s key competitors in the Pay-TV market are UPC, Orange, and Skylink. Principal market trends in the Slovak Pay-TV market IPTV is the provision of TV services over broadband network, which allows telecommunications operators to cross-sell Pay-TV offerings to broadband subscribers. The low to moderate cable penetration increased demand for IPTV increasing ﬁbre coverage provide a favourable environment for the growth of IPTV services and this will tend to favour the operators with the most capable networks.

Slovak mobile market Introduction With a mobile penetration rate of 125% as of December 2014, the Slovak Republic is a less penetrated market than the broader CEE region8 with a median of 127% and WE with a median of 134%, according to IDC. Slovak mobile telephony market has historically been largely a post-paid market. There are currently approximately 4.6 million post-paid mobile subscribers in the Slovak Republic, representing 67% of total mobile subscribers, while pre-paid accounts for 2.2 million subscribers or 33% of the total, according to IDC. Historically, the Slovak postpaid market was supported by subsidised hardware offered together with voice services. Moreover, the introduction of a uniﬁed prepaid and postpaid offer (postpaid without commitment) in 2009 together with pricing strategy applied by some market participant drive increased demand for postpaid offers that became more accessible to customers, resulting in higher penetration of post-paid customers, which correlates to lower churn. The blended churn rate in the Slovak Republic in 2014 was 1.8% compared to 2.4% in CEE9 and 2.1% in WE10, according to Pyramid. Mobile operators and competitive environment There are currently four operators with their own mobile network in Slovakia: the Group, Orange Slovensko (wholly owned by France Telecom Group), O2 Slovakia (controlled by PPF) and SWAN, controlled by Slovak holding Danubia Invest. O2’s offering of lower priced plans signiﬁcantly contributed to a decline of ARPU in the Slovak mobile market; this trend may be exacerbated by the entry of a fourth mobile operator such as SWAN. Measured by the number of subscribers, Orange is the leading network operator as of December 2014 with approximately 2.8 million subscribers (42%), followed by the Group with approximately 2.2 million subscribers (33%) and O2 Slovakia with approximately 1.7 million subscribers (25%). In terms of mobile service revenues, Orange is the leading network operator as of December 2014 with

8 Median of Bulgaria (excluded due to structural change of the market – mandatory registration of all SIMs), Croatia, the Czech Republic, Hungary, Poland, Romania and Slovenia – excludes the Slovak Republic. 9 Median of Bulgaria, Croatia (not available for churn), the Czech Republic, Hungary, Poland, Romania and Slovenia (not available for churn) – excludes the Slovak Republic. 10 Median of Austria, Belgium, Denmark (not available for churn), Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.

136 an approximately 48% revenues share, followed by the Group (33%) and O2 Slovakia (19%), based on the Company’s and competitors’ public data.

The Group holds key spectrum licences for 2x4.4MHz in the 450MHz band, 2x10MHz in the 800MHz band, 2x10MHz in the 900MHz band, 2x15MHz in the 1,800MHz band, 2x20MHz in the 2,100MHz band, 5MHz unpaired block of 2,100MHz spectrum, 2x40MHz in the 2,600MHz band and a 50MHz unpaired block of 2,600MHz spectrum. The acquired spectrum bands provide the Group with competitive technological advantage in big cities close to borders (cross border interference can be minimised by applying the 2,600MHz spectrum). Furthermore, the 2x40MHz spectrum 2,600MHz band provides a competitive advantage in terms of superior speed of up to 300Mbps that may be achieved in urban areas. The Group has used its newly acquired frequencies to expand and upgrade its existing 4G network, including adding coverage of Bratislava. The Group’s outdoor population 4G coverage reached 52% as of 31 December 2014.11

Orange Slovensko holds key spectrum licences for 2x10MHz in the 800MHz band, 2x10MHz in the 900MHz band, 2x20MHz in the 1,800MHz, 2x20MHz in the 2,100MHz band, 5MHz unpaired block of 2,100MHz spectrum and 2x30MHz in the 2,600MHz band, according to ECO Report. According to Orange announcement from October 2014, it targeted to reach 30% 4G outdoor population coverage by the end of 2014.

O2 Slovakia holds key spectrum licences for 2x10MHz in the 800MHz band, 2x10MHz in the 900MHz band, 2x15MHz in the 1,800MHz band, 2x20MHz in the 2,100MHz band and a 5MHz unpaired block of 2,100MHz spectrum, according to ECO Report. O2 Slovakia’s 4G outdoor population coverage is below 5% as of December 2014 according to data published by O2 Slovakia.11

New entrant SWAN acquired 2x15MHz technology-neutral license in the 1,800MHz band in the auction held in December 2013 and began testing LTE in late-March 2014. SWAN has reached 20% population coverage using frequencies in the 1,800MHz frequency band as of 15 December 2014 according to the Slovak NRA.11

In addition to the three established mobile network operators, mobile offerings are available from branded resellers, which are mobile operators which do not own the network and other infrastructure needed to deliver the mobile telecommunication service to the customer. Branded resellers include, for example, large retail brand Tesco Mobile (using O2 Slovakia’s infrastructure) and FunFon (using Orange’s infrastructure). The Group has no license obligations in terms of MVNOs or branded resellers.

Mobile voice still accounts for the majority of mobile service revenues, accounting for 65% of total service revenue in 2014, a decrease from 73% in 2012. Mobile data service revenues accounted for 22% compared to 11% in 2012 and messaging service revenues for 13% compared to 16% in 2012, according to IDC. Mobile data is rapidly gaining momentum.

Mobile data services include traditional messaging services carried over the circuit-switch network (SMS) as well as messaging and non-messaging services carried over the packet-switch network and the Internet. Mobile data usage has increased in recent years and is expected to increase further.

Smartphone penetration in 2014 is relatively low at 47% but growing compared to 35% in 2012, according to WCIS. At EUR 2.4 per month in 2014, the data ARPU in the Slovak Republic has increased 8.7% per year since 2012 with further potential upside, according to IDC.

Traditional messaging services, such as SMS, have historically represented an attractive source of revenues and cash ﬂow generation for mobile network operators due to the relatively high margins and low network utilization. However, in recent years, many European countries have experienced a strong substitution effect on SMS services due to the rapid expansion of data-based OTT services, such as WhatsApp or Facebook Messenger, which enable users to access potentially unlimited messaging services over mobile Internet. However, SMS service in the Slovak Republic still remains an integral part of bundled mobile voice offerings.

The branded resellers account for approximately 3% of the total mobile subscribers market in the Slovak Republic in 2014, according to Pyramid.

11 No disclosures on the recent / currently in progress auctions for 3.5GHz, 3.7GHz, and 3.8GHz frequency bands (suitable mainly for mobile broadband as a supporting capacity layer in urban areas with high density of users). ECO Report data on licensed frequency bands rounded.

137 Principal market trends in the Slovak mobile market Despite the growth in mobile data usage, the uptake of mobile data services in the Slovak Republic has so far been relatively low. Mobile data revenues excluding messaging accounted for 22% of mobile service revenues12 in the Slovak Republic in 2014, compared to 28% in CEE and 29% in WE, according to IDC. The driving force of mobile data is the technological development of networks and end-user devices. Data demand continues to grow along with operators’ ongoing network investments. The ﬁrst LTE license auction in December 2013 allowed operators to start to roll-out 4G network and increase mobile data trafﬁc. However, the uptake of mobile devices like smartphones and tablets, as well as LTE penetration of mobile subscriptions still remain on a relatively low level. The roll-out of LTE networks and growing smartphone penetration are considered prerequisites for boosting mobile data revenues in the Slovak Republic given their superior capabilities compared to the preceding generations of mobile telecommunications technology. Major drivers for increased data demand will include video and music on demand, cloud services (including storage), social networking applications and gaming and also increased number of digitally available content.

Slovak ICT market The Slovak ICT market includes markets for software solutions, system integration, cloud-based services, outsourcing and IT consulting. The Group’s estimated market share as at the end of 2014 was 36% in cloud services,13 19% in data centres14 and 11% in IT services.15 Software solutions are experiencing increased demand driven by current the gradual implementation of e-government services and the growing trend of online business concepts. Price and ability to deliver the requested tailored solutions still remain the key decision-makingfactors in public tenders, presenting an opportunity for local players. System integration is also a fast-growing area with rising demand for data centres and data storages, but the market is occupied by many competitors. Customer demand for cloud services is growing in line with new success stories and positive awareness on cloud security and privacy, and there is potential for overall market growth supported with inﬂow of EU funds supporting information society services. The demand for outsourcing services in the Slovak Republic is expected to increase. There is already a signiﬁcant shift from self-delivery of IT services in favour of outsourcing of IT services. According to IT research and advisory company Gartner, the Slovak Republic is one of the top 30 locations for offshore IT and business process services in the world. The whole CEE region is attractive due to its available and skilled labour force, broad knowledge of languages, geographic and cultural proximity to Western Europe, well-developed infrastructure and lower wage costs in comparison with Western European or North American levels. The IT consulting segment experiences increased price pressure due to competition from global players.

Principal market trends in the Slovak ICT market Telecommunication companies are well-positioned to deliver cloud services as they can leverage network assets and take advantage of existing business relationships. Cloud solutions provide infrastructure in the form of virtual servers for optimal computing power of customer’s applications and can help to raise productivity and quality for broad range of customers, from the smallest companies (via standardised and on-demand applications) to the biggest enterprises and the public sector (via tailored solutions and IT professional services). M2M (Machine-to-Machine) is becoming an increasingly important feature in the telecommunication and IT landscape. Telecommunication operators continue to expand their position in M2M platforms for vertical industries, such as automotive, consumer products, utilities, etc. Moreover, the industry is

12 Mobile service revenues as total spending by consumers and businesses on mobile voice and mobile data services. 13 Local market players only (excl. e.g. Google, Amazon); Company’s estimates based on publicly available customers data and average value of a service package; methodologies differ per company; expert estimates used where missing data; excluding DCOM project (i.e. data center for municipalities). 14 Company estimates by occupied sq.m. 15 Company estimates based on public data (Trend TOP, May 2014); excluding hardware resale and exported IT services (e.g. HP, Accenture, IBM, etc.).

138 shifting from pure machine-to-machine to more broader and advanced IoT (Internet of Things). IoT are objects embedded with electronics, software, sensors and connectivity to enable them to achieve greater value and service by exchanging data with the manufacturer, operator and/or other connected devices.

139 MANAGEMENT

Overview The Company’s management structure is based on a two-tier board system, comprising a Supervisory Board which is responsible for general supervision of the activities of the Company and a Board of Directors which is the executive and statutory body of the Company. Together with the General Meeting, these constitute the three main internal bodies of the Company required by the Slovak Commercial Code. Day-to-day management was delegated by the Board of Directors to the Executive Management Board, consisting of the Company’s Chief Executive Ofﬁcer, Chief Financial Ofﬁcer and other senior managers. The Company complies with the corporate governance requirements of the Slovak Commercial Code. The main document setting out the Company’s governance structure as at the date of this Prospectus are the Articles of Association as adopted on 9 February 2015 (Current Articles). The General Meeting of the Company has also adopted new Articles of Association on 31 March 2015 (New Articles) which will become effective as of the date of the admission of the Shares to trading on the main listed market of the Bratislava Stock Exchange. The New Articles will implement a number provisions stemming from the adoption by the Company of certain aspects of the Corporate Governance Code for Slovakia based on OECD principles, as described under ‘‘Corporate Governance’’ below. The Company shall also form an Audit Committee, Remuneration Committee and Nomination Committee under the New Articles. See ‘‘Risk Factors – Risks Related to the Group’s Relationship with Deutsche Telekom’’ and ‘‘– Risks Related to the Securities and the Offering – The rights of minority shareholders will be governed by the laws of the Slovak Republic, whose corporate governance standards differ from those of other jurisdictions’’.

Corporate Governance The Company is compliant with the Slovak Republic’s corporate governance regime as set out in the Slovak Commercial Code and its Current Articles. As a privately held company, the Company does not comply with any corporate governance code because it is not required to do so as at the date of this Prospectus. In order to enhance the corporate governance standards that will apply to the Company as a publicly traded company, the Company has adopted certain governance changes under the New Articles. The aim of the changes is to comply with certain provisions of the Corporate Governance Code for Slovakia published in January 2008 (the Code) prepared by the Central European Corporate Governance Association as promulgated by the Bratislava Stock Exchange. The Code is based on the OECD Principles issued in 2004, on the European Commission Recommendation No 2004/913/EC fostering an appropriate regime for the remuneration of directors of listed companies and on Recommendation No. 2005/162/EC on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board. The Code is divided into individual principles that follow the OECD Principles, and each principle includes ‘‘Notes’’ explaining the principles in more detail. The Code contains recommendations for management and supervision of Slovak public companies including practices of the board of directors and supervisory board, safeguarding rights of minority shareholders, transparency, accounting policies and auditing. There is no obligation to comply with all provisions of the Code. However, in line with the ‘‘comply or explain’’ principle, Slovak law and the Bratislava Stock Exchange’s listing rules require the Company to make an annual compliance declaration and explanation of any deviations from the Code. After the admission to trading of the Shares on the main listed market of the Bratislava Stock Exchange, the Company will annually publish a declaration concerning its compliance with the Code and make it available on its website.

140 As of the date of this Prospectus, the Company intends to apply the Code with the following deviations that will be explained in the Company’s annual report:

Code chapter Deviation I.C.3 The invitation to the General Meeting does not contain information on the system of remuneration or a name list of beneficiaries. The Remuneration Committee submits to the General Meeting its opinion on the system of remuneration of members of corporate bodies directly at the General Meeting. II.A.4 The Company does not enable voting at its General Meetings by means of correspondence or by means of electronic devices. II.B The Company provides to the stock exchange and the National Bank of Slovakia a list of persons who have access to confidential information only upon their request and in accordance with the law. II.B The sale of assets of the Company to members of its bodies, their close persons and shareholders is subject to the approval of the General Meeting or the Supervisory Board in cases required under section 59a or 196a of the Slovak Commercial Code. IV.A.9 The statutes of the Company’s committees (Audit Committee, Remuneration Committee and Nomination Committee) and reports on their activities are not published as a part of the annual report. V.E.3 Invitation to the General Meeting does not contain information on the independence of candidates for membership in the Supervisory Board. The independence of candidates for membership in the Supervisory Board as defined in the Code is assessed by the Nomination Committee which submits its opinion to the General Meeting directly at its session. With regards to the requirement of the Code that the chairman of the Supervisory Board should be independent, this cannot be influenced by the Company, as it depends on which person will be elected as the chairman of the Supervisory Board by shareholders at the General Meeting. V.E.4.A The invitation to the General Meeting does not contain recommendations of the Nomination Committee. The Nomination Committee submits its recommendations to the General Meeting directly at its session. V.E.4.B The invitation to the General Meeting does not contain recommendations of the Remuneration Committee. The Remuneration Committee submits its recommendations to the General Meeting directly at its session. The Remuneration Committee is not comprised solely of Supervisory Board members, but one of its members is elected by the General Meeting.

Independent Directors The New Articles provide that at least one member of the Supervisory Board shall be independent in accordance with the Code, which requires that the Supervisory Board includes independent directors without specifying their number. It is expected that the newly created Nomination Committee will assess the independence of all members of the Supervisory Board after the Offering. Following such assessment, the exact number of independent members of the Supervisory Board will be known. The chairman of the Supervisory Board will not be independent. This is a deviation from the Code, which will be disclosed in the Company’s compliance declaration. The Code does not require that the Board of Directors include any independent directors and the Company does not expect that independent directors will be appointed to the Board of Directors. The Code defines independence in chapter V, Article E.2 as absence of any of the obstacles to independence listed therein. The list of obstacles is not exhaustive. Due to certain specific circumstances, a person may not be deemed as independent even when he meets the criteria. Under the Code, a candidate for the position of a member of the Supervisory Board would normally not be considered independent if he or she: (i) is or was a member of the Company’s management or management of an affiliated company of the Company in the past five years, (ii) is or was an employee of the Company in the past three years (except for representatives of employees in the

141 Supervisory Board, provided that such candidate did not otherwise have any other managerial position); (iii) has received any substantial remuneration from the Company (except for remuneration for serving as a Supervisory Board member) or from an affiliated company of the Company; (iv) represents the controlling shareholder of the Company in any way; (v) has or had a material direct or indirect business relationship with the Company or its affiliated Company (as a shareholder, member of its corporate bodies, leading employee, customer, supplier or creditor) in the past year; (vi) is or was an external auditor or a partner or employee in an audit firm that carried out the audit of the Company or of its affiliated company in the past three years; (vii) has any relationship to a company (or companies) other than the Company, in which any of the members of the Board of Directors of the Company holds an office; (viii) has been serving in the Supervisory Board of the Company for more than 15 years and (ix) has a close family relationship to a member of the management or any other person who fulfils any of the criteria under items (i) to (viii). The concept of independence under the Code differs from that under the UK Corporate Governance Code or in other jurisdictions. See ‘‘Risk Factors – Risks Related to the Securities and the Offering – The rights of minority shareholders will be governed by the laws of the Slovak Republic, whose corporate governance standards differ from those of other jurisdictions’’. For example, the independence criteria under the Code imply that employee representatives on the Supervisory Board may be considered to be independent. The concept of independence is also defined in the Accounting Act, which requires that at least one member of the Audit Committee must be independent. This would be relevant for the member of the Supervisory Board who is at the same time an independent member of the Audit Committee. Under the Accounting Act a person is considered independent if he has no economic or personal connection with the company or its subsidiary, shareholders, members of the Board of Directors or auditor of the company, is not a closely connected person to any of them and does not receive any remuneration from the company or its subsidiary except for his work in the Supervisory Board or in the Audit Committee.

Executive Management Board Membership, powers and meetings of the Executive Management Board The members of the Executive Management Board are appointed by the Board of Directors and comprise the executive heads of selected key departments of the Company. The role of members of the Executive Management Board is linked to the description of the employment position of each respective director. The Executive Management Board is separate from the Board of Directors, except that Ing. Miroslav Majorosˇ and Dr. Robert Hauber are members of both bodies. The Executive Management Board currently has seven members. The members meet as often as necessary, typically once a week. The Executive Management Board takes its decisions by simple majority, provided that a quorum of at least half of the members of the Executive Management Board is present. The Chairman of the Executive Management Board is the Chief Executive Ofﬁcer and has a casting vote. The Executive Management Board is responsible for the Company’s day-to- day management and administration.

Members of the Executive Management Board The name, position, experience and outside appointments for each member of the Executive Management Board are set forth below:

Year of Expiry of the Name Appointment Position current term

Miroslav Majorosˇ ...... 2003 Chairman, Chief Executive Officer indefinite Robert Hauber ...... 2011 Vice Chairman, Chief Financial Officer 31 March 2016 Branimir Maric´ ...... 2012 Chief Technology and Information Officer indefinite Dusˇan Sˇvalek...... 2012 Chief Mass Market Segment Officer indefinite Jań Adamec ...... 2012 Chief ICT and Corporate Segment Officer indefinite Jań Pitonˇa´k...... 2012 Chief Legal and Corporate Affairs Officer indefinite Petra Berecova´ ...... 2010 Chief Human Resources Officer indefinite Miroslav Majorosˇ (Ing., born 1959) has served as the Chief Executive Officer of the Company since 2003. He joined Slovak Telekom in 2003 when he was also appointed as the Member of the Board of Directors and was elected as the Chairman of the Board of Directors in 2005. He was nominated by

142 Deutsche Telekom. He was a member of the Board of Directors of the subsidiary T-Mobile Slovensko before its merger with the Company since 2003, and from the summer of 2009 to 30 June 2010 he was the Chairman of the Board. After completing his studies in 1983, Mr Majorosˇ worked at the Slovak Television broadcasting company, where he held several positions and was appointed as the head of the company in 1993. Subsequently, he took the role of the Sales Director of IBM Slovakia for industry sectors from 1994 and he was the General Manager of IBM Slovakia from 1998 to 2000. He also served as the General Manager of IBM Czech Republic and Slovakia from 2000 to 2002. Mr. Majorosˇ has completed his university education at the Faculty of Electronics and Informatics at the Slovak University of Technology in Bratislava and during his professional career supplemented his education through management education programmes at the Harvard Business School and Stanford Graduate School of Business. Mr Majorosˇ has also owned the companies Mashumi s.r.o. and m-wave s.r.o. since 2013. He is a member of the board of directors and a delegate of the Association of Delegates of Slovak Chamber of Commerce and Industry, member of the Presidium of the National Union of Employers, a member of the Policy Board of the Business Alliance of Slovakia, a co-chairman of the working group for regional policy and development in the National Convention on the EU in the Slovak Foreign Policy Association, member of the Commission for the Transformation of Posts and Telecommunications in the Parliamentary Committee for the Economy, Privatization and Business and a member of the board of trustees of the IT Association of Slovakia.

Robert Hauber (Dipl. Kfm., Dr., born 1971) has served as the Chief Financial Ofﬁcer, Vice Chairman of the Executive Management Board and Member of the Board of Directors of Slovak Telekom since 2011. He was nominated by Deutsche Telekom. Before his career with Deutsche Telekom he worked for Hewlett Packard, Procter & Gamble and DaimlerChrysler, where he was involved in the merger between Daimler-Benz & Chrysler. Within Deutsche Telekom, Dr. Hauber worked from 2002 to 2005 as Vice President Financial Controlling of T-Mobile International and from 2005 to 2009 as Senior Vice President Financial Controlling of T-Mobile International. He served as the Head of Financial Controlling of the Europe Segment of Deutsche Telekom between 2009 and 2011. In this role, he was Member of the Board of Directors of T-Mobile Czech Republic and Member of the Supervisory Board of T-Mobile Austria and Member of the Supervisory Board of Polska Telefonica Cyfrowa (PTC). Dr. Hauber studied at the University of Stuttgart, University of Mainz and at the University of Massachusetts. He holds a Master degree (Dipl. Kfm.) and a doctoral degree (Dr.) both in business administration. Dr. Hauber is employed by Deutsche Telekom. He has also been the CFO and Board member of German-Slovak Chamber of Industry and Commerce since 2011.

Branimir Maric´ (Dipl.-Ing., born 1974) has held the position of Slovak Telekom’s Chief Operating Officer, Technology and IT from 2012. Branimir Maric´ began his career with Hrvatski Telekom in the field of internet network management and development, and subsequently as the Head of the Group for customer IP and data networks, and worked as Director of Technical Research and Product Development. He held the position of Executive Director for Group Network Strategy and Platform Development and at the same time he was a member of the Croatian T-Com’s Executive Board. Following the merger of Hrvatski Telekom and T-Mobile Hrvatska in 2010 until he joined the Company in 2012, Branimir Maric´ held the post of Operating Director for Service Management and Network Operations Sector for fixed and mobile networks. He completed the Technical University in Zagreb, Faculty of Electrical Engineering and Computing (field of radio communication).

Dusˇan Sˇ valek (Ing., born 1969) has held the position of Slovak Telekom’s Chief Mass Market Segment Ofﬁcer since 2012. His career began with the positions of product and senior brand manager at the companies Benckiser and Johnson & Johnson, respectively. He worked in the Boston Consulting Group for six years. He joined T-Mobile Slovensko in 2004 as Director of the Customer Service Division, and from 2007 he was Chief Marketing Ofﬁcer. In 2010 he held the post of Marketing Director at Slovak Telekom. Since 2011, Dusˇan Sˇvalek has been responsible for marketing strategy for individual segments and for product management and the development of voice and data services in line with Deutsche Telekom’s international strategy. He studied international commerce and obtained master degree at the University of Economics in Bratislava, and later studied Corporate Economy and Management at the University of Navarra.

Jań Adamec (Ing., born 1966) has held the position of Chief ICT and Corporate Segment Officer since 2013. Jań Adamec started working in Slovenske´ telekomunikaćie, a. s., a predecessor of the Company, in 1991. From 1991 to 2012, he held several key positions with the focus on care for the corporate segment and key accounts. From 2012, he worked as the Director for ICT Services and

143 Business Sales. Jań Adamec graduated from the Faculty of Electrical Engineering at the Slovak Technical University in Bratislava. Jań Pitonˇa´k (JUDr., born 1972) has held the position of Chief Legal and Corporate Affairs Officer of Slovak Telekom since 2012. His responsibilities include regulatory and legal affairs, compliance, corporate security and public affairs. He started work for the Slovak Telekom Group in 2000 in EuroTel (later T-Mobile) in the position of Head of Legal Department, then worked as Executive Director of the Legal, Regulation and Regulatory Affairs Division, where he was responsible for managing the legal and regulatory agenda, wholesale relations with carriers operating in the telecommunications sector, and maintaining relations with public institutions. In 2001 he also became the company’s legal officer. After the integration he held the post of Director heading the Corporate Service Division. He completed his university studies at the Faculty of Law, Comenius University in Bratislava. Petra Berecova´ (Mgr., born 1975) was appointed as Chief Human Resources Officer of the integrated Slovak Telekom company in 2010. Prior to joining Slovak Telekom, she worked in the automotive industry as human resources director at Yazaki Slovakia. She started with T-Mobile Slovensko in 2005, as a senior manager for compensation and employee benefits. She managed T-Mobile’s Human Resources Division from 2007, and as a member of top management she participated in the Company’s business decisions. In 2010 she became the Executive Vice-President for Human Resources/CHRO of Slovak Telekom, while continuing her function as Human Resources Director of T-Mobile Slovensko. She studied at the Faculty of Philosophy at the Comenius University in Bratislava and subsequently at the Faculty of Law, specializing in international relations and law approximation. As from 2010, she has served as an invitee to the Compensation Committee of Slovak Telekom. Ms Berecova´ is also a member of the HR Comm Slovak Association for Human Resources Management and Development and a mentor within the Odyssey Mentoring program. The business address of each member of the Executive Management Board is Bajkalska´ 28, 817 62 Bratislava, Slovak Republic.

Board of Directors Membership and Powers of the Board of Directors The Board of Directors consists of seven members with five-year terms of office. The members are elected and dismissed by the General Meeting in accordance with applicable law and the Articles of Association. Under the existing arrangements between the Company’s shareholders, four members are nominated by Deutsche Telekom. When the New Articles take effect after the Offering, Deutsche Telekom, through its beneficial ownership of 51% of the Company’s share capital, will have the power to nominate and elect all of the members of the Board of Directors in the General Meeting. The Board of Directors has a Chairman and a Deputy Chairman, both of whom are elected and dismissed by the General Meeting. Any member of the Board of Directors may resign from his office by means of delivering a written notice of resignation to the Board of Directors. The Board of Directors manages the business operations of the Company on a day-to-day basis and is empowered to enter into transactions on the Company’s behalf. Under the Current Articles, the Board of Directors has the following powers in particular: (a) manages the business of the Company including with respect to all organisational, operational and employment matters; (b) convenes General Meetings and implements the resolutions of the General Meeting; (c) ensures proper accounting and other records, preparation and publication of individual and consolidated financial statements, publication of the annual report and consolidated annual report (to the extent that the Company is subject to such obligations); (d) approves the corporate plan, operational plan and budget of the Company; (e) submits to the General Meeting for approval financial statements, which the Company is obliged to prepared under special laws; (f) submits to the General Meeting for approval any proposal for the winding-up of the Company with liquidation, or by merger with another company or by demerger; (g) submits to the General Meeting information on the financial results of the Company’s business and a report on the status of assets for the preceding accounting period;

144 (h) submits to the Supervisory Board all documents, on which the Supervisory Board is supposed to adopt an opinion; (i) decides on the establishment and change of composition or rules of conduct of bodies created by the Board of Directors; (j) decides on any capital expenditure or investments of the Company, except for the ones that are contained in the current corporate plan or in the operational plan and the budget, if their overall value (individually or together with other capital expenditure or investment that are a part of the same transaction or related transactions) exceeds EUR 75 million or an equivalent of that amount; (k) decides on any loan or other indebtedness, which the Company accepts, any collateral or other encumbrance that the Company establishes or any guarantee that the Company provides except for those that are contained in the current corporate plan or operational plan and budget, if their value (individually or together with other loans, debts, collaterals or guarantees that are a part of the same transaction or related transactions) exceeds EUR 75 million or an equivalent of that amount; (l) decides on any acquisitions by the Company or transfers of assets (including shares or other equity interests) or liabilities of the Company, in each case the total value of which, individually or together with other acquisitions or transfers that are part of the same transaction or contemporaneous transactions, exceeds 20% of the Company’s net asset value; (m) decides on the conclusion of contracts with an overall value exceeding EUR 10 million or equivalent of this amount between the Company and (i) a shareholder; or (ii) a person controlling a shareholder or controlled by a shareholder or controlled by the same entity as a shareholder, unless such contract is a part of the scope of the framework agreement entered into between the Company and a shareholder concerning the provision of services to the Company by a shareholder or its related parties; (n) approves material changes of principles of internal management and organisation structure of the Company; (o) submits to the General Meeting a proposal for the distribution of proﬁt or coverage of loss; (p) submits to the General Meeting proposals for the listing of shares on a stock exchange; (q) approves the manner in which the representatives of the Company vote and resolve in the corporate bodies of any companies directly or indirectly controlled by the Company on certain matters. The powers of the board of directors under the New Articles will not change, except that powers (j), (k), (l) and (m) are not included in the New Articles. When acting on behalf of the Company, at least two members of the Board of Directors must act jointly and at least one of them must be the Chairman or the Deputy Chairman of the Board of Directors.

Meetings of the Board of Directors Meetings of the Board of Directors are convened six times a year by the Chairman of the Board of Directors. Moreover, any member of the Board of Directors is entitled to convene a meeting of the Board. Board meetings are convened by means of a written invitation, which must be delivered to the members of the Board of Directors at least seven business days prior to the meeting, except if all members waive this requirement in writing. The meetings take place in person in Bratislava, unless all members agree to meet at a different location or by means of electronic communication. The meetings of the Board of Directors are normally presided over by its Chairman or, in his absence, the Deputy Chairman of the Board of Directors. The Board of Directors generally takes its decisions by simple majority, provided that a quorum of majority of its members is present. Resolutions of the Board of Directors are approved if a simple majority of members in attendance voted in their favour, whereby the chairman has two votes in the case of a tie. By way of exception, resolutions of the Board of Directors on certain reserved matters necessitate a qualiﬁed majority, which is construed as follows: the resolution must be adopted by a simple majority of the attending members, whereby such majority must include at least two nominees of each shareholder that holds at least 25% of the Company’s shares. The qualiﬁed majority provisions will cease to apply under the New Articles.

145 Members of the Board of Directors must exercise their ofﬁce in person and they cannot be represented at meetings by a representative. Each meeting of the Board of Directors must be recorded in written minutes containing all relevant facts from the meeting, including the results of each vote and the exact wording of all resolutions adopted. The minutes must be signed by the chairman of the Board of Directors (or other member who presided over the meeting), as well as by the minutes clerk and they must be delivered to each member of the Board of Directors, to shareholders and to the chairman of the Supervisory Board. Under the New Articles, the minutes are not delivered to shareholders. The minutes must also contain all resolutions adopted by a written declaration since the preceding meeting of the Board.

Members of the Board of Directors The name, position, experience, outside appointments and certain other information for each member of the Board of Directors are set forth below:

Year of Name Appointment Position Expiry of current term

Miroslav Majorosˇ...... 2003 Chairman 28 April 2020(1) Michal Vaverka...... 2012 Deputy Chairman 17 September 2017 Robert Hauber ...... 2011 Member 28 April 2016 Martin Ma´c...... 2012 Member 17 September 2017 MilosˇSˇujansky´ ...... 2012 Member 17 September 2017 Kerstin Gu¨nther ...... 2012 Member 17 September 2017 Franco Musone Crispino ...... 2013 Member 29 April 2018

(1) The General Meeting of 31 March 2015 re-elected Miroslav Majorosˇ as a member and the chairman of the Board of Directors for another ﬁve-year term, which will end on 28 April 2020.

Short biographies of Miroslav Majorosˇ and Robert Hauber are set out under ‘‘– Executive Management Board’’ above. Michal Vaverka (Ing. MSc., born 1982) has served as the Deputy Chairman of the Board of Directors nominated by the Ministry of Economy of the Slovak Republic since 2012. Prior to 2012, Mr Vaverka has worked as Senior Financial Controller of Erste Bank AG. He studied at the Martin Luther University in Halle-Wittenberg and the University of Economics in Bratislava. Martin Ma´c (Ing., born 1973) has served as a member of the Board of Directors nominated by the Ministry of Economy of the Slovak Republic since 2012. Mr Ma´c has worked as a director of Zoznam s.r.o. since 2007. He studied at the University of Economics in Bratislava. MilosˇSˇ ujansky´ (Ing., M.B.A., PhD., born 1963) has served as the member of the Board of Directors nominated by the Ministry of Economy of the Slovak Republic since 2012. He has been a sole shareholder and director of the company FINCORP, s.r.o. since 2002. He has also served as a member of the Audit Committee of Slovak Telekom since 2010. Mr Sˇujansky´ studied at the University of Economics in Bratislava and at the Rochester Institute of Technology. Kerstin Gu¨nther (Dipl. Ing., M.B.A., born 1967) has served as a member of the Board of Directors nominated by the Principal Shareholder since 2012. She has served as Senior Vice President Technology Europe for Deutsche Telekom since 2012. She has also been the Chairman of the Board of Directors of Magyar Telekom since 2013 and a member of Supervisory Board of PTC in 2012 and 2013. She has been a member of the Slovak Telekom compensation committee since 2013, with her term scheduled to end in 2017. Ms Gu¨nther is also a member of Rotary International and SKM – Katholischer Verein fu¨r soziale Dienste Bonn e.V. She studied at the Case Western Reserve University Cleveland and at the Technical University Wroclaw. Franco Musone Crispino (Dipl-O¨ konom, born 1969) has served as the member of the Board of Directors nominated by the Principal Shareholder since 2013. He has also been a member of the Audit Committee of Slovak Telekom since 2013. Mr Crispino has worked as the Vice President Corporate Finance Europe for Deutsche Telekom since 2010 and as executive director of T-Mobile Global Holding GmbH since 2010. He has served as a member of Management Board in T-Mobile Global Holding 2 GmbH and T-Mobile Worldwide Holding since 2012 and of CMobil B.V. since 2013. He studied economics at the University of Kassel.

146 The business address of each member of the Board of Directors is Bajkalska´ 28, 817 62 Bratislava, Slovak Republic.

Supervisory Board Membership and Powers of the Supervisory Board The Supervisory Board consists of nine members. Their term of office is five years. Three members of the Supervisory Board are elected by employees and the remaining six members are elected by the General Meeting. Under the existing arrangements between the Company’s shareholders, out of the six members elected by the General Meeting three members of the current Supervisory Board were nominated by Deutsche Telekom and three by the Selling Shareholder (or agencies of the Slovak Republic). When the New Articles take effect after the Offering, Deutsche Telekom, through its beneficial ownership of 51% of the Company’s share capital, will have the power to nominate and elect the six members of the Supervisory Board that are not elected by employees. The members of the Supervisory Board elected by employees enjoy special protection. If the Company wishes to terminate the employment relationship of such member or to decrease the salary during such person’s term of office as a member of the Supervisory Board or during a protective period of one year after the end of the term, it may only do so with the prior consent of all other members of the Supervisory Board. Any member of the Supervisory Board may resign from his office by means of delivering a written notice of resignation to the Supervisory Board. The primary responsibility of the Supervisory Board is the supervision of the Board of Directors in its management of the Company and the pursuit of the Company’s business activities. The Supervisory Board may at any time inspect accounting documents and records relating to the activity of the Company. It also verifies whether the accounting records are accurate and properly maintained and whether the Company pursues its business in accordance with the law, Articles of Association and instructions of the General Meeting. Moreover, the Supervisory Board submits to the General Meeting conclusions and recommendations relating to the following: (i) fulfilment by the Board of Directors of tasks set by the General Meeting; (ii) compliance with the Articles of Association and laws in the activities of the Company; and (iii) economic and financial activities of the Company, accounting and documents. As a part of its mandatory competence, the Supervisory Board inspects the financial statements and the proposal for the distribution of profit (or the proposal for the coverage of loss) and submits its opinion to the General Meeting. The Supervisory Board also has a special competence in overseeing related party transactions. If a member of the Board of Directors, proxy or other person who is entitled to act on behalf of the Company and persons related to them or persons who act on their account is to be granted credit or a loan by the Company, or have Company property transferred to them or provided for their use, or have a debt secured through Company’s collateral, the Company may only do so with the prior consent of the Supervisory Board and under arms’ length conditions. The consent of the Supervisory Board is not required if the related party transaction concerns a benefit given by a controlling entity to a controlled entity (e.g. a majority shareholder to its subsidiary). The meetings of the Supervisory Board are convened by its chairman at least on a quarterly basis (four times a year) by means of a written invitation stating the place, date, time and agenda of the meeting. The Supervisory Board adopts resolutions on the basis of a simple majority of its members. The dissenting opinions of members of the Supervisory Board are also communicated to the General Meeting.

147 Members of the Supervisory Board The name, position, experience, outside appointments and certain other information for each member of the Supervisory Board are set forth below:

Year of Name Appointment Position Expiry of current term

Hans-Peter Schultz ...... 2010 Chairman 28 April 2020(1) Michal Lukacˇovicˇ...... 2012 Vice-Chairman 17 September 2017 Peter Weber...... 2012 Member 17 September 2017 Martin Haba´n ...... 2012 Member 17 September 2017 Denisa Herdova´ ...... 2013 Member 18 March 2018 Miriam Kvocˇkova´ ...... 2013 Member 18 March 2018 Drahoslav Letko ...... 2013 Member 18 March 2018 Cornelia Elisabeth Sonntag...... 2010 Member 28 April 2020(1) Tanja Wehrhahn ...... 2011 Member 9 November 2016

(1) The General Meeting of 31 March 2015 re-elected Hans-Peter Schultz as a member and the chairman of the Supervisory Board for another ﬁve-year term, and re-elected Cornelia Elisabeth Sonntag as a member of the Supervisory Board for another ﬁve-year term; these terms will end on 28 April 2020.

Hans-Peter Schultz (Dr., born 1958) has served as a member of the Supervisory Board nominated by the Principal Shareholder since 2010 and as the Chairman of the Supervisory Board since 2011. He has worked as the Vice President for Area Management Slovakia since 2010 and as the Vice President for Area Management Czech Republic until 2011. Between 2008 and 2010 Mr Schultz served as the member of the board of directors of Crnogorski Telekom a.d. and between 2010 and 2013 as the member of supervisory board of T-Mobile Czech Republic. He studied at the Moscow Technical University of Communication and Informatics and at Harvard University.

Michal Lukacˇovicˇ (Ing., born 1978) has served as the Vice-Chairman of the Supervisory Board nominated by the Ministry of Economy of the Slovak Republic since 2012. Mr Lukacˇovicˇ has been a director of WEON group, a.s. since 2007. He has been a member of the supervisory board of RETRO Retail, a.s. since 2010 and an executive in companies All sense, s.r.o., SPORT ACTIVITIES, s.r.o., Wellness activities, s.r.o., RETROkids events, s.r.o., all for kids slovakia, s.r.o., 3angel, s.r.o. and SPORT RETRO, s.r.o.

Peter Weber (Ing., born 1945) has served as the member of the Supervisory Board nominated by the Ministry of Economy of the Slovak Republic since 2012. Mr Weber has been a part-time consultant of the Ministry of Finance of the Slovak Republic since 2014. He has also worked as a consultant for PaR Solutions, s.r.o. since 2011. He has been an executive in FVE Mucˇ´n,ı s.r.o. since 2010. He is the co-owner of Agronova Liptov, s.r.o., Fontana for You, s.r.o., BPE Prosiek, s.r.o., Fontana Travel, s.r.o. and PizzaLand, s.r.o. He is a member of the board of directors of Agos Technologies, a.s. Mr Weber is a member of the IT Association of the Slovak Republic, a member of the General Board of the Association of Entrepreneurs of the Slovak Republic, a member of the Science, Research and Innovation Committee of the Republic Union of Employers, a member of the Administrative Board of the Zˇ ilina University and a member of the Scientiﬁc Board of the Management Faculty of Comenius University. He studied at the Military Academy in Brno.

Martin Haba´n (Mgr., born 1984) has served as a member of the Supervisory Board nominated by the Ministry of Economy of the Slovak Republic since 2012. Mr Haba´n is a self-employed attorney. Between 2013 and 2014 he served as a member of the supervisory board of VBP PROPERTY a.s. He is a member of the Slovak Bar Association. He studied law at the Comenius University in Bratislava.

Denisa Herdova´ (Ing., born 1979) has served as a member of the Supervisory Board nominated and elected by employees since 2013. She has worked as the Mass Market and Infrastructure Senior Manager in Slovak Telekom since 2012 and as a director in DIGI SLOVAKIA, s.r.o. since 2013. Between 2010 and 2013, she owned the accounting company FCCA Partners, s.r.o. She studied at the Economic University in Bratislava.

Miriam Kvocˇkova´ (born 1975) has served as the member of the Supervisory Board nominated and elected by employees since 2013. She has held the position of Technical Support Manager of Slovak Telekom since 2010. She studied administration at the Economic High School in Martin.

148 Drahoslav Letko (Ing., born 1958) has served as a member of the Supervisory Board nominated and elected by employees since 2013. He has worked in Slovak Telekom as a technician since 1982 and he is the chairman of the Trade Union Telekom acting as the employees’ representative. He studied at the University of Zˇ ilina. Cornelia Elisabeth Sonntag (born 1968) has served as the member of the Supervisory Board nominated by the Principal Shareholder since 2010. She has worked as the Vice President Area Manager Czech Republic and former T-Mobile Slovensko for Deutsche Telekom since 2001. Since 2010 she has been the chairwoman of the Supervisory Board of T-Mobile Czech Republic. Between 2005 and 2010 she served as the Vice-Chairwoman of the Supervisory Board of Eurotel Bratislava (later T-Mobile Slovensko). She studied at the Hotel Management School Bad Ueberkingen. Tanja Wehrhahn (born 1969) has served as a member of the Supervisory Board nominated by the Principal Shareholder since 2011. Until 2013 she was the Vice President eBusiness & eTransformation for Deutsche Telekom AG. Since 2013, she has been the Senior Vice President Operating Ofﬁce Sales for Telekom Deutschland GmbH. She studied at the University Trier. The business address of each member of the Supervisory Board is Bajkalska´ 28, 817 62 Bratislava, Slovak Republic.

Code of Conduct As part of the Deutsche Telekom Group, the Company adheres to Deutsche Telekom’s Code of Conduct (the Code of Conduct). The Code of Conduct objectives include deﬁning the Group’s mission and corporate values; ensuring the Group’s employees understand their personal responsibility to the Group’s customers, business partners, shareholders and their colleagues for executing their ofﬁcial duties and performing their functions; and setting forth the fundamental principles of the Group’s relationships with customers, business partners, state and municipal authorities and competitors. The Code of Conduct applies to all employees of the Group and it also aims to facilitate the integration of new employees into the Group’s corporate culture.

Remuneration and the Remuneration Committee None of the members of the Company’s Executive Management Board, Board of Directors or Supervisory Board (the Senior Management) have entered into service (management) agreements with the Company which would stipulate the amount of remuneration. Nine members of the Senior Management, namely Mr Miroslav Majorosˇ, Mr Branimir Maric, Mr Dusˇan Sˇvalek, Mr Jań Adamec, Dr Jań Pitonˇa´k, Ms Petra Berecova´, Mr Denisa Herdova´, Mr Miriam Kvocˇkova´ and Mr Drahoslav Letko serve on the basis of employment agreements. Six of them are members of Executive Management Board and three of them are members of Supervisory Board. The CEO is a member of Executive Management Board as well as the chairman of the Board of Directors. The Company has no contractual relationship with Mr. Robert Hauber, Ms Kerstin Gu¨nther, Mr Franco Musone Crispino, Mr Hans-Peter Schultz, Ms Tanja Wehrhahn and Ms Cornelia Elisabeth Sonntag, who are employees of the Deutsche Telekom Group. The Company also has no contractual relationship with Mr Peter Weber, Mr Martin Habań and Mr Michal Lukacˇovicˇ who serve on the Company’s Supervisory Board as nominees of the Ministry of Economy of the Slovak Republic. The remuneration package for members of Senior Management with employment contracts is composed of a fixed and variable component. Remuneration for membership in Senior Management is a fixed amount paid on monthly basis. Elements of fixed pay (for members who are also employees of the Company), primarily comprising base salary and benefits, are set taking into account factors such as the nature of the role, the experience and performance of the individual, and salary levels in the telecommunication sector in the Slovak Republic. Benefits cover mostly health care as well as meal vouchers. Members are also entitled to working tools (such as company phones, laptops, cars and drivers), insurance premiums, expenses for company-related social functions and security measures as well as reimbursements of certain expenses related to performance of their duties. Fixed pay elements are normally reviewed annually to ensure they remain competitive. The value of these benefits is included in the amounts of remuneration disclosed below. Variable pay elements (which relate only to members of the Executive Management Board who are also employees of the Company) are intended to motivate the members of Senior Management towards the achievement of group-wide and personal objectives, which ultimately promote delivery of the corporate strategy and the creation of shareholder value. Variable pay is used as a tool to

149 incentivise and reward Senior Management and furthermore, through the deferral of awards, ensure part of their remuneration is aligned to their own and the Group’s future performance.

In the year ended 31 December 2014 the Group provided remuneration and other beneﬁts to the members of the Senior Management in total amount of EUR 3,048 thousand. Of that amount, EUR 2,950 thousand was provided to the members of the Executive Management Board (including EUR 18 thousand as a provision in connection with participation in the Share Matching Plan described below), EUR 54 thousand to the members of the Board of Directors and EUR 44 thousand to the members of the Supervisory Board. The Group provided contribution to the pension plans for the members of the Senior Management in total amount of EUR 63 thousand. The Group has not set aside any amounts in respect of pension beneﬁts of the members of the Senior Management.

The Company does not have any stock option plan or other plans for involving the employees in the capital of the Company for its employees or members of its Senior Management. However, Mr Miroslav Majorosˇ, Mr Robert Hauber, Mr Branimir Maric´, Mr Dusˇan Sˇvalek, Mr Ja´n Adamec, Mr Ja´n Pitonˇa´k, Ms Petra Berecova´ and Ms Herdova´ participate in the Long Term Incentive Plan and may participate in the Share Matching Plan at the Deutsche Telekom Group level. The long-term compensation instrument is a four year cash plan based on phantom shares (instruments linked to shares in Deutsche Telekom AG shares) and is granted to eligible employees based on their individual performance rating. The Share Matching Plan is a long-term voluntary compensation instrument. Eligible employees can volunteer to invest part of their target STI in DT shares (participation is voluntary, but compulsory for Mr Miroslav Majorosˇ). After a four-year lock-up period, an additional bonus in the form of matching shares is awarded.

Some of the management members (Ms Berecova´, Mr Pitonˇa´k,MrSˇvalek, Mr Maric´) who are employed by the Company, are entitled to receive one-off compensation from the Company equivalent to 12 base monthly salaries if their employment is terminated by speciﬁc reasons described in the employment contract. If the statutory conditions are met, this one-off reward also includes a gratuity payment and also the severance pay, in amounts according to the Slovak Labour Code and the Company’s Collective Labour Agreement. Mr Majorosˇ is entitled to a termination payment only if he complies with the non-compete clause, which prohibits him from performing earning activity that competes with the business activity of the Company for a period of one year after the termination of his employment. In such case he is entitled to compensation of one base monthly salary for every month of compliance with the restriction obligation. In addition, Mr Majorosˇis entitled to a severance payment in cases speciﬁed in the Company’s Collective Labour Agreement, currently seven average monthly salaries plus certain additional payments not exceeding EUR 10,000 for the time worked for the Group and retirement. If his employment is terminated during a calendar year, Mr Majorosˇ is entitled to a pro-rata variable part of his salary. Mr Adamec, Ms Kvocˇkova´, and Mr Letko are entitled to termination payment currently in the amount of eight average monthly salaries and Ms Herdova´ in amount of six average monthly salaries plus certain additional payments not exceeding EUR 18,000 for the time worked for the Group and retirement, in each case in accordance with the Slovak Labour Code and the Company’s Collective Labour Agreement.

Under the New Articles, the remuneration rules for members of corporate bodies of the Company will be approved by the General Meeting and the Remuneration Committee will be established. More specifically, the General Meeting will approve: (i)the remuneration rules of the members of corporate bodies; (ii) the remuneration of members of the Board of Directors, Supervisory Board, Audit Committee, Nomination Committee and Remuneration Committee; and (iii) the system of remuneration of the members of corporate bodies of the Company or the employees of the Company in the form of shares, options for shares or other rights to shares of the Company or in the form of remuneration based on the development of the prices of the shares including the changes to this system of remuneration and of the long-term incentive schemes aimed at the members of the corporate bodies and Senior Management of the Company. The rules of remuneration of the members of corporate bodies (the Remuneration Policy) of the Company will be approved by the General Meeting on the basis of a proposal prepared by the Remuneration Committee, which is required to be formed under the New Articles. The Remuneration Committee will comprise three members, two appointed by the Supervisory Board from the members of the Supervisory Board and one elected by the General Meeting. Their term of office will be five years.

The statute of the Remuneration Committee was approved by the General Meeting of 31 March 2015.

150 As at the date of this Prospectus the elected members of the Remuneration Committee are: Cornelia Elisabeth Sonntag and Miriam Kvocˇkova´. Both were elected into ofﬁce on 16 April 2015 by the Supervisory Board from among the members of the Supervisory Board. As at the date of this Prospectus, the position of the third member of the Remuneration Committee is vacant.

Audit Committee The Company currently has an audit committee (the Audit Committee). The Audit Committee’s role and procedures will be enhanced under the New Articles. Under the New Articles the Audit Committee shall be composed of three members, out of which two members will be appointed by the Supervisory Board of the Company from the members of the Supervisory Board and one member will be appointed by the General Meeting. The term of office of the members of the Audit Committee is five years. At least one of the members of the Audit Committee must fulfil the requirement of professional experience and independence under Slovak accounting legislation. As at the date of this Prospectus the elected members of the Audit Committee are: Ing. Denisa Herdova´ and Dr. Hans-Peter Schultz. Both were elected into office on 16 April 2015 by the Supervisory Board from among the members of the Supervisory Board. As at the date of this Prospectus, the position of the third member of the Audit Committee is vacant. The Audit Committee supervises the preparation of financial statements and compliance with accounting and auditing legislation and standards. It also supervises the systems of internal control and risk management in the Company and makes recommendations and monitoring with respect to appointing of the Company’s auditors. The terms of service of the members of the Audit Committee as well as the statute of the Audit Committee will be approved by the Supervisory Board.

Nomination Committee As at the date of this Prospectus, the Company currently has no nomination committee or other body concerned specifically with appointment of the members of the corporate bodies of the Company (the Nomination Committee). Under the New Articles, the Company shall establish the Nomination Committee consisting of three members, out of whom two members will be appointed by the Supervisory Board from the members of the Supervisory Board and one member will be appointed by the General Meeting. The term of office of the members of the Nomination Committee will be five years. As at the date of this Prospectus the elected members of the Nomination Committee are: Miriam Kvocˇkova´ and Dr. Hans-Peter Schultz. Both were elected into office on 16 April 2015 by the Supervisory Board from among the members of the Supervisory Board. As at the date of this Prospectus, the position of the third member of the Nomination Committee is vacant. The main role of the Nomination Committee will be to give recommendations regarding appointments of the members of corporate bodies of the Company and to evaluate the independence of members of the Company bodies. The Nomination Committee shall submit its recommendation to the shareholders during the session of the General Meeting. The statute of the Nomination Committee was approved by the General Meeting of 31 March 2015.

Interests of the Management in the Company As at the date of this Prospectus, no Shares and/or options over Shares are held, directly or indirectly, by the members of the Senior Management.

Conflicts of Interest As at the date of this Prospectus, for at least the previous five years, none of the current members of the Senior Management: * has had any convictions in relation to fraudulent offences; * has held an executive function in the form of a senior executive officer or a member of the administrative, management or supervisory bodies of any company at the time of or preceding any bankruptcy, receivership or liquidation; or * has been subject to any official public incrimination and/or sanction by any statutory or regulatory authority (including any designated professional body) or has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company.

151 There are no family relationships between the members of the Senior Management. Mr Robert Hauber, Ms Kerstin Gu¨nther, Mr Franco Musone Crispino, Mr Hans-Peter Schulz, Ms Tanja Wehrhahn and Ms Cornelia Elisabeth Sonntag are employees of the Deutsche Telekom Group. None of the members of the Senior Management has any private interests or other duties which may potentially conﬂict with their respective duties to the Company.

152 PRINCIPAL AND SELLING SHAREHOLDERS

General The Company’s share capital amounts to EUR 864,113,000 and is comprised of 86,411,300 Shares, each with a nominal value of EUR 10. The following table sets out certain information regarding the shareholding structure of the Company.

After the Offering After the Offering (assuming no exercise of the (assuming the Put Option is Prior to the Offering Put Option)) exercised in full)

Total % of Total % of Total % of issued share issued share issued share capital and capital and capital and Total Shares voting rights Total Shares voting rights Total Shares voting rights

Deutsche Telekom Europe B.V.(1)...... 44,069,763 51.0 44,069,763 51.0 44,069,763 51.0 National Property Fund of the Slovak Republic...... 42,341,537 49.0 — — 4,234,153 4.9 Other(2)...... — — 42,341,537 49.0 38,107,384 44.1

Total ...... 86,411,300 100.0 86,411,300 100.0 86,411,300 100.0

Notes: (1) Deutsche Telekom Europe B.V. (before 1 March 2015, the name of the entity was CMobil B.V.) is a wholly owned subsidiary of Deutsche Telekom AG (2) Consists of the Offer Shares sold in the Offering, including in the form of GDRs.

Principal Shareholder Deutsche Telekom Europe B.V. (CMobil B.V. prior to 1 March 2015) (the Principal Shareholder)isa wholly owned subsidiary of Deutsche Telekom AG. Deutsche Telekom AG owns the Principal Shareholder indirectly through its wholly owned subsidiary Deutsche Telekom Europe Holding GmbH, which in turn has a 100% share in Deutsche Telekom Europe Holding B.V., which is the direct 100% shareholder in Deutsche Telekom Europe B.V. The Principal Shareholder has no special voting rights and each Share it owns has a voting right equal to each Offer Share. The Company is directly controlled by the Principal Shareholder and indirectly controlled by Deutsche Telekom AG on the basis of holding 51% of the share capital and voting rights in the Company. The measures which seek to ensure that such control is not abused are contained in the Slovak Commercial Code and the Company’s Articles of Association. See ‘‘Risk Factors – Risks Related to the Group’s Relationship with Deutsche Telekom – Interests of Deutsche Telekom may differ from those of holders of the Securities’’ and ‘‘– Risks Related to the Securities and the Offering – The rights of minority shareholders will be governed by the laws of the Slovak Republic, whose corporate governance standards differ from those of other jurisdictions’’. The Principal Shareholder will not sell any Shares in the Offering and will continue to control the Company after the Offering. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change in control of the Company after the Offering.

Selling Shareholder The National Property Fund of the Slovak Republic (the NPF or the Selling Shareholder) is the owner of 49% of the Company’s shares. Except for acting as the Company’s shareholder and exercising its rights as the Company’s shareholder, the Selling Shareholder has had no material relationship with the Company, other than contracts entered into in the ordinary course of the Group’s business, within the three years prior to the date of this Prospectus. See ‘‘Related Party Transactions – Slovak Government Related Parties’’.

153 Shareholders’ Agreement On 18 July 2000, the Company, the Selling Shareholder, the Slovak Republic represented by the Ministry of Transport, Posts and Telecommunication (subsequently, the Slovak Republic has become represented by the Ministry of Economy of the Slovak Republic) and Deutsche Telekom entered into the Shareholders’ Agreement which provides for co-operation between the parties in order to achieve the strategic objectives of the Company and the general governance of the Company, and sets out non-compete provisions and certain transfer restrictions concerning the shareholders’ respective shareholdings in the Company (the Shareholders’ Agreement). Shareholders’ agreements are not recognised under Slovak corporate law. Consequently, although the Shareholders’ Agreement is valid and binding as a matter of Slovak contract law, a corporate action (e.g. adoption of a board resolution) made in breach of the Shareholders’ Agreement would be valid and effective under Slovak corporate law. The other shareholder would have a damage or similar claim against the breaching shareholder, but cannot challenge the validity of the concerned corporate action. As of the date of this Prospectus the Shareholders’ Agreement is in place and effective. The Shareholders’ Agreement may remain effective also after the Admission. This could be the case if: (i) the Selling Shareholder and Deutsche Telekom do not agree to terminate the Shareholders’ Agreement and at the same time the Selling Shareholder retains 10% or more of the Shares, thus preventing Deutsche Telekom from unilaterally terminating the Shareholders’ Agreement (under the termination right described below); or (ii) the conditions for unilateral termination are fulﬁlled, however, the termination notice has not yet been served or the termination notice period is running. The termination provisions of the Shareholders’ Agreement do not address a situation after the Admission has already taken place and the New Articles (which are not in line with the special shareholder arrangements under the Shareholders’ Agreement) have already become effective. From a legal point of view, the continued existence and effectiveness of the Shareholders’ Agreement does not affect the effectiveness of the New Articles. Therefore, the question of whether the Shareholders’ Agreement would have any effect at all as between Deutsche Telekom and the Selling Shareholder would ultimately depend on their mutual agreement. Certain key provisions of the Shareholders’ Agreement are summarised below:

Strategic Objectives Under the terms of the Shareholders’ Agreement, Deutsche Telekom and the Slovak Republic agreed on a number of medium-term and long-term objectives and strategies for the Company, including increasing proﬁtability and shareholders’ value and improving quality of service.

The General Meeting of Shareholders The Shareholders’ Agreement stipulates that as long as the Slovak Parties (that is the Selling Shareholder and Slovak Republic through any of its agencies) own shares in an aggregate nominal value in excess of 25% of the Company’s registered capital, the approval of the issuance of new shares, convertible bonds or warrants or other securities or instruments granting any right to the Shares by the Company, any right to subscribe for Shares or any redemption or purchase of Shares by the Company, shall require the consent of shareholders holding shares in an aggregate nominal value of at least 75% of the Company’s registered capital (and each of the Shareholders shall use their reasonable best efforts to procure that the Articles of Association so stipulate).

The Board of Directors The Shareholders Agreement provides that, so long as Deutsche Telekom (together with its affiliates) owns Shares representing more than 50% of the registered capital of the Company, it shall be entitled to nominate four candidates for election to the Board of Directors, including the Chairman. In addition, as long as the Selling Shareholder (including any other government agencies) owns shares representing at least 25% of the registered capital of the Company, the Ministry of Economy shall be entitled to nominate three candidates for election to the Board of Directors, including the Deputy Chairman. If Deutsche Telekom, together with its affiliates, ceases to own shares representing more than 50% of the Company’s registered capital, or the Selling Shareholder (including any other government agencies) cease to own Shares representing at least 25% of the Company’s registered capital, but Deutsche Telekom, together with its affiliates, and the Selling Shareholder (including any government agencies) will be able to exert a significant influence on the election of the directors, Deutsche

154 Telekom and the Selling Shareholder shall each have the right to nominate for election to the Board of Directors the number of Directors whose relation to the total number of Directors on the Board of Directors is as proportional as possible to the percentage of the aggregate registered capital of the Company owned by Deutsche Telekom, together with its affiliates, on the one hand, and the Selling Shareholder (including other government agencies) on the other hand. For so long as the Selling Shareholder (including any other government agencies) holds in the aggregate a shareholding interest of at least 25%, certain decisions of the Board of Directors can only be passed subject to the following two-fold requirement: (i) the resolution must be passed by a majority vote, and (ii) at least two Directors nominated by the Ministry must vote in favour thereof. The decisions falling into this category are as follows: * any acquisitions by the Company or any subsidiary thereof, or transfers of assets (including shares or other equity interests) or liabilities of the Company or its subsidiaries, in each case the total value of which, individually or together with other acquisitions or transfers that are part of the same transaction or contemporaneous transactions, exceeds 20% of net asset value of the Company; * issuance of shares, convertible bonds or warrants or other securities or instruments granting any right to equity interest in any subsidiary of the Company, any right to subscribe for shares of a subsidiary or any redemption or purchase of shares by a subsidiary; * any related party agreement, other than pursuant to a framework agreement between the Company and Deutsche Telekom AG for the provision of services to the Group on an arm’s length commercial basis, the total value of which is in excess of EUR 10 million, or its equivalent; * any capital expenditure or investment by the Company or any subsidiary, other than those included in the Corporate Plan or the Operating Plan and Budget in effect at such time, the total value of which, individually or together with other capital expenditures or investments that are part of the same transaction or contemporaneous transactions, exceeds EUR 75 million, or its equivalent; * any loan or other indebtedness incurred by the Company or any subsidiary, any security interest or comparable encumbrance granted by the Company or any subsidiary or any guarantee provided by the Company or any Subsidiary, other than those included in the Corporate Plan or the Operating Plan and Budget in effect at such time, the total value of which, individually or together with other loans, indebtedness, security interests or guarantees that are part of the same transaction or contemporaneous transactions, exceeds EUR 75 million, or its equivalent; * any consent permitting Deutsche Telekom or any of its affiliates to undertake a telecommunications activity (as defined in the law) in the Slovak Republic (other than through or in joint venture with the Company or as a supplier to the Company or any of its subsidiaries); and * any merger, liquidation, dissolution or similar change of the Company or any subsidiary.

The Supervisory Board The Supervisory Board consists of nine members. The Shareholders’ Agreement provides that, for so long as Deutsche Telekom, together with its affiliates, owns shares representing more than 50% of the registered capital of the Company, it shall be entitled to nominate three candidates for election to the Supervisory Board, including the Chairman. In a similar fashion, as long as the Selling Shareholder (including any government agencies) owns shares representing at least 25% of the registered capital of the Company, it will be entitled to nominate three candidates for election to the Supervisory Board, including the Deputy Chairman. The remaining candidates for election to the Supervisory Board shall be nominated by the employees of the Company, to the extent this remains a requirement pursuant to applicable regulations. If Deutsche Telekom, together with its affiliates, ceases to own shares representing more than 50% of the Company’s registered capital, or the Selling Shareholder (including any government agencies) ceases to own shares representing at least 25% of the Company’s registered capital, but Deutsche Telekom, together with its affiliates, and the Selling Shareholder (including any government agencies) will be able to exert a significant influence on the election of the members of the Supervisory Board, Deutsche Telekom and the Ministry of Economy shall each have the right to nominate for election to the Supervisory Board the number of candidates whose relation to the total number of members of the Supervisory Board is as proportional as possible to the percentage of the aggregate registered

155 capital of the Company owned by Deutsche Telekom, together with any of its afﬁliates, on the one hand, and the Selling Shareholder (including any government agencies), on the other hand, provided that for the duration of the Shareholders’ Agreement the Ministry of Economy shall be allowed to nominate at least one member of the Supervisory Board.

Transfer of shares The Shareholders’ Agreement stipulates a pre-emption right of Deutsche Telekom. Specifically, neither the Ministry of Economy nor the Selling Shareholder shall sell, assign or otherwise transfer any shares to any person that is not a public institution other than in exchange for cash or a cash equivalent, unless such shares are first offered to Deutsche Telekom. In the case the Ministry of Economy or the Selling Shareholder wish to sell its shares to a third party the following two-stage procedure applies: * Upon receipt of a bona fide written offer that the Ministry or the Selling Shareholder (the Prospective Transferor) wishes to accept, or the entering into of any bona fide conditional agreement to transfer shares, the Prospective Transferor shall without undue delay give written notice of the identity of the proposed transferee (the Proposed Transferee), and the terms and conditions of the proposed transfer, to Deutsche Telekom, including the cash price which the Proposed Transferee has proposed, and which Deutsche Telekom must pay in order to exercise its rights to purchase the shares hereunder. Such notice shall constitute an offer of the Prospective Transferor to Deutsche Telekom, irrevocable for 60 days from the date such notice is given, to transfer such shares on the terms and conditions described in the notice. * If Deutsche Telekom does not accept the offer in writing within the 60 day period, the Prospective Transferor may transfer such shares to the Proposed Transferee on the terms and conditions set forth in the notice. The above restrictions on transfer shall not apply to the sale of shares in a public offering made pursuant to the Shareholders’ Agreement, including the Offering under this Prospectus.

Termination The Shareholders’ Agreement shall continue in effect so long as any of the Slovak Parties, Deutsche Telekom or any of its affiliates own any shares in the Company, unless it is terminated in accordance with its terms. The Ministry of Economy may terminate the Shareholders’ Agreement on 45 days’ written notice to the other Shareholders if any of the following occurs: * Deutsche Telekom, together with its affiliates, owns shares representing less than 20% of the registered capital of the Company; or * the Selling Shareholder (including any government agencies) and Deutsche Telekom, together with its affiliates, own shares representing less than 50% of the registered capital of the Company. Similarly, Deutsche Telekom may terminate the Shareholders’ Agreement on 45 days’ written notice to the other Shareholders if any of the following occurs: * the Selling Shareholder (including any government agencies) owns Shares representing less than 10% of the registered capital of the Company; or * the Selling Shareholder (including any government agencies) and Deutsche Telekom, together with its affiliates, own shares representing less than 50% of the registered capital of the Company.

156 RELATED PARTY TRANSACTIONS

The following is a summary of transactions with related parties as deﬁned in IAS 24 ‘‘Related Parties Disclosure’’, in accordance with IFRS. Transactions between related parties are effected on the same terms, conditions and amounts as transactions between unrelated parties. The Group is, and has been, a party to various agreements and other arrangements with certain related parties, the most signiﬁcant of which are described below.

Deutsche Telekom Related Parties Following the Offering, Deutsche Telekom will continue to hold a majority of the Company’s share capital through its subsidiaries. Deutsche Telekom is one of the world’s leading telecommunications companies, offering its customers a broad spectrum of telecommunications and IT services. As one of Europe’s largest telecommunications providers, Deutsche Telekom is represented in many of the most important markets in Europe, Asia and America and in approximately 50 countries worldwide. As part of the Deutsche Telekom Group, the Group benefits from its overall support scale and operational expertise, in particular in regard to international telecommunications markets. The Group’s access to such technical expertise is set out in various agreements between the Group and Deutsche Telekom. The Group also benefits from the licensing of certain trademarks and domain names from Deutsche Telekom, as well as access to certain services to the Group from expert personnel in accordance with the terms of a framework contract. The Group does not expect any changes to its relationship with Deutsche Telekom as a result of the Offering. Business transactions relate mainly to telephone calls and other traffic in the related parties’ networks. Other transactions include data services, management, consultancy, other services and purchases of fixed assets. The most significant of these transactions are described below. See also ‘‘Risk Factors – Risks Related to the Group’s Relationship with Deutsche Telekom – The Group is dependent on its controlling shareholder, Deutsche Telekom, and a change in or loss of this relationship may adversely affect the Group’s business and results of operations’’, and ‘‘– Interests of Deutsche Telekom may differ from those of holders of the Securities’’.

Licensing Agreements The key licence agreements with Deutsche Telekom Group comprise the Licence Agreement between Deutsche Telekom AG (T-Com) and Slovak Telekom, a.s. dated 23 December 2005 for ‘‘T’’, ‘‘T- com’’ brands and the Licence Agreement between T-Mobile Global Holding Nr. 2 GmbH and EuroTel Bratislava, a.s. dated 16 March 2005 for the ‘‘T-Mobile’’ brand. The licensing agreements are entered into for an indeﬁnite period.

Loans to Deutsche Telekom Related Parties Total loans to related parties amounted to EUR 150 million as at 31 December 2014, comprising a short-term loan the Group granted Deutsche Telekom AG in November 2014 in the amount of EUR 150 million, payable in May 2015 and with an interest rate of 0.18%. Interest related to the loan amounted to EUR 45 thousand in 2014. See Notes 9, 25 and 35 to the Financial Statements. The loans are documented under the Master Agreement for Upstream Loans entered into between Deutsche Telekom AG and the Company in 2008. The transactions are performed on an arm’s length commercial basis, with supporting documentation for transfer pricing tax purposes. The Company expects to continue making loans to Deutsche Telekom from time to time after the Offering, subject to market conditions.

Asset Purchases among Related Parties The Group made purchases of ﬁxed assets from Deutsche Telekom Related Parties in the amount of EUR 1.2 million, EUR 7.3 million and EUR 1.2 million in the year ended 31 December 2014, 2013 and 2012 respectively. These purchases were primarily in relation to the Group’s new CRM system.

Provision of Services among Related Parties The Company is also party to a number of agreements with Deutsche Telekom AG or its afﬁliated companies for the provision of various services. A summary of such agreements is set forth below. Master and Framework Cooperation Agreements In 2012, the Company and Deutsche Telekom AG entered into a framework cooperation and service agreement, under which Deutsche Telekom AG (or its afﬁliates) provide to the Company services in

157 the telecommunications industry. The speciﬁc services are agreed under separate arrangements that are renewed on a yearly basis and cover areas including corporate IT, wholesale roaming know-how and strategy, central development of Deutsche Telekom shops concept, products and innovations, mobile product and terminal management, IT procurement operations, network technology and other. In 2008, the Company and T-Systems Business Services GmbH concluded a master agreement regulating further cooperation of the parties in the deployment of global telecommunication network and other areas. The cooperation consists of reciprocal services provided under the master agreement. Additional services may be rendered under separate agreements. Originally, the services provided under the agreement included the supply of telecommunication services by the Company to T-Systems Business Services GmbH. The Company concluded a similar master agreement in 2004 with T-Systems International GmbH. Currently, there are no material transactions effected under these agreements.

Participation Agreement In 2012 the Company signed a participation agreement with BuyIn, a joint venture company of Deutsche Telekom AG and France Telekom. The Company has undertaken to pursue procurement activities falling within the scope of the participation agreement exclusively through BuyIn. The participation agreement covers procurement of network technology, customer equipment and service platforms. The Company is currently involved in a process of broadening the scope of the procurement activates performed under the participation agreement to include information technologies. The agreement does not provide for any payments by the Company to BuyIn in connection with the subject matter of the agreement.

Service Agreements In 2013 Deutsche Telekom AG and the Company concluded an agreement on city-to-city bandwidth services provided to the Company. The agreement was concluded for a definite term until 31 August 2015 and the Company does not expect it to be prolonged as it will no longer require the service. In 2013 Deutsche Telekom AG and the Company entered also into a contract on Deutsche Telekom ICSS mobile services, pursuant to which Deutsche Telekom AG provides to the Company particular platforms and services. Further, pursuant to a service agreement concluded in 2012 between the Company and T-Systems International GmbH concerning the Netcentrics Mobile Management, T-Systems International GmbH provides to the Company online administration and management services for the Company’s mobile device fleet. The services include, in particular, online administration and management of the mobiles’ installed software, password settings. Under business management contracts concluded in 2011 and 2012 between the Company and Deutsche Telekom Shared Services, s. r. o., the latter provides specific intercompany services to the Company. The scope of services consists mainly of operational accounting, namely accounts receivables (non-core), accounts payables, fixed assets, bank payments processing, general ledger and related IT support as well as from operational procurement services related to processing of shopping carts, purchase requisitions, purchase orders and invoices and related help-desk support. In 2011, the Company and Deutsche Telekom AG entered into a project service agreement, under which the latter undertook to deliver software and perform services to the Company concerning the implementation of Next Generation Customer-Relationship-Management. In 2012 Deutsche Telekom AG assigned and transferred its rights under the project service agreement to T-Systems International GmbH. Further, under a software delivery agreement entered into in 2012, the Company undertook to provide services to T-Systems International GmbH and to act as the latter’s subcontractor. A project service agreement is in place since 2012 between the Company and Deutsche Telekom AG laying down the framework conditions for provision of shared platforms and services by Deutsche Telekom AG to the Company. In 2013, Telekom Deutschland GmbH and the Company concluded an individual agreement for resellers, under which Telekom Deutschland GmbH provides to the Company audio conference capacities for marketing to third parties.

Insurance agreement In 2012, Deutsche Telekom AG and the Company concluded an agreement, under which Deutsche Telekom AG includes the Company and the Company’s fully consolidated afﬁliates (i.e. currently including Zoznam, s.r.o., Zoznam Mobile, s.r.o., Telekom Sec, s.r.o., PosAm, spol.s r.o. and DIGI

158 SLOVAKIA, s.r.o.) into Deutsche Telekom AG’s insurance portfolio in order to provide the Company and its fully consolidated afﬁliates with insurance coverage. Deutsche Telekom AG has a right to determine, alter, limit or amend the scope of its insurance portfolio. The Company pays costs incurred by Deutsche Telekom AG in relation to its insurance portfolio on a pro rata basis.

Human resources and accounting The Company further provides services in human resources, salary administration, and occupational safety and health protection to Deutsche Telekom Shared Services, s. r. o. based on an agreement entered into in 2012.

Interconnection agreements and IP transit agreements The Company is also party to a number of interconnection and IP transit agreements with Deutsche Telekom AG afﬁliates in other countries. In 2006, the Company and T – Mobile Czech Republic, a.s., entered into an agreement on an interconnection of their telecommunications networks. In 2011, the Company entered into a telecommunication services agreement and wholesale service agreement concerning interconnection and routing of international calls with OTE International Solutions S.A. In 2011, the Company also entered into a wholesale service agreement with ROMTELECOM S.A. concerning the interconnection of their telecommunication systems. Finally, the Company and T- Systems Austria GmbH concluded an IP transit supply agreement with a termination date of 31 May 2015. Under this agreement T-Systems Austria GmbH provides to the Company a ﬁxed IP transit line connecting the IP network of the Company and the IP backbone of T – Systems International GmbH.

Roaming – International roaming agreements and agreements on roaming discounts The Company is party to a number of direct international roaming agreements with Deutsche Telekom AG affiliates in other countries: with Telekom Deutschland as of 1997, with T-Mobile Czech Republic as of 1997, with Magyar Telekom as of 1997, with T-Mobile Austria as of 1997, with Croatian Telekom as of 1997, with T-Mobile Poland as of 1997, with T-Mobile Netherlands as of 1998, with Telekom Romania as of 2000, with Cosmote Greece as of 1998, with T-Mobile Makedonia as of 1997, with AMC Albania as of 2000, with T-Mobile USA as of 1997. In 2010, the Company and Deutsche Telekom AG entered into an agreement on commercial roaming broker services concerning commercial roaming discounts management with third parties on a group level via commercial roaming broker. Intra-group commercial roaming discounts management was integrated into the commercial roaming broker agreement in 2014 by an amendment. Also, in 2014, the Company and Deutsche Telekom AG Company concluded an agreement on roaming discounts concerning commercial roaming conditions between the Company and other affiliates of Deutsche Telekom AG (as a substitution of former party-to-party agreements on roaming discounts with the other affiliates from 2005).

Roaming – inter-carrier services and shared platforms In 2003, the Company concluded an agreement on T-Systems global roaming eXchange with T- Systems Austria GmbH concerning inter-carrier services for data roaming. In 2005, the Company entered into an agreement on the usage of a shared platform for roaming trafﬁc steering with Deutsche Telekom AG.

Slovak Government Related Parties The Slovak Government has significant influence over the financial and operating policy decisions of the Group through the Selling Shareholder’s ownership of 49% of the shares of the Company. Therefore, the Slovak Government and the companies controlled or jointly-controlled by the Slovak Government (Slovak Government Related Entities) are classified as related parties of the Group.

Licensing fees In 2014, the Group paid the Slovak NRA fees of EUR 60.8 million for the licence to provide mobile services on 800 MHz and 2,600MHz frequency bands (the LTE licence) that was put in use in March 2014. In 2013, the Group paid to Slovak NRA a fee of EUR 1.0 million for the prolongation of the licence for the provision of mobile services under the frequencies of 900MHz, 1,800MHz and 450MHz. The Group also incurred expenses with respect to other frequency and telecommunication equipment related fees to Slovak NRA of EUR 2.8 million, EUR 2.5 million and EUR 3.5 million for the year ended 31 December 2014, 2013 and 2012, respectively. The Group has no special treatment with regard to the fees payable to Slovak NRA compared to other competitors.

159 Contracts with Slovak Government Related Entities During 2013, the Group entered into a contract for a period of two years with a Slovak Government Related Entity on development, implementation and support of software solution of the municipalities portal. The total value of the contract was approximately EUR 38.2 million. The Group recognised revenue related to this contract of EUR 15.9 million and EUR 3.9 million for the years ended 31 December 2014 and 2013, respectively. The reason for the increase in 2014 is that the contract was signed in the fourth quarter of 2013, therefore revenues recognised in 2013 were only partial. The contract was entered into on standard commercial terms including customary termination conditions. The contract governs delivery of the solution which is expected to be accepted and launched later this year. There is a subsequent support and maintenance contract entered into for a five year term. The Group also entered into several contracts with Slovak Government Related Entities on development, support and other services in relation to the budget information system. More specifically, the Group entered into three development contracts for the budget information system for the period 2012 through 2015. The total value of these three contracts is approximately EUR 16.5 million. The Group recognised revenue related to these contracts of EUR 3.9 million, EUR 4.4 million and EUR 4.1 million for the years ended 31 December 2014, 2013 and 2012, respectively. In addition, the Group entered into a service contract in relation to the budget information system. The Group recognised revenue related to this contract of EUR 2.5 million, EUR 2.3 million and EUR 2.4 million for the years ended 31 December 2014, 2013 and 2012, respectively. During 2010, the Group entered into a contract for a period of five years with a Slovak Government Related Entity with respect to the establishment and delivery of communication systems, lease of terminal equipment, delivery of internet connectivity and other telecommunications services. The total value of the contract was approximately EUR 23.9 million. The Group recognised revenue related to this contract of EUR 5.4 million, EUR 5.3 million and EUR 5.4 million for the years ended 31 December 2014, 2013 and 2012, respectively. Master Agreement In 2001, the Group signed a master agreement with a Slovak Government Related Entity to provide communications infrastructure services. The contract amount depends on actual services provided during the contract period. The contract is entered into for an indefinite period with 12 months’ notice. The Group recognised revenue related to this contract of EUR 10.3 million, EUR 9.8 million and EUR 8.9 million for the year ended 31 December 2014, 2013 and 2012, respectively. Other Transactions The Group purchases services and goods from Slovak Government Related Entities in the normal course of business. Specifically, the Group purchases electricity and electricity distribution services and postal and cash collection services from Slovak Government Related Entities. The Group purchased electricity and electricity distribution services in an aggregate amount of EUR 8.0 million, EUR 8.3 million and EUR 8.6 million for the year ended 31 December 2014, 2013 and 2012, respectively. The Group purchased postal and cash collection services in the aggregate amount of EUR 4.4 million, EUR 4.7 million and EUR 5.4 million for the year ended 31 December 2014, and 2013 and 2012 respectively. The Group also routinely provides telecommunication and other electronic communication or IT services to Slovak Government Related Entities as part of its ordinary course business activities.

Additional Information Additional information on related party transactions can be found in Note 35 to the Financial Statements.

160 TELECOMMUNICATION REGULATION IN SLOVAK REPUBLIC

The Company’s main operations are subject to industry sector-specific telecommunications regulation which govern the conduct of its various operating segments, general competition law, as well as a variety of other areas such as legislation concerning data or consumer protection. The regulatory measures with the largest potential impact on the Company relate to significant market power, price regulation, international roaming charges and licensing regimes for the use of frequencies. Regulation of operators with significant market power is applied under Slovak national law, after a market analysis carried out by the national regulator, although the Slovak regulation stems from the relevant European Union (EU) Directives and is coordinated by the European Commission (Commission).

International Obligations As a member of WTO, the Slovak Republic has obligations arising from the General Agreement on Trade in Services, especially its Annex on Telecommunications. It is also a signatory of the Fourth Protocol to the General Agreement on Trade in Services and has accepted certain sector-specific commitments as specified in the Schedule of Specific Commitments regarding the telecommunications sector. Moreover, the Slovak Republic committed itself to the Reference Paper on regulatory principles. Until 2003 certain exemptions applied to the Company and it had an exclusive position in certain telecommunication services. As of 2003, Slovak Republic offers competition in public voice services and network infrastructure. The competition in private leased line services is permitted in connection with public networks since 2003. The competition in all mobile and personal communication services, including mobile supply of international voice is permitted. Licensing criteria have to be publicly available. The telecommunications regulation body is separated from and not accountable to any telecommunication service provider. The Slovak Republic has also committed to transparent and non- discriminatory use of scarce resources, such as frequencies. The Slovak NRA entered into many international agreements on frequency planning with NRAs of (mostly) neighbouring countries with the aim of ensuring efficient use of spectrum in the border areas.

EU Telecom Regulatory Framework The TV, fixed and mobile telephony and internet access services, which represent the core business of the Company, are regulated at European Union level through the so called ‘‘Regulatory Framework for Electronic Communications in the European Union’’ (EU Framework) established in 2002 and substantially revised in 2009. The general aim of the EU Framework is to continue the liberalisation of the EU telecommunications market, improve the functioning of the market, guarantee basic user rights and stimulate investment in the sector. The EU Framework regulates a wide range of electronic communications networks and services, including fixed and mobile telecommunications networks, fixed and mobile voice services, satellite and internet networks and services. The EU Framework consists of a package of five directives, two regulations and a number of other legislative instruments. In contrast to EU regulations, which are directly applicable to companies and individuals, the directives require incorporation into national legal systems through the enactment of domestic legislation. The five key directives constituting the EU Framework are Directive 2002/21/EC Framework Directive (Framework Directive), Directive 2002/19/EC Access and Interconnection Directive (Access Directive), Directive 2002/20/EC Authorisation Directive (Authorisation Directive), Directive 2002/22/EC Universal Service Directive (Universal Service Directive) and Directive 2002/58/ EC Directive On Privacy and Electronic Communications (Directive on Privacy and Electronic Communications). The two key regulations are Regulation No. 531/2012 Regulation on Roaming on Public Mobile Communications Networks (Roaming Regulation) and Regulation No. 1211/2009 On Body of European Regulators for Electronic Communications (BEREC Regulation). In each EU Member State (Member State), a national regulatory authority (NRA) is responsible for enforcing national telecommunications laws in accordance with the EU Framework. NRAs have powers under their relevant telecommunications laws in the area of generally applicable sector-specific regulation (e.g. on interoperability and end-user protection) and also power to impose specific obligations on operators that have significant market power (e.g. network access obligations and price controls). NRAs also have the authority to allocate and to supervise the use of frequencies and numbers.

161 Licensing According to the Authorisation Directive electronic communications networks or services can only be provided on the basis of a general authorisation. In other words, the undertaking concerned may be required to submit a notification to NRA but it may not be required to obtain an explicit decision or any other administrative act by the NRA before it can start providing networks or services. However, Member States can issue general authorisations (i.e. not issued to individual undertakings in individual proceedings) setting out general conditions under which networks and services may be provided by each undertaking. Undertakings providing cross-border services shall not be required to submit more than one notification per Member State. Notwithstanding the principle of general authorisation, Member States may still require individual authorisations for the use of scarce resources, such as frequencies and numbers (e.g. calling numbers and addresses of public networks and services). In particular, the NRAs may make the use of radio frequencies subject to individual authorisation in order to: * avoid harmful interference; * ensure technical quality of service; * safeguard efficient use of frequency spectrum; or * fulfil other general interest objectives defined by Member States in conformity with Community law. The general authorisation to provide networks and services and the rights to use frequencies and numbers may only be subject to the conditions set out in the Annex to the Authorisation Directive (e.g. interoperability of services; interconnection of networks; accessibility and portability of numbers; administrative charges). Where a Member State considers limiting the number of individual rights for the use of radio frequencies, changing the existing conditions or their extension, certain conditions and procedures have to be followed (e.g. consultation of all interested parties, publication of all decisions and a periodic review of the limitations). Where rights of use is limited in this way, Member States must grant individual authorisation on the basis of selection criteria which must be objective, transparent, non-discriminatory and proportionate.

SMP Undertakings To ensure that the telecommunications markets are competitive, NRAs can impose ex ante regulation by means of market analysis and decisions imposing obligations on undertakings that have SMP within a relevant market defined in a given country (SMP Undertakings). Ex ante regulation involves NRAs imposing specific behavioural rules aimed at furthering market competition on particular SMP Undertakings in advance as opposed to fining them after they breach general competition rules (ex post supervision). However, compliance with ex ante regulation does not automatically absolve the SMP Undertakings from liability for potential infringements of general competition law and ex post investigations and sanctions by the relevant competition authorities. If an NRA finds that on a particular relevant market an undertaking, either individually or jointly with others, enjoys a market position equivalent to dominance, i.e. a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers, it designates such undertaking an SMP Undertaking and imposes one or more obligations on it. Before it can be established whether an undertaking or service provider has SMP, the NRA must apply the principles of the general European competition law to determine in which relevant markets the undertaking competes. When determining the presence of SMP, NRAs are obliged to take into account the Commission’s recommendations on relevant markets. The latest such recommendation is Commission Recommendation C(2014) 7174 of 9 October 2014 on Relevant Product and Service Markets within the Electronic Communications Sector Susceptible to Ex Ante Regulation in Accordance with Directive 2002/21/EC of the European Parliament and of the Council on a Common Regulatory Framework for Electronic Communications Networks and Services 2014/710/EU (Relevant Markets Recommendation). In the recommendation, the Commission defined four product and service markets in respect of which ex ante regulation might be warranted (See ‘‘– Slovak National Telecom Regulatory Framework – Market analyses conducted by the Slovak NRA and definitions of relevant markets’’ below for the definitions of the particular markets). When conducting market analysis, NRAs must investigate instances of SMP in these four predefined markets. However, if it is justified by specific national circumstances involving (i) presence of high and non-transitory barriers to entry; (ii) a market structure which does not tend towards effective competition; and (iii) insufficiency of

162 competition law alone to adequately address the market failure(s) concerned, the NRAs may also define further relevant markets and apply ex ante regulation to them. Where, following a market analysis, an undertaking is identified as having SMP, NRAs are obliged to impose one or more of the following obligations on that SMP Undertaking, according to the circumstances: * obligation of transparency in relation to interconnection and/or access requiring operators to make public specified information such as accounting information, technical specifications or network characteristics; * obligation of non-discrimination in relation to interconnection and/or access to ensure that the SMP Undertaking applies equivalent conditions in equivalent circumstances to other undertakings providing equivalent services; * obligation of accounting separation in relation to specific activities concerning interconnection or access; * obligation of access to, and use of, specific network elements and associated facilities (including e.g.: obligation to give third parties access to network elements and/or unbundled access to the local loop; obligation to negotiate in good faith with undertakings requesting access; obligation not to withdraw access to facilities already granted; or obligation to interconnect networks or network facilities (facilities include e.g.: buildings, building wiring, antennae, towers, ducts, conduits, masts, manholes and cabinets)) * obligation of price control, including cost orientation of prices or obligations concerning cost accounting systems; or * as an exceptional measure, functional separation according to which a vertically integrated SMP Undertaking must place activities related to the wholesale services in an independently operating business entity. In order to secure consistency among the Member States’ regulatory treatment of SMP Undertakings within the respective relevant markets, the Commission issues recommendations on pricing methodologies which the NRAs must take into account when imposing price control on SMP Undertakings. In May 2009, the Commission issued Recommendation on the Regulatory Treatment of Fixed Termination Rates and Mobile Termination Rates in the EU No. 2009/396/EC (Recommendation on Termination Rates) aimed at the harmonisation of price control applied by the NRAs in the wholesale fixed and mobile termination markets, which sets cost calculation standards for fixed termination rates (FTRs) and mobile termination rates (MTRs). The Recommendation on Termination Rates introduced the so called ‘‘pure long-run incremental costs’’ (pure LRIC) approach of costs calculation, which no longer takes into account various costs which had previously been considered when setting termination rates. The new approach led to reduction in FTRs and MTRs applied among the EU Member States. On 20 September 2010 the Commission passed the Recommendation on Regulated Access to Next Generation Access Networks (NGA) No. 2010/572/EU for the purpose of harmonising the regulatory approach of NRAs with regard to broadband services markets (recommended relevant markets No. 4 and 5). This recommendation was further amended on 11 September 2013 by a new Commission Recommendation on Consistent Non-discrimination Obligations and Costing Methodologies to Promote Competition and Enhance the Broadband Investment Environment No. 2013/466/EU which set the bottom-up long-run incremental costs-plus (BU LRIC +) costing methodology as the recommended costing methodology with regard to copper and NGA wholesale access prices. In addition, this Recommendation called for enhancement of obligation of non-discrimination by the NRAs through implementation of Equivalence of Input (EOI) or Equivalence of Output (EOO) principles into regulated wholesale services.

Universal service One of the objectives of the EU Framework, enshrined in the Universal Service Directive, is to ensure that end-users in each Member State have access to the so called ‘‘universal service’’, i.e. to a certain minimum set of services of a speciﬁed quality to which all end-users have access at an affordable price in the light of speciﬁc national conditions. This minimum set of services should be made available to all users within a Member State’s territory, regardless of their geographical location. The EU Framework sets out obligations in order to secure this objective.

163 First, Member States shall ensure that all reasonable requests for connection at a fixed location to a public communications network are met by at least one undertaking and at a reasonable price. The connection provided must be capable of supporting voice, facsimile and data communications at data rates that are sufficient to permit functional internet access, taking into account prevailing technologies used by the majority of subscribers and technological feasibility. Second, Member States shall ensure that at least one comprehensive directory is available to end-users and must be updated at least once a year. Similarly, at least one directory enquiry service must be available to end-users, including users of public pay telephones. Third, the public pay telephones or other access points to publicly available telephone services should be provided to meet the needs of end-users and the NRAs must be able to impose obligations on undertakings to ensure fulfilment of this requirement. However, if an NRA is satisfied that these facilities or comparable services are widely available, it can decide not to impose any such obligations on undertakings. Finally, unless other requirements have been put in place which achieve an equivalent effect, Member States are obliged to take specific measures to ensure that access to, and affordability of, the access and directory services for disabled end-users is equivalent to the level enjoyed by other end-users. Member States may take specific measures, in the light of national conditions, to ensure that disabled end-users can also take advantage of the choice of undertakings and service providers available to the majority of end-users. Member States may designate one or more undertakings to guarantee the provision of universal service. Undertakings which have universal service obligations may be subject to price control by NRAs which may set price caps or common tariffs for the provision of universal service. As to the financing of universal service, Member States are obliged to establish effective compensation mechanisms for net costs incurred by designated universal service providers when obligations imposed on them represent an unfair burden. The compensation may be paid either from public funds or from shared contributions by other providers of electronic communications networks and services. Member States may choose not to require contributions from undertakings whose national turnover is less than a set limit.

Access, interoperability and interconnection All providers of public electronic communications networks or services (irrespective of whether they have been designated as SMP undertakings or not) who control access to end-users in the EU are obliged to enter into negotiations upon a request of a competitor to conclude an interoperability agreement. Interoperability refers to all measures, including access and interconnection that need to be implemented to ensure end-to-end connections. NRAs can impose proportionate obligations on the providers in order to ensure end-to-end connectivity. If commercial negotiation regarding access fails, the NRA has the power to secure access, interconnection and interoperability in the interests of end- users. The interoperability obligations imposed by the NRA must be objective, transparent, proportionate and non-discriminatory.

International roaming on mobile networks The Roaming Regulation provides the framework for reductions of voice, SMS and data roaming charges (i.e. additional fees for calls, SMS and data transfers initiated outside the subscriber’s home country) on mobile networks in the European Union. The ultimate aim of the regulation is to eliminate the difference between domestic charges and roaming charges and thereby establish an internal market for mobile communications services. In accordance with the regulation the regulated wholesale and retail roaming price caps for calls, SMS and mobile data services have decreased annually since July 2012 until the end of July 2014 and are to remain at the current low levels until July 2017 with regard to retail roaming charges and until July 2022 with regard to wholesale roaming charges. In addition to furthering the price reduction policy, the Roaming Regulation introduced certain ‘‘structural measures’’ aimed at creating more competitive retail roaming markets. For example, from July 2014, retail roaming services are required to be ‘‘decoupled’’ from other service offerings, meaning that roaming has to be offered separately from national services and has to be obtainable from alternative roaming providers. Roaming customers must have the right to switch roaming provider at any time. Where a roaming customer chooses to switch roaming provider, the switch must be carried out without undue delay, under no circumstances exceeding three working days from the conclusion of the agreement with the new roaming provider. The switch to an alternative roaming

164 provider or between roaming providers shall be free of charge for customers and shall be possible under any tariff plan. The Roaming Regulation also introduced certain transparency obligations such as duty of roaming providers to alert roaming customers free of charge to the fact that they will be subject to roaming charges and provide them with basic personalised pricing information on such charges (including VAT).

New EU Directive on NGA A new EU Directive 2014/61/EU On Measures to Reduce the Cost of Deploying High-Speed Electronic Communications Networks was enacted on 15 May 2014. Its main objective is to facilitate and incentivise the roll-out of high-speed electronic communications networks, i.e. networks capable of delivering broadband access services at speeds of at least 30 Mbps, by promoting the joint use of existing physical infrastructure and by enabling a more efﬁcient deployment of new physical infrastructure so that such networks can be rolled out at lower cost. It establishes minimum requirements relating to civil works and physical infrastructure, with a view to approximating certain aspects of the laws, regulations and administrative provisions of the Member States.

The directive requires Member States to ensure that, upon written request of an undertaking providing, or authorised to provide, public communications networks, any network operator has the obligation to meet all reasonable requests for access to its physical infrastructure under fair and reasonable terms and conditions, including price, with a view towards deploying elements of high- speed electronic communications networks. Every refusal of such access must be based on objective, transparent and proportionate criteria and the reasons for refusal must be stated by a network operator within two months from the request for access. In case of a dispute either party will be allowed to refer the case to a competent national body for dispute resolution. The Member States will have to ensure that all newly constructed buildings at the end-user’s locations or buildings that underwent major renovation works, for which applications for building permits have been submitted after 31 December 2016, are equipped with physical infrastructure capable of hosting elements of or delivering of high-speed electronic communications networks, up to the network termination points. All multi-dwelling buildings for which building permits have been submitted after 31 December 2016 should be equipped with access point. Member States may provide for exemptions from these obligations in cases where the obligations would be disproportionate. The directive further deals with issues pertaining to transparency of physical infrastructure and planned civil works, coordination of civil works, permit-granting procedures and access to in-building physical infrastructure.

In case of any discrepancies between the directive and the EU Framework, provisions of EU Framework prevail over the provisions of the directive. The directive must be implemented into Slovak national law by 1 January 2016 and the legislation implementing it must enter into force by 1 July 2016 at the latest. Preparatory works on the new legislation already began.

The ‘‘Connected Continent’’ draft legislative package On 11 September 2013, the Commission adopted a legislative package ‘‘Connected Continent: Building a Telecoms Single Market’’ aimed at building a connected, competitive continent and enabling sustainable digital jobs and industries. The legislative package is a part of a broader ‘‘Digital Agenda for Europe’’ initiative and is mainly represented by the Proposal for a Regulation of the European Parliament and of the Council Laying Down Measures Concerning the European Single Market for Electronic Communications and to Achieve a Connected Continent, and amending Directives 2002/20/ EC, 2002/21/EC and 2002/22/EC and Regulations (EC) No. 1211/2009 and (EU) No. 531/2012. The proposal was adopted by the Commission on 11 September 2013 and approved with amendments by the EU Parliament on 3 April 2014. The legislative process is still on-going.

The European Telecommunications Network Operators (ETNO) has expressed concerns over the package, in particular regarding the evolution of the open internet provisions which they consider may introduce far-reaching restrictions on traffic management, affecting efficient management of networks. The Body of European Regulators for Electronic Communications (BEREC) also raised concerns regarding the proposed package in a statement it published on 17 May 2014. As the legislative process is still on-going and the final wording of the regulation is unclear, the description of the package below is limited only to a cursory overview. According to the Commission, the legislative changes proposed complement the current regulatory framework and are intended to address mainly the following:

165 * Simplifying EU rules for telecoms operators – A single authorisation for operating in all 28 member states (instead of 28 authorisations) and further harmonising the way operators can rent access to networks owned by other companies in order to provide a competing service. * Roaming premiums – Incoming call charges while travelling in the EU would be banned. Companies would have the choice to either (1) offer phone plans that apply everywhere in the EU (‘‘roam like at home’’), the price of which will be driven by domestic competition, or (2) allow their customers to ‘‘decouple’’ and opt for a separate roaming provider (without having to buy a new SIM card). This builds on the 2012 Roaming Regulation which subjects operators to wholesale price cuts of 67% for data from July 2014 (See ‘‘– International roaming on mobile networks’’ above). * International calls within Europe – The proposal would mean companies cannot charge more for a ﬁxed intra-EU call than they do for a long-distance domestic call. For mobile intra-EU calls, the price could not be more than EUR 0.19 per minute (plus VAT). Intra- European call prices would be set based on cost recovery principles. * Legal protection for open internet (‘‘net neutrality’’) – Blocking and throttling of internet content will be banned, giving users access to the full and open internet regardless of the cost or speed of their internet subscription. Companies will still be able to provide ‘‘specialised services’’ with assured quality so long as this does not interfere with the internet speeds promised to other customers. * New consumer rights, harmonised across Europe – This proposes new rights such as the right to plain language contracts with more comparable information, greater rights to switch provider or contract, introduction of the provider switching process led by the receiving provider, the right to a 12-month contract (if the customer does not want a longer contract), the right to end a contract if promised internet speeds are not delivered, and the right to have emails forwarded to a new email address after switching internet provider. * Coordinated spectrum assignment – The European Commission proposes stronger coordination of timing, duration and other conditions of assignment of spectrum between Member States. * More certainty for investors – The Recommendation on Costing Methodologies and Non- Discrimination of 11 September 2013 is the second element of this package. The European Commission intends for it to increase certainty for investors, to increase their investment levels, and reduce divergences between regulators, by (1) further harmonising and stabilising costs that incumbent operators may charge for giving others access to their existing copper networks; and (2) granting ‘‘access seekers’’ equivalent access to networks.

Slovak National Telecom Regulatory Framework Overview of legislation and other sources of regulation In the Slovak Republic, the EU Framework is implemented mainly through Act No. 351/2011 Coll. on Electronic Communications as amended (Electronic Communications Act) and related legislation. The related legislation includes Act No. 402/2013 Coll. on Regulatory Authority for Electronic Communications and Postal Services, Transport Authority and on alteration and amendment of certain acts, Act No. 122/2013 Coll. on Personal Data Protection as amended, Act No. 18/1996 Coll. On Prices as amended, Act No. 71/1967 Coll. Administrative Code as amended and Act No. 145/1995 Coll. on Administrative Charges as amended. The ﬁeld is also governed by relevant secondary legislation issued on the basis of the above-mentioned acts, such as the Ordinance of the Government of the Slovak Republic No. 420/2012 Coll. Establishing the National Table of the Frequency Spectrum, The Plan of Use of the Frequency Spectrum, general authorisations and other measures issued by the relevant authorities.

State administration authorities in the area of electronic communications Government of the Slovak Republic The Government’s role is limited to adopting basic strategic documents such as the National Electronic Communications Policy, which sets basic goals in the ﬁeld of electronic communications at the national level for the coming years, and to adopting the National Table of the Frequency Spectrum, which is the basic document governing the use of frequencies (see ‘‘– The national licensing system’’ below).

166 Ministry of Transport, Construction and Regional Development of the Slovak Republic The Ministry’s role is focused on questions of general policy and strategic planning. It prepares a proposal of the National Electronic Communications Policy and a proposal of the National Table of the Frequency Spectrum and presents them to the Government for approval. It cooperates with the Commission and Member States of the European Union, and provides for international relations in the electronic communications sector at the European Union level and other international organisations. Regulatory Office for Electronic Communications and Postal Services The Regulatory Office for Electronic Communications and Postal Services (Slovak NRA) is the main telecommunication regulatory and supervisory authority and has the following main competencies: * Regulation of electronic communications, including the ex ante regulation of SMP Undertakings; * Administration of the frequency spectrum, including power to set administrative charges for the use of frequencies; * Protection of the interests of end users with regard to the quality and prices of services; * Promotion of effective competition, effective investments and innovation, development of the common market of the European Union, adequate access to networks, interconnection of networks and interoperability of services and freedom of carrier selection; * Adoption of generally binding legal regulations within the limits of the Electronic Communications Act; * Determination and imposition of administrative fees; * Out-of-court resolution of disputes between undertakings and between undertakings and end- users; * State supervision in the area of electronic communications; and * Imposition of penalties and other sanctions for breaching obligations stipulated by the Electronic Communications Act. Slovak NRA is headed by a chairman, who acts as a statutory body and is elected and dismissed by the National Council of the Slovak Republic upon a proposal of the Government. The chairman, when absent, is deputised by the vice-chairman of the Slovak NRA who fulfils tasks assigned to him by the chairman. The vice-chairman is appointed and dismissed by the Government. Both the chairman and the vice-chairman are appointed for a six-year term.

The national licensing system The licencing system in the field of electronic communications in the Slovak Republic is governed by the Electronic Communications Act as well as by secondary legislation issued on its basis. The licensing is administered by the Slovak NRA and applies in three main areas: (i) general licencing for the provision of electronic networks/services (ii) licencing for the use of frequencies and (iii) licencing for the use of calling numbers, numbering blocks and the addresses of public networks and services (Numbers). General authorisation to provide networks and services In line with the EU Framework, the provision of networks and services is generally permitted upon simple notification to the Slovak NRA without any special individual permits. The general authorisation to provide networks and services is granted to all undertakings by means of a special document adopted by the Slovak NRA (currently General Authorisation No. 1/2014 to Provide Electronic Communications Networks or Electronic Communications Services) which also sets out basic conditions for the provision of networks and services and stipulates an administrative fee for doing so. The General Authorization sets out obligations of providers of public electronic communications networks and services such as obligations relating to protection of end-users and availability of services for disabled end-users, obligation to enable interception by competent authorities, obligation to ensure compliance with technical standards and technical specifications for networks and services (see ‘‘Business – Key Sector-specific Regulations Applicable to the Group – Pubic Service and Public Network Provider). The National Table of the Frequency Spectrum and the Plan of Use of Frequency Spectrum Frequency licensing is governed by the Electronic Communications Act, the National Table of the Frequency Spectrum (National Table) and the Plan of Use of Frequency Spectrum (Plan). The

167 National Table is a governmental decree adopted by the Government of the Slovak Republic which divides the frequency spectrum into frequency bands, specifies which bands may be used for civil and which for military purposes, and stipulates what type of services may be used in each band (e.g. digital TV, digital radio broadcast, analogue radio broadcast). The National Table furthermore identifies the frequency bands that may be used under general authorisations for the use of frequencies. The basic rules set out in the National Table are further elaborated in the Plan issued by the Slovak NRA. When adopting the Plan the Slovak NRA must take into account the need for European synchronisation, the level of technical development of radio equipment, the provision of services in the specific frequency band, consumer welfare, and the state defence and security. The Plan consists of a general part and appendices, setting out conditions applicable for particular frequency bands (e.g. whether individual authorisation is required, whether rights to use the frequencies may be transferred or leased, a maximum number of frequency-allocating individual authorisations that may be issued, a maximum amount of spectrum that may be held by one undertaking, standards that must be observed in terms of the usage of devices, etc.). In accordance with the rules set out in the Electronic Communications Act, the Slovak NRA may use the Plan to: * adopt restrictions on some types of radio network or wireless access technology; * restrict the extent of services in a specific frequency band; or * prohibit the provision of anything other than a specified service in a specific frequency band. General authorisations for the use of frequencies As a general rule, frequencies in the Slovak Republic may be used only on the basis of a general or individual authorisation. The frequencies that may be used under general authorisations do not require any individual licences and may be used freely by all undertakings subject to the conditions set out therein. When adopting general authorisations, the Slovak NRA must follow the conditions set out in the National Table and the Plan. Individual authorisations for the use of frequencies Some frequencies can be used only by holders of individual authorisations issued by the Slovak NRA. Individual authorisations may take one of the following forms: * a decision on the allocation of frequencies and setting out the conditions under which the frequencies may be used; * a decision on the allocation of frequencies; * a decision on the conditions under which the frequencies may be used (e.g. decision setting technical specifications of electronic communications devices that may be used by an undertaking); or * a terrestrial operating licence (special license for enabling the provision of terrestrial transmission of digital TV and radio broadcasting). Individual authorisations are granted either on application or through a tender. The Plan usually stipulates which of the two regimes is applicable, although this question may also be decided by the Slovak NRA on an ad-hoc basis if it finds it necessary to restrict the number of individual authorisations. If an authorisation is granted on the basis of application, it is awarded on a ‘first come, first served’ basis. Tenders may be carried out through electronic auctions or without an auction. In case of tender proceedings without electronic auction, the tender bids are assessed by a five-member selection committee on the basis of selection criteria published by the Slovak NRA. The members of the committee are appointed by the chairman of the Slovak NRA and must meet the requirements of professional competence, integrity and impartiality set out by the Electronic Communications Act. If the tender proceedings are carried with electronic auction, the only selection criterion is the amount of one-off fee for the use of frequencies in question offered by the bidders. Before a successful tenderer starts to use the awarded (allocated) frequencies, the Slovak NRA must issue a separate decision on the conditions of their use. The Slovak NRA may issue individual authorisations for a maximum period of ten years. However, the authorisation may be issued for a longer period if it is needed on the ground of a longer payback period on specific network investments to be made by the holder. Furthermore, the statutory ten-year limit does not apply to frequencies used for the transmission of analogue radio broadcasting. Any holder of an individual authorisation that was issued upon application is entitled to apply for an extension. However, getting an extension is not possible if the authorisations are issued through

168 tender proceedings. This means that, if the holder of a licence gained through a tender wishes to continue using the frequencies after the authorisation expiration date, it must enter new tender proceedings. Moreover, if the Slovak NRA considers it necessary to restrict the number of rights for the use of frequencies or if it follows from the Plan, tender proceedings may be ordered by the Slovak NRA also for frequency bands allocated on the basis of applications (some of the most important frequencies held by the Company (including 4G licences) were allocated to it through tenders). Individual authorisations for the use of frequencies may impose various obligations on their holders, e.g. the obligation to ensure minimum coverage of Slovak population by services provided using the allocated frequencies, obligation to adhere to a set minimum quality standard of the services provided, the obligation to provide a national roaming to new market entrants, or obligation to use frequencies in border areas in accordance with rules set out in relevant international agreements on use of frequency spectrum (for particular duties of the Company stemming from its individual authorisations see ‘‘Business – Key Sector-specific Regulations Applicable to the Group – Obligations set out in the individual authorisations for the use of frequencies’’ above). Non-compliance with obligations set out in individual authorisations can lead to withdrawal of the respective authorisations or allocated frequencies. The Slovak NRA may decide to change an individual authorisation if: * this is required by an international agreement or membership of the Slovak Republic in an international organisation; * the realities, on the basis of which the individual authorisation was granted, have substantially changed; or * an application for a change of the authorisation is lodged with the Slovak NRA by its holder. The Slovak NRA is obliged to withdraw an individual authorisation if: * the holder has not started using the allocated frequency within a set time limit (normally within 6 months from when the decision on allocation of frequencies became final and binding), or used it for a purpose other than its prescribed purpose; * the holder has not used (or has ceased to use) the allocated frequency for the permitted purpose or in the defined territory for more than six months; * the holder does not fulfil its obligations under the Electronic Communications Act or obligations set out in the individual authorisation; * the holder has not paid a payment for the frequencies (see ‘‘– Fees’’ below); * the transfer or lease of the rights arising from the allocated frequencies has been effected in contradiction with the Electronic Communications Act or the individual authorisation; or * the holder of the license does not respect the statutory ban on proprietary and monetary interconnection between broadcasters and terrestrial multiplex providers. The individual authorisation expires mainly: * upon the lapse of the period for which it was granted or upon death or dissolution of the holder, unless the dissolved undertaking has a legal successor; * on the date stated in the written waiver of the individual authorisation delivered to the Slovak NRA by the holder; * on the date when the holder ceased to provide electronic communications networks or services; or * on the date when the broadcasting licence for a radio broadcast transmitted using the frequencies was withdrawn or when the registration of retransmission for which the frequencies were granted was cancelled. Decisions on allocation of frequencies set out conditions under which the allocated frequencies can be transferred or leased. The conditions must be in line with the respective stipulations of the Plan. Each planned transfer of rights must be notified to the Slovak NRA at least four weeks in advance as well as at latest five days after its execution. Information on each transfer is published by the Slovak NRA. Under the Act on Electronic Communications a transfer or lease of allocated frequencies is inadmissible: (i) in case of analogue TV and analogue radio broadcasting frequencies, (ii) if it follows from their harmonisation, (iii) if the planned transfer or lease would lead to distortion of market

169 competition or (iv) if in course of the last three years before the intended transfer or lease the Slovak NRA withdrew an individual authorisation held by the intended acquirer or lessee.

Individual authorisations for the use of numbers The Slovak NRA administers Numbers. It issues the Numbering Plan (Numbering Plan) which lays down rules for setting up and using Numbers and general terms and conditions of their allocation and aims to provide for equivalent treatment of all providers of public services as well as compliance with international agreements and obligations of the state. The Slovak NRA allocates Numbers to particular undertakings by means of individual authorisations for the use of numbers which are issued upon application. Undertakings using numbers are obliged to pay recurring fees to the Office (see ‘‘– Fees’’ below). The Slovak NRA is obliged to withdraw an individual authorisation if: * the holder failed to fulfil its obligations under the Electronic Communications Act or obligations set out in the individual authorisation (this does not apply to paying the annual fee for the allocated numbers); * the holder did not use that number for a period of at least 12 months from the allocation of the number or stopped using the allocated numbers for at least three months; * the holder has not settled the recurring fee for the allocated numbers within three months from its due date; * the holder no longer fulfils the conditions for the use of allocated harmonised number of social value under Decision of EU Commission 2007/116/EC On Reserving the National Numbering Range Beginning With ‘116’ for Harmonised Numbers for Harmonised Services of Social Value (e.g. number 116 000 reserved for a hotline for missing children); or * it is necessary in terms of state defence, security of state or the protection of public order. Under certain circumstances stipulated by the Electronic Communications Act, the Slovak NRA can change an individual authorisation for the use of Numbers (e.g. if it is in the interest of adaptation to market requirements or requirements of users).

Number portability The Electronic Communications Act sets out obligations allowing for number portability imposed on providers of public electronic communication services (including the Company), which must ensure that a subscriber to such service may, upon request, retain his number independently of the undertaking providing the service. This applies: (i) in the case of geographic numbers at a speciﬁc location; and (ii) in the case of non-geographic numbers (e.g. mobile phone numbers) at any location. For the service of number portability the providers are obliged to charge only costs-oriented wholesale prices. Where service providers require direct payments from their subscribers for the services related to number portability, they may not act as disincentive for their use. Such direct payments almost ceased to exist on the Slovak market. Service providers are obliged to port and activate the number as soon as possible but not later than one day after conclusion of an agreement on portability. Service providers are required to compensate subscribers for any delays in porting. The number-portability obligations do not apply to number portability between ﬁxed and mobile public networks.

Fees The following administrative fees are levied in the electronic communications sector:

General administrative fee for the provision of services and networks According to the currently effective general authorisation to provide networks and services (see above), each provider of networks, services, or both must pay an administrative fee of 0.08% of its annual revenues derived from the provision of services or networks in the previous closed accounting period. Each undertaking is obliged to submit to the Ofﬁce a declaration of the amount of revenues by 10 April each year, or by 10 July each year if the undertaking applied for an extension of the statutory term for submitting an income tax return.

170 Administrative fees for the use of frequencies One-off fees are determined by the Slovak NRA for individual authorisations on an ad-hoc basis. If the authorisations are awarded through tender proceedings, the one-off fee represents the expected lowest bid or offer. The one-off fees are the highest fees levied by the Slovak NRA. Recurring fees are usually monthly or quarterly (in special cases yearly or daily) tariff charges calculated in accordance with a special regulatory measure adopted by the Slovak NRA. The amount of recurring fees varies depending on the parameters of the frequencies used (see ‘‘Business – Key Sector-speciﬁc Regulations Applicable to the Group – Obligations set out in the individual authorisations for the use of frequencies’’ for further details on the one-off fees payable by the Company for the use of frequencies).

General administrative charges The Slovak NRA levies various one-off tariff procedural charges under the general legislation governing such charges, mainly for ﬁling various applications with the Slovak NRA. These charges are non-signiﬁcant and can be in the range between several thousand of euro for more complicated matters and about 10 euro for more technical and administrative steps.

Fees levied for the use numbers The Slovak NRA issues a special measure stipulating the amount of fees charged for the allocated numbers. The fees are normally levied as recurring annual fees for a bundle of 1000 allocated numbers. The amount charged depends on the type of the numbers allocated (e.g. for a bundle of 1000 assigned nine-digit numbers most commonly used in mobile telephony the Slovak NRA levies a yearly fee of EUR 7).

Public networks and public services For information on obligations relating to the provision of public electronic networks and services see ‘‘Business – Key Sector-speciﬁc Regulations Applicable to the Group – Public Service and Public Network Provider’’ above.

Universal service For information on obligations relating to the provision of public electronic networks and services see ‘‘Business – Key Sector-speciﬁc Regulations Applicable to the Group – Universal service provider’’ above.

Market analyses conducted by the Slovak NRA and definitions of relevant markets The Slovak NRA determines list of relevant markets by way of special decision. While doing so it must take into account the applicable relevant markets recommendations issued by the Commission. Subsequently the Slovak NRA examines the state of competition on these markets and on the basis of the market analysis it issues decisions determining SMP Undertakings and imposing obligations on these SMP undertakings in the respective relevant markets. The market analyses are typically conducted every three years. On 18 November 2014 the Slovak NRA issued a new decision on determination of relevant markets which formally replaced the former list set out in the previous decision dated 20 January 2011. The new list of relevant markets is as follows: Market 1: Wholesale services of call termination in individual public telephone networks provided at a fixed location. Market 2: Wholesale services of voice call termination in individual mobile networks. Market 3: a) Wholesale services of local access provided at a fixed location. b) Wholesale central access services provided at a fixed location for products intended for mass market. Market 4: Wholesale high-quality access services provided at a fixed location. Market 5: Wholesale services of call origination in a public telephone network provided at a fixed location. Market 6: Retail services of access to public telephone network at a fixed location for residential and non-residential customers.

171 The change in the relevant markets was prompted by the adoption of the new Relevant Markets Recommendation by the Commission in October 2014. Despite the adoption of the new list of relevant markets, the existing obligations imposed on SMP Undertakings on the old relevant markets remain valid until replaced by new obligations reflecting the changed list of relevant markets. In order to impose the new obligations the Slovak NRA must first conduct market analyses on the newly defined relevant markets. The market analyses are currently on-going and are expected to be finished in the last quarter of 2015. The old list of relevant markets as defined under the 2011 Slovak NRA decision is as follows: Retail level market Market 1: Access to the public telephone network at a fixed location for residential and non- residential customers (Retail Fixed Telephone Access). Wholesale level markets Market 2: Call origination on the public telephone network provided at a fixed location (Wholesale Fixed Call Origination). Call origination on the public telephone network provided at a fixed location is a conveyance of a telephone call or a call to the internet network (used for a dial-up internet connection) from a termination point in a fixed public telephone network defined by a specific network address to the point of interconnection between two fixed networks or between a fixed and a mobile network. Market 3: Call termination on individual public telephone networks provided at a fixed location (Wholesale Fixed Call Termination). Call termination on individual public telephone networks provided at a fixed location is conveyance of a call directed at an end user of a public telephone service at a fixed connection point from a point of interconnection between two fixed networks or between a mobile and a fixed network to a termination point of a fixed public telephone network defined by a specific network address. Market 4: Wholesale (physical) access, including shared or fully unbundled access, provided through infrastructure at a fixed location (Wholesale Physical Access) Market 5: Wholesale broadband access (Wholesale Broadband Access). Wholesale Broadband Access consists of access to electronic communication networks allowing conveyance of signals at the speed higher than 256 Kbit/s. Market 6: Wholesale terminating segments of leased circuits (Wholesale terminating segments of leased circuits) are segments of leased circuits, which connect network termination points with the point of interconnection. Market 7: Call termination on individual public mobile telephone networks (Wholesale Mobile Termination). Call termination on individual public mobile telephone networks is a service which consists of conveyance of a call directed at an end user of a mobile telephone service from a point of interconnection between mobile networks or between a mobile network and a fixed network to a termination point in a mobile telephone network defined by a specific network address. The new decision did not bring substantial changes in the existing market definitions, the new market analyses may lead to changes in the existing obligations imposed on SMP Undertakings including the Company.

Obligations imposed on SMP Undertakings On each of the listed seven old relevant markets, the Slovak NRA designated respective SMP Undertakings on which it imposed one or more obligations. The Company was designated as having SMP in all seven originally defined relevant markets (see ‘‘Business – Key Sector-specific Regulations Applicable to the Group – Obligations of the Company as an SMP Undertaking’’). The obligations that the Slovak NRA may impose under the Electronic Communications Act are in line with the EU Framework and include the following: * Transparency of access and interconnection, in particular the obligation to publish specific information designated by the Slovak NRA such as accounting information, standard business terms and conditions and network characteristics and/or the obligation to publish a mandatory reference offer under conditions set by the Slovak NRA. A mandatory reference offer is a document produced and published by the SMP Undertaking and approved by the Slovak NRA that states conditions and specifications under which the SMP Undertaking provides certain

172 services (e.g. access and interconnection). The Slovak NRA decides which conditions and specifications must be included in the mandatory reference offer and the SMP Undertaking is obliged to apply these conditions and specifications to all its customers. The Slovak NRA may decide on the change of the content of the reference offer. * Non-discrimination of access and interconnection, which entails applying comparable conditions under comparable circumstances to other undertakings and providing other undertakings with information and services under equal conditions and in equal quality as if used for one’s own needs or would be provided to a controlled undertaking. * Accounting separation, which entails separation of specific activities in relation to access or interconnection and making accounting of vertically integrated undertakings transparent to ensure non-discrimination. * Access to specific network facilities including the obligation to give third parties access to specified network elements and/or facilities including access to network elements which are not active and/or unbundled access to the local loop, obligation to provide access to related facilities and services in order to ensure interoperability and interconnection, obligation to enable co- location or other forms of shared use of associated facilities, obligation not to withdraw access to facilities already granted, obligation to negotiate in good faith with undertakings requesting access and obligation to provide access to operational support systems or similar software systems necessary to ensure fair competition in the provision of services. * Regulation of services for end-users on retail level relevant markets, in particular ban on giving preference to a certain group of end users and ban on unreasoned bundling of the provision of services to provide other services or products where such provision of services or products is feasible also in a separate manner. Furthermore, in order to prevent SMP Undertakings from demanding inadequately high or low prices the Slovak NRA may impose price regulation on retail level relevant markets. * Price regulation of access and interconnection (see below).

Functional separation Where other obligations imposed on SMP Undertaking have failed to achieve effective competition, and if there are important and persisting competition problems or market failures identiﬁed in relation to the wholesale provision of certain access product markets, the Slovak NRA may as an exceptional measure impose an obligation on vertically integrated undertakings to place activities related to the wholesale provision of relevant access products in an independently operating business entity.

Price control The Slovak NRA may regulate prices of access (at the wholesale level) and on the end-users markets (retail level). The Slovak NRA may also regulate prices of the universal service and number portability fees. As regards the first two areas of price control in the areas of wholesale access and end-user markets, these are imposed only on SMP Undertakings within ex ante regulation. Price control of universal service is applicable solely to the providers of universal service designated by the Slovak NRA. Finally, price control in the area of number portability, if any, is applicable generally to all providers of networks and services. Although the Slovak NRA’s power to regulate prices is wide, the Electronic Communications Act places certain statutory constraints upon it. First, the Slovak NRA must respect general principles of the regulation set out in the Electronic Communications Act such as non-discrimination, technological neutrality, proportionality and efficiency. Second, the Electronic Communications Act stipulates that a price control can be imposed as a part of ex ante regulation only if other available measures are, or would be, insufficient for eliminating the shortcomings found on a the relevant market. Finally, when imposing price control on SMP Undertakings, the Slovak NRA is obliged to take into account any investments in the networks made or expected to be made by the respective SMP Undertaking. The Slovak NRA may use the following methods for price regulation: * directly define maximum or minimum prices;

173 * set binding pricing guidelines, in particular: (i) maximum increases in prices within a defined period, (ii) maximum weight of defined inputs for calculation of a price within a defined period, or (iii) prohibit price increase on a particular relevant market for a maximum of 12 months; or * set a binding pricing methodology. Where the Slovak NRA sets a binding pricing methodology, the SMP Undertaking is obliged to calculate its prices in accordance with the methodology and submit the calculation to the Slovak NRA for approval within the statutory time limit of two months from the day on which the decision on price regulation became final and binding. The Slovak NRA then verifies the presented price calculation and, if it is satisfied that the binding methodology was applied correctly, it approves the resulting prices whereby they become binding as maximum prices upon the SMP Undertaking. The Slovak NRA reviews the approved prices once a year and, if needed, may decide on their alteration (see also ‘‘Business – Key Sector-specific Regulations Applicable to the Group – Obligations of the Company as an SMP Undertaking’’ above).

Co-location and sharing of facilities In order to prevent unreasonable infringements on third-party rights and promote reasonable territorial planning, providers of public electronic communication networks and services are under certain conditions obliged to enable other market players to use their own infrastructure. This is the case, in particular, when an undertaking is unable to place a new line or install telecommunications equipment without unreasonable interference in third-party real estate. If such circumstances arise, the undertaking which controls the existing infrastructure is obliged to conclude an agreement on co- location or sharing of facilities with the requesting undertaking. The undertaking providing the co- location and sharing of its facilities may require payment for such a service. However, the Electronic Communications Act prescribes that the co-location and sharing must be provided under non- discriminatory conditions. An undertaking may refuse to conclude the agreement only if the co- location or shared use is technically impracticable or poses serious security risk. The Slovak NRA may on its own initiative or upon request from an affected undertaking decide on shared use of infrastructure and oblige a provider of public networks or services to share its infrastructure with other undertakings.

Interconnection of networks Under the Electronic Communications Act, an undertaking providing a public network has the right and, upon request of another undertaking providing a public network, an obligation to negotiate on network interconnection. An undertaking also has an obligation to interconnect its network with the network of a requesting undertaking if it is feasible. An undertaking providing a public network is obliged to enable interconnection in line with technical standards, in a reasonable time period and under reasonable non-discriminatory conditions. These obligations apply generally to all undertakings irrespective of their market power, although SMP Undertakings may be subject to more stringent speciﬁc requirements in this area, see ‘‘– Obligations imposed on SMP Undertakings’’ above. In order to promote transparency on the market, the Slovak NRA publishes the basic technical and business terms and conditions of existing contracts on interconnection of networks on its webpage. Contractual parties are obliged to submit the contract to the Slovak NRA for publication within 45 days of its conclusion. In order to ensure interoperability and interconnection of networks the Slovak NRA may issue decisions obliging undertakings which control at least one network termination point to ensure interconnectivity between network termination points and interoperability of their services and may also order interconnection of networks within a set time limit.

Penalties and other sanctions The Slovak NRA can impose administrative penalties on undertakings for various violations of the Electronic Communications Act or for violation of Slovak NRA’s decisions rendered under the Electronic Communications Act. The amount of the penalty that can be imposed in a particular case depends on the severity of the violation in question. Depending on the type of violation the Slovak NRA can impose penalties up to EUR 3,000,000. The violations of the Electronic Communications Act for which the Slovak NRA can impose a ﬁne include for example: * most serious violations such as violation of speciﬁc transparency and non-discrimination obligations imposed on SMP Undertakings (penalty up to EUR 3,000,000);

174 * violations of other obligations imposed on an SMP Undertaking under the ex ante regulation, universal service obligations or interconnection obligations (penalty up to EUR 1,500,000); * violations of certain notification obligations, e.g. an obligation to notify the Slovak NRA in advance of relevant changes in the provision of networks or services or of the transfer of rights to use frequencies, or realisation of a transfer or lease of the rights in contravention of the Electronic Communications Act (penalty up to EUR 1,500,000); * violations of the conditions of the general authorization and violations of certain technical obligations, such as operation of non-complying telecommunications equipment (penalty up to EUR 1,500,000); * violations of bookkeeping standards, in particular standards relating to separation and transparency of costs and revenues (penalty up to EUR 1,500,000); or * violations of privacy such as a failure to ensure the confidentiality of communications and related traffic data (penalty up to EUR 1,500,000). When imposing a penalty, the Slovak NRA must take into account the severity, manner, duration and consequences of the breach. For a repeated breach, the Slovak NRA may impose a penalty repeatedly. In addition to penalties, the Electronic Communications Act provides for other forms of sanctions. For example, where the holder of an individual authorisation for the use of numbers or frequencies has not paid the recurring fee within three months from its due date or has not paid a one-off fee on its due date, the Slovak NRA withdraws the individual authorisation. Furthermore, in case of severe or repeated violation which has not been remedied despite the fact that a penalty has been imposed or special measure put in place, the Slovak NRA may bar the undertaking from providing electronic communication networks or services for a period up to 24 months, taking into account the severity and duration of the violation in question. Finally, late payments of administrative fees, non-compliance with the conditions set out in the individual authorisations and certain other instances of non-compliance can preclude undertakings from prolonging their existing individual authorisations as well as from applying for new ones. According to the Slovak NRA’s 2013 Annual Report, in 2013 it initiated 548 administrative proceedings and imposed 373 penalties amounting to EUR 72,230 in total, which represents a year- over-year increase by 7.9%.

Appeals process Save for specific statutory exceptions, the decisions of the Slovak NRA may be appealed to the Chairman of the Slovak NRA. When deciding on the appeals the Chairman consults a special committee established by him for this purpose. Appeals cannot be brought on the following matters: * temporary measures taken by the Slovak NRA; * determination of the applicable price calculation methodology in terms of price regulation imposed on an SMP Undertaking; * general authorisation to provide networks and services; * definition and analysis of relevant markets; * selection procedure applied when granting individual authorisations for the use of frequencies; * issuance of certificates on special professional competence; * price regulation applied for number portability; and * out-of-court dispute resolution. Notwithstanding the statutory exceptions listed above, and subject to conditions set out in the Act No. 99/1963 Coll. Code of Civil Procedure as amended, the decisions of the Slovak NRA are subject to judicial review of the Supreme Court of the Slovak Republic (Supreme Court) which has the jurisdiction to review the Slovak NRA’s decisions in terms of their legality. The decisions rendered by the court pursuant to judicial review can further be reviewed by the Constitutional Court of the Slovak Republic (Constitutional Court) in terms of their constitutional conformity (in particular with regard to matters of due process).

175 Further Applicable Regulation Broadcasting, retransmission and provision of on-demand audiovisual media services The Group’s business partially concerns provision of audiovisual content by means of TV broadcasting, retransmission and on-demand audiovisual media services. The distribution of audiovisual content is regulated by the following key EU and Slovak legislation: EU Directive 2010/ 13/EU On the Coordination of Certain Provisions Laid Down by Law, Regulation or Administrative Action in Member States Concerning the Provision of Audio-visual Media Services (AMS Directive), Act No. 308/2000 Coll. on Broadcasting and Retransmission and on Amendments of Act No. 195/ 2000 Coll. on Telecommunications as amended (Broadcasting Act), Act No. 220/2007 Coll. On Digital Broadcasting as amended (Digital Broadcasting Act), Act No. 147/2001 Coll. Advertising Act as amended (Advertising Act) and Act No. 343/2007 on the Conditions of Registration, Public Distribution and Preservation of Audiovisual Works, Multimedia Works and Sound Recordings of Artistic Performances including Amendments and Supplements to some other Laws as amended (Audiovisual Act). AMS Directive stipulates inter alia prohibition on restriction of cross-border audiovisual media services, sets out conditions when certain programmes can be banned, sets which programmes must be accessible without restrictions, strengthens production of EU programmes and regulates television advertising. It distinguishes between linear audiovisual media services (television broadcasting) and non-linear audiovisual media services (on-demand audiovisual media service). The AMS Directive has been transposed into Slovak law by the Broadcasting Act and the Digital Broadcasting Act. The Broadcasting Act established the Council for Broadcasting and Retransmission as a body primarily responsible for monitoring compliance with broadcasting regulations, issuing licences for analogue and digital TV and radio broadcasting in the Slovak Republic and carrying out registration of retransmission providers and on-demand audiovisual media services providers (for an overview of the broadcasting licenses and retransmission registrations of the Group see ‘‘Business – Key Sector- specific Regulations Applicable to the Group – TV broadcasting, on-demand audiovisual media services and retransmission provider’’). The Broadcasting Act also sets out rights and duties of broadcasters (in general), retransmission providers and providers of on-demand audiovisual media services. In contrast, the Digital Broadcasting Act contains special rules applicable to digital broadcasting, digital broadcasters and to provision of services directly linked to digital transmission. Broadcasting of a programme service is defined by the Digital Broadcasting Act as a dissemination of an original coded or non-coded programme service intended for reception by public via communications network or telecommunications device and is divided into broadcasting of radio programme service (radio broadcasting) and broadcasting of TV programme service (TV broadcasting). An on-demand audiovisual media service is defined by the Broadcasting Act as a service of a primarily economic nature for the viewing of programmes at the moment chosen by the user, provided by electronic means of communication at the user’s individual request on the basis of a catalogue of programmes compiled by the provider of the on-demand audiovisual media service for the purposes of providing information, entertainment or education to the general public; the provision of audio recordings is not deemed an on-demand audiovisual media service. Retransmission is defined as the reception and simultaneous, full and unmodified transmission of an original broadcast of a programme service or its significant part intended by the broadcaster to be received by the public, carried out by means of an electronic communication network; if retransmission is carried out by means of a cable distribution system or a microwave system it is described as cable retransmission. According to the Broadcasting Act, TV and radio broadcasting can be provided only under license issued by the Council for Broadcasting and Retransmission. The license for TV broadcasting is valid for a maximum period of 12 years and may be extended by the Council for Broadcasting and Retransmission by additional 12 years. Digital terrestrial TV and radio broadcasting is regulated separately by the Digital Broadcasting Act and is subject to license issued by the Council for Broadcasting and Retransmission for an indefinite period of time unless the applicant requests otherwise. In terms of territorial scope broadcasting licences may be (i) nationwide, (ii) multiregional, (iii) regional, or (iv) local. In case of a breach of law the Council for Broadcasting and Retransmission may impose fines ranging from EUR 33 to EUR 165,969 on broadcasters and in certain cases may withdraw a license. Broadcasting license cannot be transferred to another natural or legal person and in case of legal persons does not pass to legal successors. Retransmission can be provided only on the basis of a registration by the Council for Broadcasting and Retransmission valid for an indefinite period of time. Retransmission of programme services is

176 subject to consent of original broadcasters of the programme services. On-demand audiovisual media services are provided upon simple notification to the Council for Broadcasting and Retransmission. Broadcasters and providers of on-demand audiovisual media services are obliged to devote specific percentage of their broadcast time to European works. The Council for Broadcasting and Retransmission has the right to ensure that substantial proportion of the public is not deprived of broadcasting of certain events, considered of major importance for society, solely on the basis of exclusivity rights of broadcasters. For this purpose it may issue a list of events and implementation procedures. The Broadcasting Act also sets rules of television advertising, product placement and sponsorship (e.g. maximum time that can be spent on advertising and content of advertising). Broadcasting Act sets out certain rules on plurality of information, transparency of ownership and personal relations in broadcasting. According to the Broadcasting Act a publisher of a periodical that is published at least five times a week and is available to the public in at least half of the territory of the Slovak Republic cannot simultaneously hold a license for multiregional or nationwide broadcasting. Moreover, one person cannot hold more than 25% interest or the same amount of voting rights (cross ownership) in more than one licensed nationwide or multiregional broadcaster or in a national periodical press publisher. The Broadcasting Act also prohibits cross ownership and certain personal connections between radio and TV broadcasters, and between radio and TV broadcasters and national periodical press publishers. Similarly, the Act on Digital Broadcasting prohibits cross ownership and certain personal connections between digital broadcasting license holders themselves, and between broadcasters and multiplex providers.

Data protection The processing of personal data in the EU is regulated by Directive No. 95/46/EC on the Protection of Individuals with Regard to the Processing of Personal Data and the Free Movement of such Data (Data Protection Directive). The Data Protection Directive sets out detailed conditions for the processing of personal data, regulates the transfer of this data outside of the EU/EEA and provides individuals with rights in respect of the processing of their data including access to it. In February 2012, the Commission presented a proposal for a reform of the EU data protection law. The Commission’s proposal aims to update and modernise the principles enshrined in the 1995 Data Protection Directive, aiming to bring them into the digital age. The proposed regulation (COM(2012) 11), once adopted, will substantially change the data protection regime in the EU. The regulation will establish a single, pan-European law for data protection, replacing the current inconsistent patchwork of national laws, meaning that companies will deal with one law, not 28 different data protection laws. The draft regulation has been subject to a lot of controversy during the adoption process and the definite date of its adoption is therefore difficult to predict. After its final adoption, EU member states will have two years to apply the new regime. The new regime which the regulation introduces will translate into additional expenses for ensuring compliance. In the Slovak Republic, the Data Protection Directive has been transposed by Act No. 122/2013 Coll. on the Protection of Personal Data (Slovak Data Protection Act). To a large extent, the requirements of the Slovak Data Protection Act are stricter than the Data Protection Directive. The Slovak Data Protection Act was amended in April 2014 by Act No. 84/2014 Coll. (Amendment). By adopting the Amendment, the Slovak data protection regime was made somewhat less strict. However, it still represents ‘‘gold-plating’’ when compared to the Data Protection Directive. Personal data is defined extensively by the Slovak Data Protection Act and comprises any data by which a natural person is identified or identifiable, either directly or indirectly. This definition mirrors the definition of personal data in the Data Protection Directive. Any processing needs to be supported by a legal basis which may in particular be (i) data subject’s consent, which needs to be demonstrable, (ii) contract or pre-contractual relations with the data subject, (iii) an important task carried out in the public interest, (iv) processing based on specific laws, (v) protection of life, health or property of an individual, (vi) personal data published according to the law; or (vii) legitimate interests of the data controller or third party in particular to protect the property, financial or other interests of the controller. All datasets which contain personal data need to be notified to the Data Protection Office, Slovak data protection watchdog. Personal data may be processed as soon as notification is completed. The notification obligation does not need to be fulfilled where a company nominates a data protection officer. Nomination of a data protection officer is voluntary but, where company decides to nominate a data protection officer, that officer needs to pass an exam at the Data Protection Office. All datasets which contain biometric data (where processing is based on consent), datasets which contain

177 sensitive personal data (e.g. CCTV images) which are to be transferred to a third country not ensuring adequate level of protection of personal data and in certain cases (depending on the appreciation of the Data Protection Office) datasets processed for legitimate interests of data controller (e.g. whistleblowing or employee monitoring schemes) need to be registered at the Data Protection Office (notification is not sufficient). Only upon registration by the Data Protection Office (which effectively means approval), datasets mentioned above may be processed. All contracts, the subject of which is the processing of personal data on behalf of the data controller (e.g. outsourcing or contracts with suppliers) need to be in writing and their content is prescribed by the Slovak Data Protection Act. Transfers of personal data within EU/EEA and within countries ensuring an adequate level of protection of personal data are guaranteed by the Slovak Data Protection Act and the same requirements are applicable as if the transferor and transferee were in the same member state. Transfers of personal data to third countries outside the EU/EEA not ensuring an adequate level of protection of personal data need to be supported by a (i) data transfer agreement which incorporates standard contractual clauses approved by the Commission or (ii) Binding Corporate Rules (BCRs) or transfer is based on other safeguards such as data subject’s consent (which is however not suitable for bulk or massive data transfers). Transfers of sensitive personal data to a third country not ensuring an adequate level of protection of personal data requires written consent of the data subject. Transfers of employee data follow somehow stricter regime(data transfer agreement needs to incorporate standard contractual clauses or BCRs must be in place). Transfers where standard contractual clauses have been amended (and so have not been incorporated into the data transfer agreement ‘‘as is’’) require approval of the Data Protection Office and translations. This may cause significant delays. Data subjects have several rights according to the Slovak Data Protection Act, i.e. subject access rights, right to have their personal data corrected or updated or right to have their personal data deleted. Security of processing of personal data is prescribed by government decrees No. 164/2013 and No. 117/2014. Datasets containing sensitive personal data which are connected to the internet network require preparation of a security project. Non-compliance with the provisions of the Slovak Data Protection Act can result in a fine of up to EUR 200,000. Fines are being imposed rather frequently although they are usually set at the lower range meaning that for simple offences they do not tend to go beyond EUR 5,000. Specific supplemental rules for the telecommunications sector in the EU are set out in Directive No. 2002/58/EC on Privacy and Electronic Communications (e-Privacy Directive) and its amendments, which govern, among other things, location data and telecommunications traffic data as well as retention of data and cookies rules. The e-Privacy Directive has been transposed by the Electronic Communications Act. Confidentiality of telecommunications communications and related traffic data is ensured by imposition of obligations on the undertakings to adopt adequate technical and organizational security measures as well as by the set of other related safeguards, including a general prohibition of listening, wiretapping, storage and any form of interception or surveillance of telecommunications communications and the related telecommunications traffic data. Contrary to the provisions regarding cookie consent enshrined in the e-Privacy Directive which requires consent before placing cookies on the end user’s device, the Electronic Communications Act regards browser settings as providing the requisite consent (to the extent the browser is set for accepting the cookies). Any infringements of personal data need to be reported to the Slovak NRA. In certain cases, the data subjects will also need to be informed about the incident regarding their personal data breach. Traffic data may be processed for the purpose of direct marketing or value added services only if the user of services has given his consent. The use of calling systems with or without human intervention, facsimile machines or electronic mail (e.g. automated robot calls) for the purpose of direct marketing shall be allowed only with the prior opt-in consent of the user of services. The use of electronic mail for the purposes of sending unsolicited communications is only allowed with the prior opt-in consent of the person concerned, unless there has been a previous commercial relationship between the parties (in which case opt-in consent is not required (implied consent being sufficient) but the person must be given an opportunity to refuse receiving marketing messages in each and every message (possibility to opt-out)). Sending messages through electronic mail from which it is not possible to identify the sender (spam) is not allowed.

178 Electronic Communications Act in its original version contained also provisions regarding the compulsory length of retention of data (for six or twelve months, depending on the data and form of electronic communication). These provisions have however been suspended by the Constitutional Court in 2014 (ref. No. PL. U´ S 10/2014-29 dated 23 April 2014). This was due to the fact that these provisions transposed the Directive 2006/24/EC on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks (Retention Directive) and the Retention Directive has been declared invalid by Court of Justice of the European Union in cases C-293/12 and C-594/12 (Digital Rights Ireland/ Seitlinger). Directive No. 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce in the internal market (e-Commerce Directive), sets out a framework for electronic commerce and establishes rules on issues such as the transparency and information requirements for online service providers, commercial communications and electronic contracts. In the Slovak Republic, the e-Commerce Directive has been transposed by Act No. 22/2004 on Electronic Commerce (Electronic Commerce Act). The Electronic Commerce Act also sets out the limitations of liability of intermediary service providers (such as hosting, caching or mere conduit) by regulating when they are and are not liable for material transmitted by or through their services.

General Competition Law The EU Framework draws heavily on concepts of competition law. By way of example, the Commission is required to set out guidelines for the analysis of relevant markets and SMP in accordance with the principles of competition law. However, that does not mean that compliance with sector-specific ex ante regulation automatically absolves the Group from complying with EU and Slovak competition law. In other words, sector-specific ex ante regulation and general competition regulation apply concurrently. That being said, compliance with ex ante sector regulation does not automatically absolve the Group from liability for potential infringements of competition law. Even though the Group may have complied with ex ante regulation, it may still be subject to ex post investigations and sanctions by the relevant competition authorities. The key legislative act governing the protection of competition in the Slovak Republic is Act No. 136/2001 Coll. on Protection of Competition as amended (Slovak Competition Act). At the same time, Articles 101 and 102 of Treaty on the Functioning of the European Union apply concurrently to any practices that may affect trade between Member States. The practices prohibited by relevant Slovak and European competition law comprise, in particular, agreements restricting competition and abuse of dominant position. The former include horizontal agreements (such as price fixing between competitors, limiting or controlling production, markets, technical development, or investment, market sharing, or bid rigging) as well as vertical agreements (such as resale price maintenance, resale restrictions, or certain types of exclusivity arrangements). As for abuse of dominant position, prohibited practices include, in particular, unfair pricing, discrimination among trading parties, tying and bundling of products, margin squeeze, or refusal to grant access to certain facilities. The main administrative body responsible for the protection of competition at the national level is the Slovak Competition Authority (the Antimonopoly Office of the Slovak Republic), while regulatory oversight at the EU level is carried out by the Commission. The Commission and the Slovak Competition Authority may impose fines of up to 10% of annual turnover on undertakings which violate competition law by taking part in agreements restricting competition or by abuse of dominant position. The decisions of the Slovak Competition Authority are subject to review by Slovak courts. Decisions of the European Commission can be appealed to the General Court of the European Union and then further to the Court of Justice of the European Union. Slovak and European competition law also provide for prior clearance of concentrations exceeding certain turnover thresholds set out in Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings (the EC Merger Regulation) as amended and the Slovak Competition Act. A merger or an acquisition of control is subject to prior clearance by the Slovak Competition Authority where the aggregate Slovak turnover of the undertakings concerned exceeds EUR 46 million and the Slovak turnover of each of at least two of the undertakings concerned exceeds EUR 14 million; or where the Slovak turnover of at least one undertaking concerned (such as in the case of an acquisition of the target, the turnover of the target) exceeds EUR 14 million and the worldwide turnover of another undertaking concerned exceeds EUR 46 million. Implementation of

179 a concentration before it has been duly cleared by the relevant competition authority can trigger sanctions of up to 10% of annual turnover. Although relevant markets defined by the Slovak NRA for the purposes of ex ante regulation are identified on the basis of competition law, they do not always have to coincide with the definition of relevant market for the purposes of finding – ex post – an infringement of general competition law by the Antimonopoly Office or by the Commission. From time to time, the Group has been subject to investigations and proceedings by both the Commission and the Slovak Competition Authority. See ‘‘Business – Legal Proceedings’’. In addition to regulatory sanctions, anti-competitive conduct can give rise to damages claims by third parties, in particular competitors or consumers. The Group is already facing two such claims (see ‘‘Business – Legal Proceedings’’) and further actions may be initiated against the Group. Currently, Slovak law does not specifically provide a framework for such damages claims and although they can, in principle, be based on general statutory provisions, they are largely untested before Slovak courts. Damages claims and, in particular, the damages claims following on from the decisions of the competition authorities finding infringement of the competition rules are likely to be facilitated by the implementation of Directive No. 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (the Damages Directive). The Damages Directive seeks to provide a specific framework for such claims by introducing, inter alia, a specific right to compensation, rules on disclosure of evidence, limitation periods and quantification of harm. The Slovak Republic is obliged to implement the Damages Directive by 27 December 2016.

Consumer protection legislation The Group is also subject to consumer protection law enshrined mainly in Act No. 250/2007 Coll. On Consumer Protection as amended (Consumer Protection Act) and in Act No. 40/1964 Coll. Civil Code as amended (Civil Code). The Slovak consumer protection law is harmonised with the EU consumer protection framework consisting of a number of EU legislative acts, most importantly Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts as amended and Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 Concerning Unfair Business-to-Consumer Commercial Practices in the Internal Market and Amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council as amended. The Consumer Protection Act defines consumer as any natural person who, in concluding or discharging a consumer contract, is acting outside the scope of his or her business, employment or profession. The Consumer Protection Act grants rights to consumers and affords them protection inter alia against traders, i.e. against persons that, in concluding or discharging a consumer contract, are acting within the scope of their business or profession. For the purposes of the Consumer Protection Act, the Group is a trader with respect to telecommunications and other services provided to consumers and, thus, has to comply with the relevant statutory obligations, including for example: * not to use unfair business-to-consumer commercial practices (the Consumer Protection Act contains a general definition of the term ‘‘unfair business-to-consumer commercial practices’’ covering primarily misleading and aggressive practices towards consumers and in its Annex No. 1 lists business-to-consumer commercial practices which are always regarded as unfair); * not to make a sale of a product or a provision of a service conditional on the sale of another product or the provision of another service (sale bundling) except if the trader sells the products or provides the services also separately or if a separate sale of the products or a separate provision of the services is technically impossible; * to provide the services in usual quality; * to invoice the services properly; * not to discriminate against any consumer; * not to request or accept payment for any service that the consumer did not order; etc. The respective supervisory administrative body may impose fines for various violations of the Consumer Protection Act up to EUR 332,000.

180 In addition to the obligations listed above, the Group must adhere to the consumer protection rules set out in the Civil Code. Mainly, it has to avoid using unfair terms in consumer contracts, i.e. terms that cause signiﬁcant imbalance in the parties’ rights and obligations to the detriment of the consumer. The Civil Code includes a non-exhaustive list of terms in consumer contracts that are normally regarded as unfair (e.g. terms that allow traders to alter contractual conditions unilaterally without a reason agreed in the contract or terms requiring consumers to pay unreasonably high contractual penalties) and lends to civil courts the authority to decide on an ad-hoc basis, whether a particular term of a consumer contract is unfair. Unfair terms in consumer contracts are void by operation of law. Terms in consumer contracts may not deviate from the Civil Code to the detriment of consumers. In particular, consumers may not waive, in advance, their rights conferred to them under the Civil Code or under special consumer protection legislation. When in doubt regarding the content of consumer contracts, the interpretation more favourable for the consumer prevails.

Provision of payment services In connection with the telecommunication services, the Company also provides certain ancillary payment services to its customers. Such services involve processing payments between a customers and third party provider of services or goods, typically through mobile telecommunication devices. Therefore, the Company has to comply with rules set out in Act No. 492/2009 Coll. on Payment Services and on Amendments to Certain Laws, as amended (Payment Services Act) and the related legislation. The licensing and supervision in the field of payment services falls within the competence of the NBS. Generally, a licence issued by the NBS is required in order to provide payments services in the Slovak Republic. The Payment Services Act differentiates between regular payment institutions and limited payment institutions. Limited payment institutions can provide payment services only for payment operations for which the average total amount of payment operations, calculated for any rolling 12 month period, does not exceed EUR 3,000,000 per month. The Company currently holds licence of such limited payment institution which is subject to less stringent requirements (in comparison with the regime of regular payment institutions). Under the Payment Services Act, certain legal acts related to payment institutions require prior consent of the NBS otherwise they are regarded as null and void under Slovak law. The following prior consents of the NBS are currently applicable to the Company: * the acquisition of a direct share of registered capital or voting rights in the Company that would reach or exceed 10%, 20%, 30% or 50% or whereby the Company would become a subsidiary of an entity (see also ‘‘Risk Factors – Risks Related to the Securities and the Offering – The acquisition of a direct shareholding in the Company reaching or exceeding certain thresholds is subject to prior approval of the NBS and there are certain limitations regarding the cross- ownership of the Company as a licensed broadcaster’’); * the election or designation of persons nominated as members of the Company’s statutory body as well as the appointment of a proxy (in Slovak: prokurista), and designation of a chief employee and a chief employee responsible for performance of internal audit; * a change in the articles of association of the Company except for changes which are unrelated to activities of the Company as a payment institution; * a renouncement of an authorisation for payment services; and * a winding-up of a Company in a liquidation. Furthermore, the Payment Services Act sets out a number of obligations and requirements that the Company must meet, mainly the following: * a transparent, credible and legal origin of the monetary contribution to the registered capital, as well as of other financial sources of the payment institution; * suitability of persons with qualifying holding (i.e. holding of above 10% of registered capital or voting rights) and transparency of those persons’ relationships with other persons, particularly transparency of their holdings in registered capital and voting rights in other legal entities; * adequate and proportionate technical systems, resources and procedures for the sound provision of payment services; * the payment institution’s registered office, head office and the provision of payment services must be located in the territory of the Slovak Republic;

181 * sound and appropriate organisational and technical measures required for the payment institution’s business, including prudent conduct of business, accounting, audit, internal control system, data processing and risk management, reporting and record keeping. The NBS may impose ﬁnes up to EUR 600,000, withdraw the license or impose other sanctions or measures on payment institutions for violation of their obligations connected with the provision of payment services. Moreover, the NBS may also impose ﬁnes on members of the payment institution’s statutory and supervisory bodies as well as on the payment institution’s proxy for violations of their legal obligations under the Payment Services Act.

Public procurement The Group, in particular PosAm, derives significant income from the contracts with public authorities and other entities controlled by the State. The award of such contracts is, as a general rule, subject to public procurement rules. Recently, new Directives on public procurement have been adopted by the EU. The new rules are set out in Directive 2014/24/EU on public procurement and repealing Directive 2004/18/EC and Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC. Member States are to implement the new Directives by 18 April 2016. In the Slovak Republic, a draft of the new Public Procurement Act implementing the Directives is undergoing the legislative process, and should enter into force on 1 January 2016. Until then, public procurement rules are set out in Act No. 25/2006 Coll. on public procurement, as amended (Public Procurement Act). The Public Procurement Act covers the award of contracts on purchasing goods, services and works, subject to a number of exemptions, such as employment contracts, contracts on the lease of real properties or financial services contracts. The rules must be observed by the public sector (e.g. public authorities, municipalities, but also business companies solely controlled by the State) and by certain companies active in the utilities sector which, however, have a slightly less stringent regime than the public sector. The public sector must follow the rules even when awarding contracts that fall below the thresholds set by the EU Directives; however, the rules applicable to below-threshold contracts are slightly less strict than those for above-threshold contracts. An undertaking may participate in a public tender if it meets the personal, financial and technical qualification criteria. Personal qualification criteria are the same for any tender, and mean that the tenderer must prove, in particular, that it (or its representatives) was not involved in criminal activity, illegal employment, is not subject to bankruptcy or liquidation proceedings, and is not in delay with the payment of taxes or social security contributions. A participant in a cartel related to public procurement (i.e. bid rigging), or an undertaking that failed to pay its subcontractors in connection with the performance of a public contract is also excluded from participation in future public tenders for a certain period of time. Financial and technical qualification criteria are specifically tailored for each tender, and should prove that the tenderer has the financial strength and technical and professional capacity and experience necessary to perform the contract. The tenderer may use capacities of third parties to prove its financial or technical capacity. If a tenderer considers the tender conditions to be unfair, or is treated in an unfair manner, it may challenge the actions of the contracting authority. The process of using the remedies is very lengthy and complicated. First (subject to certain exceptions), the tenderer must turn to the contracting authority and give it an opportunity to remedy its decision or conduct. Failing this, the tenderer may file objections (in Slovak: na´mietky) with the Public Procurement Office, which is the regulatory authority responsible for overseeing public procurement in the Slovak Republic. If the objections are dismissed, the tenderer may file an appeal with the Council of the Public Procurement Office. A negative decision of the Council may be challenged before the court. Filing of the objections as well as the appeal is subject to a payment of a substantial deposit (up to EUR 300,000, depending on the value of the contract in question), which will be forfeited if the objections or the appeal is dismissed. Furthermore, a contract entered into in breach of the public procurement rules (e.g. a contracting authority entered into a contract without conducting a public tender, even though it was obliged to do so) may be declared invalid by the courts upon a motion filed by the Public Procurement Office, the public prosecutor or by an undertaking that could have been interested in being awarded the contract. A public tender usually takes several months to complete, but may take much longer if challenges are filed against actions of the contracting authority.

182 The Public Procurement Ofﬁce may impose on a contractor a ban on participation in public tenders for up to three years for certain breaches of the public procurement rules, for instance for submitting falsiﬁed documents in a public tender, for failure to make payments to subcontractors, or where the contracting authority rescinded a public contract due to a material breach of the obligations of the contractor.

Special levy In June 2012 the National Council of the Slovak Republic passed Act No. 235/2012 Coll. on a Special Levy for Conducting a Business in Regulated Industries whereby a special levy was imposed on undertakings in certain regulated industries, including electronic communications. The levy was originally introduced in 2012 as part of the Slovak government’s consolidation efforts and was set to expire by the end of 2013. However, in 2013 it was extended until the end of 2016. The annual rate of the levy paid on the Company’s proﬁt before tax is 4.356% per annum as determined in accordance with the Slovak Accounting Standards.

Legislation Governing Transfer of State Assets The Company was formed in 1999 as the legal successor of the state owned enterprise Slovenske´ telekomunika´cie, sˇ.p. Until 2000 the Slovak Republic remained in control of 100% of the Company’s shares. The Company was subsequently partially sold in April 2000, when Deutsche Telekom AG acquired 51% of its shares. As the Offering concerns the sale of the remaining 49% share in the Company still controlled by the state, it is subject to applicable legislation governing transfer of state assets. In the Slovak Republic, the transfer of state-owned assets is subject to rules and procedures set out in Act No. 92/1991 Coll. on the conditions of transfer of state assets to other persons as amended (Act on Transfer of State Assets). On 25 June 2014 the National Council of the Slovak Republic passed amending Act No. 197/2014 Coll. that was directly linked to the intention of the Slovak government to sell the remaining state-controlled shares in the Company. The amendment, for the ﬁrst time in the modern Slovak history, provides for the possibility of the transfer of the Selling Shareholder’s shares in companies by way of offering shares to the public. As under the Act on Transfer of State Assets the Company has a position of a natural monopoly, the transfer proposal for the sale of the Offer Shares in the Offering must be discussed in the National Council of the Slovak Republic and subsequently approved by the Slovak Government. The National Council of the Slovak Republic discussed the transfer on 20 March 2015 and the Slovak Government approved the Offering on 1 April 2015.

183 THE BRATISLAVA STOCK EXCHANGE AND SLOVAK SECURITIES REGULATION

Introduction The establishment and operation of stock exchanges in the Slovak Republic are governed by Slovak Act No. 429/2002 Coll. on the Stock Exchange, as amended (the Stock Exchange Act). According to the Stock Exchange Act, each stock exchange in the Slovak Republic must be incorporated as a joint stock company and must obtain a licence from the NBS. The Bratislava Stock Exchange was founded on 8 January 1991 and trading on the Bratislava Stock Exchange commenced on 6 April 1993. Since 26 June 2001, the Bratislava Stock Exchange has been operating under a licence, granted by the Financial Market Authority of the Slovak Republic (now the capital markets department of the NBS). The licence was extended on 26 March 2008 to include the operation of a multilateral trading facility (MTF). The Bratislava Stock Exchange is owned by several shareholders. The Selling Shareholder is the majority shareholder with a 75.94% stake. Other shareholders include Patria Finance, a.s. (KBC Group) with 11.77%, Allianz – Slovenska´ poist’ovnˇa, a.s. (Allianz Group) with 5.07% and Slovenska´ sporitel’nˇa, a.s. (Erste Group) with a 3.93% shareholding. The remaining 3.29% stake is held by other members. The Bratislava Stock Exchange has been a regular member of the Federation of European Securities Exchanges (FESE) since 1 June 2004. The ofﬁcial Bratislava Stock Exchange website is http://www.bsse.sk. The Bratislava Stock Exchange is the only stock exchange operating in the Slovak Republic. The organisation, operation, conditions for listing securities and rules for trading on the Bratislava Stock Exchange are further governed by the articles of association and stock exchange rules (the Stock Exchange Rules) adopted and published by the stock exchange and approved by the NBS. Only members of the Bratislava Stock Exchange and the NBS can trade on the Bratislava Stock Exchange. Membership can be granted only to ﬁnancial institutions, including domestic and foreign securities dealers, banks and asset managers, provided that they meet the conditions stipulated in the Stock Exchange Act and Stock Exchange Rules. The Stock Exchange Rules differentiate between a temporary membership, limited for a period of one year, and a regular membership, which is unlimited in time. As at 31 December 2014, the Bratislava Stock Exchange had 15 regular members (excluding the NBS). Trading on the Bratislava Stock Exchange is supervised by both the Bratislava Stock Exchange and the NBS, which monitors compliance with rules and regulations regarding insider-trading activity, fairness in trading and other market-related matters.

The Markets of the Bratislava Stock Exchange The following types of securities are currently traded on the Bratislava Stock Exchange: (i) shares in Slovak joint-stock companies and co-operatives, (ii) fund units, and (iii) bonds, including mortgage (covered) bonds and government bonds. Securities may be traded on one of three regulated markets or on the MTF market. The regulated markets comprise two listed securities markets and a Free Market (FM). The highest-ranking listed securities market is the Main Listed Market (MLM) which comprises securities of issuers that meet the most stringent criteria in terms of market capitalisation and reporting requirements. The second regulated listed securities market is the Parallel Listed Market (PLM) which offers less strict market capitalisation requirements than the MLM. The reporting requirements are substantially the same for both MLM and PLM. The third regulated market is the FM, on which there are no minimum market capitalisation requirements and the reporting requirements are less stringent. Finally, securities on the Bratislava Stock Exchange may be traded through its MTF market, which has no minimum capitalisation requirements and only requires limited information obligations imposed on issuers in comparison with the regulated markets. All markets are exchange markets, conducted electronically using an order-driven trading system. The securities listed on the Bratislava Stock Exchange may be traded in euros or in a foreign currency. To list shares on the MLM, (i) a company has to have an expected market capitalisation of at least EUR 15 million; and (ii) the free float part of the issue (defined as the part of the issue held by shareholders holding less than 5%) must be no less than 25% of the issue or have an expected market capitalisation of at least EUR 5 million. Listing shares on the PLM requires (i) an expected market capitalisation of at least EUR 3 million; and (ii) the free float part of the issue must be no less than

184 25% of the issue or have an expected market capitalisation of at least EUR 1 million. The Company expects its Shares to be traded on the MLM upon admission.

Trading and Settlement Trading on the Bratislava Stock Exchange is conducted on working days between 8:30 a.m. and 4:00 p.m. and must be executed by Bratislava Stock Exchange members. Members enter into stock exchange transactions on their own behalf and may conclude them either on their own account or on the account of their clients. Non-members may take part in the trading only through a member. Each member has to comply with the Stock Exchange Rules, the Stock Exchange Act, the Slovak Securities Act and other applicable Slovak regulations when trading on the Bratislava Stock Exchange. The trading can be made by authorised personnel acting for the members, i.e. licensed stockbrokers holding valid qualification certificates. All members have equal rights and obligations. Five types of transactions may be concluded on the Bratislava Stock Exchange: (i) electronic order book transactions; (ii) block transactions; (iii) negotiated transactions; (iv) REPO transactions; and (v) transactions relating to takeover bids. Trades are executed through the electronic stock exchange trading system. Stockbrokers enter trading instructions into the trading system through workstations connected to the Bratislava Stock Exchange’s central computer. Following the ‘matching of instruction’ method, the trading system is divided into the auction trading module, the continuous trading module, the market makers module and the block trading module. The prices of securities traded on the Bratislava Stock Exchange are published on its website. Data concerning the trades conducted on the relevant date are published at the end of each trading day. The trading data are also provided by the Bratislava Stock Exchange to certain press agencies and professional data distributors. On the following day, a modified version of the price list is published by Slovak newspaper ‘‘Hospoda´rske noviny’’. The Bratislava Stock Exchange also publishes monthly and yearly statistical data reports which are publicly available on its website. Settlement of transactions is normally carried out on the third day after their execution (T+3). Block transactions can be settled by the 15th day after the execution of the transaction at the latest (T+15). Negotiated and REPO transactions concerning shares or fund units are settled in compliance with a member’s instruction to the stock exchange trading system between T+0 and T+15.

SAX Index The Slovak share index (SAX) is the ofﬁcial share index of the Bratislava Stock Exchange established in 1993. Until 30 June 2001 it was based on average prices stated in the price lists. Effective from 1 July 2001 the ofﬁcial daily index value is calculated on the base of the last published prices of included shares. As of 31 December 2014, shares of seven companies were included in the SAX. The SAX is a capital-weighted index that compares the market capitalisation of a selected set of shares with the market capitalisation of the same set of shares as of the reference date of 14 September 1993. More information on the SAX is available on the Bratislava Stock Exchange’s website.

Trading Volumes and Liquidity According to the most recent 2014 Fact Book16 issued by the Bratislava Stock Exchange, 272 issues of securities (both debt and equity) were traded on the regulated markets of the Bratislava Stock Exchange as of the last trading day of 2014. Of these issues, 23 were traded on the MLM, 38 on the PLM, and 211 on the FM. All issues were EUR denominated, except for eight denominated in Czech crowns. As at 31 December 2014, 61 share issuers had their shares traded on the Bratislava Stock Exchange and market capitalisation was only EUR 3.9 billion. In 2014, a total of 11,269 trades were made on the Bratislava Stock Exchange and the trading volume exceeded EUR 8.3 billion. In comparison with trading results in 2013, the number of trades fell by 17.7% and the trading volume dropped by 3.6%. Debt securities transactions with a total volume of EUR 8.3 billion in 2014 (an increase of 2.6% compared to 2013) generated 99.3% of the total trading volume. In the same period, the trading volume of equity securities was EUR 56.1 million (a decrease of 29.5% compared to 2013). A major

16 http://www.bsse.sk/Portals/2/Resources/statistics/year/Factbook-2014-BSSE.pdf.

185 proportion of the total trading volume was generated in negotiated deals, where the price is determined by agreement between the parties and then reported to the Bratislava Stock Exchange. The trading volume of REPO transactions in 2014 (including retransfers) amounted to EUR 2.4 billion, representing a 21.8% decrease from 2013. A total of 104 REPO transactions were concluded, of which 97 transactions comprised a purchase or sale of equity securities in an amount of EUR 2.14 billion (accounting for 89.4% of the total volume of REPO transactions). Transactions by non-residents in 2014 accounted for 74% of the total trading volume. Transactions on behalf of natural persons had a 0.9% share in the total turnover, the remainder was traded on behalf of legal entities.

Notification and Reporting Requirements Each issuer of securities admitted to trading on a regulated market of the Bratislava Stock Exchange is required to comply with certain disclosure obligations towards investors, the Bratislava Stock Exchange and the NBS. These duties result primarily from the Stock Exchange Act and the Slovak Securities Act, which implement the Directive 2004/109/EC, as amended (the Transparency Directive), and Directive 2003/6/EC, as amended (the Market Abuse Directive). Further duties are set out in Slovak Act No. 431/2002 Coll. on Accounting as amended (the Accounting Act), Slovak Commercial Code and the Stock Exchange Rules. The fulfilment of these obligations is supervised by the NBS as well as by the Bratislava Stock Exchange. Disclosure obligations comprise mainly: * mandatory publication of ‘‘regulated information’’ (information that the issuer has to publish pursuant to the Stock Exchange Act and the Slovak Securities Act (Regulated Information)); and * additional disclosure obligations owed towards the Bratislava Stock Exchange under the Stock Exchange Rules. The content and scope of the issuer’s disclosure obligations depend on the market on which the issuer’s securities are admitted (i.e. whether they are admitted on one of the listed regulated markets (MLM or PLM) or on the FM), the nature of the issuer (state, private company, closed-ended fund, etc.) and the nature of the securities concerned (shares or bonds). Each issuer has to apply the principle of equal treatment to all owners of the securities which are admitted to trading on any regulated market. Regulated Information is published either on a regular basis or on an ad hoc basis, depending on the nature of the information in question. If the Stock Exchange Act does not stipulate otherwise, an issuer of shares listed on one of the regulated listed markets (MLM or PLM) is obliged to publish on a regular basis: * annual financial reports including audited financial statements; * semi-annual financial reports including condensed interim financial statements which do not have to be audited or reviewed by auditors; and * interim statements detailing the main events and transactions that took place in the relevant period including a general description of the financial position and results of the issuer as well as of the entities under its control (in the alternative to interim statements an issuer may publish quarterly financial reports). The Accounting Act requires that an issuer of listed securities prepare financial statements in accordance with IFRS. In accordance with the Transparency Directive as implemented by the Stock Exchange Act, each issuer of shares listed on a regulated market is also obliged to publish on an ad hoc basis information on the following: * changes of rights associated with various types of shares; * incurrence of indebtedness and on security provided for such indebtedness; * distribution and payment of dividends; * new share issues, including information concerning the assignment, subscription, termination or exchange of the new shares; * qualified changes in voting rights; * qualified trading in own shares (acquisition/transfer);

186 * the total number of voting rights and amount of registered capital; * selection of home member state under the Transparency Directive (if relevant); and * inside (price sensitive) information pursuant to section 132b of the Slovak Securities Act implementing Article 6(1) of the Market Abuse Directive. The Regulated Information is published on the issuer’s website and submitted to the official Slovak Regulated Information System (Centra´lna evidencia regulovanyćh informaćiı´) operated by the NBS and accessible online, as well as to the Bratislava Stock Exchange. In addition to the Regulated Information, each issuer of shares listed on the MLM is obliged to submit to the Bratislava Stock Exchange without delay all information necessary for the protection of investors and the operation of the securities market under the Stock Exchange Rules, including in particular: * information about changes in the issuer’s financial situation or other facts during the financial year which could cause a significant change of the price of shares, restrict the issuer’s ability to fulfil its obligations resulting from a share issue, or significantly affect its business activity; * information about the calling of ordinary and extraordinary general meetings, including their agenda; * detailed information about the course of general meetings and about decisions adopted at the general meetings; * draft amendments to the constitutional documents and updated wording of those documents; * information about changes of the members of a statutory body, members of supervisory bodies and the most senior managers of the issuer; * information about payment of dividends including the amount of dividend before tax per share, a decision specifying the date of record to claim the dividend payment and the date and manner of dividend payment; * information on changes in the registered capital of the issuer; * information about any decision taken in the issuer’s general meeting to cease trading shares on a stock exchange; * information about a change of particulars of shares, a change in the amount of issued shares and any modification or cancellation of shares; * information on issuing new securities by the issuer, including issues of depositary receipts; * identification concerning the appointment of paying agents (if any); * information about admission of the issuer’s securities to trading on another regulated market; and * any other information and documents the Bratislava Stock Exchange requests from the issuer. The Bratislava Stock Exchange may request an issuer to publish certain information if it considers the publication necessary in order to keep investors informed. If the issuer does not fulfil this request, the Bratislava Stock Exchange may, after a consultation with the issuer, publish the information itself.

Major Shareholding Notifications In accordance with the Transparency Directive as implemented in the Slovak Republic, if a shareholder has acquired or transferred shares (or certain other instruments enabling the shareholder to exercise voting rights, including depositary receipts) it is obliged to notify the issuer and the NBS about its share in the issuer’s voting rights if this share reaches, exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%. The issuer is required to publish this information within three days of its receipt. In addition to the major shareholding notifications under the Transparency Directive, there are further notification requirements in respect of transfers of shares in the Company under special regulation as described in ‘‘Description of Share Capital and Summary of Articles of Association – Reporting Requirements’’.

187 Suspension and Ceasing of Trading in the Shares If an issuer fails to meet its obligations under the Stock Exchange Act (including in respect of its information obligations) the Bratislava Stock Exchange must suspend the trading of its securities without delay and call upon the issuer to remedy the situation within a period determined by it. The Bratislava Stock Exchange shall also suspend the trading in case of market manipulation or in case of an unusually large change in the price of security. This suspension cannot exceed three months. The Bratislava Stock Exchange has discretion not to suspend the trading if it would cause major threat to the interests of investors or the operation of the market. If the issuer fails to remedy the breach within the determined period, the Bratislava Stock Exchange is obliged to exclude the issuer’s securities from trading on the Bratislava Stock Exchange. An issuer whose shares were traded on a regulated stock exchange market but have been excluded from trading must place a mandatory takeover bid (further details below) for all shares which, due to the exclusion, can no longer be traded on the Bratislava Stock Exchange or another foreign regulated market.

Takeover Rules The regulation of takeover bids in the Slovak Republic complies with EU Directive 2004/25/EC on Takeover Bids as amended (the Takeover Directive). The Takeover Directive has been transposed into the Slovak domestic legal system by means of an amendment of the Slovak Securities Act in 2006.

The Slovak Securities Act requires a person who has acquired a controlling shareholding in a company listed on a regulated market (either by itself or together with other persons acting in concert) (Offeror) to make a mandatory takeover bid for all shares in that company. A controlling shareholding (Controlling Shareholding) for the purposes of the Slovak takeover rules is a shareholding equal to or exceeding 33% of the voting rights in a company listed on a regulated market (Target Company). If several persons acquire a Controlling Shareholding together acting in concert, at least one of the persons has to make the mandatory takeover bid.

Each mandatory takeover bid must be approved by the NBS before its publication. The bid must include, most importantly, information on: (i) the offered consideration for shares together with the methods used for its calculation; (ii) the manner in which the offer can be accepted; (iii) means of ﬁnancing of the bid; (iv) expiration of the bid, which must not be less than 30 days or more than 70 days from the date of publication; (v) intentions of the Offeror with respect to the Target Company (e.g., continuation of the business, disposition of the company’s assets); (vi) governing law and jurisdiction of the contracts for purchase of the shares; and (vii) other information or facts which may play a role in the decision-making of the Target Company’s shareholders with respect to the mandatory takeover bid.

The consideration for shares may be offered in cash, securities or a combination thereof. If a part of the consideration is offered in securities, cash consideration must be offered as an alternative. Furthermore, the consideration for shares must be fair.

The Slovak Securities Act sets out conditions determining when the consideration can be regarded as fair. First, the Offeror must present an expert opinion on the value of the shares and the consideration must not be lower than the amount ascertained in that opinion. Second, it must not be lower than the highest consideration which the Offeror or a person acting in concert with the Offeror has provided for the shares within 12 months before the obligation to make a takeover bid occurred. Third, it must not be lower than the value of net assets of the Target Company, including the value of intangible assets, calculated per share according to the most recent ﬁnancial statements audited before the obligation to make a takeover bid occurred. Finally, for listed shares, the consideration must not be lower than the average price of those shares over the 12 month period before the obligation to make a takeover bid occurred. The fairness of the consideration is examined by the NBS before it grants its approval of the bid.

The Offeror must inform the NBS, the Target Company and the public about its obligation to place a takeover bid without delay after that obligation accrues. The Offeror then has 10 days within which it is required to draft and present the proposed takeover bid to the NBS for its approval. The Offeror has to publish the takeover bid without delay after the NBS grants its approval. The takeover bid becomes effective upon its publication. The Offeror may not exercise any voting rights in the Target Company which exceed the Controlling Shareholding before the publication of the mandatory takeover bid.

188 Delisting A general meeting of a Slovak joint stock company listed on a regulated market may decide to delist the shares, provided that at least a two-thirds majority of the shareholders present at the meeting vote in favour of that decision. If the general meeting has approved delisting, the company is required to make a takeover bid for all shares owned by shareholders who voted against the delisting or who did not take part in the general meeting at which the delisting was approved. The Bratislava Stock Exchange may delist the shares only after the company notiﬁes it of the fulﬁlment of its obligations to make the takeover bid.

Squeeze-out and Buy-out An Offeror that makes a takeover bid and as a result holds shares which represent at least 95% of the registered capital and at least 95% of the voting rights in a listed company is entitled to require the remaining shareholders to sell their shares to it for a fair consideration subject to approval by the NBS (Squeeze-Out Right). If the Squeeze-Out Right is not exercised within three months after the expiration of the takeover bid, it ceases to exist. The Squeeze-Out Right is accompanied by a corresponding right of the remaining shareholders to demand an Offeror holding at least 95% of the registered capital and at least 95% of the voting rights to buy their remaining shares for a fair consideration (Buy-Out Right). If the Buy-Out Right is not exercised within three months after the expiration of the takeover bid, it ceases to exist.

189 DESCRIPTION OF SHARE CAPITAL AND SUMMARY OF ARTICLES OF ASSOCIATION

The following is a summary of the material terms of the Company’s Shares, as set out in the Company’s Articles of Association and certain provisions of the Slovak Commercial Code, Slovak Securities Act and other relevant laws. This description is only a summary. Investors are encouraged to read the full Articles of Association which are available for inspection at the Company’s registered ofﬁce. See ‘‘Additional Information – Documents on Display’’. The Current Articles were adopted at the General Meeting held on 9 February 2015 and they apply in accordance with the Slovak Commercial Code.

Adoption of the New Articles The General Meeting held on 31 March 2015 adopted the New Articles, which will become effective on the date of admission of the Shares to trading on the main listed market of the Bratislava Stock Exchange. The New Articles will reflect, among other things, the adoption by the Company of certain provisions of the Corporate Governance Code for Slovakia based on OECD principles. See ‘‘Management – Corporate Governance’’ and ‘‘Risk Factors – Risks Related to the Securities and the Offering – The rights of minority shareholders will be governed by the laws of the Slovak Republic, whose corporate governance standards differ from those of other jurisdictions’’. The New Articles contain the following principal changes compared with the Current Articles: * The Company is designated as a public (rather than private) joint-stock company. * Three supervisory committees have been set up: the Audit Committee, the Nomination Committee and the Remuneration Committee. The Audit Committee had been established in the Company already before the adoption of the New Articles. However, given that the Company was a private joint-stock company, it was not obliged to ensure that its composition and creation are compliant with the Slovak accounting legislation and the Code. The New Articles include changes to bring the Audit Committee into compliance with both the Slovak accounting legislation and the Corporate Governance Code. * All majority provisions that gave the Selling Shareholder a right of veto in the decision-making of the Board of Directors or the General Meeting have been abolished. No resolution of the General Meeting will require a 3/4 majority of votes to be passed. * There is no longer a quorum for the General Meeting – the General Meeting is quorate with any percentage of attending shareholders. * The power of the General Meeting in the field of remuneration have been extended and specified to cover the approval of the remuneration rules, share-based remuneration systems and individual remuneration packages of all members of the Board of Directors, Supervisory Board, Audit Committee, Nomination Committee and Remuneration Committee. In accordance with the New Articles the General Meeting may adopt a resolution delegating and entrusting the decision-making on individual remuneration packages of members of corporate bodies of the Company into the scope of competence of the Remuneration Committee. * Changes in the convening of General Meetings – besides sending the invitation to all shareholders, the Board of Directors must also publish it in a nationwide newspaper that publishes stock exchange news; furthermore, the invitation itself must contain more information than was previously required. * The invitation and all underlying documents concerning a General Meeting must be published on the website of the Company for a continuous period of 30 days prior to the actual date of the General Meeting. * The list of matters that require the consent of a 2/3 majority of shareholders present at the General Meeting has been expanded, given the change of status of the Company as a public joint-stock company. The requirement for a 2/3 majority corresponds to the statutory rules. Furthermore, in accordance with the statutory rules, if the General Meeting is voting on changing the shareholder rights associated with a certain kind of shares and on the restriction of the transferability of the non-bearer shares, the consent of a 2/3 majority of all shareholders holding such shares is necessary.

190 * Each member of the Board of Directors is explicitly obliged to inform the other members of the Board of Directors of any circumstances that could give rise to a conflict of interest in his decision-making on a particular matter. The remaining members of the Board of Directors shall vote on whether or not the potentially conflicted member will participate in the decision-making on that matter. The same rules apply to the Supervisory Board. * At least one member of the Supervisory Board must be independent. * The independence of members of the Supervisory Board will be regularly assessed by the Nomination Committee. * Election of the Supervisory Board members has been streamlined and simplified – the General Meeting takes a separate vote on each nominee.

Share Capital As of 31 December 2014, the Company’s registered share capital consisted of 26,027,500 authorised, issued and fully paid physical registered shares (in Slovak: listinne´ akcie na meno) each with a nominal value of EUR 33.20. The Company’s extraordinary General Meeting held on 9 February 2015 approved the change of the form of the shares from physical registered shares to ordinary book- entered non-bearer shares (in Slovak: zaknihovane´ akcie na meno) and changed the nominal value of the shares from EUR 33.20 per share to EUR 10 per share. The changes were made in the context of preparation for the Offering. As a result, the Company’s registered share capital as of the date of this Prospectus consists of 86,411,300 ordinary book-entered non-bearer shares, each with a nominal value of EUR 10. As of 31 December 2014, the registered share capital has been paid up in full. There has been no increase or decrease in the registered share capital of the Company between 1 January 2009 and the date of this Prospectus. There has been no change in the number of shares outstanding between 1 January 2012 and 31 December 2014. The number of shares changed in February 2015, as described above. The Company has not issued preferred shares, rights, convertible bonds or any other equity or equity-linked securities. All Shares bear equal rights with the other Shares of the Company. The Company has no authorised but unissued capital. The Shares bear no redemption or conversion rights. No Shares or ﬁnancial instruments linked to the Shares are held by the Company or any of its afﬁliates, except as set forth in ‘‘Principal and Selling Shareholders’’. Except for 49% share capital of PosAm (not owned by the Company) which is under a put option, no capital of any member of the Group is under option nor is it agreed conditionally or unconditionally to be put under option. By way of exception from the general statements in this paragraph, the Offering will involve a stabilisation scheme. See ‘‘Plan of Distribution (Terms of the Offer) – Stabilisation’’. As of the date of this Prospectus there have been no public takeover bids, mandatory takeover bids, squeeze-outs or buy-outs in respect of the Company’s shares.

Shareholder Rights Each shareholder of the Company shall have the same rights and the Company and its management are obliged to treat all shareholders equally. Changing the rights of the shareholders requires amendment to the Articles of Association which require approval by a two-thirds majority of shareholders present at the General Meeting. These conditions are not more stringent than is required by law. The Shares provide the following rights:

Proprietary Rights * the right to receive dividends, if any, when declared by the Company; * a right of pre-emption on subscription of new shares in the Company; * the right to receive a shareholding in the share capital of the Company in the case of a decrease in share capital equivalent in proportion to that owned immediately prior to the decrease in share capital; * the right to receive an amount of the Company’s liquidation proceeds after fulﬁlment of its obligations to creditors, proportionate to their shareholding; and

191 * the right of shareholders subject to certain conditions to have their shares bought out by the Company in case of change of legal form of the Company, merger of the Company or delisting of the Company’s shares;

Voting and Supervisory Rights Available to All Shareholders * the right to attend any General Meeting, submit proposals at General Meetings, take part in discussions and vote at any General Meeting; * the right to request certain information and explanations, including copies of certain documents relating to the business of the Company; and * the right to challenge the decisions of the General Meeting in court proceedings subject to conditions set out in the Slovak Commercial Code;

Management and Supervisory Rights Available to Shareholders Holding at least 5% of Shares * the right to request the Board of Directors to convene a General Meeting and to include a certain item in the agenda of the General Meeting; * the right to request that the Supervisory Board examine the conduct of the Board of Directors in a certain matter; * the right to request the Board of Directors to raise a claim, on behalf of the Company, against a shareholder who is in default in the payment of the issue price of Shares or to claim from a shareholder any beneﬁt paid by the Company to such shareholder, contrary to the Slovak Commercial Code; * the right to request the Supervisory Board to raise a claim for damages on behalf of the Company or any other claim that the Company has vis-a`-vis members of the Board of Directors; and * the right to request the Supervisory Board to raise a claim for the payment of the issue price of shares of the Company if it subscribes its own shares contrary to the Slovak Commercial Code.

Increases in Share Capital The share capital of the Company can be increased by either of the following methods: * Subscription for new shares. In this case either existing shareholders or new shareholders contribute new cash or in-kind contributions to the Company’s share capital. In exchange, the Company issues new shares. Existing shareholders have a pre-emptive right to subscribe for new shares, which can be excluded, in whole or in part, only through a resolution of the General Meeting. * Conditional increase in share capital. This alternative is applicable only if the General Meeting has decided on the issuing of convertible bonds or priority bonds. In such case, the General Meeting shall simultaneously decide on the increase of the registered capital, whereby the increase will depend on the extent to which the holders of convertible bonds will exercise their right to have shares issued or the holders of priority bonds will exercise their right to subscribe for new shares. The increase of share capital is therefore ‘‘conditional’’, as it depends on the discretion of third parties. The amount of the conditional increase of registered capital must not exceed 50% of the share capital of the Company at the time when the General Meeting adopts the decision on the conditional increase of registered capital. The details of how rights from convertible bonds or priority bonds can be exercised must be set out in the resolution of the General Meeting that approves the conditional increase of share capital * Increase from the equity of the Company. The General Meeting may resolve that retained profit or funds created from profit whose utilisation is not set out by law, or other of the Company’s own resources reported in individual financial statements as the Company’s equity, shall be used to increase the registered capital. The standard requirements for capital distribution under the Slovak Commercial Code apply, i.e. the use of the Company’s equity for the increase of share capital must not result in the decrease of its equity below the aggregate sum of all mandatory funds. Furthermore, the General Meeting’s resolution on the increase of share capital from the equity of the Company must be based on approved financial statements that have been verified by an auditor without reservations, and the underlying data of such financial statements must not be older than six months at the time of the General Meeting resolution. If this method of

192 increase of share capital is used new shares are allocated to existing shareholders in proportion to their existing shareholdings in the Company. Alternatively, instead of the issuing of new shares, the Company may re-issue existing shares with a higher nominal value.

* Combined increase of share capital. This is a combination of the increase by means of issuance of new shares and increase from the Company’s equity. If the Company increases registered capital by permitting subscriptions for new shares, the General Meeting may decide that a part of the issue price of subscribed shares shall be covered from the Company’s own resources reported under the Company’s equity in the ﬁnancial statements. All requirements relating to the increase of share capital from the equity of the Company set out in the paragraph above also apply in this case. If the General Meeting resolves on the combined increase of share capital, any increase of registered capital by in-kind contributions or any limitation or exclusion of the shareholders’ pre-emption right to subscribe for new shares is not permitted, given that the Company’s assets are used in the process.

* Decision of the Board of Directors on the basis of authorisation of the General Meeting. The articles of association or a General Meeting resolution may authorise the Board of Directors to decide on the increase of registered capital up to a certain amount under the conditions stipulated by the Slovak Commercial Code and the Articles of Association. The authorisation to increase registered capital may be granted for a maximum of ﬁve years; the General Meeting may repeatedly extend the validity of the authorisation, each time by a maximum of ﬁve years. The authorisation by the General Meeting is subject to certain formalities: the General Meeting resolution authorising the Board of Directors to increase share capital shall be entered into the Commercial Register, stating the approved amount of share capital; the actual resolution of the General Meeting shall be deposited in the Collection of Documents. The Board of Directors must refrain from increasing the share capital prior to such said registration in the Commercial Register. The details of the share capital increase are set out directly in the General Meeting resolution that authorised the Board of Directors to effect the increase, such as: the highest sum by which the share capital may be increased, the manner in which the share capital may be increased as well as the nominal value, form, type and format of shares that may be issued in order to increase the share capital, etc. As a part of the authorisation, the Board of Directors may repeatedly increase the registered capital, provided the total amount of registered capital by which the registered capital may be increased under the authorisation is not exceeded.

The decision on the increase of the share capital is in the competence of the General Meeting, whereby the resolution on the increase must be passed by a two-thirds majority of the votes of attending shareholders. If several types of shares have been issued, the same majority of the votes of attending shareholders is required for each type of shares.

Decreases in Share Capital The General Meeting may decide on the reduction of registered capital by a two-thirds majority of the votes of attending shareholders upon a proposal of the Board of Directors. If several types of shares have been issued, such a majority of the votes of attending shareholders is required for each type of shares.

The Slovak Commercial Code provides for two methods of decreasing share capital:

* Decrease by reduction of nominal value of the shares. The nominal value of book-entered shares is reduced by changing the entry on the amount of their nominal value in the register of securities maintained by the Slovak Central Depository; and

* Decrease by withdrawal of shares. Shares may be withdrawn from circulation in one or more of the following ways: (i) by agreement with the shareholders that answer the call of the Board of Directors; (ii) on the basis of the rules (criteria) determined by the General Meeting; (iii) by drawing lots; or (iv) if the Company owns any of its shares, by withdrawing those shares from circulation. The General Meeting shall determine the details of the procedure for withdrawing the shares from circulation. Importantly, other than by agreement with shareholders, shares may be withdrawn from circulation only for an appropriate consideration and provided that such manner was expressly permitted and regulated by the Articles of Association at the time the shares were subscribed. Such wording is not contained in neither the Current Articles nor the New Articles. Book-entered shares shall be withdrawn from circulation by their cancellation in

193 the register of book-entered securities maintained by the Slovak Central Depository. The cancellation of book-entered shares shall be effected by the Board of Directors without undue delay after the reduction of registered capital has been entered into the Commercial Register. The Company’s share capital is decreased as of the day on which the decision to decrease the share capital is entered into the Commercial Register. With regard to the protection of creditors the Company is obliged to notify the creditors of its share capital decrease by publishing the registration of such decision. Specifically, within 30 days from the date on which the notice of deposit of the resolution of the General Meeting on the reduction of registered capital in the Collection of Documents is published (the Deposit Date), the Board of Directors is obliged to report the reduction of registered capital and its extent to the Company’s known creditors whose receivables towards the Company were incurred before such publication and to notify them of their rights, as described below. Such notice must be published on at least two consecutive occasions with an interval of at least 30 days. The Company’s creditors that have receivables towards the Company which are not yet due as of the Deposit Date are entitled, within 90 days from the day they received the notice on the reduction of registered capital, otherwise within 90 days from its second publication, to request that payment of their unpaid receivables is secured in a sufficient manner. A creditor whose receivable has already been sufficiently secured does not have such right. The choice of the method depends on the contemplated purpose of the decrease (e.g. to cover loss). The purpose of the decrease in share capital must be specified in the resolution on the decrease of the share capital. There are no conditions in the Articles of Association governing changes in the registered share capital which are more stringent than is required by the Slovak Commercial Code.

Acquisition of Shares by the Company Pursuant to the Slovak Commercial Code, as a joint stock company, the Company may not purchase its own shares, except in the following certain limited circumstances (in each case subject to the compliance with a number of conditions as set out in the statute and/or in the Articles of Association): (a) the acquisition of shares is necessary to protect the Company from serious and imminent danger; (b) the shares so acquired are to be offered to employees of the Company or of an associated company; (c) if the Company reduces the registered capital, subject to provisions of the Slovak Commercial Code; (d) as a legal successor the Company enters into all rights and obligations of the person that was the owner of such shares; (e) such acquisition concerns shares that the Company has acquired based on an obligation stipulated by law or based on a court decision to protect minority shareholders; (f) such acquisition concerns shares whose issue price has been fully paid-up and the Company acquires them without charge; (g) such acquisition concerns shares whose issue price has been fully paid-up and which have been acquired by the Company in an auction during a court execution of a decision by which the Company has recovered its receivables from the owner of the shares; (h) such acquisition concerns shares that have been acquired by the Company in the process of expulsion of a shareholder for reasons laid down in the law; and (i) the holding of own shares is temporary (maximum 18 months), the General Meeting has approved it and all rules for capital distribution have been complied with.

Form, Ownership and Transfer of the Shares Form of the Shares The Shares take the form of book-entered non-bearer shares. The Slovak Securities Act deﬁnes book- entered shares as shares having the form of a record in the register maintained by the Slovak Central Depository or its members, or, in the register maintained by a custodian of the Shares as prescribed by Slovak law, if the Shares are held through a holding account opened with the Slovak Central Depository.

194 Limitations on the Ownership of the Shares There are no provisions in the Articles of Association that would have an effect of delaying, deferring or preventing a transfer of Shares or change in control of the Company nor are there provisions restricting ownership of Shares or setting an ownership threshold above which shareholder ownership must be disclosed. No restrictions exist in relation to the holding or exercising by foreigners or non- residents of voting rights in respect of the Shares. The Company is a limited payment institution under the Payment Services Act, as a result of which the prior consent of the NBS is necessary for the acquisition of a direct share of registered capital or voting rights in the Company that would reach or exceed 10%, 20%, 30% or 50% or whereby the Company would become a subsidiary of an entity. The Company and DIGI are licenced television broadcasters. Under applicable laws (see ‘‘Telecommunication Regulation in Slovak Republic – Further Applicable Regulation – Broadcasting, retransmission and provision of on-demand audiovisual media services’’) a person cannot hold more than a 25% interest or the same amount of voting rights (cross ownership) in more than one licensed nationwide or multiregional broadcaster or in a national periodical press publisher. The Broadcasting Act also prohibits cross ownership and certain personal connections between radio and TV broadcasters, and between radio and TV broadcasters and national periodical press publishers. Similarly, the Digital Broadcasting Act prohibits cross ownership and certain personal connections between digital broadcasting license holders themselves, and between broadcasters and multiplex providers.

Transfer of the Shares The transfer of ownership of book-entry shares is effected by means of registration of the change of ownership of shares with the Slovak Central Depository (whether directly through the Slovak Central Depository or through a member of the Slovak Central Depository) or in the registry maintained by a custodian in respect of a holding account pursuant to Section 105a of the Slovak Securities Act, if the Shares are held through a holding account opened with the Slovak Central Depository.

Reporting Requirements In addition to the disclosure requirements described in ‘‘The Bratislava Stock Exchange and Slovak Securities Regulation – Major Shareholding Notiﬁcations’’, the following reporting requirements exist with respect to shareholdings in the Company under applicable Slovak law:

Reporting under the Payment Services Act Because the Company is a payment institution under the Payment Services Act, if a shareholder intends to divest its shareholding interest in such manner that its direct shareholding interest would fall below 20%, 30% or 50% or if the Company ceased to be its subsidiary, such shareholder is obliged to notify the NBS of the contemplated divestment in advance. In contrast to the acquisition of shares, where the consent of the NBS is necessary in order for the transaction to be legally effective, in the case of divestment a mere notiﬁcation is sufﬁcient and the consent of the NBS is not required.

Reporting under the Broadcasting Act The Company is a holder of a broadcasting licence and therefore the Company must notify the Council for Broadcasting and Retransmission of each change of its shareholders within 15 days of the effective date. The closing of the Offering would trigger this notiﬁcation duty.

Summary of the Articles of Association

Business Objectives The Company is a Slovak company whose general objective is to be engaged in proﬁt making activities. No speciﬁc business objectives are set out in the Company’s foundation deed or the Articles of Association. The Company’s principal business activities are described in ‘‘Business’’ above and include mainly the provision of electronic communication networks and electronic communication services, broadcasting, retransmission and ICT services. A full list of the Company’s permitted business activities is set out in Article 2 of the Articles of Association.

195 General Meeting of Shareholders and Voting Rights Powers of the General Meeting The powers of the General Meeting comprise: * approving amendments to the Articles of Association; * resolving on the increase of the share capital (or the authorisation of the Board of Directors to increase share capital); * resolving on the decrease of share capital; * resolving on the issuing of convertible bonds or priority bonds or other bonds; * resolving on the change of the form of issued shares from physical to book-entered and vice versa; * election and recall of members of the Board of Directors and the Supervisory Board, except for the members of the Supervisory Board elected by employees; * approval of the annual report on the financial results and operations of the Company; * approving individual and consolidated financial statements and extraordinary individual and consolidated financial statements; * resolving on the distribution of profit and the determination of the amount of dividends and directors’ fees; * resolving on the covering of loss; * resolving on the use of the reserve fund; * approving the remuneration rules of members of corporate bodies; * resolving on matters related to activities of the Company in the field of defence, protection and security of the state in accordance with the relevant laws; * resolving on the use of repeater stations on Banska´ Bystrica II and Presˇov III; * approving the listing of the Company’s shares on a stock exchange; * resolving on the winding-up of the Company or liquidation, merger or demerger of the Company, as well as the change of legal form of the Company; * resolving on the appointment of a liquidator for the Company; * resolving on the termination of a stock exchange listing; * resolving on changing the Company’s status from private to a public joint-stock company; * approving the agreement on the transfer of business or a part of business; * approval of the auditor that will audit the financial statements; and * resolving on other matters that are within the competence of the General Meeting pursuant to the Articles of Association or applicable law.

The Convening of the General Meeting The General Meeting takes place at least once each year and is convened by the Board of Directors no later than four months after the end of the preceding accounting period. The invitation to the General Meeting must be sent to all shareholders at least 30 days prior to the General Meeting. After the Shares of the Company are admitted to trading on the Bratislava Stock Exchange in connection with the Offering, the Company will also publish the invitation to the General Meeting on its website. Furthermore, the Board of Directors shall convene an Extraordinary General Meeting particularly in the following cases: * the previous General Meeting resolved so (whereby any supplementing or change of the approved agenda of the General Meeting requires the participation and consent of all shareholders); * the loss suffered by the Company will reach at least one-third of the share capital or such level of loss can be reasonably foreseen; * the Company has not been able to pay its debts as they become due for more than three months;

196 * a shareholder owning at least 5% of the Company’s shares requests the Board of Directors to convene a General Meeting, stating a reason for doing so (in such case the Board of Directors is obliged to convene a General Meeting within 40 days of the request; an additional condition laid down by the Articles of Association is that the shareholder has owned such shares at least three months prior to the deadline for the convening of the General Meeting). In addition, if the Supervisory Board identifies any material breach of directors’ obligations or material shortcomings in the business of the Company, it is also empowered to convene an extraordinary General Meeting. Voting at the General Meetings The distribution of votes in the Company follows the ‘‘one vote per share’’ principle (regardless of the fact that a multiple is used for ease of calculation of voting results at General Meetings). The Articles of Association set out a quorum for the General Meeting to be able to pass resolutions. Accordingly, the General Meeting is quorate if shareholders are present whose shares have a total nominal value amounting to more than 76% of the share capital of the Company. If the General Meeting is not quorate within 90 minutes of the time stipulated in the invitation to the General Meeting, the Board of Directors shall convene another General Meeting. The second General Meeting shall be convened within three business days with an unaltered agenda, whereby it shall take place at least 30 days after the sending of the invitations. The second General Meeting is quorate if shareholders are present whose shares have a total nominal value amounting to more than 45% of the share capital of the Company. Once the General Meeting is quorate, its resolutions are passed by a simple majority of votes cast by the present shareholders, except for cases where the Articles of Association prescribe a higher majority, whereby the list of matters that require a qualified majority is broader than the one prescribed by the law. Specifically, in accordance with the Slovak Commercial Code, the following resolutions require a two- thirds majority of shareholders present at the General Meeting: (i) amendment of the Articles of Association; (ii) increase of share capital (or the authorisation of the Board of Directors to increase share capital); (iii) decrease of share capital; and (iv) the winding-up of the Company or a change of its legal form. Under the law, a two-thirds majority would also be required for the delisting of shares and transformation of the Company from a public company to a private company (though, by definition, such resolutions are only relevant for companies whose shares are already listed and who therefore already are public joint-stock companies). A three-fourths majority is required for approval of issuances of convertible bonds or preference bonds by the Company. For details on changes to the required voting majorities introduced in the New Articles, please refer to ‘‘– Adoption of the New Articles’’ above. In certain cases set out in the Slovak Commercial Code and Articles of Association, the resolution of the General Meeting must take the form of a notarial deed.

197 TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS

The following terms and conditions (the Conditions), subject to completion and amendment and excepting sentences in italics, will apply to the global depositary receipts (the GDRs) and will be endorsed on each GDR certificate (each a GDR Certificate). The GDRs are issued in respect of the ordinary shares, having a nominal value of EUR 10.00 each (the Shares) of Slovak Telekom, a.s. (the Company), pursuant to and subject to (i) in the case of the Regulation S GDRs, the Regulation S Deposit Agreement to be entered into on or about the Closing Date by and between the Company and Citibank, N.A., as depositary (the Depositary) (the Regulation S Deposit Agreement) and, in the case of the Rule 144A GDRs, the Rule 144A Deposit Agreement to be entered into on or about the Closing Date by and between the Company and the Depositary (the Rule 144A Deposit Agreement). References in the Conditions to the Deposit Agreement shall mean, in the case of Regulation S GDRs, the Regulation S Deposit Agreement and, in the case of Rule 144A GDRs, the Rule 144A Deposit Agreement. Each GDR represents the right to receive, subject to the terms of the Deposit Agreement and the Conditions, one Share on deposit under the terms of the Deposit Agreement. Pursuant to the provisions of the Deposit Agreement, the Depositary has appointed Citibank Europe plc, acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky, as custodian to receive and hold on its behalf the Shares from time to time deposited under the Deposit Agreement (the Deposited Shares), and all rights, securities, property and cash deposited with the Custodian which are attributable to the Deposited Shares (such rights, securities, property and cash together with the Deposited Shares, the Deposited Property). The Depositary shall hold Deposited Property for the benefit of the Holders (as defined below) as bare trustee in proportion to the number of Shares in respect of which the GDRs held by them are issued. In these Conditions references to the Depositary are to Citibank, N.A. and/or any other depositary which may from time to time be appointed under the Deposit Agreement, references to the Custodian are to Citibank Europe plc, acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky, or any other custodian which may from time to time be appointed under the Deposit Agreement and references to the Office mean, in relation to the Custodian, the principal office of the Custodian in Bratislava, Slovak Republic (currently at Mlynske´ nivy 43, 825 01 Bratislava, Slovak Republic). References in the Conditions to the GDRs shall include the GDRs issued pursuant to the terms of the Regulation S Deposit Agreement (the Regulation S GDRs) and the GDRs issued pursuant to the terms of the Rule 144A Deposit Agreement (the Rule 144A GDRs). References in these Conditions to the Holder of any GDR shall mean the person registered as the holder of any GDR on the books of the Depositary maintained for such purpose. References in these Conditions to Beneficial Owner of any GDR shall mean any person who is the beneficial owner of GDRs as determined in accordance with Rule 13d-3 and Rule 13d-5 under the Exchange Act. These Conditions include summaries of, and are subject to, the detailed provisions of the Deposit Agreement, which includes the forms of the GDR Certificate in respect of the GDRs. Copies of the Deposit Agreement are available for inspection at the principal office of the Depositary. Holders and Beneficial Owners are deemed, by virtue of being a Holder or Beneficial Owner, to have notice of, and be subject to, all of the applicable provisions of the Deposit Agreement and Conditions. Terms used in the Conditions and not defined herein but which are defined in the Deposit Agreement have the meanings ascribed to them in the Deposit Agreement. The Depositary shall hold Deposited Property for the benefit of the Holders as bare trustee in proportion to the number of Shares in respect of which the GDRs held by them are issued and the Holders will accordingly be tenants in common of such Deposited Property to the extent of the Deposited Property corresponding to the GDRs in respect of which they are the Holders. For the avoidance of doubt, in acting hereunder the Depositary shall have only those duties, obligations and responsibilities expressly specified in the Deposit Agreement and these Conditions and, other than holding the Deposited Property as bare trustee as aforesaid, does not assume any relationship of trust for or with the Holders or the Beneficial Owners or any other person. Any right or power of the Depositary in respect of Deposited Property is reserved by the Depositary under its declaration of trust contained in this paragraph and is not given by way of grant by any Holder or Beneficial Owner.

198 Holders and Beneficial Owners of GDRs are not parties to the Deposit Agreement and thus, under English Law, have no contractual rights against, or obligations to, the Company or Depositary. However, the Deed Poll executed by the Company in favour of the Holders provides that, if the Company fails to perform the obligations imposed on it by certain specified provisions of the Deposit Agreement, any Holder may enforce the relevant provisions of the Deposit Agreement as if it were a party to the Deposit Agreement and was the ‘‘Depositary’’ in respect of that number of Deposited Shares to which the GDRs of which it is the Holder relate. Holders and Beneficial Owners are deemed, by virtue of being a Holder or Beneficial Owner and owning, acquiring or holding, as the case may be, a GDR, to have notice of and be subject to all applicable provisions of the Deposit Agreement and the Conditions. The Depositary is under no duty to enforce any of the provisions of the Deposit Agreement or the Conditions on behalf of any Holder or Beneficial Owner of a GDR or any other person. GDRs will initially take the form of global GDRs evidenced by one or more Master GDR Certificates (each a Master GDR Certificate) registered (i) in the case of Regulation S GDRs, in the name of Citivic Nominees Limited as nominee for Citibank Europe plc, as common depositary (the Common Depositary), and will initially be held by the Common Depositary for Euroclear Bank, SA/NV, as operator of the Euroclear System (Euroclear) and Clearstream Banking, socie´te´ anonyme (Clearstream), for the account of accountholders in Euroclear or Clearstream (Euroclear Participants and Clearstream Participants, respectively), as the case may be, and (ii) in the case of Rule 144A GDRs, in the name of Cede & Co., as nominee for The Depository Trust Company (DTC) for the account of accountholders in DTC (DTC Participants). The GDRs are exchangeable for certificates in definitive registered form in respect of GDRs representing all or part of the interest of the holder in the Master GDR Certificate only in the limited circumstances set out in ‘‘Description of Key Provisions Relating to the Global Depositary Receipts While in Master Form’’. Under the terms of the GDRs, each purchaser of GDRs is deemed to have represented and agreed, among other things, that the GDRs have not been and will not be registered under the Securities Act and may be offered, sold, pledged or otherwise transferred only in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. Each GDR will contain a legend to the foregoing effect. For a description of the restrictions on the transfer of the GDRs see ‘‘Transfer Restrictions’’ and ‘‘Plan of Distribution (Terms of the Offer)’’.

1. Deposit of Shares 1.1 The Depositary may, in accordance with the terms of the Deposit Agreement, but subject to the Conditions, and upon delivery of (x) a duly executed or electronically submitted order (in a form approved by the Depositary) and (y) a duly executed or electronically submitted deposit certification substantially in the form attached to the Deposit Agreement by or on behalf of any investor who is to become the Beneficial Owner of the GDRs (other than in the case of a deposit of Shares by the Company or an Affiliate of the Company which shall be subject to Clause 7.1.4 of the Deposit Agreement), from time to time issue and deliver further GDRs having the same terms and conditions as the GDRs which are then outstanding in all respects and, subject to the terms of the Deposit Agreement, the Conditions and applicable law, the Depositary shall accept for deposit any further Shares in connection therewith, so that such further GDRs shall form a single series with the already outstanding GDRs. References in these Conditions to the GDRs include (unless the context requires otherwise) any further GDRs issued pursuant to this Condition and forming a single series with the already outstanding GDRs. The deposit certificate to be provided pursuant to the Regulation S Deposit Agreement certifies, among other things, that the person providing such certificate is not an ‘‘affiliate’’ of the Company, is located outside the United States and will comply with the restrictions on transfer applicable to Regulation S GDRs set forth under ‘‘Transfer Restrictions’’. The deposit certificate to be provided pursuant to the Rule 144A Deposit Agreement certifies, among other things, that the person providing such certificate is not an ‘‘affiliate’’ of the Company, is a ‘‘Qualified Institution Buyer’’ (as defined in Rule 144A under the Securities Act), and will comply with the restrictions on transfer applicable to Rule 144A GDRs set forth under ‘‘Transfer Restrictions’’.

199 1.2 Subject to the terms and conditions of the Deposit Agreement and applicable law, upon (i) physical delivery to the Custodian of Shares, or book-entry transfer of Shares to an account of the Custodian at Centra´lny depozita´r cennyćh papierov SR, a.s. or any successor thereto (the Slovak Central Depository), (ii) physical or electronic delivery to the Depositary of the applicable deposit certification unless the deposit of Shares is made by the Company or an Affiliate of the Company in which case such deposit will be subject to Section 7.1.4 of the Deposit Agreement, and (iii) payment of necessary taxes, governmental charges (including transfer taxes) and other charges as set forth in the Deposit Agreement and fees of the Depositary as set forth in Clause 10.1 of the Deposit Agreement and Condition 19, the Depositary will (i) adjust its records for the number of GDRs issued in respect of the Shares so deposited, (ii) notify DTC or the Common Depositary, as the case may be, to increase the number of GDRs evidenced by a Master GDR Certificate, and (iii) make delivery of the GDRs so issued to the applicable DTC Participant, Euroclear Participant or Clearstream Participant specified in applicable order received for such purpose. 1.3 Subject to the limitations set forth in the Deposit Agreement and applicable law, the Depositary may (but is not required to) issue GDRs prior to the delivery to it of Shares in respect of which such GDRs are to be issued against evidence to receive rights from the Company (or any agent of the Company involved for the Company in the maintenance or ownership or transactions records for the Shares) in the form of a written blanket or specific guarantee of ownership furnished by the Company (or any agent of the Company involved for the Company in the maintenance or ownership or transactions records for the Shares). No such issue will be deemed a ‘‘Pre-Release Transaction’’ as defined in Condition 1.5. 1.4 Any further GDRs issued pursuant to Condition 1.1 which (i) represent Shares which have rights (whether dividend rights or otherwise) which are different from the rights attaching to the Shares represented by the outstanding GDRs, or (ii) are otherwise not fungible (or are to be treated as not fungible) with the outstanding GDRs, will, subject to Clause 3.16 of the Deposit Agreement be represented by a separate master partial entitlement GDR certificate (each a Master Partial Entitlement GDR Certificate). Upon becoming fungible with outstanding GDRs, such further GDRs shall be evidenced by a Master GDR Certificate (by increasing the total number of GDRs evidenced by the relevant Master GDR Certificate or by the number of such further GDRs, as applicable). 1.5 Subject to the further terms and provisions of the Deposit Agreement, Citibank, N.A., its agents and affiliates, on their own behalf, may own and deal in any class of securities of the Company and its affiliates and in GDRs. In its capacity as Depositary, the Depositary shall not lend Shares or GDRs; provided, however, that the Depositary may (i) issue GDRs prior to the receipt of Shares pursuant to Condition 1 and Clause 3 of the Deposit Agreement, and (ii) deliver Shares prior to the receipt and cancellation of GDRs pursuant to Condition 2 and Clause 3 of the Deposit Agreement, including GDRs which were issued under (i) above but for which Shares may not have been received (each such transaction a Pre-Release Transaction). The Depositary may receive GDRs in lieu of Shares under (i) above and receive Shares in lieu of GDRs under (ii) above. Each such Pre-Release Transaction will be (a) subject to a written agreement whereby the person or entity (the Applicant) to whom GDRs or Shares are to be delivered (v) represents that at the time of the Pre-Release Transaction the Applicant or its customer owns the Shares or GDRs that are to be delivered by the Applicant under such Pre- Release Transaction, (w) agrees to indicate the Depositary as owner of such Shares or GDRs in its records and transfer all beneficial right, title and interests in and to such Shares or GDRs, as the case may be, to the Depositary and to hold such Shares or GDRs in trust for the Depositary until such Shares or GDRs are delivered to the Depositary or the Custodian, (x) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares or GDRs, (y) agrees not take any action with respect to such Shares or GDRs, as the case may be, that is inconsistent with such transfer of beneficial ownership other than to deliver such Shares or GDRs, as the case may be, to the Depositary in satisfaction of such Pre-Release Transaction and (z) agrees to any additional restrictions or requirements that the Depositary deems appropriate, (b) at all times fully collateralised with cash, U.S. government securities or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than five (5) business days’ notice, and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate. The Depositary will normally limit the number of GDRs and Shares involved in such Pre- Release Transactions at any one time to

200 thirty per cent. (30%) of the GDRs outstanding (without giving effect to GDRs outstanding under (i) above), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The Depositary may also set limits with respect to the number of GDRs and Shares involved in Pre- Release Transactions with any one person on a case by case basis as it deems appropriate.

The Depositary may retain for its own account any compensation received by it in connection with the foregoing. Collateral provided pursuant to (b) above, but not the earnings thereon, shall be held for the beneﬁt of the Holders (other than the Applicant). The Depositary may require that the person to whom any Pre Release Transaction is to be made pursuant to this Condition 1.5 deliver to the Depositary a duly completed certiﬁcation and agreement in substantially the form set forth as Schedule 3 to the Regulation S Deposit Agreement or Schedule 3 Part A to the Rule 144A Deposit Agreement.

1.6 Any person delivering Shares for deposit under the Deposit Agreement and Condition 1 and any Holder or Beneficial Owner may be required and will be deemed to accept, by virtue of being a Holder or a Beneficial Owner, that, from time to time, it will be required to furnish the Depositary or the Custodian with such proof, certificates and representations and warranties as to matters of fact, including without limitation the citizenship and residence of the depositor, taxpayer status, payment of all applicable taxes or governmental charges, exchange control approvals, legal or beneficial ownership of GDRs and Deposited Property, compliance with all applicable laws, the terms of the Deposit Agreement, the Conditions and the provisions of, or governing, the Deposited Property and the identity and genuineness of any signature on any of the supporting instruments or other documents, and with such further documents and information as the Depositary may deem necessary or appropriate for the administration or implementation of the Deposit Agreement and the Conditions. The Depositary, the Registrar or the Custodian may withhold acceptance of Shares for deposit, withhold delivery or registration of issuance or transfer of all or part of any GDR Certificate, withhold adjustment of the Master GDR Certificate to reflect increases in Shares represented thereby or withhold the distribution or sale of any dividend or distribution of rights or of the net proceeds of the sale thereof or the delivery of any Deposited Property, until such proof or other information is filed or such certifications are executed, or such representations are made or such other documentation or information is provided in each case to the satisfaction of the Depositary, the Registrar or the Custodian.

1.7 Notwithstanding anything else contained in the Deposit Agreement or the Conditions, the Depositary shall not be required to accept for deposit or maintain on deposit with the Custodian (a) any fractional Shares or fractional Deposited Property, or (b) any number of Shares or Deposited Property which, upon application of the ratio of GDRs to Shares or Deposited Property, as the case may be, would give rise to fractional GDRs. No Share shall be accepted for deposit unless accompanied by evidence, if any is required by the Depositary or the Custodian, that is reasonably satisfactory to the Depositary or the Custodian that all conditions for such deposit have been satisﬁed by the person depositing such Shares under the laws and regulations of the Slovak Republic and any necessary approval has been granted by any applicable governmental body in the Slovak Republic (if any), including, without limitation, if applicable, any regulator of currency exchange.

1.8 Each person depositing Shares under the Deposit Agreement and the Conditions shall be deemed thereby to represent and warrant that (i) such Shares (and the certiﬁcates therefor) are duly authorised, validly issued, fully paid, non-assessable and legally obtained by such person, (ii) all pre-emptive (and similar) rights with respect to such Shares have been validly waived or exercised, (iii) the person making such deposit is duly authorised so to do, (iv) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, (v) the Shares presented for deposit have not been stripped of any rights or entitlements, and (vi) in the case of the Regulation S Deposit Agreement, that the Shares are not, and the Regulation S GDRs will not be, ‘‘restricted securities’’ (as deﬁned in Rule 144(a)(3) under the Securities Act). Such representations and warranties shall survive the deposit and withdrawal of Shares and the issuance and cancellation of GDRs in respect thereof and the transfer of such GDRs. If any such representations or warranties are false in any way, the Company and the Depositary shall be authorised, at the cost and expense of the person depositing Shares, to take any and all actions necessary to correct the consequences thereof.

201 Each person depositing Shares, taking delivery of or transferring GDRs or any beneficial interest therein, or surrendering GDRs or any beneficial interest therein and withdrawing Shares under the Deposit Agreement and the Conditions shall be deemed thereby to acknowledge that the GDRs and the Shares represented thereby have not been and will not be registered under the Securities Act, and may not be offered, sold, pledged or otherwise transferred except in accordance with the restrictions on transfer set forth in the applicable Securities Act Legend, and such person shall be deemed thereby to represent and warrant that such deposit, transfer or surrender or withdrawal complies with the foregoing restrictions. Such representations and warranties shall survive any such deposit, transfer or surrender and withdrawal of the Shares or the GDRs or any beneficial interest therein.

2. Withdrawal of Deposited Property 2.1 Subject to the terms and provisions of the Deposit Agreement, the Conditions the procedures of the Slovak Central Depository and applicable law, any Holder may request withdrawal of the Deposited Property attributable to any GDR upon production of such evidence that such person is the Holder of, and entitled to, the relative GDR as the Depositary may reasonably require at the principal office of the Depositary accompanied by: (a) a duly executed order (in a form approved by the Depositary) requesting the Depositary to cause the Deposited Property being withdrawn or evidence of the electronic transfer thereof to be delivered to or upon the order in writing of, the person or persons designated in such order; (b) the payment of such fees, taxes, duties, charges and expenses as may be required under the Conditions or the Deposit Agreement including, but not limited to the fees of the Depositary set forth in Clause 10.1 of the Deposit Agreement and Condition 19; (c) (x) surrender of a GDR Certificate at the Principal New York Office or Principal London Office, if DTC, Euroclear or Clearstream book-entry settlement system is not then available for GDRs, or (y) receipt by the Depositary at the Principal New York Office of instructions from DTC, Euroclear or Clearstream, or a DTC Participant, Euroclear Participant or Clearstream Participant or their respective nominees, on behalf of any Beneficial Owner together with a corresponding credit to the Depositary’s account at DTC, Euroclear or Clearstream for the GDRs so surrendered, if the book-entry settlement system is then available for GDRs, in either case for the purpose of withdrawal of the Deposited Property represented thereby; and (d) the delivery to the Depositary of, in the case of Rule 144A GDRs, a duly completed withdrawal certificate pursuant to the Rule 144A Deposit Agreement. 2.2 Withdrawals of Deposited Shares may be subject to such transfer restrictions or certifications, as the Company or the Depositary may from time to time determine to be necessary for compliance with applicable laws. 2.3 Upon production of such documentation and the making of such payment as aforesaid in accordance with paragraph 2.1 of this Condition 2, the Depositary will direct the Custodian, within a reasonable time after receiving such direction from such Holder, to deliver at its office, to, or to the order in writing of, the person(s) designated in the accompanying order: (a) a certificate for, or other appropriate instrument of title to, or evidence of book-entry transfer of, the relevant Deposited Shares, registered in the name of the Depositary or its nominee and accompanied by such instruments of transfer in blank or to the person or persons specified in the order for withdrawal and such other documents, if any, as are required by law for the transfer thereof; and (b) all other property forming part of the Deposited Property attributable to such GDR, accompanied, if required by law, by one or more duly executed endorsements or instruments of transfer in respect thereof as aforesaid or evidence of the electronic transfer of such other Deposited Property; provided that the Depositary: (i) may make delivery of (a) any cash dividends or cash distributions or (b) any proceeds from the sale of any distributions of Shares or rights which are held by the Depositary in respect of the Deposited Property represented by the GDRs surrendered for cancellation and withdrawal; and

202 (ii) at the request, risk and expense of any Holder surrendering a GDR for cancellation and withdrawal, will direct the Custodian to forward any cash or other property (other than securities) held by the Custodian in respect of the Deposited Property represented by such GDRs to the Depositary,

in each case at the principal ofﬁce from time to time of the Depositary located in New York or London (if permitted by applicable law from time to time).

2.4 Delivery by the Depositary and the Custodian of all certiﬁcates, instruments, dividends or other property forming part of the Deposited Property as speciﬁed in this Condition will be made subject to any laws or regulations applicable thereto.

2.5 If any GDR surrendered and cancelled represents fractional entitlements in Deposited Property, the Depositary shall cause the appropriate whole number of Deposited Property to be withdrawn and delivered in accordance with the terms of the Deposit Agreement and this Condition 2 and shall, at the discretion of the Depositary, either (i) issue and deliver to the person surrendering such GDR a new GDR representing any remaining fractional Share, or (ii) sell or cause to be sold the fractional Share represented by the GDR surrendered and remit proceeds of such sale (net of (a) fees and charges of, and expenses incurred by, the Depositary, and (b) taxes withheld) to the person surrendering the GDR.

2.6 Notwithstanding anything to the contrary in the Deposit Agreement or the Conditions, the Depositary shall not knowingly accept any Rule 144A GDRs for cancellation and withdrawal of the Deposited Property represented thereby if the recipient thereof has instructed the deposit of such Deposited Property into any unrestricted depositary receipt facility, unless the Depositary shall have received an opinion of counsel reasonably satisfactory to it stating that the Deposited Property so withdrawn are not at such time ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act.

3. Suspension of Issue of GDRs and of Withdrawal of Deposited Property The issuance and delivery of GDRs against deposits of Shares generally or deposits of particular Shares may be suspended or withheld, or the registration of transfer of GDR Certiﬁcates in particular instances may be refused, or the registration of transfers generally may be suspended or refused, during any period when the transfer books of the Depositary, the Company, a registrar of GDRs or any registrar of Shares are closed, or if any such action is deemed necessary or advisable by the Company or the Depositary in good faith, at any time or from time to time because of any requirement of law, any government or governmental body or commission or any securities exchange on which the GDRs or Shares are listed, an applicable court order, or under any provision of the Deposit Agreement, the Conditions, or the provisions of or governing the Deposited Property, or any meeting of shareholders of the Company or for any other reason. The Depositary may restrict the transfer of Deposited Shares where the Company notiﬁes the Depositary in writing that such transfer would result in ownership of Shares exceeding any limit under any applicable law, government resolution or the Articles of Association or would otherwise violate any applicable laws.

The Depositary will refuse to accept Shares for deposit under the Rule 144A Deposit Agreement, if it has been notiﬁed by the Company in writing that the Deposited Shares or any depositary receipts corresponding to Shares are listed on a U.S. national securities exchange or quoted on a U.S. automated inter-dealer quotation system unless accompanied by evidence satisfactory to the Depositary that any such Shares are eligible for resale pursuant to Rule 144A under the Securities Act.

Notwithstanding any provision of the Deposit Agreement, the Conditions or any GDR Certiﬁcate to the contrary, Holders and Beneﬁcial Owners are entitled to surrender outstanding GDRs to withdraw the Deposited Shares at any time subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the deposit of Shares in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any laws or governmental regulations or an applicable court order relating to the GDRs or to the withdrawal of the Deposited Shares.

203 4. Transfer and Ownership 4.1 GDRs are to be issued in registered form. Title to the GDRs passes upon registration in the records of the Depositary. The Depositary will refuse to accept for transfer any GDRs if it reasonably believes that such transfer would result in a violation of applicable laws. The Holder of any GDR will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not any payment or other distribution in respect of such GDR is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or loss of, any certificate issued in respect of it) and no person will be liable for so treating the Holder. The Depositary will maintain Holder records, including a register of Holders, at its principal office in New York. Interests in the Rule 144A GDRs may be transferred to a person whose interest in such GDRs is subsequently represented by the Master Regulation S GDR Certificate only upon receipt by the Depositary of written certifications and agreements, as required under the Regulation S Deposit Agreement and the Rule 144A Deposit Agreement. Interests in the Regulation S GDRs may be transferred to a person whose interest in such GDRs is subsequently represented by the Master Rule 144A GDR Certificate only upon receipt by the Depositary of written certifications and agreements, as required under the Rule 144A Deposit Agreement. Any interest in GDRs represented by one of the Master GDR Certificates that is transferred to a person whose interest in such GDRs is subsequently represented by the other Master GDR Certificate, will, upon transfer, cease to be an interest in the GDRs represented by such first Master GDR Certificate and, accordingly, will be subject to all transfer restrictions and other procedures applicable to interests in GDRs represented by such other Master GDR Certificate for so long as it remains such an interest. For a description of the restrictions on the transfer of the GDRs see ‘‘Transfer Restrictions’’. 4.2 Notwithstanding any other provision of the Deposit Agreement or the Conditions, each Holder and Beneficial Owner, by virtue of their ownership of any GDR or any Deposited Property, shall be deemed thereby to agree to comply with requests from the Company or the Depositary pursuant to Slovak Republic law and any other stock exchange on which the Shares are, or may be registered, traded or listed, or the Articles of Association, which are made to provide information, inter alia, as to the capacity in which such Holder or former Holder, Beneficial Owner or former Beneficial Owner holds or held, owns or owned a beneficial ownership interest in GDRs (and Deposited Property, as the case may be) and regarding the identity of any other person interested in such GDRs (and Deposited Property), the nature of such interest and various related matters, whether or not they are Holders and/or Beneficial Owners at the time of such request. 4.3 Applicable laws and regulations may require holders and beneficial owners of Shares, including the Holders and Beneficial Owners of GDRs, to satisfy reporting requirements or obtain regulatory approvals in certain circumstances. Holders and Beneficial Owners of GDRs are solely responsible for complying with such reporting requirements and obtaining such approvals. By virtue of their ownership of any GDR or any Deposited Property, each Holder and Beneficial Owner shall be deemed thereby to agree to file such reports and obtain such approvals to the extent and in the form required by applicable laws and regulations as in effect from time to time. None of the Depositary, the Custodian, the Company or any of their respective agents or affiliates shall be required to take any actions whatsoever on behalf of Holders or Beneficial Owners to satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.

5. Cash Distributions Whenever the Depositary receives from the Company any cash dividend or other cash distribution on or in respect of the Deposited Shares or receipt of proceeds from the sale of any Shares, rights, securities or other entitlements under the terms of the Deposit Agreement or the Conditions, the Depositary shall, if at the time of receipt thereof any amounts received in Foreign Currency can in the judgment of the Depositary (pursuant to Condition 11) be converted on a practicable basis into Dollars transferable to the U.S., promptly convert, or cause to be converted, such dividends, distribution or proceeds into Dollars in the terms

204 described in Condition 11 and will promptly distribute the amount thus received (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the Holders entitled thereto. The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Holder a fraction of one cent, and any balance not so distributable shall be held by the Depositary (without liability for interest thereon) and shall be added to and become part of the next sum received by the Depositary for distribution to Holders of GDRs then outstanding at the time of the next distribution. If the Company, the Custodian or the Depositary is required to withhold and does withhold from any cash dividend or other cash distribution in respect of any Deposited Property an amount on account of taxes, duties or other governmental charges, the amount distributed to Holders in respect of the GDRs representing such Deposited Property shall be reduced accordingly. Such withheld amounts shall be forwarded by the Company, the Custodian or the Depositary to the relevant governmental authority. Evidence of payment thereof by the Company shall be forwarded by the Company to the Depositary upon request.

6. Distributions of Shares If any distribution upon any Deposited Property consists of a dividend in, or free distribution of, Shares, the Company shall cause such Shares to be deposited with the Custodian and, if applicable, registered in the name of the Depositary, the Custodian or any of their nominees, as the case may be. Upon receipt of confirmation of such deposit from the Custodian, the Depositary shall establish the GDR Record Date upon the terms described in Condition 10 and shall, subject to the terms of the Deposit Agreement and the Conditions, either (i) distribute to the Holders as of the GDR Record Date in proportion to the number of GDRs held as of the GDR Record Date, additional GDRs, which represent the aggregate number of Shares received as such dividend or free distribution, subject to the other terms of the Deposit Agreement and Conditions and net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes, by either (x) if GDRs are not available in book-entry form, issuing additional GDR Certificates for an aggregate number of GDRs representing the number of Shares received as such dividend or free distribution, or (y) if GDRs are available in book-entry form, reflecting on the records of the Depositary such increase in the aggregate number of GDRs representing such Shares and give notice to the Common Depositary of the related increase in the number of GDRs evidenced by the Master GDR Certificate, or (ii) if additional GDRs are not so distributed, each GDR issued and outstanding after the GDR Record Date shall, to the extent permissible by law, thenceforth also represent rights and interests in the additional Shares distributed upon the Deposited Property represented thereby, net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes. In lieu of delivering fractional GDRs, the Depositary shall sell the number of Shares represented by the aggregate of such fractions and distribute the net proceeds of such sale upon the terms described in Condition 5. In the event that the Depositary determines that any distribution in Shares would violate applicable law, is not operationally practicable, is subject to any tax or other governmental charges which the Depositary is obligated to withhold, or if the Company, in the fulfillment of its obligations under Clause 7.1.4 of the Deposit Agreement, has furnished an opinion of U.S. counsel determining that the distribution to Holders of the Shares and the GDRs representing such Shares must be registered under the Securities Act or other laws in order to be distributed to Holders (and no such registration statement has been declared effective), the Depositary may dispose of all or a portion of such Shares in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable, and the Depositary shall distribute the net proceeds of any such sale, after deduction of (a) taxes and (b) fees and charges of, and expenses incurred by, the Depositary, to Holders entitled thereto upon the terms described in Condition 5. The Depositary shall hold and/or distribute any unsold balance of such property in accordance with the provisions of the Deposit Agreement and the Conditions.

7. Distributions Other than Cash or Shares Whenever the Depositary receives from the Company property other than cash, Shares or rights to purchase additional Shares and receives a notice from the Company indicating that the Company wishes such distribution to be made available to Holders of GDRs, upon receipt of satisfactory documentation within the terms of Clause 7.1.4 of the Deposit Agreement and after making the requisite determinations set forth in Clause 5.1 of the Deposit Agreement, the

205 Depositary shall distribute the property so received to the Holders of record as of the GDR Record Date set in accordance with Condition 10, in proportion to the number of GDRs held by them respectively and in such manner as the Depositary may deem reasonably practicable for accomplishing such distribution (i) upon receipt of payment or net of the applicable fees and charges of, and expenses incurred by, the Depositary, and (ii) net of any taxes withheld. The Depositary may dispose of all or a portion of the property so distributed and deposited, in such amounts and in such manner (including public or private sale) as the Depositary may deem reasonably practicable or necessary to satisfy any taxes (including applicable interest and penalties) or other governmental charges applicable to the distribution. If (i) the Company does not request the Depositary to make such distribution to Holders or requests not to make such distribution to Holders, (ii) the Depositary does not receive documentation within the terms of Clause 7.1.4 of the Deposit Agreement, or (iii) the Depositary determines (in accordance with Clause 5.1 of the Deposit Agreement) that all or a portion of such distribution is not lawful or is not reasonably practicable, the Depositary shall sell or cause such property to be sold in a public or private sale, at such place or places and upon such terms as it may deem practicable and shall (x) cause the proceeds of such sale, if any, to be converted into Dollars in accordance with Condition 11, and (y) distribute the proceeds of such conversion received by the Depositary (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes) to the Holders as of the GDR Record Date upon the terms of Condition 5. If the Depositary is unable to sell such property, the Depositary may dispose of such property in any way it deems reasonably practicable under the circumstances.

8. Rights Issues 8.1 Whenever the Company intends to distribute to the holders of the Deposited Property rights to subscribe for additional Shares, and provides a notice to the Depositary indicating that the Company wishes such rights to be made available to Holders of GDRs, upon receipt of satisfactory documentation within the terms of Clause 7.1.4 of the Deposit Agreement and after making the requisite determinations set forth in Clause 5.1 of the Deposit Agreement, the Depositary shall (x) establish a GDR Record Date (upon the terms described in Condition 10), (y) establish procedures to distribute such rights (by means of warrants or otherwise) and/or to enable the Holders to exercise the rights (upon payment of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes), and (z) issue and deliver GDRs upon the valid exercise of such rights. The Company shall assist the Depositary to the extent necessary in establishing such procedures. As soon as reasonably practicable upon receipt of notice from the Company indicating that the Company wishes such rights to be made available to Holders of GDRs, the Depositary shall give notice to the Holders, in accordance with Condition 25, of such offer or invitation of rights, specifying, if applicable, the earliest date for acceptance thereof, the last date established for acceptance thereof and the manner by which and time during which Holders may request the Depositary to exercise such rights or, if such be the case, specifying details on how the Depositary proposes to distribute such rights or the proceeds of any sale thereof. Nothing herein shall obligate the Depositary to make available to the Holders a method to exercise such rights to subscribe for Shares (rather than for GDRs). 8.2 In the event that (i) the Depositary fails to receive satisfactory documentation within the terms of Clause 7.1.4 of the Deposit Agreement or determines that it is not lawful or not reasonably practicable to make the rights available to Holders or (ii) the Company requests that the rights not be made available to Holders of GDRs or (iii) any rights made available are not exercised and appear to be about to lapse, the Depositary shall determine whether it is lawful and reasonably practicable to sell such rights, in a riskless principal capacity, at such place and upon such terms (including public and private sale) as it may deem practicable. The Company shall provide reasonable assistance to the Depositary to the extent necessary to determine such legality and practicability. If the Depositary sells such rights, the Depositary shall, upon such sale, (x) cause the proceeds of such sale, if any, to be converted into Dollars upon the terms described in Condition 11, and (y) distribute the proceeds of such sale (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes) upon the terms set forth in Condition 5.

206 If the Depositary is unable to make any rights available to Holders upon the terms described in the Deposit Agreement or to arrange for the sale of the rights upon the terms described above, the Depositary shall allow such rights to lapse. The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holder in particular, (ii) any foreign exchange exposure or loss incurred in connection with any sale or exercise, or (iii) the content of any materials forwarded to the Holders on behalf of the Company in connection with the rights distribution. 8.3 Notwithstanding anything to the contrary in the Deposit Agreement or this Condition 8, if registration (under the Securities Act or any other applicable law) of the rights or the securities to which any rights relate may be required in order for the Company to offer such rights or such securities to Holders and to sell the securities represented by such rights, the Depositary will not distribute such rights to the Holders unless and until a registration statement under the Securities Act covering such offering is in effect. In the event that the Company, the Depositary or the Custodian shall be required to withhold and does withhold from any distribution of rights an amount on account of taxes or other governmental charges, the amount distributed to the Holders of GDRs representing such Deposited Property shall be reduced accordingly. In the event that the Depositary determines that any distribution of Deposited Property or rights to subscribe therefor is subject to any tax or other governmental charges which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such Deposited Property or rights to subscribe therefor in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable to pay any such taxes or charges. There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to exercise such rights on the same terms and conditions as the holders of Deposited Property or to exercise such rights. Nothing in the Deposit Agreement or this Condition 8 shall obligate the Company to ﬁle any registration statement in respect of any rights or Deposited Property or other securities to be acquired upon the exercise of such rights.

9. Redemption If the Company intends to exercise any right of redemption in respect of any of the Deposited Property, upon receipt of satisfactory documentation within the terms of Clause 7.1.4 of the Deposit Agreement and after making the requisite determinations set forth in Clause 5.2 of the Deposit Agreement, the Depositary shall send to each Holder a notice in accordance with Condition 25 setting forth the intended exercise by the Company of the redemption rights and any other particulars set forth in the Company’s notice to the Depositary. The Depositary shall instruct the Custodian to present to the Company the Deposited Property in respect of which redemption rights are being exercised against payment of the applicable redemption price. Upon receipt of conﬁrmation from the Custodian that the redemption has taken place and that funds representing the redemption price have been received, the Depositary shall convert, transfer, and distribute the proceeds (net of applicable (a) fees and charges of, and the expenses incurred by, the Depositary, and (b) taxes), retire GDRs and cancel GDRs upon delivery of such GDRs by Holders thereof and on the terms set forth in the applicable Conditions. If less than all outstanding Deposited Property is redeemed, the GDRs to be retired will be selected by lot or on a pro rata basis, as may be determined by the Depositary. The redemption price per GDR shall be the per share amount received by the Depositary upon the redemption of the Deposited Property represented by GDRs (subject to the terms of the Deposit Agreement and the applicable fees and charges of, and expenses incurred by, the Depositary, and taxes) multiplied by the number of Deposited Property represented by each GDR redeemed.

10. GDR Record Dates Whenever the Depositary shall receive notice of the fixing of a record date by the Company for the determination of holders of Deposited Property entitled to receive any distribution (whether in cash, Shares, rights or other distribution), or whenever, for any reason, the Depositary causes a change in the number of Deposited Property that are represented by each GDR, or whenever the Depositary shall receive notice of any meeting of, or solicitation of consents or proxies of, holders of Shares or other Deposited Property, or whenever the Depositary finds it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary shall fix a record date (the GDR Record Date) for the determination of

207 the Holders of GDRs who shall be entitled to receive such dividend or distribution, to give instructions for the exercise of voting rights at any such meeting, or to give or withhold such consent, or to receive such notice or solicitation or to otherwise take action, or to exercise the rights of Holders with respect to such changed number of Deposited Property represented by each GDR. The Depositary shall make reasonable efforts to establish the GDR Record Date as closely as possible to the applicable record date for the Deposited Property (if any) set by the Company in the Slovak Republic. Subject to applicable law and the provisions of the Deposit Agreement and Conditions, only the Holders of GDRs at the close of business in New York on such GDR Record Date shall be entitled to receive such distribution, to give such voting instructions, to receive such notice or solicitation, or otherwise take action.

11. Conversion of Foreign Currency Whenever the Depositary or the Custodian shall receive any Foreign Currency by way of dividend or other distribution or as the net proceeds from the sale of securities, other property or rights, and if at the time of the receipt thereof the Foreign Currency so received can in the judgement of the Depositary be converted on a practicable basis into Dollars transferable to the U.S. and distributed to the Holders entitled thereto, the Depositary shall convert or cause to be converted by sale or in any other manner that it may determine, the Foreign Currency so received into Dollars and shall distribute such Dollars (net of applicable fees, any reasonable and customary expenses incurred on behalf of Holders in complying with currency exchange control or other governmental requirements) in accordance with the terms of the applicable Conditions. If the Depositary shall have distributed warrants or other instruments that entitle the holders thereof to such Dollars, the Depositary shall distribute such Dollars to the holders of such warrants and/or instruments upon surrender thereof for cancellation, in either case without liability for interest thereon. Such distribution shall be made upon an averaged or other practicable basis without regard to any distinctions among Holders on account of any application of exchange restrictions or otherwise. If such conversion or distribution generally or with regard to a particular Holder can be effected only with the approval or licence of any government or agency thereof, the Depositary shall have the authority, with the assistance of the Company, to ﬁle such application, for such approval or licence, if any, as it may consider desirable. In no event, however, shall the Depositary be obligated to make such a ﬁling. If at any time the Depositary shall determine that in its judgement the conversion of any currency other than Dollars and the transfer and distribution of proceeds of such conversion received by the Depositary is not practicable or lawful, or if any approval or licence of any government or agency thereof which is required for such conversion, transfer or distribution is denied or, in the opinion of the Depositary, is not obtainable at a reasonable cost, or if any such approval or licence is not obtained within a reasonable period as determined by the Depositary, the Depositary may in its discretion (i) make such conversion and distribution in Dollars to the Holders for whom such conversion, transfer and distribution is lawful and practicable, (ii) distribute the Foreign Currency (or an appropriate document evidencing the right to receive such Foreign Currency) to Holders for whom this is lawful and practicable, and (iii) hold (or cause the Custodian to hold) such Foreign Currency (without liability for interest thereon) for the respective accounts of the Holders entitled to receive the same.

12. Distribution of any Payments Any distribution of cash under Condition 5, 6, 7, 8, 9, 13 or 14 will be made by the Depositary to those Holders who are Holders of record on the GDR Record Date established by the Depositary in accordance with Condition 10 for that purpose and, distributions will be made in Dollars subject to Condition 11 by cheque drawn upon a bank in New York City or, in the case of the relevant Master GDR Certiﬁcate, according to usual practice between the Depositary and DTC, Clearstream, and Euroclear, as the case may be. The Depositary may deduct and retain from all moneys due in respect of such GDR in accordance with the Deposit Agreement all fees, taxes, duties, charges, costs and expenses which may become or have become payable under the Deposit Agreement or under applicable law in respect of such GDR or the relative Deposited Property.

208 13. Capital Reorganisation Upon any change in nominal or par value, split-up, cancellation, consolidation or any other reclassification of Deposited Property, or upon any recapitalisation, reorganisation, merger or consolidation or sale of assets affecting the Company or to which it is a party, any securities which shall be received by the Depositary or the Custodian in exchange for, or in conversion, replacement or otherwise in respect of, such Deposited Property shall, to the extent permitted by law, be treated as new Deposited Property under the Deposit Agreement and the Conditions, and the GDRs shall, subject to the terms of the Deposit Agreement, the Conditions and applicable law, evidence GDRs representing the right to receive such replacement securities. The Depositary may, with the Company’s approval, and shall, if the Company shall so request, subject to the terms of the Deposit Agreement and the Conditions, and subject to the receipt by the Depositary of an opinion of counsel reasonably satisfactory to the Depositary (obtained at the expense of the Company) that such distributions are not in violation of any applicable laws or regulations, execute and deliver additional GDRs or make appropriate adjustments in its records, as in the case of a stock dividend on the Shares, or call for the surrender of outstanding GDRs to be exchanged for new GDRs, in either case, as well as in the event of newly deposited Shares, with necessary modifications to the form of GDR attached to the Deposit Agreement specifically describing such new Deposited Property or corporate change. Notwithstanding the foregoing, in the event that any security so received may not be lawfully distributed to some or all Holders, the Depositary may, with the Company’s approval, and shall if the Company requests, subject to the receipt by the Depositary of an opinion of counsel reasonably satisfactory to the Depositary (obtained at the expense of the Company) that such action is not in violation of any applicable laws or regulations, sell such securities at public or private sale, at such place or places and upon such terms as it may deem proper, and may allocate the net proceeds of such sales (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary, and (b) taxes) for the account of the Holders otherwise entitled to such securities upon an averaged or other practicable basis without regard to any distinctions among such Holders and distribute the net proceeds so allocated to the extent practicable as in the case of a distribution received in cash pursuant to Condition 5. The Depositary shall not be responsible for (i) any failure to determine that it is lawful or practicable to make such securities available to Holders in general or to any Holder in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or (iii) any liability to the purchaser of such securities. 14. Elective Distributions Wherever the Company intends to distribute a dividend payable at the election of the holders of Shares in cash or in additional Shares and provides a notice to the Depositary indicating that the Company wishes such elective distribution to be made available to Holders of GDRs, upon receipt of satisfactory documentation within the terms of Clause 7.1.4 of the Deposit Agreement and after making the requisite determinations set forth in Clause 5.1 of the Deposit Agreement, the Depositary shall make such elective distribution available to Holders. If the Depositary fails to receive satisfactory documentation within the terms of Clause 7.1.4 of the Deposit Agreement or determines that it is not lawful or not reasonably practicable to make the elective distribution available to Holders of GDRs, or if the Company requests that such elective distribution not be made available to Holders of GDRs, the Depositary shall, to the extent permitted by law, distribute to the Holders, on the basis of the same determination as is made in the Slovak Republic in respect of the Shares for which no election is made, either (X) cash upon the terms described in Condition 5, or (Y) additional GDRs representing such additional Shares upon the terms described in Condition 6. If the above conditions are satisfied, the Depositary shall establish a GDR Record Date in accordance with Condition 10 and establish procedures to enable Holders to elect the receipt of the proposed dividend in cash or in additional GDRs. The Company shall assist the Depositary in establishing such procedures to the extent necessary. If a Holder elects to receive the proposed dividend (X) in cash, the dividend shall be distributed upon the terms described in Condition 5, or (Y) in GDRs, the dividend shall be distributed upon the terms described in Condition 6. Nothing in the Deposit Agreement or this Condition 14 shall obligate the Depositary to make available to Holders a method to receive the elective dividend in Shares (rather than GDRs). There can be no assurance that Holders and Beneficial Owners generally, or any Holder or Beneficial Owner in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of the Deposited Property.

209 15. Taxation and Applicable Laws 15.1 Payments to Holders of dividends or other distributions made to Holders on or in respect of the Deposited Property will be subject to deduction of Slovak Republic and other withholding taxes, if any, at the applicable rates, and notwithstanding any other provision of the Deposit Agreement or the Conditions, the Depositary and the Custodian will be entitled, subject to applicable law, to deduct from any cash dividend or other cash distribution which either of them receives from the Company such amount as is necessary in order to provide for any tax, charge, fee or other amount that is, or could become, payable by or on behalf of the Depositary to fiscal or other governmental authority on account of receiving such cash dividend or other cash distribution. The Holder or Beneficial Owner of any GDR or any Deposited Property shall be deemed thereby to accept (by virtue of his ownership or deposit, as the case may be) that, in the event that any tax or other governmental charge shall become payable with respect to any GDR, Deposited Property or GDR Certificate, such tax or other governmental charge shall be payable by the Holder and Beneficial Owner to the Depositary. The Custodian may refuse the deposit of Shares and the Depositary may refuse to issue or deliver GDRs, to register the transfer, split-up or combination of GDR Certificates and the withdrawal of Deposited Property until payment in full of such tax, charge, penalty or interest is received. The Depositary may, for the account of the Holder or Beneficial Owner, discharge the same out of the proceeds of sale, subject to Slovak Republic law and regulations, of an appropriate number of Deposited Shares or other Deposited Property with the Holder and Beneficial Owner remaining liable for any deficiency and being entitled to distribution of any surplus. Any such request shall be made by giving notice pursuant to Condition 25. By virtue of its ownership of any GDR or Deposited Property, each Holder and Beneficial Owner shall be deemed to agree to indemnify the Depositary, the Company, the Custodian, and any of their agents, officers, employees and Affiliates for, and to hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any tax benefit obtained for such Holder or Beneficial Owner. 15.2 If any governmental or administrative authorisation, consent, registration or permit or any report to any governmental or administrative authority is required under any applicable law in the Slovak Republic in order for the Depositary to receive from the Company Shares to be deposited under the Conditions or in order for Shares, other securities or other property to be distributed under Condition 5, 6, 7, 13 or 14 or to be subscribed under Condition 8, the Depositary shall request that the Company apply for such authorisation, consent, registration or permit or file such report on behalf of the Holders within the time required under such law. In this connection, the Company has undertaken in the Deposit Agreement, to take such action as may be required in obtaining or filing the same, to the extent reasonably practicable. The Depositary shall not distribute GDRs, Shares, other securities or other property with respect to which such authorisation, consent or permit or such report has not been obtained or filed, as the case may be, and shall have no duties to obtain any such authorisation, consent or permit or to file any such report.

16. Voting Rights 16.1 Holders of GDRs will have voting rights with respect to the Deposited Shares. The Company has agreed to notify the Depositary of any meeting of holders of Shares of the Company at which holders of Shares or other Deposited Property are entitled to vote, or of solicitation of consents or proxies from holders of Shares or other Deposited Property and the Depositary will vote or cause to be voted the Deposited Shares in the manner set out in this Condition 16. As soon as practicable after receipt from the Company of any such notice, the Depositary will ﬁx the GDR Record Date in respect of such meeting or solicitation of consent or proxy in accordance with Condition 10. The Depositary shall, if requested by the Company in writing in a timely manner in accordance with Clause 5.3 of the Deposit Agreement and at the Company’s expense and provided no U.S., English or Slovak Republic legal prohibitions exist, distribute to Holders as of the GDR Record Date: (a) such notice of meeting or solicitation of consent or proxy, (b) a statement that the Holders at the close of business in New York on the GDR Record Date will be entitled, subject to any applicable law, the provisions of the Deposit Agreement, the Conditions, the Articles of Association and the provisions of or governing the Deposited Property (which provisions, if any, shall be summarised in pertinent part by the

210 Company), to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Shares or other Deposited Property represented by such Holder’s GDRs, and (c) a brief statement as to the manner in which such voting instructions may be given. 16.2 Voting instructions may be given to the Depositary only in respect of a number of GDRs representing an integral number of Shares or other Deposited Property. Subject to applicable law, the provisions of the Deposit Agreement, the Conditions, the Articles of Association and the provisions of the Deposited Property, if the Depositary has received voting instructions from a Holders as of the GDR Record Date to vote the Deposited Property on or before the date specified by the Depositary, the Depositary shall endeavour, in so far as is practicable and permitted by Slovak Republic law and practice, to vote or cause the Custodian to vote Shares and/or other Deposited Property represented by GDRs for which timely and valid voting instructions have been received from GDR Holders in the manner so instructed by such Holders. 16.3 Neither the Depositary nor the Custodian shall, under any circumstances exercise any discretion as to voting and neither the Depositary nor the Custodian shall vote, attempt to exercise the right to vote, or in any way make use of the Shares or other Deposited Property represented by GDRs except pursuant to and in accordance with such instructions from Holders. If the Depositary timely receives voting instructions from a Holder which fail to specify the manner in which the Depositary is to vote the Deposited Property represented by such Holder’s GDRs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions. Notwithstanding anything else contained herein, the Depositary shall, if so requested in writing by the Company, represent all Deposited Property (whether or not voting instructions have been received in respect of such Deposited Property from Holders as of the GDR Record Date) for the sole purpose of establishing quorum at a meeting of shareholders. 16.4 There can be no assurance that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable the Holder to return voting instructions to the Depositary in a timely manner. By continuing to hold GDRs, all Holders and Beneficial Owners shall be deemed to have agreed to the provisions of this Condition 16 as it may be amended from time to time in order to comply with applicable Slovak Republic law. A valid corporate decision of the Company will bind the Depositary (as registered owner of the Shares) and the Holders and Beneficial Owners of GDRs shall be deemed to agree to being bound by such a corporate decision of the Company. 16.5 Notwithstanding anything else contained in the Deposit Agreement or the Conditions, the Depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of Deposited Property if the taking of such action would violate U.S., English or Slovak Republic laws. The Company agrees that it shall not, except to the extent necessary to comply with applicable law, establish internal procedures that would that would prevent the Depositary from complying with, or that are inconsistent with, the provisions of this Condition 16 and, if so requested by the Depositary, agrees to deliver to the Depositary an opinion of counsel reasonably satisfactory to the Depositary (obtained at the expense of the Company) addressing any actions to be taken by the Depositary with respect to the exercise of voting rights under this Condition 16.

17. Liability 17.1 Neither the Depositary nor the Company shall be obligated to do or perform any act which is inconsistent with the provisions of the Deposit Agreement or the Conditions or shall incur any liability (i) if the Depositary or the Company shall be prevented or forbidden from, or delayed in, doing any act or thing required by the terms of the Deposit Agreement or the Conditions, by reason of any provision of any present or future law or regulation of the U.S., England, the Slovak Republic or any other country, or of any relevant governmental or regulatory authority or stock exchange, or by reason of the interpretation or application of any such present or future law or regulation or any change therein, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of the Articles of Association or any provision of or governing any Deposited Property or by reason of any other circumstances beyond their control (including, without limitation, acts of God or war,

211 nationalisation, expropriation, currency restrictions, work stoppage, strikes, civil unrest, acts of terrorism, revolutions, rebellions, explosions and computer failure), (ii) by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement, the Conditions or in the Articles of Association or provisions of or governing Deposited Property, (iii) for any action or inaction in reliance upon the advice or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, any Beneficial Owner or authorised representative thereof, or any other person believed by it in good faith to be competent to give such advice or information, but only insofar as the terms of this subsection (iii) are not prohibited by applicable law, (iv) for the inability by a Holder or Beneficial Owner to benefit from any distribution, offering, right or other benefit which is made available to holders of Shares but is not, under the terms of the Deposit Agreement or the Conditions, made available to Holders of GDRs or (v) for any consequential or punitive damages for any breach of the terms of the Deposit Agreement or the Conditions 17.2 In acting hereunder the Depositary shall have only those duties, obligations and responsibilities expressly specified in the Deposit Agreement and these Conditions and, other than holding the Deposited Property for the benefit of Holders as bare trustee, does not assume any relationship of trust for or with the Holders or the Beneficial Owners. 17.3 The Depositary, its controlling persons, its agents, any Custodian and the Company, its controlling persons and its agents may rely on, and shall be protected in acting upon, any written notice, request, direction or other document believed by it to be genuine and to have been duly signed or presented by the proper party or parties (including a translation which is made by a translator believed by it to be competent or which appears to be authentic). 17.4 No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement or the Conditions. 17.5 Without limitation of the foregoing, neither the Depositary, nor the Company, nor any of their respective controlling persons or agents, shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Property or in respect of the GDRs, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required (and no Custodian shall be under any obligation whatsoever with respect to such proceedings, the responsibility of the Custodian being solely to the Depositary). 17.6 The Depositary has no obligation under the Deposit Agreement to take steps to monitor, supervise or enforce the observance and performance by the Company of its obligations under the Deposit Agreement or the Conditions. 17.7 Neither the Depositary, the Custodian nor any of their agents, officers, directors or employees shall be liable (except by reason of its own negligence, wilful default or bad faith or that of its agents, officers, directors or employees) to the Company or any Holder or owner of a GDR, by reason of having accepted as valid or not having rejected any certificate for Shares or GDRs purporting to be such and subsequently found to be forged or not authentic. 17.8 The Depositary and each of its agents (and any holding, subsidiary or associated company of the Depositary) may engage or be interested in any financial or other business transactions with the Company or any of its subsidiaries or affiliates or in relation to the Deposited Property (including, without prejudice to the generality of the foregoing, the conversion of any part of the Deposited Property from one currency to another), may at any time hold GDRs for its own account, and shall be entitled to charge and be paid all usual fees, commissions and other charges for business transacted and acts done by it as a bank or in any other capacity, and not in the capacity of Depositary, in relation to matters arising under the Deposit Agreement (including, without prejudice to the generality of the foregoing, charges on the conversion of any part of the Deposited Property from one currency to another and any sales of property) without accounting to Holders or any other person for any profit arising therefrom. 17.9 The Depositary shall endeavour to effect any such sale as is referred to or contemplated in Conditions 6, 7, 8, 13 or 14 or any such conversion as is referred to in Condition 8 in accordance with the Depositary’s normal practices and procedures, but shall have no liability (in the absence of its own negligence, wilful default or bad faith or that of its agents, officers, directors or employees) with respect to the terms of such sale or conversion or if such sale or conversion shall not be possible.

212 17.10 The Depositary shall, subject to all applicable laws, have no responsibility whatsoever to the Company, any Holder, Beneficial Owner or person with an interest in a GDR, and the Company shall, subject to all applicable laws, have no responsibility whatsoever to any Holder, Beneficial Owner or person with an interest in a GDR, in each case as regards any deficiency which might arise because the Depositary is subject to any tax in respect of the Deposited Property or any part thereof or any income therefrom or any proceeds thereof. 17.11 In connection with any proposed modification, waiver, authorisation or determination permitted by the terms of the Deposit Agreement or the Conditions, the Depositary shall not, except as otherwise expressly provided in Condition 24, be obliged to have regard to the consequence thereof for the Holders, Beneficial Owners, a person with an interest in a GDR or any other person. 17.12 Notwithstanding anything else contained in the Deposit Agreement or the Conditions, the Depositary may refrain from doing anything which could or might, in its reasonable opinion, render it liable to any person and the Depositary may do anything which is, in its reasonable opinion, necessary to comply with any law, directive or regulation. 17.13 The Depositary shall be under no obligation to check, monitor or enforce compliance with any ownership restrictions in respect of GDRs or Shares under any applicable Slovak Republic law as the same may be amended from time to time. Notwithstanding the generality of Condition 3, the Depositary shall refuse to register any transfer of GDRs or any deposit of Shares against issue of GDRs if notified by the Company, or if the Depositary becomes aware of the fact, that such transfer or issue would be in violation of the limitations set forth above or any other applicable laws. 17.14 The Depositary may call for, and shall be at liberty to accept as sufficient, evidence of any fact or matter or the expediency of any transaction or thing, a certificate, letter or other communication, whether oral or written, signed or otherwise communicated on behalf of the Company, by the Board of Directors of the Company or by a person duly authorised by the Board of Directors of the Company, or such other certificate from persons which the Depositary considers appropriate and the Depositary shall not be bound in any such case to call for further evidence or be responsible for any loss or liability that may be occasioned by the Depositary acting on such certificate. 17.15 The Depositary and its agents shall not be liable for any failure to carry out any instructions to vote any of the Deposited Property, or for the manner in which any vote is cast or the effect of any vote (other than where such failure or action is a result of its own negligence, wilful default or bad faith or is not in accordance with the terms of the Deposit Agreement and the Conditions). The Depositary shall not incur any liability (save in the case of its own negligence, willful default or bad faith) for any failure to determine that any distribution or action may be lawful or reasonably practicable, for the content of any information submitted to it by the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Property, for the validity or worth of the Deposited Property, for the credit-worthiness of any third party, for any tax consequences that may result from the ownership of GDRs, Shares or Deposited Property, for allowing any rights to lapse upon the terms of the Deposit Agreement and the Conditions, for the failure or timeliness of any notice from the Company. 17.16 No provision of the Deposit Agreement or the Conditions shall require the Depositary to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity and security against such risk of liability is not assured. 17.17 The Depositary may, in the performance of its obligations hereunder, instead of acting personally, employ and pay an agent, whether a lawyer or other person, including obtaining an opinion of legal advisers in form and substance reasonably satisfactory to it, to transact or concur in transacting any business and do or concur in doing all acts required to be done by such party, including the receipt and payment of money. Save for the failure on the part of the Depositary to exercise reasonable care in the selection or retention of any such agent, the Depositary will not be liable to anyone for any misconduct or omission by any such agent so employed by it or be bound to supervise the proceedings or acts of any such agent.

213 17.18 None of the Depositary, the Custodian, the Company or any of their respective agents or affiliates shall be required to take any actions whatsoever on behalf of Holders or Beneficial Owners to satisfy reporting requirements or obtain regulatory approvals under applicable laws and regulations which shall be the sole responsibility of the Holders and Beneficial Owners as described in Condition 4.3. 17.19 The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. 17.20 The Depositary shall not be liable for any acts or omissions made by a predecessor depositary whether in connection with an act or omission of the Depositary or in connection with any matter arising wholly prior to the appointment of the Depositary or after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

18. Issue and Delivery of Replacement GDRs and Exchange of GDRs Subject to the payment of the relevant fees, taxes, duties, charges, costs and expenses and such terms as to evidence and indemnity as the Depositary may require, replacement GDRs will be issued by the Depositary and will be delivered in exchange for or in replacement of outstanding lost, stolen, mutilated, defaced or destroyed GDRs upon surrender thereof (except in the case of destruction, loss or theft) at the Principal New York Ofﬁce of the Depositary.

19. GDR Fees and Charges 19.1 The following GDR fees are payable under the terms of the Deposit Agreement: (a) Issuance Fee: by any person depositing Shares or to whom GDRs are issued upon the deposit of Shares (excluding issuances pursuant to paragraph (d) below), a fee not in excess of U.S.$5.00 per 100 GDRs (or fraction thereof) so issued under the terms of the Deposit Agreement and the Conditions; (b) Cancellation Fee: by any person surrendering GDRs for cancellation and withdrawal of Deposited Property, a fee not in excess of U.S.$5.00 per 100 GDRs (or fraction thereof) so surrendered; (c) Cash Distribution Fee: by any Holder of GDRs, a fee not in excess of U.S.$5.00 per 100 GDRs (or fraction thereof) held for the distribution of cash dividends or other cash distributions (i.e., upon the sale of rights and other entitlements); (d) Stock Distribution /Rights Exercise Fees: by any Holder of GDRs, a fee not in excess of U.S.$5.00 per 100 GDRs (or fraction thereof) held for the distribution of GDRs pursuant to stock dividends or other free stock distributions or upon the exercise of rights to purchase additional GDRs; (e) Other Distribution Fee: by any Holder of GDRs, a fee not in excess of U.S.$5.00 per 100 GDRs (or fraction thereof) held for the distribution of securities other than GDRs or rights to purchase additional GDRs; (f) GDR Services Fee: by any Holder of GDRs, a fee not in excess of U.S.$5.00 per 100 GDRs (or fraction thereof) held on the applicable record date(s) established by the Depositary; and (g) GDR Transfer Fee: by any person presenting a GDR Certificate for transfer, a fee not in excess of U.S.$1.50 per GDR Certificate so presented for transfer. In addition, the Company, Holders, Beneficial Owners, persons depositing Shares for issuance of GDRs or surrendering GDRs for cancellation and withdrawal of Deposited Property shall be required to pay the following charges under the terms of the Deposit Agreement: (i) taxes (including applicable interest and penalties) and other governmental charges;

214 (ii) such registration fees as may from time to time be in effect for the registration of Shares or other Deposited Property on the share register and applicable to transfers of Shares or other Deposited Property to or from the name of the Custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively;

(iii) such facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing or withdrawing Shares or of the Holders and Beneﬁcial Owners of GDRs;

(iv) the expenses and charges incurred by the Depositary in the conversion of foreign currency;

(v) such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Shares, Deposited Property, GDRs and GDR Certiﬁcates; and

(vi) the fees and expenses incurred by the Depositary, the Custodian or any nominee in connection with the servicing or delivery of Deposited Property.

19.2 Any other charges and expenses of the Depositary under the Deposit Agreement and the Conditions will be paid by the Company upon agreement between the Depositary and the Company. All fees and charges may, at any time and from time to time, be changed by agreement between the Depositary and Company but, in the case of fees and charges payable by Holders or Beneﬁcial Owners, only in the manner contemplated by Condition 24. The Depositary will provide, without charge, a copy of its latest fee schedule to anyone upon request.

19.3 GDR fees payable upon (i) deposit of Shares against issuance of GDRs and (ii) surrender of GDRs for cancellation and withdrawal of Deposited Property will be payable by the person to whom the GDRs so issued are delivered by the Depositary (in the case of GDR issuance) and by the person who delivers the GDRs for cancellation to the depositary (in the case of GDR cancellations). In the case of GDRs issued by the Depositary into DTC, Euroclear or Clearstream, the GDR issuance and cancellation fees and charges will be payable by the DTC Participant(s), Euroclear Participant(s) or Clearstream Participant(s) receiving the GDRs from the Depositary or the DTC Participant(s), Euroclear Participant(s) or Clearstream Participant(s) surrendering the GDRs for cancellation, as the case may be, on behalf of the Beneficial Owner(s) and will be charged by the DTC Participant(s), Euroclear Participant(s) or Clearstream Participant(s) to the account(s) of the applicable Beneficial Owner(s) in accordance with the procedures and practices of the DTC Participant(s), Euroclear Participant(s) or Clearstream Participant(s) as in effect at the time. GDR fees in respect of distributions and the GDR services fee are payable by Holders as of the applicable record date established by the Depositary. In the case of distributions of cash, the amount of the applicable GDR fees is deducted from the funds being distributed. In the case of distributions other than cash and the GDR service fee, the Depositary will invoice the applicable Holders as of the record date established by the Depositary, and such GDR service fee may be deducted from distributions made to Holders. For GDRs held through DTC, Euroclear or Clearstream, the GDR fees for distributions other than cash and the GDR service fee are charged to the DTC Participants, Euroclear Participants or Clearstream Participants in accordance with the procedures and practices prescribed by DTC, Euroclear or Clearstream from time to time and the DTC Participants, Euroclear Participants or Clearstream Participants in turn charge the amount of such fees to the Beneficial Owners for whom they hold GDRs.

19.4 The Depositary may reimburse the Company for certain expenses incurred by the Company in respect of the Global Depositary Receipts program established pursuant to the Deposit Agreement, by making available a portion of the GDR fees charged in respect of the Global Depositary Receipts program or otherwise, upon such terms and conditions as the Company and the Depositary may agree from time to time. The Company shall pay to the Depositary such fees and charges and reimburse the Depositary for such out of pocket expenses as the Depositary and the Company may agree from time to time. Responsibility for payment of such charges may from time to time be changed by agreement between the Company and the Depositary. Unless otherwise agreed, the Depositary shall present its statement for such expenses and fees or charges to the Company once every three (3) months. The charges and expenses of the Custodian are for the sole account of the Depositary.

215 20. Listing The Company has undertaken in the Deposit Agreement to use its reasonable endeavours to obtain and thereafter maintain, so long as any GDR is outstanding, admission of trading for GDRs on the London Stock Exchange’s market. For that purpose the Company will pay all fees and sign and deliver all undertakings required by the London Stock Exchange in connection therewith. In the event that such listing is not maintained, the Company has undertaken in the Deposit Agreement to use its reasonable endeavours to obtain and maintain a listing of the GDRs on another internationally recognised investment exchange in Europe.

21. The Custodian The Depositary has agreed with the Custodian that the Custodian will receive and hold all Deposited Property for the account and to the order of the Depositary in accordance with the applicable terms of the Deposit Agreement. The Custodian shall be responsible solely to the Depositary. Upon receiving notice of the resignation of the Custodian, the Depositary shall promptly appoint a successor Custodian (after receiving the prior consent of the Company to such appointment, which consent shall not be unreasonably withheld or delayed), which shall, upon acceptance of such appointment, become the Custodian under the Deposit Agreement. Whenever the Depositary, in its sole discretion, determines that it is in the best interest of the Holders to do so, it may terminate the appointment of the Custodian and, in the event of the termination of the appointment of the Custodian, the Depositary shall promptly appoint a successor Custodian (after receiving the prior consent of the Company to such appointment, which consent shall not be unreasonably withheld or delayed), which shall, upon acceptance of such appointment, become the Custodian under the Deposit Agreement. The Depositary shall notify Holders of such change as soon as is practically possible following such change taking effect in accordance with Condition 25. Citibank, N.A. may at any time act as Custodian of the Deposited Securities pursuant to the Deposit Agreement, in which case any reference to Custodian shall mean Citibank, N.A. solely in its capacity as Custodian pursuant to the Deposit Agreement. Notwithstanding anything contained in the Deposit Agreement or the Conditions, the Depositary shall not be obligated to give notice to the Company, any Holders of GDRs or any other Custodian of its acting as Custodian pursuant to the Deposit Agreement.

22. Resignation and Termination of Appointment of the Depositary The Depositary may at any time resign as Depositary hereunder by written notice of resignation delivered to the Company, which resignation shall be effective on the earlier to occur of (i) the 90th day after delivery thereof to the Company, after which the Depositary shall be entitled to take the termination actions contemplated in Condition 23.1, and (ii) the appointment by the Company of a successor depositary and the acceptance by such successor depositary of such appointment. The Depositary may at any time be removed by the Company by written notice of removal delivered to the Depositary, which removal shall be effective on the later to occur of (i) the 90th day after delivery thereof to the Company, after which the Depositary shall be entitled to take the termination actions contemplated in Condition 23.1, and (ii) the appointment by the Company of a successor depositary and the acceptance by such successor depositary of such appointment. 22.1 The Company has undertaken in the Deposit Agreement to use its reasonable endeavours to procure the appointment of a successor depositary following the receipt of a notice of resignation from the Depositary or the giving of a notice of the termination of the appointment of the Depositary. Upon any such appointment and acceptance, notice thereof shall be duly given by the successor depositary to the Holders in accordance with Condition 25. 22.2 Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or ﬁling of any document or any further act.

23. Termination of Deposit Agreement 23.1 The Company may at any time terminate the Deposit Agreement. Upon written direction of the Company, the Depositary shall provide notice of such termination to the Holders of all GDR Certiﬁcates then outstanding at least thirty (30) days prior to the date ﬁxed in such notice for

216 such termination. If ninety (90) days shall have expired after (i) the Depositary shall have delivered to the Company a written notice of its election to resign pursuant to Clause 11.1 of the Deposit Agreement and Condition 22, or (ii) the Company shall have delivered to the Depositary a written notice of the removal of the Depositary pursuant to Clause 11.1 of the Deposit Agreement and Condition 22 and, in either case, a successor depositary shall not have been appointed and accepted its appointment as provided in Clause 11.1 of the Deposit Agreement and Condition 22, the Depositary may terminate the Deposit Agreement by providing notice of such termination to the Holders of all GDR Certificates then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination. The date fixed for termination of the Deposit Agreement in any termination notice distributed by the Depositary to the Holders of GDRs is referred to as the Termination Date. Until the Termination Date, the Depositary shall continue to perform all of its obligations under the Deposit Agreement and the Conditions, and the Holders and Beneficial Owners will be entitled to all of their rights under the Deposit Agreement and the Conditions. 23.2 If any GDRs shall remain outstanding after the Termination Date, the Registrar and the Depositary shall not, after the Termination Date, have any obligation to perform any further acts under the Deposit Agreement or the Conditions, except that the Depositary shall, subject, in each case, to the terms and conditions of the Deposit Agreement and the Conditions, continue to (i) collect dividends and other distributions pertaining to Deposited Property, (ii) sell securities and other property received in respect of Deposited Property, (iii) deliver Deposited Property, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any securities or other property, in exchange for GDRs surrendered to the Depositary (after deducting or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Clause 10.1 of the Deposit Agreement and Condition 19), and (iv) take such actions as may be required under applicable law in connection with its role as Depositary under the Deposit Agreement. At any time after the Termination Date, the Depositary may sell the Deposited Property then held under the Deposit Agreement and shall after such sale hold un-invested the net proceeds of such sale, together with any other cash then held by it under the Deposit Agreement, in an un- segregated account and without liability for interest, for the pro-rata benefit of the Holders whose GDRs have not theretofore been surrendered. After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement and the Conditions except (i) to account for such net proceeds and other cash (after deducting or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Clause 10.1 of the Deposit Agreement and Condition 19), and (ii) as may be required at law in connection with the termination of the Deposit Agreement. After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement and the Conditions, except for its obligations to the Depositary under Clause 10 of the Deposit Agreement and Condition 19. The obligations under the terms of the Deposit Agreement and the Conditions of Holders and Beneficial Owners of GDRs outstanding as of the Termination Date shall survive the Termination Date and shall be discharged only when the applicable GDRs are presented by their Holders to the Depositary for cancellation under the terms of the Deposit Agreement and the Conditions.

24. Amendment of Deposit Agreement and Conditions All and any of the provisions of the Deposit Agreement and these Conditions may at any time and from time to time be amended by written agreement between the Company and the Depositary in any respect which they may deem necessary or desirable. Notice of any amendment of the Deposit Agreement and these Conditions (except to correct a manifest error) shall be duly given to the Holders by the Depositary and any amendment (except as aforesaid) which shall increase or impose fees or charges payable by Holders or which shall otherwise, in the opinion of the Depositary, be materially prejudicial to the interests of the Holders (as a class) shall not become effective so as to impose any obligation on the Holders of the outstanding GDRs until the expiry of thirty (30) days after such notice shall have been given. Every Holder or Beneﬁcial Owner at the time any amendment or supplement so becomes

217 effective shall be deemed, by continuing to hold GDRs or any beneficial interest therein to consent to and approve such amendment or supplement and to be bound by the terms of the Deposit Agreement and the Conditions as amended and supplemented thereby. In no event shall any amendment impair the right of any Holder to receive, subject to and upon compliance with Clause 3 of the Deposit Agreement and Condition 2, the Deposited Property attributable to the relevant GDR except in order to comply with mandatory provisions of applicable law. The parties hereto agree that substantial rights of Holders and Beneficial Owners shall not be deemed materially prejudiced by any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for the GDRs or Shares to be settled in electronic-book entry form and (ii) do not impose or increase any fees or charges to be borne by Holders or Beneficial Owners. Notwithstanding anything in the Deposit Agreement or the Conditions to the contrary, if any governmental body should adopt new laws, rules or regulations which would require an amendment or supplement of the Deposit Agreement or the Conditions to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement, and the Conditions at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the Deposit Agreement and the Conditions in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance with such laws, rules or regulations.

25. Notices Any and all notices to be given to any Holder shall be deemed to have been duly given if (a) personally delivered or sent by mail, air courier or facsimile transmission, confirmed by letter, addressed to such Holder at the address of such Holder as it appears on the books of the Depositary or, if such Holder shall have filed with the Depositary a request that notices intended for such Holder be mailed to some other address, at the address specified in such request, or (b) if a Holder shall have designated such means of notification as an acceptable means of notification under the terms of the Deposit Agreement and the Conditions, by means of electronic messaging addressed for delivery to the e-mail address designated by the Holder for such purpose. Notice to Holders shall be deemed to be notice to Beneficial Owners for all purposes of the Deposit Agreement and the Conditions. Failure to notify a Holder or any defect in the notification to a Holder shall not affect the sufficiency of notification to other Holders or to the Beneficial Owners of GDRs held by such other Holders. Delivery of a notice sent by mail, air courier or facsimile transmission shall be deemed to be effective at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a facsimile transmission) is deposited, postage prepaid, in a post office letter box or delivered to an air courier service, without regard for the actual receipt or time of actual receipt thereof by a Holder. The Depositary or the Company may, however, act upon any facsimile transmission received by it from any Holder, the Custodian, the Depositary or the Company, notwithstanding that such facsimile transmission shall not be subsequently confirmed by letter. Delivery of a notice by means of electronic messaging shall be deemed to be effective at the time of the initiation of the transmission by the sender (as shown on the sender’s records), notwithstanding that the intended recipient retrieves the message at a later date, fails to retrieve such message, or fails to receive such notice on account of its failure to maintain the designated e-mail address, its failure to designate a substitute e-mail address or for any other reason.

26. Reports and Information on the Company If, so long as any of the Rule 144A GDRs or the Shares represented thereby remain outstanding and are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act, the Company is neither a reporting company under Section 13 or Section 15(d) of the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, the Company hereby undertakes to provide to any Holder, Beneﬁcial Owner or holder of Shares or any prospective purchaser designated by such Holder, Beneﬁcial Owner or holder of

218 Shares, upon the request of such Holder, Beneﬁcial Owner, holder of Shares or prospective purchaser, copies of the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act and otherwise comply with Rule 144A under the Securities Act in connection with resales of GDRs and Shares.

27. Copies of Company Notices On or before the day when the Company ﬁrst gives notice, by publication, or otherwise, to holders of any Shares or other Deposited Property, whether in relation to the taking of any action in respect thereof or in respect of any dividend or other distribution thereon or of any meeting or adjourned meeting of such holders or otherwise, the Company has undertaken in the Deposit Agreement to transmit to the Custodian and the Depositary a copy of such notice and any other material in English but otherwise in the form given or to be given to holders of Shares or other Deposited Property.

In addition, the Company will transmit to the Depositary English-language versions of the other notices, reports and communications which are generally made available by the Company to holders of Shares or other Deposited Property. The Depositary will, at the expense of the Company, make available a copy of any such notices, reports or communications issued by the Company and delivered to the Depositary for inspection by the Holders and Beneficial Owners at the Principal New York Office and Principal London Office, at the office of the Custodian and at any other designated transfer office. The Depositary shall arrange, at the request of the Company and at the Company’s expense, for the distribution of copies thereof to all Holders on a basis similar to that for holders of Shares or other Deposited Property or on such other basis as the Company may advise the Depositary.

28. Moneys Held by the Depositary The Depositary shall be entitled to deal with moneys paid to it by the Company for the purposes of the Deposit Agreement in the same manner as other moneys paid to it as a banker by its customers and shall not be liable to account to the Company or any holder or any other person for any interest thereon, except as otherwise agreed.

29. Severability If any one or more of the provisions contained in the Deposit Agreement or in the Conditions shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained therein or herein shall in no way be affected, prejudiced or otherwise disturbed thereby.

30. Governing Law 30.1 The Deposit Agreement, the Conditions, the Deed Poll and the GDRs, and any non-contractual obligations arising out of or in connection with them, are governed by English law, except that the certiﬁcations from the persons making deposits or withdrawals of Shares pursuant to the Deposit Agreement are governed by and shall be construed in accordance with the laws of the State of New York. For the avoidance of doubt, the rights and obligations attaching to the Deposited Shares will be governed by Slovak law.

30.2 The Company and the Depositary have agreed that the courts of England and the federal or state courts in the City of New York shall have exclusive jurisdiction to hear any suit, action or proceeding and to settle any disputes between them that may arise out of, or in connection with, the Deposit Agreement and the Conditions and the legal relationship established by them and accordingly any legal action or proceedings arising out of, or in connection with, the Deposit Agreement, the Conditions or the GDRs and the legal relationship established thereby (Proceedings) may be brought in such courts.

These submissions shall not limit the right of the Depositary to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdictions (whether concurrently or not) to the extent permitted by law.

219 31. Contracts (Rights of Third Parties) Act 1999 A person who is not a party to the Deposit Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 (the Act) of the United Kingdom to enforce any term of the Deposit Agreement but this does not affect any right or remedy granted under the Deed Poll or which otherwise exists or is available apart from the Act.

220 DESCRIPTION OF KEY PROVISIONS RELATING TO THE GLOBAL DEPOSITARY RECEIPTS WHILE IN MASTER FORM

The GDRs will initially be evidenced by (i) a single Master Regulation S GDR Certificate in registered form and (ii) a single Master Rule l44A GDR Certificate in registered form. The Master Regulation S GDR Certificate will be registered in the nominee name of Citivic Nominees Limited as nominee of Citibank Europe plc, as common depositary for Euroclear Bank SA/NV, in its capacity as operator of Euroclear and Clearstream, and the Master Rule 144A GDR Certificate will be registered in the name of Cede & Co., as nominee for DTC. The Master GDR Certificates contain provisions that apply to the GDRs while they are in master form, some of which modify the effect of the Conditions of the GDRs set out in this Prospectus. The following is a summary of certain of those provisions. Unless otherwise defined herein, the terms defined in the Conditions shall have the same meaning herein.

Exchange The Master Regulation S GDR Certificate and the Master Rule 144A GDR Certificate will be exchanged for certificates in definitive registered form evidencing GDRs only in the circumstances described in (a), (b), (c) or (d) below in whole but not in part. The Depositary will undertake in the Master Regulation S GDR Certificate and the Master Rule 144A GDR Certificate to deliver certificates evidencing GDRs in definitive registered form in exchange for either the Master Regulation S GDR certificate or the Master Rule 144A GDR Certificate, as the case may be, to GDR holders within 60 days of the occurrence of the relevant event, in the event that: (a) DTC, in the case of the Master Rule 144A GDR Certificate, or Euroclear or Clearstream, in the case of the Master Regulation S GDR Certificate, notifies the Company that it is unwilling or unable to continue as clearing or settlement system and a successor clearing or settlement system is not appointed within 90 calendar days; or (b) in respect of the Master Rule 144A GDR Certificate, DTC or any successor ceases to be a ‘‘clearing agency’’ registered under the United States Exchange Act; or (c) either DTC in the case of the Master Rule 144A GDR Certificate, or Euroclear or Clearstream in the case of the Master Regulation S GDR Certificate, is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces its intention to permanently cease business or does, in fact, do so and no alternative clearing system satisfactory to the Depositary is available within 45 days; or (d) the Depositary has determined that, on the occasion of the next payment in respect of the GDRs, the Depositary would be required to make any deduction or withholding from any payment in respect of the GDRs which would not be required were the GDRs in definitive registered form, provided that the Depositary shall have no obligation to so determine or attempt to so determine. Any such exchange shall be at the expense of the relevant Holder. Upon any exchange of a part of the Master Regulation S GDR Certificate or the Master Rule 144A GDR Certificate for a certificate evidencing a GDR or GDRs in definitive registered form or any distribution of GDRs pursuant to the Conditions, or any reduction in the number of GDRs evidenced hereby following any withdrawal of any Deposited Property pursuant to Condition 2, or any increase in the number of GDRs following the deposit of Shares pursuant to Condition 1, the relevant details shall be registered in the books maintained by the Depositary, whereupon the number of GDRs represented by the Master Regulation S GDR Certificate or the Master Rule 144A GDR Certificate shall be reduced or increased (as the case may be) for all purposes by the amount so exchanged and registered, provided always that if the number of GDRs evidenced by the Master Regulation S GDR Certificate or the Master Rule 144A GDR Certificate is reduced to zero the Master Regulation S GDR Certificate or the Master Rule 144A GDR Certificate shall continue in existence until the obligations of the Company under the corresponding Deposit Agreement, and the obligations of the Depositary pursuant to the corresponding Deposit Agreement and the Conditions, have terminated.

Payments and Distributions Payments of cash dividends and other amounts (including cash distributions) in respect of the GDRs represented by the Master Regulation S GDR Certiﬁcate and the Master Rule 144A GDR Certiﬁcate

221 will be made by the Depositary through DTC, Clearstream, or Euroclear on behalf of persons entitled thereto upon receipt of funds therefor from the Company. Any free distribution of Shares to the Depositary on behalf of the Holders may result in the books maintained by the Depositary being adjusted to reﬂect the increased number of GDRs represented thereby.

Surrender of GDRs Any requirement in the Conditions relating to the surrender of a GDR to the Depositary will be satisfied by the production by DTC or the common depositary, as the case may be, on behalf of a person entitled to an interest therein, of such evidence of entitlement of such person as the Depositary may reasonably require, which is expected to be a certificate or other documents issued by DTC, Clearstream, Euroclear or, if relevant, an alternative clearing system. The delivery or production of any such evidence shall be sufficient evidence, in favour of the Depositary and the Custodian, of the title of such person to receive (or to issue instructions for the receipt of) all moneys or other property payable or distributable in respect of the Deposited Property represented by such GDRs.

Notices For as long as the Master Regulation S GDR Certiﬁcate is registered in the nominee name of a common depositary on behalf of Clearstream and Euroclear and, in the case of the Master Rule 144A GDR Certiﬁcate, for so long it is registered in the nominee name of DTC, notices to Holders may be given by the Depositary by delivery of the relevant notice to DTC, Clearstream, and Euroclear for communication to Holders in substitution for publications required by Condition 25.

Information For so long as any Rule 144A GDRs or shares represented thereby are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act, during any period in which it is neither a reporting company under, and in compliance with the requirements of, Section 13 or 15(d) of the Exchange Act nor exempt from the reporting requirements of the Exchange Act by complying with the information furnishing requirements of Rule 12g3-2(b) thereunder, the Company has agreed in the Rule 144A Deposit Agreement and the Rule 144A Deed Poll to provide, at its expense, to any Holder of Rule 144A GDRs or of the Master Rule 144A GDRs or the Beneﬁcial Owner of an interest in such Rule 144A GDRs, and to any prospective purchaser of Rule 144A GDRs or shares represented thereby designated by such person, upon request of such Beneﬁcial Owner, Holder or prospective purchaser, the information required by Rule 144A(d)(4)(i) and otherwise to comply with Rule 144A(d)(4).

Governing Law The Master Regulation S GDR Certiﬁcate and the Master Rule 144A GDR Certiﬁcate and any non- contractual obligations arising out of or in connection with them will be governed by and construed in accordance with English law.

222 DESCRIPTION OF ARRANGEMENTS TO SAFEGUARD THE RIGHTS OF THE HOLDERS OF THE GLOBAL DEPOSITARY RECEIPTS

The following text should be read in conjunction with the terms and conditions of the GDRs, including, inter alia, provisions for the deposit of Shares against issuance of GDRs, the cancellation of GDRs and receipt of Shares, and payment of dividends, as set forth under ‘‘Terms and Conditions of the Global Depositary Receipts’’.

The Depositary The Depositary is Citibank, N.A., a national banking association organised under the laws of the United States. The Depositary is an indirect wholly-owned subsidiary of Citigroup Inc., a Delaware corporation. The Depositary is primarily regulated by the United States Ofﬁce of the Comptroller of the Currency. See ‘‘Information Relating to the Depositary’’. There are no bank or other guarantees attached to the GDRs which are intended to underwrite the Depositary’s obligations.

Rights of Holders of GDRs Relationship of Holders of GDRs with the Depositary: The rights of Holders against the Depositary are governed by the Conditions and the Deposit Agreements, which are governed by English law. The Depositary and the Company are parties to the Deposit Agreements. Holders of GDRs have rights in relation to cash or other Regulation S Deposited Property and Rule 144A Deposited Property (including Regulation S Deposited Shares and Rule 144A Deposited Shares (the Deposited Shares), which are fully paid Shares of the Company represented by GDRs) deposited with the Depositary under the Deposit Agreements (the Deposited Property), by virtue of the Deposit Agreements and the Conditions. The Depositary will hold the Deposited Property as bare trustee for the Holders; however, the Depositary does not otherwise assume any relationship of trust for or with the Holders or the beneﬁcial owners of the GDRs or any other person. Voting: With respect to voting of Deposited Shares and other Deposited Property represented by GDRs, the Conditions and the Deposit Agreements provide that the Depositary shall send to any person who is a Holder on the record date established by the Depositary for that purpose (which shall be as close as possible to the corresponding record date set by the Company) such notice of meeting or solicitation of consent or proxy along with a brief statement on the manner in which such Holders may provide the Depositary with voting instructions for matters to be considered. The Deposit Agreements provide that the Depositary will endeavour to exercise or cause to be exercised the voting rights with respect to Deposited Shares in accordance with instructions from Holders. As of the date of this Prospectus, the Company conﬁrms that there are no restrictions under applicable law, the Articles of Association of the Company or the provisions of the Deposited Shares that would prohibit or restrict the Depositary from voting any of the Deposited Shares in accordance with instructions from Holders. Delivery of GDRs: The Deposit Agreements provide that the Deposited Shares can only be delivered out of the Regulation S and Rule 144A GDR facilities to, or to the order of, a Holder of related GDRs upon receipt and cancellation of such GDRs.

Rights of the Company The Company has broad rights to remove the Depositary under the Conditions and the Deposit Agreements, but no speciﬁc rights under the Deposit Agreements are triggered in the event of the insolvency of the Depositary.

Insolvency of the Depositary Applicable insolvency law: If the Depositary becomes insolvent, the insolvency proceedings will be governed by the US law applicable to the insolvency of banks. Effect of applicable insolvency law in relation to cash: The Conditions state that any cash held by the Depositary for Holders is held by the Depositary as banker. Under currently applicable U.S. law, it is expected that any cash held for Holders by the Depositary under the Conditions would constitute an unsecured obligation of the Depositary. Holders would therefore only have an unsecured claim in the event of the Depositary’s insolvency for such cash that would be also be available to general creditors of the Depositary or the Federal Deposit Insurance Corporation (the FDIC).

223 Effect of applicable insolvency law in relation to non-cash assets: The Deposit Agreements state that the Deposited Shares and other non-cash assets which are held by the Depositary for Holders are held by the Depositary as bare trustee and, accordingly, the Holders will be tenants in common for such Deposited Shares and other non-cash assets. Under current US law, it is expected that any Deposited Shares and other non-cash assets held for Holders by the Depositary on trust under the Conditions would not constitute assets of the Depositary and that Holders would have ownership rights relating to such Deposited Shares and other non-cash assets and be able to request the Depositary’s receiver or conservator to deliver such Deposited Shares and other non-cash assets that would be unavailable to general creditors of the Depositary or the FDIC.

Default of the Depositary If the Depositary fails to pay cash or deliver non-cash assets to Holders in the circumstances required by the Deposit Agreements and the Conditions, the Depositary will be in breach of its contractual obligations under the Deposit Agreements and the Conditions. In such case Holders will have a claim under English law against the Depositary for the Depositary’s breach of its contractual obligations under the relevant Deposit Agreement and the Conditions.

The Custodian The Custodian is Citibank Europe plc, a public company with limited liability incorporated under the laws of Ireland, acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky. For the avoidance of doubt, as a branch of Citibank Europe plc, Citibank Europe plc, pobocˇka zahranicˇnej banky, is not a separate legal entity but instead is simply rather a part of an entity established under Irish law.

Relationship of Holders of GDRs with the Custodian The Custodian and the Depositary are parties to a custody agreement, which is governed by New York law. The Holders do not have any contractual relationship with, or rights enforceable against, the Custodian. The Custodian will hold the Deposited Shares, each of which will be registered in the Slovak Central Depository in the name of the Custodian and deposited in the Regulation S and Rule 144A GDR facilities. Under the Deposit Agreements and Slovak law applicable to custody of securities, all Deposited Property is held by the Custodian, for the account and to the order of the Depositary (on behalf of Holders) and must be identiﬁed as being held to the account of the Depositary and segregated from all other property held by the Custodian.

Default of the Custodian Failure to deliver cash: Dividend payments made to the Depositary denominated in euros or any other currency which are made in accordance with the Depositary’s current procedures and pursuant to the terms of the Deposit Agreements and Conditions will not be made through the Custodian. Rather, payments in euros or any other currency other than US dollars are expected to be made to an account outside of the Slovak Republic, converted into US dollars and, after deduction of any fees and expenses of the Depositary, credited to the appropriate accounts of the Holders. Any dividend payments made in US dollars will be made directly from the Company to an account in New York and then credited to the US dollar denominated accounts of the Holders.

Failure to deliver non-cash assets: If the Custodian fails to deliver Deposited Shares or other non-cash assets held for the Depositary as required by the Depositary or otherwise defaults under the terms of the custody agreement, the Custodian will be in breach of its obligations to the Depositary. In such case the Depositary will have a claim under New York law against the Custodian for the Custodian’s breach of its obligations under the custody agreement. The Depositary can also remove the Custodian and appoint a substitute or additional custodians and may exercise such rights if it deems necessary.

The Depositary’s obligations: The Depositary has no obligation to pursue a claim for breach of obligations against the Custodian on behalf of Holders. The Depositary is not responsible for and shall incur no liability in connection with or arising from default by the Custodian due to any act or omission to act on the part of the Custodian, except to the extent that the Depositary failed to use reasonable care in the selection of the Custodian.

Applicable law: The custody agreement is governed by New York law.

224 Insolvency of the Custodian If the Custodian becomes insolvent, the insolvency proceedings will be governed by Irish law. According to Slovak Act No. 7/2005 Coll. on bankruptcy and restructuring, as amended, where a financial institution has its registered seat in an EU Member State other than the Slovak Republic and has a branch or assets located in the Slovak Republic, the law of the jurisdiction in which the financial institution has its registered seat applies in the case of insolvency proceedings with respect to its branch or assets located in the Slovak Republic. Consequently, Citibank Europe plc, pobocˇka zahranicˇnej banky, as a branch of Irish financial institution Citibank Europe plc, cannot be subject to insolvency proceedings in the Slovak Republic. Effect of applicable insolvency law in relation to cash: For the reasons set forth above, it is not expected that any claim for cash will subsist against the Custodian as the Company will make payments directly to the Depositary or its nominee, as the case may be, and no cash will be paid to the Custodian. Effect of applicable insolvency law in relation to non-cash assets: The Deposited Shares will be registered in the Slovak Central Depository in the name of the Custodian on behalf of the Depositary or its nominee, as the case may be. The Depositary or its nominee, as the case may be, will have ownership rights over the Deposited Shares or other non-cash assets held by the Custodian at the time of its insolvency and will be able to request the Custodian to deliver such Deposited Shares or other non-cash assets to it. If the Custodian fails or refuses, such non-delivery will not affect the Depositary’s or its nominee’s, as the case may be, legal title to or ability to transfer the underlying shares of the Company. As the Depositary holds legal title to the Deposited Shares, in the event the Custodian becomes insolvent, the Deposited Shares would be deemed to form part of the assets of the Depositary (on behalf of the Holders) and the general creditors of the Custodian would not have a claim in respect of the Deposited Shares. The Depositary’s obligations: The Depositary has no obligation to pursue a claim in the Custodian’s insolvency on behalf of the Holders. The Holders have no direct recourse to the Custodian.

Information for Retail Investors with regard to the Form and Holding of GDRs The GDRs are governed by English law and their form is different from the registered form of securities governed by Slovak law. The GDRs have characteristics of registered securities representing interests in a Master GDR Certiﬁcate deposited with the relevant foreign securities depositary. Investors should seek professional advice in case they have any doubts concerning speciﬁc issues in connection with the holding of GDRs. PERSONS HOLDING BENEFICIAL TITLE TO GDRs OR INTERESTS THEREIN ARE REMINDED THAT THE ABOVE DOES NOT CONSTITUTE LEGAL ADVICE AND IN THE EVENT OF ANY DOUBT REGARDING THE EFFECT OF THE DEFAULT OR INSOLVENCY OF THE DEPOSITARY OR THE CUSTODIAN, SUCH PERSONS SHOULD CONSULT THEIR OWN ADVISORS IN MAKING A DETERMINATION.

225 TRANSFER RESTRICTIONS

As a result of the following restrictions, holders of the Securities are advised to consult with legal counsel prior to making any resale, pledge or transfer of the Securities. For a description of the restrictions applicable to the GDRs, see ‘‘Terms and Conditions of the Global Depositary Receipts’’. The Offering is being made to QIBs in the United States in accordance with Rule 144A, and outside the United States in reliance on Regulation S. The Securities have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered or sold within the United States except to QIBs in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A and to persons outside the United States in offshore transactions in accordance with Regulation S. Terms used in this section that are deﬁned in Rule 144A or Regulation S are used herein as so deﬁned.

Rule 144A Each purchaser of the Securities within the United States, by accepting delivery of this Prospectus and the Securities, will be deemed to have represented, agreed and acknowledged that: 1. the Securities have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and are subject to restrictions on transfer and are ‘‘restricted securities’’ as defined in Rule 144(a)(3) under the Securities Act; 2. it is (i) a QIB, (ii) aware, and each beneficial owner of such Securities has been advised, that the sale of such Securities to it is being made in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and (iii) acquiring such Securities for its own account or for the account of a QIB; 3. it agrees (or, if it is acting for the account of another person, such person has confirmed to it that such person agrees) that it (or such person) will not offer, resell, pledge or otherwise transfer such Securities except: (a) in accordance with Rule 144A to a person that it and any person acting on its behalf reasonably believe is a QIB purchasing for its own account or for the account of a QIB, (b) in an offshore transaction (as such term is defined in Regulation S under the Securities Act) in accordance with Rule 903 or 904 of Regulation S or (c) in accordance with Rule 144 under the Securities Act (if available), in each case in accordance with any applicable securities laws of any state of the United States. No representation is made as to the availablity of the exemption provided by Rule 144 for resales of any Securities. The purchaser will, and each subsequent holder is required to, notify any subsequent purchaser from it of those Securities of the resale restrictions referred to above; 4. the Offer Shares may not be deposited into any unrestricted depositary facility established or maintained by a depositary bank (including the Depositary), unless and until such time as the Securities are no longer ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act; 5. the Company, the Selling Shareholder, the Underwriters, the Depositary and their respective affiliates will rely upon the truth and accuracy of the acknowledgements, representations and agreements in the foregoing paragraphs. If it is acquiring Securities for the account of one or more QIBs, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account; and 6. it understands that the Rule 144A GDRs and Master Rule 144A GDRs will bear a legend substantially to the following effect: ‘‘THIS RULE 144A GLOBAL DEPOSITARY RECEIPT AND THE ORDINARY SHARES OF SLOVAK TELEKOM A.S. REPRESENTED HEREBY (‘‘THE SHARES’’) HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘US SECURITIES ACT’’), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF BY PURCHASING THE GDRs ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF SLOVAK TELEKOM A.S. AND THE DEPOSITARY NAMED BELOW THAT THE GDRs AND THE SHARES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED

226 OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER (‘‘QIB’’) (WITHIN THE MEANING OF RULE 144A UNDER THE US SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE US SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE US SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE US SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER OF THE GDRs WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER OF SUCH GDRs OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. THE BENEFICIAL OWNER OF SHARES RECEIVED UPON CANCELLATION OF ANY RULE 144A GLOBAL DEPOSITARY RECEIPT MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SHARES INTO ANY DEPOSITARY RECEIPT FACILITY IN RESPECT OF SHARES ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK, OTHER THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SHARES ARE ‘‘RESTRICTED SECURITIES’’ WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE SECURITIES ACT. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THE SHARES OR ANY RULE 144A GLOBAL DEPOSITARY RECEIPTS. EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS RULE 144A GDR CERTIFICATE OR A BENEFICIAL INTEREST IN THE RULE 144A GDRs EVIDENCED HEREBY, AS THE CASE MAY BE, REPRESENTS FOR THE BENEFIT OF SLOVAK TELEKOM A.S. AND THE DEPOSITARY NAMED BELOW THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.’’ Prospective purchasers are hereby notiﬁed that sellers of the Securities may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

Regulation S Each purchaser of Securities outside the United States, by accepting delivery of this Prospectus and the Securities, will be deemed to have represented, agreed and acknowledged that: 1. (a) it is aware that the sale of the Securities to it is being made pursuant to and in accordance with Rule 903 or 904 of Regulation S, (b) it is, or at the time such Securities are purchased will be, the beneﬁcial owner of those Securities and (c) it is purchasing such Securities in an offshore transaction meeting the requirements of Regulation S; 2. it understands that the Securities have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and are being offered outside the United States; 3. it acknowledges that the Company, the Selling Shareholder, the Underwriters, the Depositary and their respective afﬁliates will rely upon the truth and accuracy of the acknowledgements, representations and agreements in the foregoing paragraphs; and 4. it understands that the Regulation S GDRs and the Master Regulation S GDRs will bear a legend substantially to the following effect: THIS REGULATION S GDR CERTIFICATE, THE REGULATION S GDRS EVIDENCED HEREBY AND THE SHARES OF SLOVAK TELEKOM, A.S., REPRESENTED THEREBY (THE ‘‘SHARES’’) HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS REGULATION S GDR CERTIFICATE AND THE REGULATION S GDRS EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH REGULATION S GDR CERTIFICATE, THE REGULATION S GDRS EVIDENCED HEREBY AND THE

227 SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREE FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT THIS REGULATION S GDR CERTIFICATE, THE REGULATION S GDRS EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES.

Other Provisions Regarding Transfers of the GDRs Interests in the Rule 144A GDRs may be transferred to a person whose interest in such GDRs is subsequently represented by a Regulation S GDR only upon receipt by the Depositary of written certification (in the form provided in the Deposit Agreement) from the transferor to the effect that, amongst other things, such transfer is being made in accordance with Regulation S. Interests in Regulation S GDRs may be transferred to a person whose interest in such GDRs is subsequently represented by a Rule 144A GDR only upon receipt by the Depositary of written certifications from the transferor (in the forms provided in the Deposit Agreement) to the effect that, amongst other things, such transfer is being made in accordance with Rule 144A. Any interest in GDRs represented by one of the Master GDRs that is transferred to a person whose interest in such GDRs is subsequently represented by the other Master GDR will, upon transfer, cease to be an interest in the GDRs represented by such first Master GDR and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to interests in GDRs represented by such other Master GDR for so long as it remains such an interest.

228 TAXATION

The following description of principal United States federal income, United Kingdom, Slovak and Czech tax consequences of ownership of the Offer Securities is based upon laws, regulations, decrees, rulings, income tax conventions (treaties), administrative practice and judicial decisions in effect at the date of this Prospectus. Legislative, judicial or administrative changes or interpretations may, however, be forthcoming that could alter or modify the statements and conclusions set forth herein. Any such changes or interpretations may be retroactive and could affect the tax consequences to holders of the Offer Securities. This description does not purport to be a legal opinion or to address all tax aspects that may be relevant to a holder of the Offer Securities. Each prospective holder is urged to consult its own tax adviser as to the particular tax consequences to such holder of the ownership and disposition of Shares or GDRs, including the applicability and effect of any other tax laws or tax treaties, and of pending or proposed changes in applicable tax laws as of the date of this prospectus, and of any actual changes in applicable tax laws after such date.

Certain Slovak Tax Considerations The following section describes certain Slovak tax principles, relevant to both Slovak tax resident and Slovak tax non-resident holders acquiring, holding and disposing of the Securities. It is based on Slovak tax laws and their interpretation, applicable as of the date of this Prospectus. However, the interpretation of Slovak tax law, including Double Taxation Treaties (DTT), may change, as can the opinion of the tax authorities, possibly with retrospective effect. This section should not be viewed as a comprehensive or complete description of all Slovak tax aspects relevant for holders of the Securities. The summary does not discuss the tax aspects of the following investors, subject to special tax rules in Slovakia (i) companies which have not been established to conduct business activities, (ii) the National Bank of Slovakia, (iii) the National Property Fund of the Slovak Republic, (iv) mutual fund management companies, (v) pension management and supplementary pension management companies. If a partnership is a holder of the Securities, the tax treatment of a partner in the partnership will generally depend upon the status of the partner. Potential purchasers of the Securities who are in any doubt as to their tax position regarding the acquisition, holding and disposition of the Securities are strongly recommended to consult their tax advisors, as the speciﬁc tax situation of each holder can only be addressed adequately by means of individual tax advice.

General overview of relevant Slovak tax legislation In general, the Slovak income tax implications of acquiring, holding and disposing of the Securities depend, to a large extent, on the tax residency status of their holder. A Slovak tax resident is (i) a legal entity with its registered seat or place of effective management situated within the territory of the Slovak Republic; or (ii) an individual with permanent residency in the Slovak Republic, or physical presence in the Slovak Republic for at least 183 days in the calendar year. If a legal entity or an individual qualifies as a Slovak tax resident under Slovak legislation as well as a foreign tax resident, based on tax legislation of a respective foreign country, their tax residency is determined pursuant to the conditions set out in the relevant DTT (if any). A Slovak tax non-resident is an individual or a legal entity that is not a Slovak tax resident. Under Slovak legislation, a Slovak tax resident (either legal entity or individual) is subject to income tax in the Slovak Republic on their worldwide income, while a Slovak tax non-resident is subject to income tax in the Slovak Republic, solely on their Slovak source income. Slovak source income may include, inter alia, capital gains realized on disposal of securities. A legal entity is subject to a corporate income tax rate of 22%. An individual is generally subject to personal income tax at a basic rate of 19%. A progressive income tax rate of 25% applies on the portion of annual tax base exceeding the specific amount (EUR 35,022.31 for 2014). A legal entity is required to file a corporate income tax return, while an individual receiving taxable income exceeding the specific amount (EUR 1,901.67 for 2014) is required to file a personal income tax return. An income tax return for each tax year must be filed within three months of its end. The tax year for individuals is concurrent with the calendar year, while legal entities may opt to change their tax year to a separate financial year. The filing deadline can be extended by a maximum of three months, based on a written announcement filed with the tax authority before expiry of the regular filing

229 deadline. An extension of six months may be granted by the tax authorities, where the individual or legal entity has received income from foreign sources. If the income is subject to withholding tax or tax guarantee and the tax withheld is considered by a taxpayer as ﬁnal tax settlement, a tax return does not need to be ﬁled. The withholding tax or tax guarantee rate applicable for both individuals and legal entities is assessed at either 19% or 35%.

Income Tax on Shares Taxation on acquisition of Shares No Slovak income tax implications should arise for a holder of Shares upon purchase, irrespective of whether they are considered a Slovak tax resident or a Slovak tax non-resident. Where, however, a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non- resident acquires the Shares from a holder that is neither a Slovak tax resident, nor a tax resident of a European Economic Area (EEA) country, the acquirer of the Shares may be obliged to withhold a tax guarantee. For more information please refer to ‘‘– Taxation on disposal of Shares – Slovak tax non-resident holder – non-EU tax resident holder’’.

Taxation on dividends Dividends distributed from proﬁts generated after 1 January 2004 to either a legal entity or an individual, with a share of the registered capital of a company which distributes dividends, should not be subject to income tax in the Slovak Republic. Consequently, no tax on dividends will be withheld at source in respect of Shares. The Company does not have any pre-2004 distributable proﬁts.

Taxation on disposal of Shares The disposal of Shares generally results in the recognition of capital gain or loss in an amount equal to the difference between the sale price and the acquisition costs. In the case of individuals, certain immaterial allowances may be available. The loss achieved upon the disposal of Shares should, in general, not be tax deductible according to Slovak tax legislation. There are, however, several exceptions to this general rule, allowing tax deductibility of the loss in cases as follows: * disposal of securities traded at the stock exchange where the acquisition cost is no higher, and the income from the disposal is no lower, than a deviation of 10% from the average quotation published by the stock exchange on the date of purchase and date of disposal; and * disposal of securities by a holder of the securities engaged in trading, pursuant to special Slovak legislation.

Slovak tax resident holder Where Shares are held by a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident, capital gains arising from the disposal of Shares should be subject to Slovak income tax at the rates as speciﬁed above. The respective capital gain realized should be self-declared via a tax return.

Slovak tax non-resident holder – EU tax resident holder Capital gains realized upon disposal of Shares by a Slovak tax non-resident who is taxable on his or her worldwide income in another EU Member State (an ‘‘EU tax resident’’) should not be taxable in the Slovak Republic unless: * the acquirer of Shares is a Slovak tax resident, or a Slovak permanent establishment of a Slovak tax non-resident; or * the value of the Company is represented mainly by the value of immovable property situated in the Slovak Republic, i.e., the value of immovable property represents more than 50% of the Company’s equity recognized in annual accounts in the prior accounting period, unless the applicable DTT provides otherwise. Should this be the case, capital gains realized upon the disposal of Shares should be taxable in the Slovak Republic at the rates as speciﬁed above. The respective capital gain realized should be self- declared via a tax return.

230 Slovak tax non-resident holder – non-EU tax resident holder Capital gains realized upon disposal of Shares by a holder that is neither a Slovak tax resident, nor an EU tax resident (a ‘‘non-EU tax resident’’) to a Slovak tax non-resident should be taxable in the Slovak Republic at the rates as specified above, unless the applicable DTT provides otherwise. The respective capital gain taxable in the Slovak Republic should be self-declared via a tax return. Taxation of capital gains achieved upon disposal of Shares by non-EU tax resident to a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident depends on the tax residency of the holder of Shares. If the holder of Shares, while being a non-EU tax resident is a tax resident of: * a European Economic Area (EEA) country, the respective capital gain realized should be self- declared via a tax return, unless the relevant DTT provides otherwise; * a non-EEA country with which the Slovak Republic has concluded a DTT, a tax guarantee of 19% should apply unless the relevant DTT provides otherwise; * a non-EEA country with which the Slovak Republic has not concluded a DTT, but which is listed in the White List (as described under ‘‘– White List’’, below), a tax guarantee of 19% should apply; and * a non-EEA country not listed in the White List, a tax guarantee of 35% should apply. Where a tax guarantee applies, a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident as an acquirer of the Shares, is obliged to withhold the tax guarantee when the payment is settled, remitted, or credited in favor of the seller. If the acquirer fails to withhold tax guarantee, withholds incorrect amount of tax guarantee or does not pay the tax guarantee withheld on time, the tax authority would seek for recovery of such tax guarantee as if it was the tax liability of the acquirer itself. A Slovak tax non-resident should be able to file a Slovak tax return, in which he or she would declare related expenses (i.e., costs paid in relation to the share acquisition) and simultaneously, should be able to credit the Slovak tax guarantee against their Slovak income tax liability. Accordingly, they would pay tax only from the net income at the rates as specified above (as opposed to 19% or 35% tax guarantee calculated from the gross income). A potential tax overpayment should be refundable to the seller.

Income tax on GDRs Taxation on acquisition of GDRs No Slovak income tax implications should arise for a holder of GDRs upon their purchase, irrespective of whether they are considered a Slovak tax resident or non-resident. Taxation on income arising from holding of GDRs GDRs as financial instruments are not explicitly regulated or recognized under Slovak corporate or tax law. However, income arising from holding GDRs does not seem to qualify as dividend income under strict interpretation, according to Slovak tax legislation. Hence, such income should not benefit from the favourable Slovak tax treatment of dividends distributed from profits generated after 1 January 2004. Where GDRs are held by a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident, income arising from the holding of GDRs should be subject to tax in the Slovak Republic at the rates as specified above. The respective income should be self-declared via a tax return. Tax relief may be available for foreign tax paid on the income concerned, under the appropriate provisions of the relevant DTT. Realized foreign exchange differences should be tax effective, whilst unrealized foreign exchange differences can be excluded from the tax base if the holder so decides in their tax return. Such a decision is at the sole discretion of the holder. Income arising from GDRs held by a Slovak tax non-resident should not trigger any taxation in the Slovak Republic. Taxation on disposal of GDRs The disposal of GDRs generally results in the recognition of capital gain or loss in an amount equal to the difference between the sale price and the acquisition costs. In the case of individuals, certain immaterial allowances may be available.

231 The loss achieved upon disposal of GDRs should, in general, not be tax deductible according to Slovak tax legislation. Some exceptions, similar to those described in the section dealing with the disposal of Shares, should apply. Where GDRs are held by a Slovak tax resident or a Slovak permanent establishment of a Slovak tax non-resident, capital gains arising from the disposal of GDRs should be subject to Slovak income tax at the rates as speciﬁed above. The respective capital gain realized should be self-declared via a tax return. Tax relief may be available for foreign tax paid on the income concerned, under the appropriate provisions of the relevant DTT. Capital gains realized upon disposal of GDRs by a Slovak tax non-resident, should not be taxable in the Slovak Republic.

Stamp duty No Slovak stamp duty should be applicable to the acquisition, holding, disposal or other form of transfer of Shares or GDRs.

Other taxes In general, no Slovak transfer tax, gift tax or similar tax should be levied on the acquisition, holding, disposal or other form of transfer of Shares or GDRs.

Tax treaties As of 1 January 2015, the Slovak Republic was a party to DTTs with 65 countries: Australia, Austria, Belarus, Belgium, Bosnia – Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Kazakhstan, Korea (South), Kuwait, Latvia, Libya, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Moldova, Mongolia, Montenegro, Netherlands, Nigeria, Norway, Poland, Portugal, Romania, Russian Federation, Serbia, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Syria, Taiwan, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, United States, Uzbekistan and Vietnam.

White List Published by the Ministry of Finance, the White List contains countries with which the Slovak Republic has concluded a DTT or agreement on the exchange of information relating to taxes, and countries which are party to a mutual international agreement containing provision for the exchange of information for tax purposes. As of 1 January 2015, the White List contained all 65 countries with which the Slovak Republic has concluded a DTT. As of 1 January 2015, the White List also included an additional 22 countries: Albania, Anguilla, Argentina, Aruba, Belize, Bermuda, British Virgin Islands, Cayman Islands, Colombia, Costa Rica, Curacao, Faroe Islands, Ghana, Gibraltar, Greenland, Guernsey, Isle of Man, Jersey, Montserrat, New Zealand, Sint Maarten and Turks & Caicos Islands.

Certain Czech Tax Considerations The following summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, hold or dispose of the Securities. It is confined solely to matters of Czech tax laws, published administrative practice and judicial interpretations as at the date of this Prospectus, all of which are subject to change, possibly with retroactive effect, as well as on the income tax treaty between the Czech Republic and the Slovak Republic as currently in force (the Czech-Slovak Tax Treaty). This summary is given by way of general guidance only and does not address tax consequences applicable to all categories of investors, some of which (such as dealers in securities, financial institutions and insurance companies, partnerships or pension funds) may be subject to special rules that may differ significantly from those outlined below. Prospective investors in Securities are advised to consult their own tax advisors as to the tax consequences of acquiring, holding or disposing of Securities including, without limitation, the consequences of receipt of any dividends and/or income under GDRs and of sale of Shares or GDRs. This summary is based on the assumption that the Company (i) is a Slovak tax resident (including for the purposes of the Czecho-Slovak Tax Treaty) and is not considered to be resident for tax purposes outside the European Union under the terms of any double taxation agreement; (ii) does

232 not have a permanent establishment in the Czech Republic; and (iii) is subject to Slovak corporate income tax (in Slovak danˇ z prı´jmov pra´vnicky´ch osoˆb) without an option of being exempt.

Scope of taxation Investors in the Securities can be subject to Czech taxation either on a limited or unlimited basis. Unlimited taxation which includes taxation on worldwide income will apply to investors who qualify as Czech tax residents (the Czech Investors). By contrast, investors who qualify as Czech tax non- residents (the Non-Czech Investors) will be taxed in the Czech Republic only on their Czech-sourced income. Scope of taxation may further differ based on whether an investor is an individual who is subject to Czech personal income tax (the Individual Investor) or a legal person, mutual fund, trust or any other entity which is regarded as a taxpayer for Czech corporate income tax purposes (the Corporate Investor).

Taxation of income of Czech Investor from the Shares Withholding tax on dividends All dividends to be distributed to Czech Investors may be made by the Company free of withholding or deduction of, for or on the account of any taxes of whatsoever nature imposed, levied, withheld or assessed by the Czech Republic or any political subdivision or taxing authority thereof or therein.

Taxation of Dividends Distributed to Individual Investors As a basic rule, dividends distributed to an Individual Investor will be treated as income from capital assets and taxed (on a gross basis) as part of the Individual Investor’s ordinary income. The applicable tax rate will be 15% and the tax will be payable on a self-assessment basis. Nevertheless, there can be certain exceptions from tax reporting obligation (e.g. in case of employees whose employment income is processed through regular payroll and whose other income including dividends on the Shares does not exceed CZK 6,000 per year) and, accordingly, the circumstances of each Individual Investor in each case must be considered. Dividends distributed to an Individual Investor will generally be taxed by their recipient on a cash basis, except where the Individual Investor is subject to Czech accounting standards for entrepreneurs (generally individuals engaged in active business) and holds the Shares as part of his/her business assets. In this case the dividends will need to be accounted for once declared and reported for tax purposes in the tax period in which they were declared.

Taxation of Dividends Distributed to Corporate Investors Unless exempt from tax, dividends distributed to a Corporate Investor will be included into a separate tax base and taxed (on a gross basis) at a special tax rate of 15%. The dividends will need to be accounted for once declared and reported for tax purposes in the tax period in which they were declared. Exemption from tax will be available under the terms of the Parent-Subsidiary Directive (90/435/EEC) (the PS Directive), as transposed into Czech law. Accordingly, for an exemption to apply, the Corporate Investor would have to meet, in addition to being a Czech tax resident subject to Czech corporate income tax, the following eligibility requirements: * Take one of the eligible legal forms (as regards companies under Czech law, most frequently a Czech joint-stock company (in Czech akciova´ spolecˇnost) or a Czech limited liability company (in Czech spolecˇnost s rucˇenı´m omezeny´m); and * Have a holding of at least 10% in the registered capital of the Company for an uninterrupted period of at least 12 months (the 12 months period may also be fulﬁlled subsequently); and. * Is the beneﬁcial owner of the dividends.

Double taxation relief If in accordance to Slovak laws any Slovak tax is withheld by the Company upon the distribution of dividends, the Czech Investors will generally be entitled to claim an ordinary tax credit under the terms of the Czech-Slovak Tax Treaty. Pursuant to the Czech-Slovak Tax Treaty, the Slovak withholding tax (if any) must not exceed 5% of the gross amount of dividends if the beneﬁcial owner is a Corporate Investor who holds at least 10% of the Shares. In all other cases, the withholding (if any) is limited to 15%.

233 Tax Implications of Holding of the Shares by Czech Investors Czech Investors who are subject to Czech accounting standards for entrepreneurs (most companies and certain individuals engaged in active business) or to Czech accounting standards for ﬁnancial institutions (banks, insurance companies, etc.) may be, under certain circumstances, required to re- measure the Shares to fair value for accounting purposes, whereby the unrealized gains and losses would be accounted for as revenues and expenses, respectively. Save in certain speciﬁc situations, such revenues and costs are fully relevant for tax purposes.

Tax Implications of Sale of the Shares by Czech Investors Sale by Individual Investors Unless exempt from tax, any gain from the sale of the Shares will generally be treated as other income subject to tax at a rate of 15%. In addition, in case of an Individual Investor who has held the Shares in connection with his/her business activities, any such gain should be treated as income from business (trade) in which case a solidarity surcharge of 7% may also apply. Tax deductibility of any losses incurred upon the sale of Shares will largely depend on the particular circumstances of each Individual Investor. Nevertheless, in case of Individual Investors who have not held the Shares in connection with their business activities, the loss from the sale of Shares will be treated as non- deductible unless it can be offset against taxable gain(s) from the sale of other securities (not held in connection with business activities of the seller) realized in the same taxable period. No such set-off will be possible with respect to a loss incurred upon the sale of Shares if income from such loss- making sale is exempt from tax. Income from sale of the Shares will be exempt from tax if the Shares have been held for more than three years and such holding has not been in connection with the business activities of the seller. If the Shares were held in connection with the seller’s business, income from their sale will be exempt only if they are sold after three years following the termination of the business activities at the earliest. Income from the sale of the Shares will also be exempt, if the total income of an Individual Investor from the sale (or other forms of transfer for consideration) of any securities (including the Shares) in a given year does not exceed a threshold of CZK 100,000.

Sale by Corporate Investor Unless exempt from tax, any gain from the sale of the Shares will be subject to a standard tax rate of 19%. Tax deductibility of losses incurred upon the sale of Shares will essentially depend on the accounting treatment of the Shares or, more specifically, on whether the Shares are re-measured to fair value for accounting purposes or not. If the Shares are re-measured to fair value (and unless income from their sale is exempt from tax), any loss reflected in the profit & loss account of the selling Corporate Investor will also be fully recognized for tax purposes. By contrast, if the Shares are not re-measured (generally applicable if the Shares represent a controlling or material interest in the Company), any losses from the sale of the Shares will be non-deductible for tax purposes. Exemption from tax upon the sale of the Shares will be available under the same terms that apply to exemption of dividends under the PS Directive, as transposed into Czech law. Accordingly, for income from the sale of Shares to be exempt from tax, the Corporate Investor would have to meet, in addition to being a Czech tax resident subject to Czech corporate income tax, the following eligibility requirements: * Take one of the eligible legal forms (as regards companies under Czech law, most frequently a Czech joint-stock company (in Czech akciova´ spolecˇnost) or a Czech limited liability company (in Czech spolecˇnost s rucˇenı´m omezeny´m); * Have a holding of at least 10% of in the Shares registered capital of the Company for an uninterrupted period of at least 12 months (the 12 months period may also be fulfilled subsequently); and * Is beneficial owner of the income from the sale.

Taxation of GDRs Financial instruments in the form of depositary receipts, such as GDRs, are not explicitly regulated under the Czech tax law. Furthermore, given that the use of such instruments in transactions in the Czech capital markets is rather limited, to the best of our knowledge no authoritative view directly addressing the tax implications of GDRs has been expressed either by the tax authorities or the courts. Therefore, the tax treatment of the GDRs outlined below is based on the application of the

234 general tax rules and principles. Consequently, it cannot be excluded that tax authorities and/or courts may adopt a different position. Tax treatment of GDRs Under Czech tax law, when the law is applied in tax proceedings, the actual content of a legal transaction and other facts decisive for the determination of the tax and/or its collection should always be taken into account by tax authorities (Substance-over-Form). Given (i) the Substance-over- Form principle, (ii) the legal and economic characteristics of GDRs (e.g. re-distribution of dividends, voting rights or the possibility to withdraw the Deposited Shares) and (iii) the legal position of the Depositary (acting as a bare trustee who holds the Deposited Shares for the beneﬁt of the Holders of GDRs), there are reasonable arguments supporting the view that for Czech tax purposes the Holders of GDRs could be viewed as the owners of the Shares (for Czech tax treatment relating to the holding and/or the disposal of the Shares please refer above). Such view would have, for example, the following consequences: * The transfer of the Share by the investor to the Depositary in exchange for the issuance of the GDR should not be viewed as the disposal of the Share. Instead, as indicated above, for Czech tax purposes the investor (converting the Share into the GDR) should be viewed as continuing to hold the Shares. Similarly, the withdrawal of the Deposited Share should also not represent any (potentially taxable) disposal. * The sale of the GDR by the investor should, for Czech tax purposes, be viewed as the sale of the Shares. * The redistribution of the cash dividend on the Deposited Share to the Investor in GDR should, for Czech tax purposes, be viewed as the dividend distribution on the Share. However, due to the conversion into Dollars performed by the Depositary, the Investor should also recognize a foreign exchange gain/loss in relation to such redistribution. * More generally, any action taken by the Depositary should, for Czech tax purposes, be viewed as taken directly by the Investor in GDR. Thus, for example if (i) the Depositary receives the rights to subscribe for additional Shares, (ii) these rights are sold by the Depositary and (iii) proceeds received by Depositary upon such disposal are distributed to the Investors, the Inventor in GDR should for Czech tax purposes be viewed as (i) having received the subscription rights to subscribe for additional Shares and (ii) subsequently having sold such rights and (iii) having received the proceeds. * For the sake of completeness, if the ‘‘substance-based’’ approach is accepted by tax authorities, the participation through the GDR should arguably be also taken into account for the purposes of applying the PS Directive (including the capital gain exemption). Risk of alternative interpretation As indicated above, there is a high uncertainty about the tax treatment of GDRs under Czech tax law and, as such, it cannot be ruled out that the above ‘‘substance-based’’ approach will be rejected either by the tax authorities or the courts. The alternative interpretation would arguably follow the legal form of the GDRs. According to the Capital Market Act, the GDR should qualify as the ‘‘investment securities’’ which in turn qualify as ‘‘investment instruments’’. Consequently, any income derived from holding and/or disposal of GDRs realized by the Investors should, for Czech tax purposes, be viewed as income from holding and/or disposal of the investment securities/investment instruments. As a result of this, any action taken by the Depositary would not, for Czech tax purposes, be viewed as an action taken by the Investor in GDR.

Non-Czech Investors The Non-Czech Investors are subject to Czech taxation only on their Czech-sourced income. Accordingly, unless the Non-Czech Investor has a permanent establishment (taxable presence) in the Czech Republic with which the Securities are effectively connected, then any income of such Investor under the Securities or any gain derived upon their disposal should fall outside of Czech taxation scope. For the purposes of further discussion, it is assumed that the Non-Czech Investor (i) has a permanent establishment in the Czech Republic with which the Securities are effectively connected and (ii) is required to maintain accounting books in accordance with Czech accounting laws. Unless expressly stated otherwise below, the comments are limited only to the Non-Czech Investors who are Corporate Investors.

235 Taxation of Dividends from the Shares All dividends to be distributed to Non-Czech Investors (whether they are Individual or Corporate Investors) may be made by the Company free of withholding or deduction of, for or on the account of any taxes of whatsoever nature imposed, levied, withheld or assessed by the Czech Republic or any political subdivision or taxing authority thereof or therein. Unless exempt from tax, the dividends distributed to a Czech permanent establishment of a Corporate Investor will be taxed in the same way as dividends distributed to a Czech Corporate Investor. Nevertheless, the exemption of dividends from tax will only be available if the Non-Czech Investor who holds the Shares through its Czech permanent establishment qualiﬁes as resident for tax purposes in one of the member states of the European Union or the European Economic Area and meets the other eligibility requirements imposed under the PS Directive including, in particular, the minimum holding of 10% in the registered capital of the Company for an uninterrupted period of at least 12 months.

Taxation of Income from the Sale of the Shares Unless exempt from tax, any gain from the sale of the Shares which are effectively connected with Czech permanent establishment will be taxed in the same way as a gain realized by a Czech Corporate Investor. Nevertheless, income from sale of Shares will be exempt from tax if the Non- Czech Investor who holds the Shares through its Czech permanent establishment qualiﬁes as resident for tax purposes in one of the member states of the European Union or the European Economic Area and meets the other eligibility requirements imposed under the PS Directive including, in particular, the minimum holding of 10% in the registered capital of the Company for an uninterrupted period of at least 12 months.

Taxation for Income from GDRs As indicated above, it could be reasonably argued that for Czech tax purposes the Holders of GDRs could be viewed as the owners of the Shares (for Czech tax treatment relating to the holding and/or the disposal of the Shares please refer above). Nevertheless, due to an existing uncertainty about the tax treatment of GDRs under Czech tax law, it cannot be excluded that tax authorities and/or courts may adopt a different view as discussed above.

Tax Securing If income realized by a Non-Czech Investor, whether holding the Securities through a permanent establishment in the Czech Republic or not, from the sale of the Securities is subject to taxation in the Czech Republic (as discussed in the foregoing paragraphs), the Czech Investor paying the income or the Non-Czech Investor paying the income through its permanent establishment in the Czech Republic will be obliged to withhold an amount of 1% on a gross basis representing tax security, unless the Non-Czech Investor selling the Securities is for tax purposes a resident of a member state of the European Union or the European Economic Area or unless the obligation to withhold is waived based on a tax authority decision. The tax security shall be credited against the ﬁnal tax liability of the Non-Czech Investor selling the Securities.

Other Taxes or Duties Except as set out above, no registration tax, capital tax, customs duty, transfer tax, stamp duty or any other similar tax or duty is payable in the Czech Republic in respect of or in connection with the purchase, holding or disposition of the Securities.

Certain U.S. Federal Income Tax Considerations The following is a summary of certain U.S. federal income tax considerations relevant to U.S. Holders and non-U.S. Holders (as defined below) acquiring, holding and disposing of the Offer Securities. This summary is based on the U.S. Internal Revenue Code of 1986, final, temporary and proposed U.S. Treasury regulations, administrative and judicial interpretations, all of which are subject to change, possibly with retroactive effect, as well as on the income tax treaty between the United States and the Slovak Republic as currently in force (the Treaty). This summary does not discuss all aspects of U.S. federal income taxation that may be relevant to investors in light of their particular circumstances, such as investors subject to special tax rules (including, without limitation: (i) financial institutions; (ii) insurance companies; (iii) dealers in stocks, securities, or currencies or notional principal contracts; (iv) regulated investment companies; (v) real estate investment trusts; (vi) tax-exempt organisations; (vii) partnerships, pass-through entities, or

236 persons that hold Securities through pass-through entities; (viii) holders that own (directly, indirectly or constructively) 10% or more of the voting stock of the Company; (ix) investors that hold Securities as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; (x) investors that have a functional currency other than the U.S. dollar and (xi) U.S. expatriates and former long-term residents of the United States), all of whom may be subject to tax rules that differ significantly from those summarised below. This summary does not address tax consequences applicable to holders of equity interests in a holder of Securities, U.S. federal estate, gift or alternative minimum tax considerations, net investment income tax considerations or non-U.S., state or local tax considerations. This summary only addresses investors that will acquire Securities in the Offering, and it assumes that investors will hold their Securities as capital assets (generally, property held for investment). For the purposes of this summary, a U.S. Holder is a beneficial owner of Securities that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States, (ii) a corporation created in, or organised under the laws of the United States or any state thereof, including the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source or (iv) a trust that is subject to U.S. tax on its worldwide income regardless of its source. A Non-U.S. Holder is a beneficial owner of Securities that is not a U.S. Holder. If a partnership is a beneficial owner of Securities, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding Securities and partners in such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment in the Offer Securities. For U.S. federal income tax purposes, U.S. Holders of GDRs generally should be treated as owners of the Shares represented by the GDRs. Accordingly, the U.S. federal income tax consequences below generally should apply equally to U.S. Holders of GDRs.

Taxation of Distributions Subject to the passive foreign investment company (PFIC) rules discussed below, a distribution made by the Company on the Offer Securities (including amounts withheld in respect of non-U.S. income tax, if any) will be treated as a dividend includible in the gross income of a U.S. Holder as ordinary income to the extent of the Company’s current and accumulated earnings and profits as determined under U.S. federal income tax principles. Such dividends will not be eligible for the dividends received deduction allowed to corporations. To the extent the amount of such distribution exceeds the Company’s current and accumulated earnings and profits as so computed, the distribution will be treated first as a non-taxable return of capital to the extent of such U.S. Holder’s adjusted tax basis in the Offer Securities and, to the extent the amount of such distribution exceeds such adjusted tax basis, will be treated as gain from the sale of such shares. The Company does not expect to maintain calculations of earnings and profits for U.S. federal income tax purposes. Therefore, a U.S. Holder should expect that such distribution will generally be treated as a dividend. ’’Qualified dividend income’’ received by individuals and certain other non-corporate U.S. Holders, will be subject to reduced rates applicable to long-term capital gain if (i) the Company is a ‘‘qualified foreign corporation’’ (as defined below) and (ii) such dividend is paid on Securities that have been held by such U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date. The Company generally will be a ‘‘qualified foreign corporation’’ if (1) it is eligible for the benefits of the Treaty and (2) it is not a PFIC in the taxable year of the distribution or the immediately preceding taxable year. The Company expects to be eligible for the benefits of the Treaty. As discussed below under ‘‘Passive Foreign Investment Company Rules’’, the Company does not believe it was a PFIC for the taxable year ending 31 December 2014 and does not expect to be a PFIC for the current year or for any future years. Dividends on the Offer Securities generally will constitute income from sources outside the United States for foreign tax credit limitation purposes. The amount of any distribution of property other than cash will be the fair market value of the property on the date of the distribution. The amount of dividend income paid in euro that a U.S. Holder will be required to include in income will equal the U.S. dollar value of the distributed euro, calculated by reference to the exchange rate in effect on the date the payment is received by the Depositary (in the case of GDRs) or by the U.S. Holder (in the case of Offer Shares), regardless of whether the payment is converted into U.S. dollars on the date of receipt. If the foreign currency so received is converted into U.S. dollars on the date of receipt, such U.S. Holder generally will not recognise foreign currency gain or

237 loss on such conversion. If the foreign currency so received is not converted into U.S. dollars on the date of receipt, such U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any gain on a subsequent conversion or other disposition of the foreign currency generally will be treated as ordinary income or loss to such U.S. Holder and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

Sale or other disposition Subject to the PFIC rules discussed below, a U.S. Holder generally will recognise gain or loss for U.S. federal income tax purposes upon a sale or other disposition of Securities in an amount equal to the difference between the amount realised from such sale or disposition and the U.S. Holder’s adjusted tax basis in such Securities, as determined in U.S. dollars. Such gain or loss generally will be capital gain or loss and will be long-term capital gain (taxable at a reduced rate for non-corporate U.S. Holders, such as individuals) or loss if, on the date of sale or disposition, such Securities were held by such U.S. Holder for more than one year. The deductibility of capital loss is subject to signiﬁcant limitations. Such gain or loss realised generally will be treated as derived from U.S. sources. Because gains on a sale or other disposition of Securities generally will be treated as U.S. source, the use of foreign tax credits relating to any Slovak income tax imposed upon gains in respect of Securities may be limited. U.S. Holders should consult their tax advisors regarding the application of Slovak taxes to a sale or other disposition of Securities and their ability to credit a Slovak tax against their U.S. federal income tax liability. The surrender of GDRs in exchange for Shares (or vice versa) should not be a taxable event for U.S. federal income tax purposes and U.S. Holders should not recognise any gain or loss upon such a surrender. A U.S. Holder that receives foreign currency from a sale or disposition of Securities generally will realise an amount equal to the U.S. dollar value of the foreign currency on the date of sale or disposition or, if such U.S. Holder is a cash basis or electing accrual basis taxpayer and the Offer Securities are treated as being traded on an ‘‘established securities market’’ for this purpose, the settlement date. If the Offer Securities are so treated and the foreign currency received is converted into U.S. dollars on the settlement date, a cash basis or electing accrual basis U.S. Holder will not recognise foreign currency gain or loss on the conversion. If the foreign currency received is not converted into U.S. dollars on the settlement date, the U.S. Holder will have a basis in the foreign currency equal to the U.S. dollar value on the settlement date. Any gain or loss on a subsequent conversion or other disposition of the foreign currency generally will be treated as ordinary income or loss to such U.S. Holder and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

Passive foreign investment company rules In general, a corporation organised or incorporated outside the United States is a PFIC in any taxable year in which, after taking into account the income and assets of certain subsidiaries, either (i) at least 75% of its gross income is classiﬁed as ‘‘passive income’’ or (ii) at least 50% of the average quarterly value attributable to its assets produce or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. The Company believes that it was not a PFIC for the year ending on 31 December 2014 and does not expect to become a PFIC for the current year or for any future taxable year. There can be no assurances, however, that the Company will not be considered to be a PFIC for any particular year because PFIC status is factual in nature, generally cannot be determined until the close of the taxable year in question, and is determined annually. If the Company is classiﬁed as a PFIC in any year that a U.S. Holder is a shareholder, the Company generally will continue to be treated as a PFIC for that U.S. Holder in all succeeding years, regardless of whether the Company continues to meet the income or asset test described above. If the Company were a PFIC in any taxable year, U.S. Holders would be required (i) to pay a special addition (which includes an interest charge) to tax on certain distributions and gains on sale and (ii) to pay tax on any gain from the sale of Securities at ordinary income (rather than capital gains) rates in addition to paying the special addition to tax on this gain. Additionally, dividends paid by the Company would not be eligible for the reduced rate of tax described under ‘‘– Taxation of Distributions’’.

238 Non-U.S. Holders A Non-U.S. Holder generally should not be subject to U.S. federal income or withholding tax on any distributions made on the Offer Securities or gain from the sale, redemption or other disposition of the Offer Securities unless: (i) that distribution and/or gain is effectively connected with the conduct by that Non-U.S. Holder of a trade or business in the United States; or (ii) in the case of any gain realised on the sale or exchange of Securities by an individual Non-U.S. Holder, that Non-U.S. Holder is present in the United States for 183 days or more in the taxable year of the sale, exchange or retirement and certain other conditions are met.

U.S. information reporting and backup withholding tax A U.S. Holder may be subject to information reporting unless it establishes that payments to it are exempt from these rules. For example, payments to corporations generally are exempt from information reporting and backup withholding. Payments that are subject to information reporting may be subject to backup withholding if a U.S. Holder does not provide its taxpayer identiﬁcation number and otherwise comply with the backup withholding rules. Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules are available to be credited against a U.S. Holder’s U.S. federal income tax liability and may be refunded to the extent they exceed such liability, provided the required information is timely provided to the U.S. Internal Revenue Service (IRS). Non-U.S. Holders may be required to comply with applicable certiﬁcation procedures to establish that they are not U.S. Holders in order to avoid the application of such information reporting requirements and backup withholding.

Foreign Financial Asset Reporting Certain U.S. Holders that own ‘‘specified foreign financial assets’’ that meet certain U.S. dollar value thresholds generally are required to file an information report with respect to such assets with their tax returns. The Offer Securities generally will constitute specified foreign financial assets subject to these reporting requirements unless the Offer Securities are held in an account at certain financial institutions. U.S. Holders are urged to consult their tax advisors regarding the application of these disclosure requirements to their ownership of the Offer Securities.

United Kingdom Tax Considerations General The following statements are intended to apply only as a general guide to certain U.K. tax considerations, and are based on the Company’s understanding of U.K. tax law and current practice of HM Revenue and Customs (HMRC), both of which are subject to change at any time, possibly with retrospective effect. They relate only to certain limited aspects of the U.K. taxation treatment of holders of Securities who (unless the position of non-UK holders is expressly referred to) are resident and, in the case of individuals, domiciled in (and only in) the U.K. for U.K. tax purposes, who hold the Offer Securities as investments (other than under an individual savings account or a self invested personal pension) and who are the absolute beneﬁcial owners of both the Offer Securities and any dividends paid on them (U.K. Holders). The statements may not apply to certain classes of holders of Securities such as (but not limited to) persons acquiring their Offer Securities in connection with an ofﬁce or employment, dealers in securities, insurance companies and collective investment schemes. Potential investors in the Offer Securities who are in any doubt as to their tax position regarding the acquisition, ownership and disposition of the Offer Securities or who are subject to tax in a jurisdiction other than the U.K. are strongly recommended to consult their own tax advisers.

Dividends Withholding tax The Company will not be required to deduct or withhold U.K. tax at source from dividend payments it makes. Individuals An individual U.K. Holder who receives a dividend from the Company will be entitled to a tax credit which may be set off against his total U.K. income tax liability on the dividend. Such a U.K. Holder’s liability to U.K. income tax is calculated on the aggregate of the dividend and the tax credit (such aggregate being the gross dividend) which will be regarded as the top slice of the individual’s income. The tax credit will be equal to 10% of the gross dividend (i.e. the tax credit will be one-ninth of the amount of the declared dividend).

239 An individual U.K. Holder who is not liable to U.K. income tax in respect of the gross dividend will not be entitled to reclaim any part of the tax credit. An individual U.K. Holder who is liable to U.K. income tax at the basic rate will be subject to U.K. income tax on the dividend at the rate of 10% of the gross dividend so that the tax credit will satisfy in full such U.K. Holder’s liability to U.K. income tax on the dividend. An individual U.K. Holder liable to U.K. income tax at the higher rate will be subject to income tax on the gross dividend at 32.5% but will be able to set the tax credit off against part of this liability. A U.K. resident individual U.K. Holder liable to U.K. income tax at the additional rate will be subject to U.K. income tax on the gross dividend at 37.5% but will be able to set the tax credit off against part of this liability. The effect of the tax credit is that a basic rate taxpayer will not have to account for any additional tax to HMRC, a higher rate taxpayer will have to account for additional tax equal to 22.5% of the gross dividend (which equals 25% of the cash dividend received) and an additional rate taxpayer will have to account for additional tax equal to 27.5% of the gross dividend (which is approximately 30.56% of the cash dividend received).

Companies A corporate U.K. Holder which is a ‘‘small company’’ for the purposes of Chapter 2 of Part 9A of the Corporation Tax Act 2009 will not be subject to U.K. corporation tax on any dividend received from the Company provided certain conditions are met (including an anti-avoidance condition). Other corporate U.K. Holders will not be subject to U.K. corporation tax on any dividend received from the Company so long as the dividends fall within an exempt class and certain conditions are met. For example, (i) dividends paid on shares that are not redeemable and do not carry any present or future preferential rights to dividends or to the Company’s assets on its winding up, and (ii) dividends paid to a person holding less than a 10% interest in the Company, should generally fall within an exempt class. However, the exemptions mentioned above are not comprehensive and are subject to anti-avoidance rules. If the conditions for exemption are not met or cease to be satisﬁed, or such a corporate U.K. Holder elects an otherwise exempt dividend to be taxable, the U.K. Holder will be subject to U.K. corporation tax on dividends received from the Company, at the rate of corporation tax applicable to that corporate U.K. Holder (currently 20%).

Provision of information Persons in the U.K. paying ‘‘foreign dividends’’ to, or receiving ‘‘foreign dividends’’ on behalf of, another person may in certain circumstances be required to provide certain information to HMRC regarding the identity of the payee or person entitled to the ‘‘foreign dividend’’. In certain cases, such information may be exchanged with tax authorities in other countries.

Capital gains A disposal or deemed disposal of Securities by a U.K. Holder, may, depending on the U.K. Holder’s circumstances and subject to any available exemptions or reliefs, give rise to a chargeable gain or allowable loss for the purposes of U.K. taxation of capital gains.

Individuals For individual U.K. Holders, the principal factors that will determine the U.K. capital gains tax position on a disposal or deemed disposal of Securities are the extent to which the individual U.K. Holder realises any other capital gains in the U.K. tax year in which the disposal is made, the extent to which the individual U.K. Holder has incurred capital losses in that or earlier U.K. tax years, and the level of the annual allowance of tax-free gains in that U.K. tax year (the annual exemption). The annual exemption for the 2015/2016 U.K. tax year is £11,100. If, after all allowable deductions, an individual U.K. Holder’s taxable income for the year exceeds the basic rate U.K. income tax limit, a taxable chargeable gain accruing on a disposal or deemed disposal of the Securities would be taxed at 28%. Otherwise, such a gain may be taxed at 18% or a combination of both rates. A U.K. Holder who is an individual and who ceases to be resident in the U.K. for tax purposes for a period of ﬁve years or less and who disposes of Securities during that period may also be liable on his return to the U.K. to tax on any capital gain realised, subject to any available exemptions or reliefs.

240 Companies A disposal or deemed disposal of Securities by a U.K. Holder within the charge to U.K. corporation tax may give rise to a chargeable gain or allowable loss for the purposes of U.K. corporation tax, depending on the circumstances and subject to any available exemptions or reliefs. U.K. corporation tax is charged on chargeable gains at the rate applicable to that U.K. Holder (currently 20%). U.K. Holders within the charge to U.K. corporation tax will, for the purposes of computing chargeable gains, be allowed to claim an indexation allowance which applies to reduce capital gains (but not to create or increase an allowable loss) to the extent that such gains arise due to inﬂation.

Stamp Duty and Stamp Duty Reserve Tax The following statements about U.K. stamp duty and U.K. stamp duty reserve tax (SDRT) apply regardless of whether or not a holder of Securities is resident or domiciled in the U.K. No U.K.SDRT will be payable on any agreement to transfer the Offer Shares, provided that the Offer Shares are not registered in a register kept in the U.K. It is not intended that such a register will be kept in the U.K. No U.K. stamp duty will be payable on a transfer of the Offer Shares provided that (i) any instrument of transfer is not executed inside the U.K., and (ii) such instrument of transfer does not relate to any property situated, or any matter or thing done or to be done, in the U.K. No U.K. stamp duty or U.K. SDRT should be payable on (i) the transfer of any Offer Shares to the Depositary; or (ii) the issue of GDRs or their delivery into DTC, Euroclear or Clearstream, Luxembourg (assuming in each case that the Shares are not registered in a register kept in the U.K.). Neither U.K. stamp duty nor U.K. SDRT will be payable on any transfer of, or any agreement to transfer, the GDRs that is effected in electronic book entry form in accordance with the procedures of DTC, Euroclear or Clearstream, Luxembourg (assuming that the Shares are not registered in a register kept in the U.K.).

241 PLAN OF DISTRIBUTION (TERMS OF THE OFFER)

The Offering consists of an offering by the Selling Shareholder of up to 42,341,537 Shares in the form of Offer Shares and GDRs, with one GDR representing an interest in one Share. The final number of Offer Securities to be sold in the Offering will be announced after the end of the Institutional Offer Period (as defined below) and the Retail Offer Period (as defined below) by way of a press release published on the Company’s website www.telekom.sk. For more information see ‘‘– Offer Price’’. The Offer Securities are being offered to the public in the Slovak Republic and the Offer Shares are being offered to the public in the Czech Republic. The Offer Securities are being offered outside the United States in reliance on Regulation S and within the United States to QIBs in reliance on Rule 144A.

General Information about the Offering The Offering shall consist of the following: (a) an offering of the Offer Securities to Retail Investors in the Slovak Republic and an offering of the Offer Shares to Retail Investors in the Czech Republic (the Retail Offering); and (b) an offering of the Offer Securities to Institutional Investors (the Institutional Offering). For these purposes: * Institutional Investors means investors eligible to participate in the Offering pursuant to applicable laws and regulations and who are not Retail Investors (as defined below); and * Retail Investors means any individuals or legal entities who have residence or registered seat in the Slovak Republic or the Czech Republic and who are not persons falling within the definition of a qualified investor under the Prospectus Directive.

Offer Period The offer period in respect of the Institutional Offering shall commence on 21 April 2015 and end at 12:00 p.m. (Bratislava time) on 6 May 2015 (the Institutional Offer Period). The offer period in respect of the Retail Offering shall commence on 22 April 2015 and end on 5 May 2015, which date will be included in the offer period (the Retail Offer Period). The Selling Shareholder reserves its absolute right to change all dates and times relating to the Offering, subject to compliance with applicable Slovak legislation. If any such changes are made, the Selling Shareholder and/or the Company will inform about such decision by publication of a press release. During the Institutional Offer Period, the Underwriters will be soliciting non-binding indications of interest in acquiring Offer Securities in the Offering from Institutional Investors and during the Retail Offer Period the Retail Offering Coordinator will be soliciting purchase orders for Offer Securities from Retail Investors (Institutional Investors and Retails Investors, together Investors). Investors will be required to specify the number of Offer Shares and GDRs they would be prepared to acquire at the Offer Price. This process is known as book-building. Offer Securities allocated under the Institutional Offering, following the determination of the Offer Price and the execution of the Institutional Pricing Agreement (as defined below), will be fully underwritten by the Underwriters as described in this section. Offer Securities allocated under the Retail Offering, following the determination of the Offer Price and the execution of the Retail Pricing Agreement (as defined below), will be fully underwritten by the Retail Offering Coordinator as described in this section. On 7 May 2015, the results of the Offering, including the Offer Price (as defined below) and the final number of Shares sold in the form of Offer Shares and GDRs, are expected to be published by the Selling Shareholder and/or the Company by way of a press release published on the Company’s website at www.telekom.sk, on the Bratislava Stock Exchange website at www.bsse.sk and through the Regulatory News Service of the London Stock Exchange (RNS).

Offer Price Offer Shares are offered at the Share Offer Price Range of EUR 17.70 to 23.60 per Offer Share (the Share Offer Price Range). GDRs are offered at the GDR Offer Price Range of U.S.$ 19.00 to 25.30 per GDR (the GDR Offer Price Range and, together with the Share Offer Price Range, the Offer Price Range). Subscription for GDRs will be expressed in U.S. dollars.

242 The final offer price for the Offer Shares (the Share Offer Price) and the final offer price for the GDRs (the GDR Offer Price and, together with the Share Offer Price, the Offer Price) will be determined by the Selling Shareholder in consultation with the Joint Global Coordinators and is expected to be determined on the business day following the last day of the Offer Period, 7 May 2015 (the Pricing Date). The GDR Offer Price will be determined by conversion of the Share Offer Price at a U.S.$/EUR exchange rate published by the European Central Bank on the last date of the Institutional Offer Period. As a result, depending on the movements in the U.S.$/EUR exchange rate, the GDR Offer Price may fall below the lower limit of the GDR Offer Price Range. A number of factors may be considered in determining the Offer Price and the allocation under the Offering, including the level and nature of demand for the Offer Securities and the objective of encouraging the development of an orderly after-market in the Offer Securities. The Offer Price may be established at a level determined in accordance with these arrangements, taking into account indications of interest received (whether before or after the times and/or dates stated) from persons (including market makers and fund managers) connected with the Joint Global Coordinators. Institutional Investors may submit orders in respect of the Offer Securities at any price within the Share Offer Price Range and the GDR Offer Price Range, as the case may be. Retail Investors must place orders for Offer Shares and/or GDRs at the top of the relevant Offer Price Range. By submitting an order, a Retail Investor will have agreed to subscribe for, or purchase, the relevant number of Offer Securities at the Offer Price determined as set forth below, subject to the Retail Offering Discount (as defined below), if applicable. Retail Investors will not be eligible to submit limit orders. Each Retail Investor who is resident or has a registered seat (as applicable) in the Slovak Republic and who submits to the Retail Offering Coordinator or to a Retail Offering Selling Agent (as defined below) an order for Offer Shares during the period starting from 22 April 2015 and ending (i) at 8:00 a.m. (Bratislava time) on the day immediately following after the day on which the total number of Offer Securities, in respect of which orders eligible for the Retail Offering Discount (as defined below) are placed as part of the Retail Offering, reaches or exceeds 10% of the total number of Offer Securities, or (ii) on 5 May 2015, which date will be included in the period (the Preferential Retail Offer Period), whichever is earlier, will be eligible for a 5% discount from the price payable by such Retail Investor in respect of up to 423 Offer Shares purchased by such Retail Investor (the Retail Offering Discount). Occurrence of termination of the Preferential Offer Period as a result of the total number of Offer Securities in respect of which orders are placed as part of the Retail Offering reaching or exceeding 10% of the total number of Offer Securities shall be announced by the Selling Shareholder and/or the Company by way of a press release. See ‘‘– Offer Price’’. The Retail Offering Discount is calculated from the Share Offer Price and therefore the final price paid by Retail Investors in respect of Offer Shares benefiting from the Retail Offering Discount could be lower than the lower limit of the Share Offer Price Range. Retail Investors who are eligible for the Retail Offering Discount will benefit from the Retail Offering Discount only to the extent Offer Shares are allocated to them and in no event in respect of more than 423 Offer Shares per each Retail Investor. Any Offer Shares allocated to the relevant Retail Investor in excess of that limit shall be purchased by such Retail Investor at the Share Offer Price. The Retail Offering Discount shall not apply with respect to GDRs or to Retail Investors who are not resident or do not have a registered seat (as the case may be) in the Slovak Republic or who do not submit an order to the Retail Offering Coordinator or to a Retail Offering Selling Agent (as defined below). The total number of Offer Shares in respect of which Retail Investors will be entitled to the Retail Offering Discount shall be determined by the Selling Shareholder up to a maximum of 10% of the total number of Offer Securities. It is expected that the relevant Offer Securities will be delivered to the Investors on the Closing Date. Investors shall be obliged to pay the applicable purchase price for the relevant Offer Securities in such way and at such time as may be determined by the Joint Global Coordinators or the Joint Lead Managers. If any investors are required to deposit any monies in advance of the Closing Date and an Investor shall have a right to be reimbursed all or part of the monies so deposited as a result of an allocation of Offer Securities at a level lower than the number requested under the initial order, the relevant amounts shall be reimbursed to such Investors in accordance with the terms agreed with the relevant Joint Global Coordinator or the relevant Joint Lead Managers. See also ‘‘– Retail Offering’’.

243 Retail Offering It is intended that up to 10% of the Offer Securities (4,234,153 Offer Shares or GDRs) may be allocated to Retail Investors as part of the Retail Offering. The number of Offer Securities allocated to the Retail Offering may be increased as described in ‘‘– Allocation of the Offer Securities’’. The Retail Offering will be conducted by the Retail Offering Coordinator either directly or through one or more banks and/or securities brokers engaged to assist with the conduct of the Retail Offering (the Retail Offering Selling Agents). As of the date of this Prospectus, the Retail Offering Coordinator intends to appoint the following persons as its Retail Offering Selling Agents: (i) Slovenska´ sporitel’nˇa, a.s., brokerjet Cˇ eske´ sporˇitelny, a.s. in the Slovak Republic and (ii) Cˇ eska´ sporˇitelna, a.s. and brokerjet Cˇ eske´ sporˇitelny, a.s. in the Czech Republic. By submitting an application in accordance with the procedures and requirements of the Retail Offering Coordinator or the relevant Retail Offering Selling Agents, as the case may be, to subscribe for, or purchase, any Offer Securities, each Retail Investor will agree to subscribe for, or purchase, the relevant Offer Securities at any Offer Price within the Offer Price Range, subject to the Retail Offering Discount (if applicable) and subject, in the case of the GDR Offer Price, to adjustment based on the movement of U.S.$/EUR exchange rate, which is determined as described above. Retail Investor may not submit an application to subscribe for, or purchase, less than 10 Offer Securities. In order to participate in the Retail Offering, the Retail Investors will need to satisfy such conditions and provide such documents as the Retail Offering Coordinator may require. Furthermore, the Retail Offering Selling Agents may have separate conditions and requirements, including know-your- customer requirements, with which the Retail Investors may be required to comply. The requirements of the Retail Offering Coordinator and/or the Retail Offering Selling Agents may include a requirement that the Retail Investor deposit some or all of the consideration payable by such Retail Investor in respect of the relevant Offer Securities, whether at the time the purchase order is submitted or at such other time as the Retail Offering Coordinator and/or the Retail Offering Selling Agents may determine. If such payment is required, following calculation of the total consideration payable by the relevant Retail Investor on the basis of the Offer Price and any applicable bank transfer fees, the Retail Offering Coordinator and/or the relevant Retail Offering Selling Agent will procure that the balance of deposited monies, after deduction of the consideration for the allocated Offer Securities calculated on the basis of the Offer Price, is returned to the relevant Retail Investor in accordance with the terms of the agreement between the Retail Offering Coordinator or the relevant Retail Offering Selling Agent and the relevant Retail Investor. The Offer Price in respect of the Offer Shares and GDRs will be expressed in Euro and U.S. dollars, respectively. Accordingly, the Retail Investors should consult the Retail Offering Coordinator or the relevant Retail Offering Selling Agent as to the exchange rate that will be applied to any payments made in respect of the Offer Securities in currency other than Euro (in the case of Offer Shares) or U.S. dollars (in the case of GDRs). Retail Investors should contact the Retail Offering Coordinator or the relevant Retail Offering Selling Agent for more details. Retail Investors wishing to apply for subscription for GDRs may do so only at Slovenska´ sporitel’nˇa, a.s. at Toma´sˇikova 48, 832 37 Bratislava, Slovak Republic.

Underwriting Agreements The Company, the Selling Shareholder, the Joint Global Coordinators, the Joint Lead Managers (the Joint Global Coordinators, the Retail Offering Coordinator and Regional Offering Coordinator together, the Underwriters or any of them an Underwriter) are expected to enter into an institutional underwriting agreement on or about 20 April 2015 (the Institutional Underwriting Agreement). Pursuant to the Institutional Underwriting Agreement, and subject to the execution of a pricing agreement between the Selling Shareholder, the Company and the Underwriters expected to be dated the Pricing Date (the Institutional Pricing Agreement), the Underwriters will severally agree to procure purchasers for, or to themselves purchase (in the proportions set out in the Institutional Pricing Agreement), at the Offer Price, the number of Offer Securities to be set out in the Institutional Pricing Agreement. In addition, the Company, the Selling Shareholder and the Retail Offering Coordinator are expected to enter into a retail underwriting agreement on or about 20 April 2015 (the Retail Underwriting

244 Agreement and together with the Institutional Underwriting Agreement, the Underwriting Agreements). Pursuant to the Retail Underwriting Agreement, and subject to the execution of a pricing agreement between the Selling Shareholder, the Company and the Retail Offering Coordinator (the Retail Pricing Agreement), the Retail Offering Coordinator will agree to procure purchasers for, or to itself purchase, at the Offer Price, the number of Offer Securities to be set out in the Retail Pricing Agreement.

As consideration for entering into the Underwriting Agreements, the Selling Shareholder and the Underwriters will also enter into a fees letter pursuant to which the Underwriters will be paid from the proceeds of the Offering a base commission payable by the Selling Shareholder amounting to 2.2% of the aggregate gross sale proceeds of the Offering.

The Institutional Underwriting Agreement will contain the following provisions, amongst others:

* The Selling Shareholder will grant a put option to the Underwriters to sell up to 4,234,153 Offer Securities to the Selling Shareholder at such prices at which the Stabilising Managers may acquire them in the open market in connection with the stabilisation transactions (the Put Option). The Put Option will be exercisable up to the third business day following the end of the Stabilisation Period. In connection with the stabilising actions that may be performed by the Stabilising Managers (as deﬁned below), the Selling Shareholder will agree that the Stabilising Managers will retain 10 per cent. out of the gross proceeds obtained by the Selling Shareholder from the Offering in order to ﬁnance the stabilisation transactions. The balance of such retained proceeds, after deduction of amounts used by the Stabilising Managers to acquire the Offer Securities in respect of which the Put Option is exercised, shall be transferred to the Selling Shareholder by no later than the third business day following the end of the Stabilising Period. The Underwriters will not be granted any overallotment or "green-shoe" option pursuant to the terms of the Institutional Underwriting Agreement.

* The obligations of the parties to the Institutional Underwriting Agreement will be subject to certain conditions, including the execution of the Institutional Pricing Agreement, that are typical for an agreement of this nature. These conditions will include, amongst others, the accuracy of the representations and warranties contained in the Institutional Underwriting Agreement and the application for admission to the Official List and to trading on the London Stock Exchange and to trading on the Bratislava Stock Exchange having been approved on or prior to the closing of the Offering. The Joint Global Coordinators may terminate the Institutional Underwriting Agreement prior to the closing of the Offering in certain specified circumstances that are typical for an agreement of this nature. These include the occurrence of certain material changes in the Company’s condition, including its business and financial condition, and certain changes in financial, political or economic conditions, or termination of the Retail Underwriting Agreement (as set out more fully in the Institutional Underwriting Agreements). If any of the above-mentioned conditions are not satisfied (or waived, where capable of being waived) by, or the Institutional Underwriting Agreement is terminated prior to, the closing of the Offering, then the Offering will lapse.

* The Company will make certain customary representations and warranties to the Underwriters, including in relation to the business, the ﬁnancial condition and the legal compliance of the Company and in relation to the contents of this Prospectus.

* The Selling Shareholder will make customary representation and warranties to the Underwriters, including in respect of its title to the Offer Securities.

* The Company and the Selling Shareholder will give customary indemnities to the Underwriters in connection with the Institutional Offering.

* If an Underwriter defaults, the Institutional Underwriting Agreement will provide that in certain circumstances, the subscription and purchase commitments of each non-defaulting Underwriter may be increased or the Institutional Underwriting Agreement may be terminated.

* The Underwriters are offering the Offer Securities when, as and if, delivered to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the Offer Securities and other conditions contained in the Institutional Underwriting Agreement, such as the receipt by the Underwriters of, amongst other things, ofﬁcer’s certiﬁcates and legal opinions.

245 The Retail Underwriting Agreement will contain the following provisions, amongst others: * The obligations of the Retail Offering Coordinator to the Retail Underwriting Agreement will be subject to certain conditions, including the execution of the Retail Pricing Agreement, that are typical for an agreement of this nature. These conditions will include, amongst others, the accuracy of the representations and warranties contained in the Retail Underwriting Agreement and the application for admission to the Official List and to trading on the London Stock Exchange and to trading on the Bratislava Stock Exchange having been approved on or prior to the closing of the Offering. The Retail Offering Coordinator may terminate the Retail Underwriting Agreement prior to the closing of the Offering in certain specified circumstances that are typical for an agreement of this nature. These include the occurrence of certain material changes in the Company’s condition, including its business and financial condition, and certain changes in financial, political or economic conditions (as set out more fully in the Retail Underwriting Agreements), or termination of the Institutional Underwriting Agreement. If any of the above-mentioned conditions are not satisfied (or waived, where capable of being waived) by, or the Retail Underwriting Agreement is terminated prior to, the closing of the Offering, then the Offering will lapse. * The Company will make certain customary representations and warranties to the Retail Offering Coordinator, including in relation to the business, the financial condition and the legal compliance of the Company and in relation to the contents of this Prospectus. * The Selling Shareholder will make customary representation and warranties to the Retail Offering Coordinator, including in respect of its title to the Offer Securities. * The Company and the Selling Shareholder will give customary indemnities to the Retail Offering Coordinator in connection with the Retail Offering. * The Retail Offering Coordinator is offering the Offer Securities when, as and if, delivered to and accepted by it, subject to approval of legal matters by its counsel, including the validity of the Offer Securities and other conditions contained in the Retail Underwriting Agreement, such as the receipt by the Retail Offering Coordinator of, amongst other things, officer’s certificates and legal opinions. The Underwriters are expected to underwrite the Offering in the following aggregate proportions:

Underwriting Commitment (as percentage of the total number of Underwriter allocated Offer Securities) Citigroup Global Markets Limited...... 35% J.P. Morgan Securities plc ...... 35% Erste Group Bank AG...... 15% Wood & Company Financial Services, a.s...... 15% Total ...... 100% The underwriting commitments of the Underwriters in respect of the Offering may be subject to change. The details of the Underwriters are as follows: Citigroup Global Markets Limited Citigroup Centre, Canada Square London E14 5LB United Kingdom J.P. Morgan Securities plc 25 Bank Street London E14 5JP United Kingdom WOOD & Company Financial Services, a.s. Palladium, Na´m. Republiky 1079/1a 110 00 Prague 1 Czech Republic

246 Erste Group Bank AG Graben 21 1010 Vienna Austria

Lock-up Provisions Each of the Company and the Selling Shareholder will agree that neither it, nor any of its affiliates or subsidiaries, nor any person acting on its behalf will and Deutsche Telekom Europe B.V. will agree that, subject to certain exceptions including transfers between existing holders of the Shares at the date of this Prospectus, from the date hereof until 180 days after the Closing Date, without the prior written consent of the Joint Global Coordinators: (i) issue (only in the case of the Company), offer, sell, lend, mortgage, assign, contract to sell, pledge, charge, contract to sell or issue, sell any option or contract to purchase, purchase any option or contract to sell or issue, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of (or publicly announce any such action), directly or indirectly, any Securities or any securities convertible or exchangeable into or exercisable for, or substantially similar to, any Securities or any security or financial product whose value is determined directly or indirectly by reference to the price of the underlying securities, including equity swaps, forward sales and options or global depositary receipts representing the right to receive any such securities; or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of Securities; or (iii) enter into any transaction with the same economic effect as, or agree to, or publicly announce any intention to enter into any transaction described above, whether any such transaction described above is to be settled by delivery of Securities or other securities, in cash or otherwise, subject to certain customary exceptions. The lock-up arrangement described above shall not apply to the Offering. Furthermore, the lock-up arrangement with Deutsche Telekom Europe B.V. described above shall not apply to: (i) any inter-company transfer of Securities in favour of its subsidiaries or affiliates, provided that the transferee agrees to be bound by the same lock-up undertaking for the unexpired portion of the restricted period; (ii) the transfer of Securities in the context of a potential tender offer to all holders of Securities for the acquisition of the Company; or (iii) the provision of an irrevocable undertaking to all holders of Securities to accept an offer for the acquisition of the Company.

Change and Withdrawal of Subscriptions Institutional Investors and Retail Investors may change or withdraw their initial orders for Offer Securities until the end of the Offer Period. The change of the orders will be subject to the same submission, processing and validation requirements as the ones for the initial order. If a supplement to this Prospectus is published, orders may be withdrawn by any investor within two business days from the date when the respective supplement to the Prospectus was published. In such case, Retail Investors may withdraw their orders for Offer Securities in accordance with the rules and procedures of the Retail Offering Coordinator or the relevant Retail Offering Selling Agent through which the initial order was placed.

Allocation of the Offer Securities Allocations will be determined by the Joint Global Coordinators, and in the case of the Retail Offering by the Retail Offering Coordinator, in consultation with the Company and the Selling Shareholder after indications of interest from investors have been received in the book-building process. Upon the recommendation of the Joint Global Coordinators, the Offer Securities may be reallocated from the Institutional Offering to the Retail Offering and vice versa. Allocation of Offer Securities within the Retail Offering If the total number of Offer Securities subscribed within the Retail Offering is lower than, or equal to, the number of Offer Securities allocated to the Retail Offering (as determined on the Pricing Date), each Retail Investor will receive the number of subscribed Offer Securities. Subject to application of the preferential allocation to certain Retail Investors described below, if the number of

247 Offer Securities subscribed within the Retail Offering exceed the number of Offer Securities allocated to the Retail Offering, the Offer Securities from the Retail Offering will be allocated to each Retail Investor proportionally to the number of Offer Securities subscribed by such investor. If the number of Offer Securities allocated to a subscription after the pro rata allocation is not a whole number, the number of Offer Securities allocated to the relevant subscription shall be rounded down to the immediately lower whole number. Allocation of any remaining Offer Securities allocated within the Retail Offering as resulting from fractional entitlements following the initial allocation shall be allocated to Retail Investors on such basis as the Selling Shareholder may determine in consultation with the Joint Global Coordinators and the Retail Offering Coordinator. The same allocation factor will be applied to the allocation of Offer Shares and to the allocation of GDRs within the Retail Offering. In the event that the Retail Offering is oversubscribed, the Retail Investors who submitted their orders during the Preferential Retail Offer Period shall be entitled to preferential allocation in respect of up to 423 Offer Shares on such basis the Selling Shareholder in consultation with the Joint Global Coordinators and the Retail Offering Coordinator may determine. Reasons independent from the Company, the Selling Shareholder or the Underwriters may lead to delays in processing the data and in preparing and sending the notice regarding the Offering results to the NBS. As a consequence, none of the Underwriters, the Company or the Selling Shareholder will be liable for delays in the return of the amounts due to the investors in the event that the Offering is over-subscribed. In such circumstances, none of the Selling Shareholder, the Underwriters nor the Company shall have any liability to any investors.

Allocation of Offer Securities within the Institutional Offering The number of Offer Securities allocated to each Institutional Investor will be determined by the Joint Global Coordinators, in consultation with the Company and the Selling Shareholder, on the basis of the book-building exercise. When allocating the Offer Securities within the Institutional Offering, the Company, the Selling Shareholder and the Joint Global Coordinators may consider, among others, certain qualitative criteria such as: investment policy, acquaintance of the Institutional Investors with companies operating in the same ﬁeld as the Company; number of subscribed Offer Securities and support of the Offering; whether the subscription was received at the beginning of, or early in, the Offer Period; the price offered for the Offer Securities; qualitative feedback during pre-marketing process; focus on the telecommunications industry and/or on the Central and Eastern European region; assets under management; equity investments in Slovak Republic or Central and Eastern European; other criteria that allow a high-quality investor base and a positive evolution of the market price after the closing of the Offering. By subscribing for the Offer Securities in the Offering, Institutional Investors acknowledge and agree that they may be allocated fewer Offer Securities than they have subscribed for or they may receive no Offer Securities at all. Institutional Investors also acknowledge and agree that they cannot refuse the allocation. Institutional Investors also acknowledge and agree that they will have no right to request, and the Selling Shareholder and the Joint Global Coordinators shall have no obligation to disclose, the reasons for their allocation and pricing decisions.

Admission to Trading An application will be made for the Shares to be admitted to trading on the main listed market of the Bratislava Stock Exchange under the symbol ‘‘STX’’. Trading in the Shares on the Bratislava Stock Exchange is expected to commence on 12 May 2015. An application will be made for the GDRs to be admitted to the Ofﬁcial List and to be admitted to trading on the main market for listed securities of the London Stock Exchange under the symbol ‘‘STXX’’. Unconditional trading in the GDRs through the IOB on the London Stock Exchange is expected to commence on 12 May 2015. Prior to the Offering, there has been no public market for the Offer Securities. Prices for the Shares traded on the Bratislava Stock Exchange may not be identical to the prices of the GDRs. See ‘‘Risk Factors – Risks Relating to the Securities and the Offering – There has been no prior public market for the securities and an active and liquid market for the securities may not develop’’. No assurance can be given that the listing applications will be approved.

248 There are no entities with ﬁrm commitment to act as intermediaries in secondary trading, providing liquidity through bid and offer rates. There is no intention to simultaneously or almost simultaneously with the sale of the Offer Securities to issue or place privately any securities of the same class or to place publicly or privately securities of the Company of any other class.

Stabilisation The Selling Shareholder will agree, pursuant to the Institutional Underwriting Agreement, that the Stabilising Managers may undertake stabilisation actions as further detailed below. The Selling Shareholder anticipates that in connection with the Offering the Stabilising Managers will have the right to acquire Offer Securities on the Bratislava Stock Exchange and or the London Stock Exchange pertaining to not more than 4,234,153 Offer Securities in order to stabilise the price of the Offer Securities at a level higher than that which may otherwise prevail if stabilisation actions were not taken. The acquisition of the Offer Securities as part of stabilising transactions by the Stabilising Managers will be subject to the applicable provisions of the Stabilisation Regulation. The purchase transactions related to the Offer Securities may be effected during the period not longer than the Stabilisation Period at a price not higher than the Offer Price. The Stabilising Managers will not, however, be required to take any of the above stabilisation actions. If such actions are taken by the Stabilising Managers, they may be discontinued at any time, but not later than the end of the Stabilisation Period. In connection with the stabilising actions that may be performed by the Stabilising Managers, the Selling Shareholder will agree in the Institutional Underwriting Agreement, that the Stabilising Managers will retain 10 per cent. out of the gross proceeds obtained by the Selling Shareholder from the Offering (the Stabilisation Proceeds) to ﬁnance the stabilising actions. Pursuant to the Put Option, the Selling Shareholder will agree to purchase any Offer Shares and/or GDRs up to the number Offer Securities speciﬁed above acquired by the Stabilising Managers in the course of the stabilising actions at the prices at which such Securities were acquired by the Stabilising Managers, free and clear of all encumbrances, and any remaining portion of the Stabilisation Proceeds which was not used in the stabilisation activities shall be transferred to the Selling Shareholder by no later than the third working day following the end of the Stabilisation Period.

Interests of Natural and Legal Persons Involved in the Offering In connection with the Offering, each of the Underwriters and any of its respective affiliates acting as an investor for its own account may take up the Offer Securities and in that capacity may retain, subscribe for, purchase or sell the Offer Securities for its own account and may offer or sell such securities otherwise than in connection with the Offering. The Underwriters do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so. Each of the Underwriters is a full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Underwriters and their respective affiliates have in the past performed commercial banking, investment banking and advisory services for the Company from time to time for which they have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for the Company in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve the Company’s securities and instruments. The Depositary is an affiliate of Citigroup Global Market Limited, which is one of the Joint Global Coordinators. The National Property Fund of the Slovak Republic as the Selling Shareholder is interested in the success of the Offering. For more information see ‘‘Use of Proceeds’’. The Company is not aware of any other interests including conflicting interests of natural and legal persons involved in the Offering that are material to the Offering.

249 Except for the Depositary and Custodian, no depositary agents or paying agents have been appointed in connection with the Offering.

Existing shareholdings The Principal Shareholder is not selling any shares in the Offering. It is possible that the Principal Shareholder will purchase Offer Securities in the Offering. Other than as disclosed in this Prospectus, the Company is not aware of any major shareholders or members of the Company’s management, supervisory or administrative bodies intending to purchase any Offer Securities in the Offering or of any other person intending to subscribe for more than ﬁve per cent of the Offer Securities. The Principal Shareholder does not have any pre-emptive rights in connection with the Offer Securities. The members of the Company’s management, supervisory or administrative bodies have not purchased any Shares and they have not been granted to any rights to acquire any Securities.

No new Company shares will be issued in connection with the Offering. Accordingly, there will be no dilution of the existing shareholdings.

Other fees No expenses or taxes in connection with the Offering will be speciﬁcally charged to investors by the Company or the Selling Shareholder.

Selling Restrictions General The distribution of this Prospectus and the Offering in certain jurisdictions may be restricted by law and therefore persons into whose possession this Prospectus comes should inform themselves about and observe any restrictions, including those set forth in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Other than in the Slovak Republic and the Czech Republic, no action has been or will be taken in any jurisdiction that would permit a public offering of the Offer Securities, or possession, circulation or distribution of this Prospectus or any other offering material relating to the Company or the Offer Securities, in any country or jurisdiction where action for such purpose is required. Accordingly, the Offer Securities may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisement in connection with the Offer Securities may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Persons into whose possession this Prospectus comes should inform themselves about and observe any restrictions on the distribution of this Prospectus and the offer, subscription and sale of the Offer Securities, including those in the paragraphs below. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Prospectus does not constitute an offer to subscribe for or purchase any of the Offer Securities to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

No Public Offering outside the Slovak Republic and the Czech Republic No action has been or will be taken in any country or jurisdiction, other than the Slovak Republic and the Czech Republic, that would permit a public offering of the Offer Securities in any country or jurisdiction where action for that purpose is required or doing so may be restricted by law.

European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a ‘‘Relevant Member State’’), other than Slovak Republic and the Czech Republic, no offer will be made to the public of any Securities which are the subject of the Offering in that Relevant Member State except that it may make an offer of any Securities to the public in that Relevant Member State at any time under any of the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State: (i) to legal entities which are qualiﬁed investors as deﬁned under the Prospectus Directive;

250 (ii) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Underwriters for any such offer; or (iii) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Securities shall result in a requirement for the publication by the Company or any Underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. Each person in a Relevant Member State, other than the Slovak Republic and the Czech Republic, who initially acquires any Securities or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with the Company and the Underwriters that it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive. For the purposes of this provision, the expression an ‘‘offer of any Securities to the public’’ in relation to any Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Securities to be offered so as to enable an investor to decide to purchase any Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. In the case of any Offer Securities being offered to a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the Offer Securities acquired by it have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to persons in circumstances which may give rise to an offer of any Securities to the public other than their offer or resale in a Relevant Member State to qualified investors who are not financial intermediaries as so defined or in circumstances in which the prior consent of the Joint Global Coordinators has been obtained to each such proposed offer or resale. The Company, the Joint Global Coordinators and their respective affiliates, and others will rely (and the Company acknowledges that the Underwriters and their respective affiliates and others will rely) upon the truth and accuracy of the foregoing representations, acknowledgements, and agreements.

United Kingdom In relation to the United Kingdom, this Prospectus is only addressed and directed to Qualiﬁed Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Order), and/or (ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, and other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as Relevant Persons). The Offer Securities are only available in the United Kingdom to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire any Offer Securities in the United Kingdom will be engaged in only with, Relevant Persons. Any person in the United Kingdom who is not a Relevant Person should not act or rely on this Prospectus or any of its contents.

United States of America The Offer Securities have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except in certain transactions exempt from or not subject to the registration requirements of the Securities Act. The Underwriters propose to offer the Offer Securities (i) outside the United States in accordance with Regulation S under the Securities Act and (ii) in the United States to QIBs as deﬁned under and in accordance with Rule 144A. In addition, until 40 days after the commencement of the Offering, an offer or sale of the Offer Securities into or within the United States by a dealer, whether or not such dealer is participating in the Offering, may violate the registration and prospectus delivery requirements of the Securities Act if such offer or sale is not made in accordance with Rule 144A.

251 CLEARING AND SETTLEMENT

Clearing and Settlement of the Shares Registration of the Shares The Shares are book-entered non-bearer securities with ISIN SK 1110017722 (series 1) with nominal value of EUR 10 registered in the Slovak Central Depository (spolocˇnost’ Centra´lny depozita´r cenny´ch papierov SR, a.s., with registered seat at ul. 29. augusta 1/A, 814 80 Bratislava, identiﬁcation number 31 338 976, registered with Commercial Register of District court Bratislava I, section: Sa, insert no. 493/B) issued by the Company in accordance with the Slovak Commercial Code and other applicable Slovak laws. The Shares may be held by the relevant holders in their accounts established either with the Slovak Central Depository or with a member of the Slovak Central Depository. Only persons that are registered as the owners of the Shares in the accounts with the Slovak Central Depository or with a member of the Slovak Central Depository or that are entered in the register of a custodian that holds the Shares in a holding (nominee) account with the Slovak Central Depository will be recognised as owners of the Shares. The owners of the Shares held in a holding (nominee) account with the Slovak Central Depository will be able to exercise all of their rights of shareholders against the Company through the respective custodian (accountholder) that has such holding (intermediary) account with the Slovak Central Depository.

ICSDs The Shares may also be held through Euroclear and/or Clearstream. Both Euroclear and Clearstream have either direct or indirect links with the Slovak Central Depository; an indirect link is normally maintained through a custodian that holds the Shares for Euroclear and Clearstream in a holding (nominee) account with the Slovak Central Depository. Persons holding any Shares in their accounts with Euroclear and/or Clearstream may only exercise their rights against the Company through Euroclear and/or Clearstream or the relevant custodian that holds such Shares for Euroclear and/or Clearstream, whichever entity is registered as a holder of an account in relation to such Shares with the Slovak Central Depository. Exercising such rights will be always subject to the standard rules of procedure of Euroclear and/or Clearstream (if so enabled thereunder) and the applicable laws.

Clearing and Settlement of GDRs Custodial and depositary links have been established between Euroclear, Clearstream, Luxembourg and DTC to facilitate the initial issue of the GDRs and cross-market transfers of the GDRs associated with secondary market trading.

The Clearing Systems Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg each hold securities for participating organisations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book- entry changes in accounts of such participants. Euroclear and Clearstream, Luxembourg provide to their respective participants, among other things, services for safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg participants are ﬁnancial institutions throughout the world, including Joint Global Coordinators and securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective clients may settle trades with each other. Indirect access to Euroclear or Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Euroclear or Clearstream, Luxembourg participant, either directly or indirectly. Distributions of dividends and other payments with respect to book-entry interests in the GDRs held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the Depositary, to the cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system’s rules and procedures. DTC DTC is a limited-purpose trust company organised under the laws of the State of New York, a ‘‘banking organisation’’ within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a ‘‘clearing corporation’’ within the meaning of the New York

252 Uniform Commercial Code and a ‘‘clearing agency’’ registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities for DTC participants and facilitates the clearance and settlement of securities transactions between DTC participants through electronic computerised book-entry changes in DTC participants’ accounts. DTC participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Holders of book-entry interests in the GDRs holding through DTC will receive, to the extent received by the Depositary, all distributions of dividends or other payments with respect to book-entry interests in the GDRs from the Depositary through DTC and DTC participants. Distributions in the United States will be subject to relevant U.S. tax laws and regulations. See ‘‘Taxation – Certain U.S. Federal Income Tax Considerations’’. As DTC can act on behalf of DTC direct participants only, who in turn act on behalf of DTC indirect participants, the ability of beneﬁcial owners who are indirect participants to pledge book- entry interests in the GDRs to persons or entities that do not participate in DTC, or otherwise take actions with respect to book-entry interests in the GDRs, may be limited.

Registration and Form Book-entry interests in the GDRs held through Euroclear and Clearstream, Luxembourg will be represented by the Master Regulation S GDR registered in the name of BT Globenet Nominees Limited as nominee of Citibank Europe plc as common depositary for Euroclear and Clearstream, Luxembourg. Book-entry interests in the GDRs held through DTC will be represented by the Master Rule 144A GDR which will be registered in the name of Cede & Co., as nominee for DTC, and which will be held by the Depositary, as custodian for DTC. As necessary, the Depositary will adjust the amounts of GDRs on the relevant register to reflect the amounts of GDRs held through Euroclear, Clearstream, Luxembourg and DTC, respectively. Beneficial ownership in the GDRs will be held through financial institutions as direct and indirect participants in Euroclear, Clearstream, Luxembourg and DTC. The aggregate holdings of book-entry interests in the GDRs in Euroclear, Clearstream, Luxembourg and DTC will be reflected in the book-entry accounts of each such institution. Euroclear, Clearstream, Luxembourg and DTC, as the case may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interest in the GDRs, will be responsible for establishing and maintaining accounts for their participants and clients having interests in the book-entry interests in the GDRs. The Depositary will be responsible for maintaining a record of the aggregate holdings of GDRs registered in the name of the common depositary for Euroclear and Clearstream, Luxembourg and the nominee for DTC. The Depositary will be responsible for ensuring that payments received by it from the Company for holders holding through Euroclear or Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg as the case may be, and the Depositary will also be responsible for ensuring that payments received by it from the Company for holders holding through DTC are received by DTC. The Company will not impose any fees in respect of the GDRs; however, holders of book-entry interests in the GDRs may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear, Clearstream, Luxembourg or DTC and certain fees and expenses payable to the Depositary in accordance with the terms of the Deposit Agreement. See ‘‘Terms and Conditions of the Global Depositary Receipts’’.

Global Clearance and Settlement Procedures Initial Settlement The GDRs will be in global form evidenced by the two Master GDRs. Investors electing to hold book-entry interests in GDRs through Euroclear or Clearstream, Luxembourg accounts will follow the settlement procedures applicable to depositary receipts. DTC participants acting on behalf of purchasers electing to hold book-entry interests in the GDRs through DTC will follow the delivery practices applicable to depositary receipts.

Secondary Market Trading For a description of the transfer restrictions relating to the GDRs, see ‘‘Transfer Restrictions’’.

253 Trading between Euroclear and Clearstream, Luxembourg Participants Secondary market sales of book-entry interests in the GDRs held through Euroclear or Clearstream, Luxembourg to purchasers of book-entry interests in the GDRs through Euroclear or Clearstream, Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear or Clearstream, Luxembourg and will be settled using the normal procedures applicable to depositary receipts.

Trading between DTC Participants Secondary market sales of book-entry interests in the GDRs held through DTC will occur in the ordinary way in accordance with DTC rules and will be settled using the procedures applicable to depositary receipts, if payment is effected in U.S. dollars, or free of payment, if payment is not effected in U.S. dollars. Where payment is not effected in U.S. dollars, separate payment arrangements outside DTC are required to be made between the DTC participants.

Trading between a DTC Seller and Euroclear/Clearstream, Luxembourg Purchaser When book-entry interests in the GDRs are to be transferred from the account of a DTC participant to the account of a Euroclear or Clearstream, Luxembourg participant, the DTC participant must send to DTC a delivery free of payment instruction at least two business days prior to the settlement date. DTC will in turn transmit such instruction to Euroclear or Clearstream, Luxembourg, as the case may be, on the settlement date. Separate payment arrangements are required to be made between the DTC participant and the relevant Euroclear or Clearstream, Luxembourg participant. On the settlement date, DTC will debit the account of its DTC participant and will instruct the Depositary to instruct Euroclear or Clearstream, Luxembourg, as the case may be, to credit the relevant account of the Euroclear or Clearstream, Luxembourg participant, as the case may be. In addition, on the settlement date, DTC will instruct the Depositary to: * decrease the amount of book-entry interests in the GDRs registered in the name of a nominee for DTC and represented by the Master Rule 144A GDR; and * increase the amount of book-entry interests in the GDRs registered in the name of the common nominee for Euroclear and Clearstream, Luxembourg and represented by the Master Regulation S GDR.

Trading between a Clearstream, Luxembourg/Euroclear Seller and DTC Purchaser When book-entry interests in the GDRs are to be transferred from the account of a Euroclear or Clearstream, Luxembourg participant to the account of a DTC participant, the Euroclear or Clearstream, Luxembourg participant must send to Euroclear or Clearstream, Luxembourg a delivery free of payment instruction at least one business day prior to the settlement date. Separate payment arrangements are required to be made between the DTC participant and the relevant Euroclear or Clearstream, Luxembourg participant, as the case may be. On the settlement date, Euroclear or Clearstream, Luxembourg, as the case may be, will debit the account of its participant and will instruct the Depositary to instruct DTC to credit the relevant account of Euroclear or Clearstream, Luxembourg, as the case may be, and will deliver such book-entry interests in the GDRs free of payment to the relevant account of the DTC participant. In addition, Euroclear or Clearstream, Luxembourg, as the case may be, shall on the settlement date instruct the Depositary to: * decrease the amount of the book-entry interests in the GDRs registered in the name of the common nominee and evidenced by the Master Regulation S GDR; and * increase the amount of the book-entry interests in the GDRs registered in the name of a nominee for DTC and represented by the Master Rule 144A GDR.

General Although the foregoing sets forth the procedures of Euroclear, Clearstream, Luxembourg and DTC in order to facilitate the transfers of interests in the GDRs among participants of Euroclear, Clearstream, Luxembourg and DTC, none of Euroclear, Clearstream, Luxembourg or DTC are under any obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Company, the Joint Global Coordinators, the Depositary, the Custodian or their respective agents will have any responsibility for the performance by Euroclear, Clearstream, Luxembourg or DTC or their respective participants of their respective obligations under the rules and procedures governing their operations.

254 Settlement of the GDRs Payment for the GDRs is expected to be made in U.S. dollars in same-day funds through the facilities of DTC, Euroclear and Clearstream, Luxembourg on the Closing Date. Book-entry interests in the GDRs held through Euroclear and Clearstream, Luxembourg will be represented by the Master Regulation S GDR registered in the name of Citivic Nominees Limited as nominee of Citibank Europe plc, as common depositary for Euroclear and Clearstream, Luxembourg. Book-entry interests in the GDRs held through DTC will be represented by the Master Rule 144A GDR, which will be registered in the name of Cede & Co., as nominee for DTC, and which will be held by the Depositary, as custodian for DTC. Except in limited circumstances described herein, investors may hold beneﬁcial interests in the GDRs evidenced by the corresponding Master GDR only through DTC, Euroclear or Clearstream, Luxembourg, as applicable. Transfers within DTC, Euroclear and Clearstream, Luxembourg will be in accordance with the usual rules and operating procedures of the relevant system.

255 INFORMATION RELATING TO THE DEPOSITARY

The Depositary is the issuer of the GDRs. Citibank, N.A. (Citibank) has been appointed as Depositary pursuant to the Deposit Agreements. Citibank is an indirect wholly owned subsidiary of Citigroup Inc., a Delaware corporation. Citibank is a commercial bank that, along with its subsidiaries and affiliates, offers a wide range of banking and trust services to its customers throughout the United States and the world. Citibank was originally organised on 16 June 1812 and is now a national banking association organised under the National Bank Act of 1864 of the United States of America. Citibank is primarily regulated by the United States Office of the Comptroller of the Currency. Its principal executive office is at 399 Park Avenue, New York, NY 10043. Citibank’s consolidated balance sheets are set forth in Citigroup’s most recent Annual Report (audited balance sheet) and Quarterly Report (unaudited), each on file on Form 10-K and Form 10-Q, respectively, with the U.S. Securities and Exchange Commission. Citibank’s articles of association and by-laws, each as currently in effect, together with Citigroup’s Annual Report on Form 10-K and Quarterly Report on Form 10-Q are available for inspection at the Depositary Receipt office of Citibank, 388 Greenwich Street, New York, NY 10013, United States of America. Holders of GDRs may contact Citibank, N.A. as Depositary for the GDRs with questions relating to the transfer of GDRs on the books of the Depositary, which shall be maintained at the Depositary’s principal administrative establishment located at 388 Greenwich Street, 14th Floor, New York, NY 10013, United States of America.

256 INDEPENDENT AUDITORS

The Financial Statements included in this Prospectus have been audited by PricewaterhouseCoopers Slovensko, s.r.o. as stated in their audit report (the Independent Auditor’s Report) appearing herein on pages F-1 to F-60. PricewaterhouseCoopers Slovensko, s.r.o. have registered ofﬁces at Na´mestie 1. ma´ja 18, 815 32 Bratislava, Slovak Republic. PricewaterhouseCoopers Slovensko, s.r.o. is a corporate member of the Slovak Chamber of Auditors, licence number 161. PricewaterhouseCoopers Slovensko, s.r.o. has acted as auditor for the Company since 2011. It has not resigned or been removed and has not been re-appointed during the period covered by the Financial Statements.

257 LEGAL MATTERS

Certain legal matters with respect to the Offering will be passed upon for the Company in respect of the laws of England and Wales and United States federal securities laws by Allen & Overy LLP, in respect of the laws of the Slovak Republic by Allen & Overy Bratislava, s.r.o. and in respect of the laws of the Czech Republic by Allen & Overy (Czech Republic) LLP, organizacˇnı´ slozˇka. Certain legal matters with respect to the Offering will be passed upon for the Underwriters in respect of the laws of England and Wales and the United States federal securities laws by White & Case LLP and in respect of the laws of the Slovak Republic by White & Case s.r.o.

258 ADDITIONAL INFORMATION

Authorisations and Consents The Company has obtained all consents, approvals and authorisations in the Slovak Republic in connection with the offer and sale of the Offer Securities.

No Material Adverse Change There has been no signiﬁcant change in the ﬁnancial or trading position of the Company (or of the Company together with its subsidiaries) since 31 December 2014 and no material adverse change in the prospects of the Company (or of the Company together with its subsidiaries) since 31 December 2014.

Documents on Display Copies of the following documents will be available for inspection in electronic and hard copy forms free of charge, during normal business hours on any weekday, at the registered offices of the Company from the date of publication of this Prospectus: * this Prospectus; * the Company’s Articles of Association and foundation deed; * the Financial Statements including the historical financial information; and * all reports, letters, statements and other documents any part of which is included or referred to in this Prospectus. The registered office of the Company is located at Bajkalska´ 28, 817 62 Bratislava.

Publication of the Prospectus After approval by the NBS, this Prospectus will be published by the Company on its website www.telekom.sk. The Company will also publish a notice on the publication of the Prospectus in a general or ﬁnancial information newspaper in the Slovak Republic in accordance with Article 31 of the Prospectus Regulation.

Websites Any reference to websites in this Prospectus is for information purposes only and such websites shall not form part of this Prospectus.

259 GLOSSARY

The following are selected terms and abbreviations used in this Prospectus: Access Directive means Directive 2002/19/EC Access and Interconnection Directive, as amended. Accounting Act means Slovak Act No. 431/2002 Coll. on Accounting, as amended. Act on Transfer of State Assets means Slovak Act No. 92/1991 Coll. on the conditions of transfer of state assets to other persons, as amended. Active prepaid SIM means an activated SIM that has been topped up in the last 12 months. Active postpaid SIM means a SIM with valid contracts that has not been de-activated or suspended. Advertising Act means Slovak Act No. 147/2001 Coll. Advertising Act, as amended. AMS Directive means EU Directive 2010/13/EU On the Coordination of Certain Provisions Laid Down by Law, Regulation or Administrative Action in Member States Concerning the Provision of Audio-visual Media Services, as amended. Audiovisual Act means Slovak Act No. 343/2007 on the Conditions of Registration, Public Distribution and Preservation of Audiovisual Works, Multimedia Works and Sound Recordings of Artistic Performances including Amendments and Supplements to some other Laws, as amended. ARPA means monthly service revenue from provision of ﬁxed-line voice services, broadband services or Pay-TV services divided by the average number of accesses for the respective service, reported in a calendar month. ARPU means average revenue per user. It is a measure of the revenue generated by one mobile subscriber per month. ARPU is calculated as monthly revenue from provision of mobile telecommunciation services divided by the average number of mobile subscribers reported in a calendar month measured by the number of active SIM cards. Authorisation Directive means Directive 2002/20/EC Authorisation Directive, as amended. BEREC means the Body of European Regulators for Electronic Communications. BEREC Regulation means Regulation No. 1211/2009 On Body of European Regulators for Electronic Communications. Blended churn rate means overall rate of customers cancelling their subscriptions. Blended ARPU means the average ARPU comprised of both postpaid and prepaid ARPU. Bratislava Stock Exchange means Burza cenny´ch papierov v Bratislave a.s. Broadcasting Act means Slovak Act No. 308/2000 Coll. on Broadcasting and Retransmission and on Amendments of Act No. 195/2000 Coll. on Telecommunications, as amended. Brussels I Recast means Council Regulation (EC) No 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters. Civil Code means Slovak Act No. 40/1964 Coll. Civil Code, as amended. Closing Date means 12 May 2015. Code means the Corporate Governance Code for Slovakia published in January 2008 prepared by the Central European Corporate Governance Association as promulgated by the Bratislava Stock Exchange.

260 Code of Conduct means the Deutsche Telekom’s Code of Conduct. Commission means the European Commission. Common Depositary means Citibank Europe plc. Company means Slovak Telekom, a.s. with its registered seat at Bajkalska´ 28, 817 62 Bratislava, Identiﬁcation No.: 35 763 469, registered in the Commercial register of District Court Bratislava I, Section: Sa, Insert No.: 2081/B. Conditions means the terms and conditions of the global depositary receipts as set forth in ‘‘Terms and Conditions of the Global Depositary Receipts’’. Constitutional Court means the Constitutional Court of the Slovak Republic. Consumer Protection Act means Slovak Act No. 250/2007 Coll. On Consumer Protection, as amended. CRA Regulation means Regulation (EC) No. 1060/2009, as amended. CRM means Customer Relationship Management. Current Articles means the Articles of Association of the Company as amended on 9 February 2015 and effective as of the date of this Prospectus. Custodian means Citibank Europe plc acting through its Slovak branch, Citibank Europe plc, pobocˇka zahranicˇnej banky. Damages Directive means Directive No. 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, as amended. Data Protection Directive means Directive No. 95/46/EC on the Protection of Individuals with Regard to the Processing of Personal Data and the Free Movement of such Data, as amended. Deposit Agreement means each deposit agreements expected to be entered into on or about the Closing Date between the Company and the Depositary in connection with the GDRs. Depositary means N.A., a national banking association organised under the laws of the United States. Deposited Property means all rights, securities, property and cash deposited with the Custodian which are attributable to the Deposited Shares (such rights, securities, property and cash together with the Deposited Shares). Deposited Shares means the Shares deposited under the Deposit Agreement. Deutsche Telekom Group means the group of companies ultimately controlled by Deutsche Telekom AG. Digital Broadcasting Act means Slovak Act No. 220/2007 Coll. On Digital Broadcasting, as amended. Directive on Markets in Financial means Directive 2004/39/EC on Markets in Financial Instruments Instruments as amended. Directive on Privacy and Electronic means Directive 2002/58/EC Directive On Privacy and Electronic Communications Communications as amended. DTC means The Depository Trust Company. DTH means Direct to Home, a satellite based television service. DTT means Double Taxation Treaties. e-Commerce Directive means Directive No. 2000/31/EC on Certain Legal Aspects of Information Society Services, in particular Electronic Commerce in the Internal Market, as amended. EEA means European Economic Area.

261 EFQM means European Quality Management Foundation. Electronic Commerce Act means Slovak Act No. 22/2004 Coll. on Electronic Commerce, as amended. Electronic Communications Act means Slovak Act No. 351/2011 Coll. on Electronic Communications, as amended. EOI means Equivalence of Input as defined in the Commission Recommendation No. 2013/466/EU on consistent non- discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment. EOO means Equivalence of Output as defined in the Commission Recommendation No. 2013/466/EU on consistent non- discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment. e-Privacy Directive means Directive No. 2002/58/EC on Privacy and Electronic Communications, as amended. ERP means the Group’s Enterprise Resource Planning. ETNO means the European Telecommunications Network Operators. European Enforcement Order means Regulation (EC) No. 805/2004 of the European Parliament Regulation and of the European Council regulates the Creation of a European Enforcement Order for Uncontested Claims, as amended. FCA means the United Kingdom Financial Conduct Authority. FDIC means the Federal Deposit Insurance Corporation. FESE means the Federation of European Securities Exchanges. FM means the Regulated Free Market of the Bratislava Stock Exchange. Framework Directive means Directive 2002/21/EC Framework Directive, as amended. FSMA means the United Kingdom Financial Services and Markets Act 2000. FTE means full time equivalents. FTRs means fixed termination rates. GDRs means global depositary receipts. Group means the Company and its consolidated subsidiaries Zoznam, s.r.o., Zoznam Mobile, s.r.o., Telekom Sec, s.r.o., PosAm, spol. s r.o. and DIGI SLOVAKIA, s.r.o. HDTV means high definition TV. HMRC means HM Revenue and Customs. HSPA+ means high speed packet access technology. ICT means information and communication technology. IFRS means International Financial Reporting Standards. Independent Auditor’s Report means audit report provided by PricewaterhouseCoopers Slovensko, s.r.o on the Financial Statements. IOB means the International Order Book. IRS means the U.S. Internal Revenue Service. ISPs means Internet service providers. Joint Global Coordinators means Citigroup Global Markets Limited and J.P. Morgan Securities plc. London Stock Exchange means London Stock Exchange plc. M2M means machine-to-machine.

262 Market Abuse Directive means Directive 2003/6/EC on Insider Dealing and Market Manipulation (Market Abuse), as amended. Member State means each EU Member State. MLM means the Main Listed Market of the Bratislava Stock Exchange. MMS means multimedia message service. MTF means multilateral trading facility. MTRs means mobile termination rates. National Table means the National Table of the Frequency Spectrum issued by Slovak NRA. NBS means the National Bank of Slovakia. New Articles means new Articles of Association of the Company adopted by the General Meeting of the Company on 31 March 2015 which will become effective as of the date of admission of the shares to trading on the main listed market of the Bratislava Stock Exchange. NGA means next generation access networks. NPF means the National Property Fund of the Slovak Republic, the Selling Shareholder. NRA means national regulatory authority. NT means network. Offer Securities means GDRs together with the Offer Shares. Offer Shares means 42,341,537 ordinary shares in the Company each fully paid- up with a nominal value of 10 EUR per share, offered by the Selling Shareholder. Ofﬁcial List means ofﬁcial list of the FCA. Order means the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. OSS means Operations Support System. OTT means over-the-top applications. Payment Services Act means Slovak Act No. 492/2009 Coll. on Payment Services, as amended. PBX means private branch exchange. PFIC means the passive foreign investment company. PLM means the Parallel Listed Market of the Bratislava Stock Exchange. Principal Shareholder means Deutsche Telekom Europe B.V. Private International Law Act means Slovak Act No. 97/1963 Coll. on Private and Procedural International Law, as amended. Prospectus Directive means Directive 2003/71/EC on the Prospectus to be Published when Securities are Offered to the Public or Admitted to Trading as amended. Prospectus Rules means Slovak Securities Act and Regulation (EC) No. 809/2004 of 29 April 2004 implementing the Prospectus Directive as amended. Public Procurement Act means Slovak Act No. 25/2006 Coll. on public procurement, as amended. pure LRIC means pure long-run incremental costs. PVR means personal video recording. Recommendation on Termination means Recommendation on the Regulatory Treatment of Fixed Rates Termination Rates and Mobile Termination Rates in the EU No. 2009/396/EC issued by the Commission in May 2009.

263 Regulated Information means information that the issuer has to publish pursuant to the Stock Exchange Act and Slovak Securities Act. Regulation S means Regulation S under the Securities Act. Relevant Markets Recommendation means Commission Recommendation C(2014) 7174 of 9 October 2014 on Relevant Product and Service Markets within the Electronic Communications Sector Susceptible to Ex Ante Regulation in Accordance with Directive 2002/21/EC of the European Parliament and of the Council on a Common Regulatory Framework for Electronic Communications Networks and Services 2014/710/EU. Retail Fixed Telephone Access means access to the public telephone network at a fixed location for residential and non-residential customers. Retention Directive means Directive 2006/24/EC on the Retention of Data Generated or Processed in Connection with the Provision of Publicly Available Electronic Communications Services or of Public Communications Networks as amended. RGUs means revenue generating units. Roaming Regulation means Regulation No. 531/2012 Regulation on Roaming on Public Mobile Communications Networks as amended. SAX means the Slovak share index. SDRT means stamp duty reserve tax. Securities means the Shares, together with GDRs. Securities Act means the U.S. Securities Act of 1933 as amended. Selling Shareholder means the National Property Fund of the Slovak Republic. Senior Management means Executive Management Board, Board of Directors and Supervisory Board. Shareholders’ Agreement means the shareholders’ agreement entered into between the Selling Shareholder, the Slovak Republic represented by the Ministry of Transport, Posts and Telecommunication and Deutsche Telekom, on 18 July 2000. Shares means 86,411,300 ordinary shares, each fully paid-up with a nominal value of 10 EUR, comprising 100% of the registered capital of the Company. Slovak Central Depository means Centra´lny depozita´r cennyćh papierov SR, a.s. Slovak Commercial Code means Slovak Act No. 513/1990 Coll. the Commercial Code, as amended. Slovak Competition Act means Slovak Act No. 136/2001 Coll. on Protection of Competition, as amended. Slovak Competition Authority means Antimonopoly Office of the Slovak Republic. Slovak Data Protection Act means Slovak Act No. 122/2013 Coll. on the Protection of Personal Data, as amended. Slovak NRA means the Slovak Regulatory Authority for Electronic Communications and Postal Services. Slovak Securities Act means Slovak Act No. 566/2001 Coll. on Securities and Investment Services, as amended. SMP means significant market power. SMP Undertaking means an undertaking which, pursuant to a decision of the Slovak NRA, has a significant market power in a relevant market. SMS means short message service. Stabilising Manager means Citigroup Global Markets Limited and Erste Group Bank AG.

264 Stock Exchange Act means Slovak Act No. 429/2002 Coll. on the Stock Exchange, as amended. Stock Exchange Rules means stock exchange rules adopted and published by the Bratislava Stock Exchange and approved by the NBS. Takeover Directive means Directive 2004/25/EC on Takeover Bids, as amended. Transparency Directive means Directive 2004/109/EC on Harmonisation of Transparency Requirements in Relation to Information about Issuers whose Securities are Admitted to Trading on a Regulated Market, as amended. UKLA means United Kingdom Listing Authority. ULL means unbundled local loop. Universal Service Directive means Directive 2002/22/EC Universal Service Directive, as amended. VAS means value added service. VOD means video on demand.

265 RESPONSIBILITY STATEMENT AND SIGNATURES

The Company, represented by Mr Miroslav Majorosˇ, Chairman of the Board of Directors and Mr Michal Vaverka, Vice-Chairman of the Board of Directors, accepts responsibility for all the information contained in this Prospectus. To the best of the knowledge and belief of the Company (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import. The Company has consented to the use of the Prospectus by the Selling Shareholder for the purposes of the Offering and it accepts responsibility for the content of the Prospectus also with respect to the Offering. In Bratislava, 17 April 2015

Miroslav Majorosˇ Michal Vaverka Chairman of the Board of Directors Vice-Chairman of the Board of Directors

266 INDEX TO FINANCIAL STATEMENTS

Consolidated Financial Statements of the Company as at and for the years ended 31 December 2014, 2013 and 2012 Independent Auditor’s Report F-2 Consolidated Income Statement F-4 Consolidated Statement of Comprehensive Income F-5 Consolidated Statement of Financial Position F-5 Consolidated Statement of Changes in Equity F-7 Consolidated Statement of Cash Flows F-8 Notes to the Consolidated Financial Statements F-9

F-1 F-2 F-3 F-4 Consolidated Financial Statements All amounts are in thousands of Euro, unless otherwise stated

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December

Notes 2014 2013 2012

Profit for the year 43,566 49,301 63,147

Other comprehensive income

Gain on remeasurement of available-for-sale investments 22 86 36 - Deferred tax income / (expense) 11 8 (8) - Net other comprehensive income to be reclassified to profit or loss in subsequent periods 94 28 -

(Loss) / gain on remeasurement of defined benefit plans 29 (1,825) 1,446 (2,131) Deferred tax income / (expense) 11 402 (310) 373 Net other comprehensive income not to be reclassified to profit or loss in subsequent periods (1,423) 1,136 (1,758)

Total comprehensive income for the year, net of tax 42,237 50,465 61,389

3 Slovak Telekom, a.s. The accompanying NotesF-5 form an integral part of these Consolidated Financial Statements Consolidated Financial Statements All amounts are in thousands of Euro, unless otherwise stated

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December Notes 2014 2013 2012 ASSETS Non-current assets Property and equipment 13 792,167 817,646 918,503 Intangible assets 14 404,359 443,016 358,118 Available-for-sale investments 22 32,102 176,633 - Deferred tax 11 826 918 190 Term deposits 23 - 1,088 - Trade and other receivables 17 1,725 9,142 9,135 Prepaid expenses and other assets 19 13,172 12,806 14,214 1,244,351 1,461,249 1,300,160 Current assets Inventories 20 12,109 14,192 14,038 Investments at amortized cost 21 3,120 3,120 74,326 Available-for-sale investments 22 171,965 49,865 - Term deposits 23 219,596 142,271 105,961 Escrow 24 1,000 13,000 - Loans 25 150,000 - - Trade and other receivables 17 112,107 130,730 110,522 Prepaid expenses and other assets 19 6,545 7,828 9,763 Current income tax receivables 9,986 825 4,002 Cash and cash equivalents 26 93,067 229,084 371,488 779,495 590,915 690,100 Assets held for sale 12 8,647 19,772 - 788,142 610,687 690,100 TOTAL ASSETS 2,032,493 2,071,936 1,990,260

EQUITY AND LIABILITIES Shareholders’ equity Issued capital 27 864,113 864,113 864,113 Share premium 27 386,139 386,139 386,139 Statutory reserve fund 172,823 172,823 170,634 Other (1,907) 1,812 634 Retained earnings and profit for the year 187,558 160,392 183,848 1,608,726 1,585,279 1,605,368 Non-current liabilities Deferred tax 11 115,916 128,288 150,479 Provisions 29 25,751 16,915 18,215 Trade and other payables 30 638 1,088 255 Other liabilities and deferred income 32 3,511 2,810 4,830 145,816 149,101 173,779 Current liabilities Provisions 29 37,420 34,294 5,243 Trade and other payables 30 128,959 225,230 133,536 Other liabilities and deferred income 32 110,632 73,995 72,198 Current income tax liabilities 940 4,037 136 277,951 337,556 211,113 Total liabilities 423,767 486,657 384,892 TOTAL EQUITY AND LIABILITIES 2,032,493 2,071,936 1,990,260

4 Slovak Telekom, a.s. The accompanying NotesF-6 form an integral part of these Consolidated Financial Statements Consolidated Financial Statements All amounts are in thousands of Euro, unless otherwise stated

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December

Statutory Issued Share reserve Retained Total Notes capital premium fund Other earnings equity

Year ended 31 December 2012 At 1 January 2012 864,113 386,139 159,240 2,380 224,095 1,635,967 Profit for the year - - - - 63,147 63,147 Other comprehensive income - - - (1,758) - (1,758) Total comprehensive income - - - (1,758) 63,147 61,389 Transactions with shareholders: Allocation to funds 27 - - 11,394 - (11,394) - Other changes in equity - - - 12 - 12 Dividends 27 - - - - (92,000) (92,000) At 31 December 2012 864,113 386,139 170,634 634 183,848 1,605,368

Year ended 31 December 2013 At 1 January 2013 864,113 386,139 170,634 634 183,848 1,605,368 Profit for the year - - - - 49,301 49,301 Other comprehensive income - - - 1,164 - 1,164 Total comprehensive income - - - 1,164 49,301 50,465 Transactions with shareholders: Allocation to funds 27 - - 2,189 - (2,189) - Other changes in equity - - - 14 - 14 Dividends 27 - - - - (70,568) (70,568) At 31 December 2013 864,113 386,139 172,823 1,812 160,392 1,585,279

Year ended 31 December 2014 At 1 January 2014 864,113 386,139 172,823 1,812 160,392 1,585,279 Profit for the year - - - - 43,566 43,566 Other comprehensive income - - - (1,329) - (1,329) Total comprehensive income - - - (1,329) 43,566 42,237 Transactions with shareholders: Other changes in equity - - - (2,390) - (2,390) Dividends 27 - - - - (16,400) (16,400) At 31 December 2014 864,113 386,139 172,823 (1,907) 187,558 1,608,726

5 Slovak Telekom, a.s. The accompanying NotesF-7 form an integral part of these Consolidated Financial Statements Consolidated Financial Statements All amounts are in thousands of Euro, unless otherwise stated

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December Notes 2014 2013 2012

Operating activities Profit for the year 43,566 49,301 63,147 Adjustments for: Depreciation, amortization and impairment losses 12,13,14 194,956 236,921 236,352 Interest income, net (2,289) (2,442) (4,399) Income tax expense 11 27,395 20,857 50,495 Gain on disposal of property and equipment and intangible assets 7 (1,248) (1,160) (1,113) Other non-cash items 3,709 7,679 4,586 Movements in provisions 28,164 25,534 (1,415) Changes in working capital Change in trade and other receivables 20,423 (15,944) (8,050) Change in inventories 2,506 155 (2,512) Change in trade and other payables (1,384) 13,432 13,495 Cash flows from operations 315,798 334,333 350,586 Income taxes paid (50,844) (43,936) (57,437) Net cash flows from operating activities 264,954 290,397 293,149

Investing activities Purchase of property and equipment and intangible assets (178,273) (111,949) (104,462) Proceeds from disposal of property and equipment and intangible assets 2,718 2,050 1,857 Acquisition of interest in subsidiaries 16.5 1,638 (52,746) (2,438) Acquisition of investments at amortized cost - - (70,582) Proceeds from disposal of investments at amortized cost - 70,582 78,094 Acquisition of available-for sale investments (32,937) (231,465) - Proceeds from disposal of available-for sale investments 49,981 1,930 - Disbursement of loans (150,000) - (140,000) Repayment of loans - - 330,000 Acquisition of term deposits (423,519) (207,456) (136,029) Termination of term deposits 348,276 169,669 30,000 Interest received 6,569 1,452 5,975 Net cash used in investing activities (375,547) (357,933) (7,585)

Financing activities Dividends paid 27 (16,400) (70,568) (92,000) Repayment of finance lease liabilities (5) (53) (109) Repayment of other financial liabilities (8,378) (3,419) - Other charges paid (664) (788) (600) Net cash used in financing activities (25,447) (74,828) (92,709)

Effect of exchange rate changes on cash and cash equivalents 23 (40) - Net (decrease) / increase in cash and cash equivalents (136,017) (142,404) 192,855 Cash and cash equivalents at 1 January 26 229,084 371,488 178,633

Cash and cash equivalents at 31 December 26 93,067 229,084 371,488

6 Slovak Telekom, a.s. The accompanying NotesF-8 form an integral part of these Consolidated Financial Statements Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Index to the notes to the consolidated financial statements 1. General information 8 2. Accounting policies 11 3. Financial risk management 29 4. Segment reporting 34 5. Revenue 36 6. Staff costs 37 7. Other operating income 37 8. Other operating costs 37 9. Financial income 38 10. Financial expense 38 11. Taxation 38 12. Assets held for sale 40 13. Property and equipment 41 14. Intangible assets 42 15. Impairment of goodwill 44 16. Business combinations 45 17. Trade and other receivables 47 18. Finance lease – the Group as lessor 47 19. Prepaid expenses and other assets 48 20. Inventories 48 21. Investments at amortized cost 48 22. Available-for-sale investments 49 23. Term deposits 49 24. Escrow 50 25. Loans 50 26. Cash and cash equivalents 50 27. Shareholders’ equity 50 28. Earnings per share 52 29. Provisions 52 30. Trade and other payables 54 31. Finance lease – the Group as lessee 54 32. Other liabilities and deferred income 54 33. Commitments 55 34. Operating lease – the Group as lessee 55 35. Related party transactions 55 36. Contingencies 57 37. Audit fees 58 38. Events after the reporting period 58

7 Slovak Telekom, a.s. F-9 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

1. General information

These consolidated financial statements have been prepared for Slovak Telekom, a. s. (“the Company“ or “Slovak Telekom”) and its subsidiaries DIGI SLOVAKIA, s.r.o. (“DIGI”), PosAm, spol. s r. o. (“PosAm”), Zoznam, s. r. o. (“Zoznam”), Zoznam Mobile, s. r. o. (“Zoznam Mobile”) and Telekom Sec, s. r. o. (“Telekom Sec”) (together “the Group”). Slovak Telekom is a joint-stock company incorporated on 1 April 1999 in the Slovak Republic. The Company’s registered office is located at Bajkalská 28, 817 62 Bratislava. The business registration number (IČO) of the Company is 35 763 469 and the tax identification number (DIČ) is 202 027 3893. On 4 August 2000, Deutsche Telekom AG (“Deutsche Telekom” or “DT AG”) gained control of the Company through the acquisition of 51% of the shares of Slovak Telekom. The transaction involved the purchase of existing shares from the National Property Fund of the Slovak Republic and the issue of new shares. On 13 December 2013 Deutsche Telekom AG transferred 51% share of Slovak Telekom and voting rights associated with the shares to T-Mobile Global Holding Nr. 2 GmbH, and on 17 December 2013 T-Mobile Global Holding Nr. 2 GmbH transferred 51% share and voting rights associated with the shares to CMobil B.V. The change of the shareholders came into effect by registering in the Central Securities Depository of the Slovak Republic. T-Mobile Global Holding Nr. 2 GmbH became the shareholder of Slovak Telekom on 18 December 2013 and CMobil B.V. became the shareholder of Slovak Telekom on 10 January 2014. The Slovak Republic retains 34% of the shares of the Company through the Ministry of the Economy of the Slovak Republic and the National Property Fund of the Slovak Republic retains 15% of the shares of the Company. Effective 1 July 2010 Slovak Telekom, a.s. and T-Mobile Slovensko, a.s. (“T-Mobile”) have been legally merged. T-Mobile was wound up without liquidation by means of an up-stream merger. Slovak Telekom became a legal successor of T-Mobile and consequently has taken over their assets and liabilities. Since October 2011 the integrated Company operates on the market under one common brand named Telekom replacing brand names T-Com and T-Mobile. Slovak Telekom is the largest universal multimedia operator in Slovakia offering residential and corporate clientele benefits of comprehensive solutions provided from a single source. Slovak Telekom offers a full-array of data and voice services, and owns and operates the fixed and mobile telecommunications network covering almost the entire territory of the Slovak Republic. In the field of the fixed network, Slovak Telekom systematically invests in the most advanced optical infrastructure, operates the Next Generation Network (NGN) and is the largest broadband provider in the country. As the first multimedia operator in the country, it offers the IPTV (Magio TV) and satellite TV (Magio SAT) via fixed networks and satellite technology DVB-S2. In the field of mobile communication, it provides as the only operator internet connectivity via five technologies for high-speed data transmission - GPRS/EDGE, Wireless LAN (Wi-Fi), UMTS FDD/HSDPA/HSUPA, FLASH-OFDM and LTE (as the first operator commercially launched services running on the LTE network). Slovak Telekom established and operates public mobile telecommunications networks over frequencies: 900 MHz and 1800 MHz under the standard GSM (Global System for Mobile Communications) to provide voice services. Slovak Telekom also provides wireless broadband internet access and Managed Data Network Services over frequencies 2100 MHz under the standard UMTS (Universal Mobile Telecommunications System), 800 MHz, 1800 MHz and 2600 MHz under standard LTE and 450 MHz under the Flash-OFDM standard. In addition, Slovak Telekom provides Fixed Wireless Access (FWA) over frequencies 26 GHz/28 GHz. On 30 December 2013 the Telecommunications Office of the Slovak Republic granted to Slovak Telekom the license for the provision of mobile services on 800 MHz and 2600 MHz frequency bands (LTE license) valid until 31 December 2028. The frequency authorization granted by the Telecommunications Office of the Slovak Republic for the provision of mobile services on 900 MHz, 1800 MHz and 450 MHz frequency bands is valid up to 31 December 2025. The UMTS license for 2100 MHz frequency band (including the 28/29 GHz frequency band for backhaul connections) is valid up to 31 August 2026. The 28 GHz frequency licenses granted by the Telecommunications Office of the Slovak Republic is valid until 21 December 2017 and 26 GHz frequency is valid until 23 January 2018.

8 Slovak Telekom, a.s. F-10 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

1. General information (continued)

At 31 December 2014, the Company had the following fully consolidated direct subsidiaries: Name and registered office Activity Share and voting rights

DIGI SLOVAKIA, s.r.o., Röntgenova 26, 851 01 Bratislava TV services, broadband services and TV 100% channels production PosAm, spol. s r. o., Odborárska 21, 831 02 Bratislava IT services, applications and business 51% solutions Zoznam, s.r.o., Viedenská cesta 3-7, 851 01 Bratislava Internet portal 100% Zoznam Mobile, s.r.o., Viedenská cesta 3-7, 851 01 Bratislava Mobile content provider 100% Telekom Sec, s.r.o., Bajkalská 28, 817 62 Bratislava Security services 100%

All subsidiaries are incorporated in the Slovak Republic. Shares in the subsidiaries are not traded on any public market. On 1 September 2013 the Group acquired 100% share capital and voting rights in DIGI (Note 16). In October 2013 Slovak Telekom increased registered capital of DIGI by EUR 1,000 thousand. On 29 January 2010 the Group acquired 51% of the share capital and voting rights in PosAm and obtained control of PosAm. The business combination was accounted for as if the acquirer had obtained a 100% interest in the acquiree due to existence of put & call options which, if triggered, may result in the transfer of the residual 49% equity interest in PosAm to Slovak Telekom. The Group concluded that terms of the transaction represent a contractual obligation to purchase the Group’s equity instrument. The fair value of such liability (i.e. present value of the redemption amount) has been reclassified from equity (non-controlling interest) to financial liabilities (Note 30). Accordingly, the consideration transferred includes the present value of the liability related to the acquisition of 49% of PosAm under the put & call options. PosAm directs its business activities towards providing IT services, applications solutions, infrastructure solutions and consulting to corporate customers. On 31 August 2005 the Group purchased 90% share of Zoznam and 100% share of Zoznam Mobile. On 30 June 2006 the Group acquired the remaining 10% share in Zoznam. Zoznam operates one of the most frequently visited Slovak internet portals, Zoznam.sk, specializes in internet website search and offers on-line products like a news server Topky.sk, specialised magazines, freemail service, job portal or catalogue of companies. Zoznam Mobile provides mobile internet content services, mobile technologies and tailor-made solutions. In December 2013 Slovak Telekom increased registered capital of Telekom Sec by EUR 5 thousand.

9 Slovak Telekom, a.s. F-11 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

1. General information (continued)

Members of the Statutory Boards at 31 December 2014 Board of Directors Chair: Ing. Miroslav Majoroš Vice-chair: Ing. Michal Vaverka Member: Dr. Robert Hauber Member: Kerstin Günther Member: Franco Musone Crispino Member: Ing. Miloš Šujanský, PhD., M.B.A. Member: Ing. Martin Mác

Supervisory Board Chair: Dr. Hans-Peter Schultz Vice-chair: Ing. Michal Lukačovič Member: Ing. Denisa Herdová Member: Miriam Kvočková Member: Ing. Peter Weber Member: Ing. Drahoslav Letko Member: Mgr. Martin Habán Member: Cornelia Elisabeth Sonntag Member: Tanja Wehrhahn

There were no changes entered in the Commercial Register in 2014. T-Mobile Global Holding Nr. 2 GmbH with registered office at Landgrabenweg 151, Bonn, Germany was the parent of the Company at 31 December 2013. CMobil B.V. with registered office at Stationsplein 8 K, Maastricht, the Netherlands became the parent of the Company on 10 January 2014. Deutsche Telekom AG, with its registered office at Friedrich Ebert Allee 140, Bonn, Germany, is the ultimate parent of the group of which the Company is a member and for which the group financial statements are drawn up. The ultimate parent’s consolidated financial statements are available at their registered office or at the District Court of Bonn HRB 6794, Germany.

10 Slovak Telekom, a.s. F-12 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

2. Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation The financial statements have been prepared under the historical cost convention, except where disclosed otherwise. The Group’s functional currency is the Euro (“EUR”), the financial statements are presented in Euros and all values are rounded to the nearest thousands, except where otherwise indicated. The financial statements were prepared using the going concern assumption that the Group will continue its operations for the foreseeable future. The preparation of financial statements in conformity with International Financial Reporting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 2.20.

Statement of compliance These financial statements are the ordinary consolidated financial statements of the Group and have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as adopted by the European Union (“IFRS”). The consolidated financial statements are available at the Company's registered office and in the public administration information system (the Register) administered by the Ministry of Finance of the Slovak Republic.

Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December for each year. The financial statements of the subsidiaries are prepared for the same reporting year as the Company, using uniform accounting policies. Subsidiaries are all entities in which the Company has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. All subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that control ceases. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the assets transferred, shares issued or liabilities undertaken at the date of acquisition. The excess of the cost of acquisition over the fair value of the net assets and contingent liabilities of the subsidiary acquired is recorded as goodwill. The consideration payable includes the fair value of any asset or liability resulting from a contingent consideration arrangement. If the amount of contingent consideration (a liability) changes as a result of a post-acquisition event (such as meeting an earnings target), the change is recognized in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Put option on share held in subsidiary by minority shareholders is classified as financial liability. The corresponding amount is reclassified from equity (non-controlling interest). Subsequent measurement of the liability is at amortised cost in accordance with IAS 39. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Costs directly attributable to the acquisition are expensed. All intra-group balances, transactions, income and expenses and unrealized gains and losses resulting from intra-group transactions are eliminated in full.

11 Slovak Telekom, a.s. F-13 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.2 Property and equipment Property and equipment is initially measured at historical cost, excluding the costs of day-to-day servicing. The cost of property and equipment acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, property and equipment is carried at cost less any accumulated depreciation and provision for impairment, where required. The initial estimate of the costs of dismantling and removing the item of property and equipment and restoring the site on which it is located is also included in the costs, if the obligation incurred can be recognized as a provision according to IAS 37. Historical cost includes all costs directly attributable to bringing the asset into working condition for its use as intended by the management. In case of network, costs comprise all expenditures, including internal costs directly attributable to network construction, and include contractors’ fees, materials and direct labour. Costs of subsequent enhancement are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Maintenance, repairs and minor renewals are charged to the income statement as incurred. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included within other operating income or expense in the income statement in the period in which the asset is derecognized. Net disposal proceeds consist of both cash consideration and the fair value of non-cash consideration received. Depreciation is calculated on a straight-line basis from the time the assets are available for use over their estimated useful lives. Depreciation charge is identified separately for each significant part of an item of property and equipment. The useful lives assigned to the various categories of property and equipment are: Buildings and masts 50 years Other structures 8 to 30 years Duct, cable and other outside plant 8 to 50 years Telephone exchanges and related equipment 4 to 30 years Radio and transmission equipment 5 to 8 years Other property and equipment 13 months to 30 years

No depreciation is provided on freehold land or capital work in progress. Residual values and useful lives of property and equipment are reviewed and adjusted in accordance with IAS 8, where appropriate, at each financial year-end. For further details on groups of assets influenced by the most recent useful life revisions refer to Note 2.20. Property and equipment are reviewed for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and its value in use. Impairment losses are reversed if the reasons for recognizing the original impairment loss no longer apply.

2.3 Assets held for sale Property and equipment are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction, the sale is considered as highly probable, it must be available for immediate sale in its present condition and it must be genuinely be sold, not abandoned. When property and equipment meet these criteria, they are measured at the lower of their carrying amount and fair value less costs to sell and are reclassified from non-current to current assets. Property and equipment once classified as held for sale are not depreciated. Impairment of such assets is recognized if fair value less costs of disposal is lower than the carrying amount. If fair value less costs of disposal subsequently increases, the impairment loss previously recognized must be reversed. The reversal of impairment losses is limited to the impairment losses previously recognized for the assets concerned. If the requirements for the classification of assets as held for sale are no longer met, the assets may no longer be shown as held for sale. These assets are to be measured at the lower of the carrying amount that would have applied if the assets had not been classified as held for sale, and the recoverable amount at the date at which the requirements for the classification as held for sale are no longer met.

12 Slovak Telekom, a.s. F-14 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.4 Intangible assets Intangible assets acquired separately are recognized when control over them is assumed and are initially measured at historical cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and provision for impairment, where required. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. With the exception of goodwill, intangible assets have a finite useful life and are amortized using the straight-line method over their estimated useful lives. The assets’ residual values and useful lives are reviewed and adjusted in accordance with IAS 8, as appropriate, at each financial year-end. For further details on the groups of assets influenced by the most recent useful life revisions refer to Note 2.20. The useful lives assigned to the various categories of intangible assets are as follows: Software 2 to 16 years Licenses 1 to 22 years Customer relationships 9 to 13 years

Any gain or loss on derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and is included within other operating income or expense in the income statement in the period in which the asset is derecognized.

Software and licenses Development costs directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met: a) it is technically feasible to complete the software product so that it will be available for use; b) management intends to complete the software product and use or sell it; c) there is an ability to use or sell the software product; d) it can be demonstrated how the software product will generate probable future economic benefits; e) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and f) the expenditures attributable to the software product during its development can be reliably measured. Directly attributable costs capitalized as part of a software product include software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet recognition criteria and costs associated with maintaining computer software programs are recognized as an expense as incurred. Acquired software licenses are capitalized on the basis of the costs incurred to acquire and bring to use specific software. Costs comprise all directly attributable costs necessary to create, produce and prepare the software to be capable of operating in a manner intended by the management, including enhancements of applications in use. Costs associated with the acquisition of long term frequency licenses are capitalized. Useful lives of concessions and licenses are based on the underlying agreements and are amortized on a straight-line basis over the period from availability of the frequency for commercial use until the end of the initial concession or license term. No renewal periods are considered in the determination of useful life. Recurring license fees paid for core frequencies may be subject to change and therefore cannot be reliably estimated over the duration of the license term and are recognized as other operating costs in the period they relate to. Recurring license fees are paid during whole period of granted license. The Group accounts for content licenses as intangible assets if there is unavoidable obligation to pay for the content rights, there are no doubts that the content will be delivered and the cost can be reliably estimated. Acquired content licenses are shown at historical cost. If there is no fixed price defined in the contract, the Group uses best estimate to assess the fee during the contracted period. The useful lives of content licenses are based on the underlying agreements and are amortized on a straight-line basis over the period from availability for commercial use until the end of the license term which is granted to the Group.

13 Slovak Telekom, a.s. F-15 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.4 Intangible assets (continued) Goodwill Goodwill arises on the acquisition of subsidiaries and represents an excess of consideration transferred over Group’s interest in net fair value of the net identifiable assets acquired, liabilities and contingent liabilities of the acquiree and the fair value of non-controlling interest in the acquiree. Following initial recognition, goodwill is carried at cost less any accumulated impairment losses. Goodwill is not amortized but it is reviewed for impairment annually or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired (Note 15). Carrying value of goodwill is compared to its recoverable amount, which is the higher of value in use and fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed. Fair values less costs to sell of cash-generating units with allocated goodwill tested for impairment are in Level 3 of the fair value hierarchy.

2.5 Impairment of non-financial assets An impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. Assets with indefinite useful life or intangible assets not ready to use are not subject to amortization and are tested for impairment annually. Impairment losses for each class of asset are disclosed within depreciation, amortization and impairment losses in the income statement. Reversals of impairment losses are disclosed within other operating income in the income statement. For the purpose of assessing impairment, assets are grouped into cash-generating units, representing the smallest groups of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Group determines the recoverable amount of a cash-generating unit on the basis of fair value less costs of disposal. The calculation is determined by reference to discounted cash flows calculations. These discounted cash flows calculations are based on financial budgets approved by management, usually covering a ten or four-year period. Cash flows beyond the detailed planning periods are extrapolated using appropriate growth rates. Key assumptions on which management bases the determination of fair value less costs of disposal include average revenue per user, customer acquisition and retention costs, churn rates, capital expenditures, market share, growth rates and discount rates. Discount rates reflect risks specific to the cash-generating unit. Cash flows reflect management assumptions and are supported by external sources of information. This is highly judgmental, which carries the inherent risk of arriving at materially different recoverable amounts if estimates used in the calculations proved to be inappropriate. If carrying amount of a cash-generating unit to which the goodwill is allocated exceeds its recoverable amount, goodwill allocated to this cash-generating unit is reduced by the amount of the difference. If an impairment loss recognized for the cash-generating unit exceeds the carrying amount of the allocated goodwill, the additional amount of the impairment loss is recognized through pro rata reduction of the carrying amounts of assets allocated to the cash-generating unit. Impairment losses on goodwill are not reversed. In addition to the general impairment testing of cash-generating units, the Group also tests individual assets if their purpose changes from being held and used to being sold or otherwise disposed of. In such circumstances the recoverable amount is determined by reference to fair value less costs to sell. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from synergies of combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal purposes. Impairment is determined by assessing the recoverable amount of cash-generating unit to which the goodwill relates. For more details on impairment of goodwill refer to Note 15.

2.6 Inventories Cost of inventories comprises all the costs of purchase and other costs incurred in bringing the inventories to their present location and condition, including customs, transportation and similar costs. Inventories are stated at the lower of cost and net realizable value. Cost of inventory is determined on the weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated selling expenses. An allowance is created against slow-moving and obsolete inventories. Phone sets are often sold for less than cost in connection with promotions to obtain new subscribers with minimum commitment periods. Such loss on the sale of equipment is recorded upon customer acquisition or retention within material and equipment costs in the income statement. Phone set inventory impairment allowances are recognised immediately when the phone sets are no longer marketable to secure subscriber contractual commitment or if the resale value on a standalone basis (without the subscriber commitment) is lower than cost.

14 Slovak Telekom, a.s. F-16 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.7 Cash and cash equivalents Cash and cash equivalents comprise cash at banks and in hand and short-term deposits with original maturity of three months or less from the date of acquisition. For the purpose of the statement of cash flows, cash and cash equivalents are net of bank overdrafts. In the statement of financial position, bank overdrafts are included in borrowings in current liabilities.

2.8 Financial assets The Group classifies its financial assets as: loans and receivables, financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. The Group determines the classification of its financial assets on initial recognition and, where allowed and appropriate, re- evaluates this designation at each financial year-end. Regular purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell the asset. When financial assets are recognized, they are initially measured at fair value, plus, in case of investments not held at fair value through profit or loss, directly attributable transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when the rights to receive cash flows from the asset have expired or the Group has transferred its rights to receive cash flows from the asset and has transferred substantially all the risks and rewards of the ownership. Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Group’s loans and receivables are detailed in Note 3.6. Trade receivables are amounts due from customers for services performed or merchandise sold in the ordinary course of business. Trade and other receivables are included in current assets, except for maturities greater than 12 months after the financial year-end. These are classified as non-current assets. Trade and other receivables are initially recognized at fair value and subsequently measured at amortized cost, using the effective interest rate method, less allowance for impairment. For the purpose of impairment evaluation, trade receivables are grouped together on the basis of similar credit risk characteristics, tested collectively for impairment and written down, if necessary. The amount of impairment loss recognised is the difference between the asset´s carrying amount and present value of estimated future cash flows which are based on the past experience of the collectability of overdue receivables. Allowance for impairment reflects the estimated credit risk. When a trade receivable for which an allowance was recognized becomes uncollectible or sold, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognized within other operating income in the income statement. Amounts payable to and receivable from the same international telecommunication operators are shown net in the statement of financial position when a legally enforceable right to set-off exists and the Group intends to settle them on a net basis.

Finance lease receivables Where Group is a lessor in a lease which transfers substantially all the risks and rewards incidental to ownership to the lessee, the assets leased out are presented as a finance lease receivable and carried at the present value of the future lease payments. Finance lease receivables are initially recognized at commencement (when the lease term begins), using a discount rate determined at inception. The difference between the gross receivable and the present value represents unearned finance income which is recognized over the term of the lease using the effective interest rate method.

15 Slovak Telekom, a.s. F-17 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.8 Financial assets (continued)

Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated upon initial recognition in this category. A financial asset held for trading is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current. Gains or losses arising from changes in the fair value of “financial assets through profit or loss” category are presented in the income statement within financial income or financial expense in the period in which they arise. Derivatives are also classified as held for trading. Gains or losses on assets held for trading are recognized in the income statement within financial income or financial expense. The Group does not apply hedge accounting in accordance with IAS 39 for its financial instruments, therefore all gains and losses are recognized in the income statement within financial income or financial expense.

Held-to-maturity investments Quoted non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity. After initial recognition held-to-maturity investments are measured at amortized cost using the effective interest rate method, less impairment. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. Gains and losses are recognized in profit or loss when the investments are derecognized or impaired.

Available-for-sale investments Available-for-sale financial investments include debt securities. Debt securities in this category are those that may be sold in response to needs for liquidity or in response to change in the market conditions. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income and credited in the available-for-sale reserve until the investment is derecognized, at which time the cumulative gain or loss is recognized in financial income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the income statement in financial expense. Interest earned whilst holding available-for-sale financial investments is reported as interest income using the effective interest rate method.

2.9 Impairment of financial assets The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the financial asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Impairment losses of financial assets reduce their carrying amount and are recognized in the income statement against allowance accounts. Upon derecognition of a financial asset the net carrying amount includes any allowance for impairment. Any gains or losses on derecognition are calculated as the difference between the proceeds from disposal and the net carrying amount and are presented in the income statement. If, in a subsequent period, the amount of an impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized in the income statement.

16 Slovak Telekom, a.s. F-18 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.10 Financial liabilities There are two measurement categories for financial liabilities used by the Group: financial liabilities carried at amortized costs represented by trade and other payables and financial liabilities at fair value through profit or loss. A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are initially measured at fair value. After initial recognition trade and other payables are measured at amortized cost using the effective interest rate method.

Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in profit or loss. The Group does not apply hedge accounting in accordance with IAS 39 for its financial instruments, therefore all gains and losses are recognized in the income statement within financial income or financial expense.

2.11 Prepaid expenses The Group has easement rights to use and access technological equipment sited in properties owned by third parties. These easements are presented within prepaid expenses in the statement of financial position. Easements are initially recognized at their net present value and amortized over their expected duration. Amortization of easement rights is presented within other operating costs in the income statement.

2.12 Provisions and contingent liabilities Provisions for asset retirement obligations, restructuring costs and legal and regulatory claims are recognized when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. If the effect of the time-value of money is material, provisions are discounted using a risk-adjusted, pre-tax discount rate. Where discounting is used, the increase in the provision due to the passage of time is recognized as a financial expense. No provision is recognized for contingent liabilities. A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

Asset retirement obligations Asset retirement obligations relate to future costs associated with the retirement (dismantling and removal from use) of non-current assets. The obligation is recognized in the period in which it has been incurred and it is considered to be an element of cost of the related non-current asset in accordance with IAS 16. The obligation is measured at present value, and it is depreciated over the estimated useful life of the related non-current asset. Upon settlement of the liability, the Group either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

17 Slovak Telekom, a.s. F-19 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.13 Employee benefit obligations

Retirement and other long-term employee benefits The Group provides retirement and other long-term benefits under both defined contribution and defined benefit plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into separate publicly or privately administered entities on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the Group has no further payment obligations. The contribution is based on gross salary payments. The cost of these payments is charged to the income statement in the same period as the related salary cost. The Group also provides defined retirement and jubilee benefit plans granting certain amounts of pension or jubilee payments that an employee will receive on retirement, usually dependant on one or more factors such as an age, years of service and compensation. These benefits are unfunded. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The last calculation was prepared on 31 December 2014. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using discount rate of weighted-average yields for high-quality (Bloomberg Aa*) - non-cancellable, non-putable corporate bonds. The currency and term of the bonds are consistent with the currency and estimated term of the benefit obligations. Past service costs are recognized immediately in income statement. Remeasurement gains and losses arising from experience-based adjustments and changes in actuarial assumptions are recognized in the period in which they occur within other comprehensive income for retirement benefits and within the income statement for jubilee benefits. Current service cost, past service cost and curtailment gain are included within wages and salaries under staff costs. Interest costs are included within financial expense.

Termination benefits Employee termination benefits are recognized in the period in which is the Group demonstrably committed to a termination without possibility of withdrawal, i.e. the management defines and authorizes a detailed plan listing the number and structure of employees to be discharged and announces it to the trade unions. Expenses related to termination benefits are disclosed within staff costs in the income statement.

2.14 Revenue recognition Revenue is recognized upon the delivery of services and products and customer acceptance thereof and to the extent that: it is probable that economic benefits will flow to the Group; the revenue can be measured reliably and when specific criteria as stated below have been met. Revenue from rendering of services and from sales of equipment is shown net of value added tax and discounts. Revenue is measured at the fair value of consideration received or receivable. The Group recognizes revenue as follows: The Group provides customers with narrow and broadband access to its fixed, mobile and TV distribution networks. Service revenue is recognized when the services are provided in accordance with contractual terms and conditions. Airtime revenue is recognized based upon minutes of use and contracted fees less credits and adjustments for discounts, while subscription and flat rate revenue is recognized in the period they relate to. Revenue from prepaid cards is recognized when credit is used by a customer or after period of limitation when unused credit elapsed. Interconnect revenue generated from calls and other traffic that originates in other operators’ networks is recognized as revenue at the time when the call is received in the Group’s network. The Group pays a proportion of the revenue it collects from its customers to other operators for calls and other traffic that originate in the Group’s network but use other operators’ networks. Revenue from interconnect is recognized gross. Content revenue is recognized gross or net of the amount due to a content provider. Depending on the nature of relationship with the content provider, gross presentation is used when the Group acts as a principal in the transaction with a final customer. Content revenue is recognized net, if the Group acts as an agent; i.e. the content provider is responsible for service content and the Group does not assume risks and rewards of ownership.

18 Slovak Telekom, a.s. F-20 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.14 Revenue recognition (continued) Revenue from multiple revenue arrangements is considered as comprising identifiable and separable components, to which general revenue recognition criteria can be applied separately. Numerous service offers are made up of two components, a product and a service. When separable components have been identified, an amount received or receivable from a customer is allocated to individual deliverables based on each component’s fair value. Amount allocable to a delivered item(s) is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (the non-contingent amount). The revenue relating to the item(s) is recognized when risks and rewards are transferred to the customer which occurs on delivery. Revenue relating to the service element is recognized on a straight-line basis over the service period. Revenue from sales of equipment is recognized when the equipment is delivered and installation is completed. Completion of an installation is a prerequisite for recognizing revenue on such sales of equipment where installation is not simple in nature and functionally constitutes a significant component of the sale. Revenue from operating leases of equipment is recognized on a straight-line basis over lease period.

IT revenue Contracts on network services, which consist of installations and operations of communication networks for customers, have an average duration of 2 to 3 years. Revenue from voice and data services is recognized under such contracts when voice and data are used by a customer. Revenue from system integration contracts comprising delivery of customized products and/or services is recognized when the customized complex solution is being delivered and accepted by a customer. Contracts are usually separated into distinct milestones which indicate completion, delivery and acceptance of a defined project phase. Upon completion of a milestone the Group is entitled to issuing an invoice and to a payment. Revenue from maintenance services (generally a fixed fee per month) is recognized over the contractual period or when the services are provided. Revenue from repairs, which are not part of the maintenance contract but are billed on a basis of time and material used, is recognized when the services are provided. Revenue from sale of hardware and software is recognized when risks of ownership are substantially transferred to a customer, provided there are no unfulfilled obligations that affect customer’s final acceptance of the arrangement.

Interest and dividends Interest income is recognized using the effective interest rate method. When a loan or receivable is impaired, the Group reduces its carrying amount to a recoverable amount. Recoverable amount is determined as an estimate of future cash flows discounted at the original effective interest rate of the instrument. Dividend income is recognized when the right to receive payment is established.

19 Slovak Telekom, a.s. F-21 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.15 Leases Determination of whether an arrangement is, or contains, a lease is based on the substance of an arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on use of a specific asset or assets and whether it conveys a right to use the asset. Leases in which significant portion of risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over lease period. When operating lease is terminated before the lease period has expired, any penalty payment to the lessor is recognized in income statement in the period in which the termination took place. Lease contracts are analyzed based on the requirements of IFRIC 4, and if they include embedded lease elements, revenue or income attributable to these is recognized in accordance with IAS 17.

Operating lease – the Group as lessor Assets leased to customers under operating leases are included in property and equipment in the statement of financial position. They are depreciated over their expected useful lives on a basis consistent with similar assets. Rental income is recognized as revenue or other operating income on a straight-line basis over the lease term.

Operating lease – the Group as lessee Costs of operating leases are charged to the income statement on a straight-line basis over the lease term.

Finance lease – the Group as lessor Leases of assets where the Group transfers substantially all the risks and rewards of ownership are recognized and disclosed as revenue against finance lease receivable. The revenue equals to the estimated present value of future minimum lease payments receivable and any unguaranteed residual value (net investment in the lease). Costs of asset sold in finance lease transactions are recognized at the commencement of the lease. Each lease receipt is then allocated between lease receivable and interest income.

Finance lease – the Group as lessee Leases of assets where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. The finance lease obligations are included in the statement of financial position in trade and other payables.

2.16 Operating profit Operating profit is defined as a result before income taxes and financial income and expenses. For financial income and expenses refer to Notes 9 and 10 respectively.

2.17 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Management Board that makes strategic and operating decisions.

2.18 Foreign currency translation Transactions denominated in foreign currencies are translated into functional currency using exchange rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the exchange rates prevailing at the statement of financial position date. All foreign exchange differences are recognized within financial income or expense in the period in which they arise.

20 Slovak Telekom, a.s. F-22 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.19 Taxes Tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, tax is also recognized in other comprehensive income or directly in equity, respectively.

Current income tax Current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted as of the statement of financial position date. Current income tax includes additional levy imposed by the Slovak government on regulated industries effective from 1 September 2012. The levy of 4.356% per annum is applied on the basis calculated as the profit before tax determined for each relevant legal entity in accordance with the Slovak Accounting Standards reduced by a fixed deduction of EUR 3,000 thousand in each relevant entity. Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities.

Deferred tax Deferred tax is calculated at the statement of financial position date using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts. Deferred tax liabilities are recognized for all taxable temporary differences, except for the deferred tax liability arising from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting nor taxable profit or loss. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Change of the income tax rate from 23% to 22%, effective from 1 January 2014, resulted in the decrease of the deferred tax liability by EUR 5,790 thousand in financial statements for the year 2013 with the effect on the tax expense of EUR 5,767 thousand and the effect on the other comprehensive income of EUR 23 thousand. Change of the income tax rate from 19% to 23%, effective from 1 January 2013, resulted in the increase of the deferred tax liability by EUR 26,351 thousand in financial statements for the year 2012 with the effect on the tax expense of EUR 26,319 thousand and the effect on the other comprehensive income of EUR 32 thousand.

2.20 Significant accounting judgements, estimates and assumptions The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent liabilities reported at the end of the period and the reported amounts of revenue and expenses for that period. Actual results may differ from these estimates. In the process of applying the Group's accounting policies, management has made the following judgements, estimates and assumptions which have the most significant effect on the amounts recognized in the financial statements:

Useful lives of non-current assets The estimation of the useful lives of non-current assets is a matter of judgement based on the Group’s experience with similar assets. The Group reviews the estimated remaining useful lives of non-current assets annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the depreciation or amortization period, as appropriate, and are treated as changes in accounting estimates. Management’s estimates and judgements are inherently prone to inaccuracy for those assets for which no previous experience exists. The Group reviewed useful lives of non-current assets during 2014 and changed accounting estimates where appropriate. The table summarizes net increase or (decrease) in depreciation or amortization charge for the following categories of non-current assets: 2014 2015 2016 2017 After 2018

Technology 3,191 836 (1,274) (723) (2,030) Cars (353) (280) (21) 382 272 Cables (303) (264) (132) (28) 727

21 Slovak Telekom, a.s. F-23 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.20 Significant accounting judgements, estimates and assumptions (continued)

Customer relationships The Group maintains record of customer relationships obtained during the acquisition of control of T-Mobile, DIGI and PosAm (Note 14) and regularly evaluates appropriateness of useful lives used to amortize these intangible assets on the basis of churn of customers acquired through the business combinations. No changes to useful lives were necessary in 2014. If the useful lives of customer relationships were shortened by one year, the amortization would increase by EUR 8,149 thousand. If the useful lives of customer relationships were shortened by two years, the amortization would increase by EUR 21,306 thousand.

Activation fees and subscriber acquisition and retention costs The Group defers activation, non-refundable up-front fees in cases when the delivery of products or rendering of services does not present a separate earnings process and the activation fees are not offset by a delivered product or rendered services. This period is estimated on a basis of an anticipated term of customer relationship under the arrangement which generated the activation fee. The estimated customer relationship period is reassessed at each financial year-end. Costs incurred in direct relation to customer activation (such as SIM card costs and commissions) are deferred to the extent of activation revenue and amortized in the same manner as the activation fees. Other subscriber acquisition costs, which primarily include losses on subsidized handsets and hardware, are expensed as incurred.

Easements On disposal of certain properties where technological equipment is sited and required for the Group’s operations, the Group enters into certain agreements to obtain easement rights to continue to use and access this equipment for extended periods. Management has determined, based on an evaluation of the terms and conditions of these sales agreements, that the Group does not retain the significant risks and rewards of ownership of the properties and accounts for easements as a prepaid expense.

Assessment of impairment of goodwill Goodwill is tested annually for impairment as further described in Note 2.5 using estimates detailed in Note 15.

Estimated impairment of trade and other receivables The Group calculates impairment for doubtful accounts receivable based on estimated losses resulting from the inability of its customers to make required payments. It is estimated on the basis of the nature of the business (fixed line, mobile, prepaid, etc.), for which the estimate is based on the aging of the accounts receivable balance and the historical write-off experience, customer credit- worthiness as well as changes in the internal and external ratings of customers. These factors are reviewed annually and changes are made to the calculations when necessary.

Asset retirement obligation The Group enters into lease contracts for land and premises on which mobile communication network masts are sited. The Group is committed by these contracts to dismantle the masts and restore the land and premises to their original condition. Management anticipates the probable settlement date of the obligation to equal useful life of mast, which is estimated to be 50 years. The remaining useful life of masts ranges from 28 to 50 at 31 December 2014. Management’s determination of the amount of the asset retirement obligation (Note 29) involves the following estimates (in addition to the estimated timing of crystallisation of the obligation): a) an appropriate risk-adjusted, pre-tax discount rate commensurate with the Group’s credit standing; b) the amounts necessary to settle future obligations; c) inflation rate. If the economic useful life of the masts was shortened by 10 years (from 50 years to 40 years) it would cause an increase of asset retirement obligation by EUR 2,722 thousand. If the inflation rate increased by 0.5%, it would cause an increase of asset retirement obligation by EUR 2,759 thousand. If the risk-adjusted, pre-tax discount rate increased by 0.5%, it would cause a decrease of asset retirement obligation by EUR 2,227 thousand. If the amounts necessary to settle future obligations increased by 10%, it would cause an increase of asset retirement obligation by EUR 1,250 thousand.

22 Slovak Telekom, a.s. F-24 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.20 Significant accounting judgements, estimates and assumptions (continued)

Provisions and contingent liabilities The Group is a participant in several lawsuits and regulatory proceedings. When considering the recognition of a provision, management judges the probability of future outflows of economic resources and its ability to reliably estimate such future outflows. If these recognition criteria are met a provision is recorded in the amount of the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Such judgments and estimates are continually reassessed taking into consideration the developments of the legal cases and proceedings and opinion of lawyers and other subject matter experts involved in resolution of the cases and proceedings. The factors considered for individual cases are described in Notes 29 and 36.

2.21 Restatement of presentation of certain IT hardware delivery transactions Delivery of some IT hardware where the Group was agent rather than principal were incorrectly presented on the gross basis during the periods ended 31 December 2013 and 31 December 2012. The effect of the IAS 8.42 adjustment on each of the affected financial statement line items for the prior periods and the effect of the restatement on those financial statements is summarised below. Impact on income statement: 2013 2012

Revenue (18,583) (11,028) Material and equipment 14,163 11,028 Other operating costs 4,420 -

The change did not have an impact on profit, other comprehensive income, statement of financial position, retained earnings, cash flow or earnings per share.

2.22 Comparatives Certain balances included in comparative information have been reclassified in order to conform to the current year presentation. These adjustments, in accordance with IAS 1.38, have been made for the purpose of comparability of data, reported periods and include the following main changes: a) Interest costs on employee benefits provision in the amount of EUR 284 thousand is presented within financial expense in 2013 comparatives (EUR 375 thousand in 2012 comparatives). In 2013 financial statements these costs were presented within Staff costs, (Note 5). b) Interest receivable on available-for-sale investments in the amount of EUR 3,451 thousand is presented within Trade and other receivables in 2013 comparatives. In 2013 financial statements this item was presented within Available-for-sale investments, (Note 21).

23 Slovak Telekom, a.s. F-25 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.23 Adoption of IFRS during the year

Standards, interpretations and amendments to published standards effective for the Group’s accounting period beginning on 1 January 2014 There are no IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2014 that have material impact on the Group.  IFRS 10 Consolidated Financial Statements, effective for annual periods beginning on or after 1 January 2014 IFRS replaces all of the guidance on control and consolidation in IAS 27, Consolidated and Separate Financial Statements, and SIC-12, Consolidation - Special Purpose Entities. IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. This definition is supported by extensive application guidance.  IFRS 11 Joint Arrangements, effective for annual periods beginning on or after 1 January 2014 IFRS 11 replaces IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities—Non-Monetary Contributions by Ventures. Changes in the definitions have reduced the number of types of joint arrangements to two: joint operations and joint ventures. The existing policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is mandatory for participants in joint ventures.  IFRS 12 Disclosures of Interests in Other Entities, effective for annual periods beginning on or after 1 January 2014 IFRS 12 applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. IFRS 12 sets out the required disclosures for entities reporting under the two new standards: IFRS 10, Consolidated Financial Statements, and IFRS 11, Joint Arrangements, and replaces the disclosure requirements currently found in IAS 28, Investments in Associates. IFRS 12 requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. To meet these objectives, the new standard requires disclosures in a number of areas, including significant judgments and assumptions made in determining whether an entity controls, jointly controls, or significantly influences its interests in other entities, extended disclosures on share of non-controlling interests in group activities and cash flows, summarised financial information of subsidiaries with material non-controlling interests, and detailed disclosures of interests in unconsolidated structured entities.  Amendments to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosures of Interests in Other Entities, effective for annual periods beginning on or after 1 January 2014 The amendments clarify the transition guidance in IFRS 10. Entities adopting IFRS 10 should assess control at the first day of the annual period in which IFRS 10 is adopted, and if the consolidation conclusion under IFRS 10 differs from IAS 27 and SIC 12, the immediately preceding comparative period (that is, year 2012 for a calendar year-end entity that adopts IFRS 10 in 2013) is restated, unless impracticable. The amendments also provide additional transition relief in IFRS 10, IFRS 11 and IFRS 12 by limiting the requirement to provide adjusted comparative information only for the immediately preceding comparative period. Further, the amendments will remove the requirement to present comparative information for disclosures related to unconsolidated structured entities for periods before IFRS 12 is first applied.  Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosures of Interests in Other Entities, and IAS 27 Consolidated and Separate Financial Statements, effective for annual periods beginning on or after 1 January 2014 The amendment introduced a definition of an investment entity as an entity that (i) obtains funds from investors for the purpose of providing them with investment management services, (ii) commits to its investors that its business purpose is to invest funds solely for capital appreciation or investment income and (iii) measures and evaluates its investments on a fair value basis. An investment entity will be required to account for its subsidiaries at fair value through profit or loss, and to consolidate only those subsidiaries that provide services that are related to the entity's investment activities. IFRS 12 was amended to introduce new disclosures, including any significant judgments made in determining whether an entity is an investment entity and information about financial or other support to an unconsolidated subsidiary, whether intended or already provided to the subsidiary.  IAS 27 (revised 2011) Separate Financial Statements, effective for annual periods beginning on or after 1 January 2014 IAS 27 (revised 2011) was changed and its objective is now to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements was replaced by IFRS 10, Consolidated Financial Statements.

24 Slovak Telekom, a.s. F-26 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.23 Adoption of IFRS during the year (continued)  IAS 28 (revised 2011) Associates and Joint Ventures, effective for annual periods beginning on or after 1 January 2014 The amendment of IAS 28 (revised 2011) resulted from the Board’s project on joint ventures. When discussing that project, the IASB decided to incorporate the accounting for joint ventures using the equity method into IAS 28 because this method is applicable to both joint ventures and associates. With this exception, other guidance remained unchanged.  Amendment to IAS 32 Financial Instruments: Presentation, Offsetting Financial Assets and Financial Liabilities, effective for annual periods beginning on or after 1 January 2014 The amendment added application guidance to IAS 32 to address inconsistencies identified in applying some of the offsetting criteria. This includes clarifying the meaning of ‘currently has a legally enforceable right of set-off’ and that some gross settlement systems may be considered equivalent to net settlement.  Amendment to IAS 36 Impairment of Assets - Recoverable Amount Disclosures for Non-financial Assets, effective for annual periods beginning on or after 1 January 2014 The amendment removes the requirement to disclose the recoverable amount when a cash-generating unit contains goodwill or indefinite lives intangible assets but there has been no impairment.  Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting, effective for annual periods beginning on or after 1 January 2014 The amendment will allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated (i.e. parties have agreed to replace their original counterparty with a new one) to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met.

Standards, interpretations and amendments to published standards that have been published, are not effective for accounting periods starting on 1 January 2014 and which the Group has not early adopted  Amendments within Annual improvements project 2010 – 2012, effective day has not yet been endorsed. The improvements consist of changes to seven standards: IFRS 2 Share-based Payment – Definition of vesting condition Amends the definitions of 'vesting condition' and 'market condition' and adds definitions for 'performance condition' and 'service condition' (which were previously part of the definition of 'vesting condition'). IFRS 3 Business combinations – Accounting for contingent consideration in a business combination Amendment clarifies that contingent consideration that is classified as an asset or a liability shall be measured at fair value at each reporting date. IFRS 8 Operating segment - Aggregation of operating segments Amendment requires an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments. IFRS 8 Operating segment - Reconciliation of the total of the reportable segments' assets to the entity's assets Amendment clarifies that an entity shall only provide reconciliations of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly. IFRS 13 Fair value Measurement – short term receivables and payables Amendment clarifies issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting if the effect of not discounting is immaterial. IAS 16 Property, Plant and Equipment – revaluation method - proportionate restatement of accumulated depreciation Amendment clarifies that when an item of property, plant and equipment is revalued the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount.

25 Slovak Telekom, a.s. F-27 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.23 Adoption of IFRS during the year (continued) IAS 24 Related Party Disclosures – Key management personnel Amendment clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. IAS 38 Intangible Assets – Revaluation method - proportionate restatement of accumulated amortisation Amendment clarifies that when an intangible asset is revalued the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount.  Amendments within Annual improvements project 2011 – 2013, effective for annual periods beginning on or after 1 January 2015. The improvements consist of changes to four standards: IFRS 1 First-time Adoption of IFRS – Meaning of effective IFRSs Amendment clarifies that an entity, in its first IFRS financial statements, has the choice between applying an existing and currently effective IFRS or applying early a new or revised IFRS that is not yet mandatorily effective, provided that the new or revised IFRS permits early application. An entity is required to apply the same version of the IFRS throughout the periods covered by those first IFRS financial statements. Amendment is not relevant for the Group. IFRS 3 Business combinations – scope of exception for joint ventures Amendment clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself. IFRS 13 Fair value Measurement – portfolio exception Amendment clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39, Financial Instruments: Recognition and Measurement, or IFRS 9, Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32, Financial Instruments: Presentation. IAS 40 Investment property - Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property Amendment clarifies that determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3, Business Combinations, and investment property as defined in IAS 40, Investment Property, requires the separate application of both standards independently of each other.  Amendments within Annual improvements project 2012 – 2014, effective day has not yet been endorsed. The improvements consist of changes to four standards: IFRS 5 Non-current assets held for sale and discontinued operation – changes in methods of disposal Add specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued. IFRS 7 Financial Instruments: Disclosures – Servicing contract Amendment adds additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of determining the disclosures required. IFRS 7 Financial Instruments: Disclosures – Applicability of the amendments to IFRS 7 to condensed interim financial statements Amendment clarifies the applicability of the amendments to IFRS 7 on offsetting disclosures to condensed interim financial statements. IAS 19 Employee benefits – discount rate: Regional market issue Amendment clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid. The amendment is not relevant for the Group. IAS 34 Interim financial reporting - Disclosure of information 'elsewhere in the interim financial report' Amendment clarifies the meaning of “elsewhere in the interim report”.

26 Slovak Telekom, a.s. F-28 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.23 Adoption of IFRS during the year (continued)  IFRS 9 Financial Instruments, effective day has not yet been endorsed The package of improvements introduced by the Standard IFRS 9 issued in November 2009 and amended in October 2010, December 2011, November 2013 and July 2014 includes a model for classification and measurement, a single, forward- looking “expected loss” impairment model and substantially-reformed approach to hedge accounting. Classification and Measurement: Classification determines how financial assets and liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 introduces an approach for the classification of financial assets, which is driven by cash characteristics and the business model in which an assets is held. Impairment: Standard introduced a new, expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, the Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. Hedge accounting: IFRS 9 introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about risk management activity. The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements.  IFRS 14 Regulatory Deferral Accounts, effective day has not yet been endorsed The aim of this interim Standard is to enhance the comparability of financial reporting by entities that are engaged in rate- regulated activities. IFRS 14 does not provide any specific guidance for rate-regulated activities. The IASB has a project to consider the broad issues of rate regulation and planed to publish a Discussion Paper on this subject in 2014. Pending the outcome of this comprehensive Rate-regulated Activities project, the IASB decided to develop IFRS 14 as an interim measure. IFRS 14 is only applicable by first-time adopters. Insofar, it is not relevant for the Group.  IFRS 15 Standard on the recognition of revenue from contracts with customers, effective day has not yet been endorsed The core principle of the new Standard is for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new Standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and new guidance for multiple-element arrangements. The adoption of the new standard will result in significant changes in the financial statements of the Group, primarily in respect of the timing of revenue recognition and in respect of capitalization of costs of obtaining a contract with a customer and contract fulfilment costs. The timing of revenue recognition and the classification of revenues as either service or equipment revenue will be affected due to the allocation of consideration in multiple element arrangements (solutions for customers that may involve the delivery of multiple services and products occurring at different points in time and/or over different periods of time) no longer being affected by limitation cap methodology. Group’s operations and associated systems are complex and the currently estimated time and effort necessary to develop and implement the accounting policies, estimates, judgments and processes to comply with the new standard is expected to span a substantial time. As a result, at this time, it is not possible to make reasonable quantitative estimates of the effects of the new standard.  Amendment to IFRS 11 Joint Arrangements - Accounting for acquisition of interests in joint operations, effective day has not yet been endorsed IFRS 11 amended explicitly requires the acquirer of an interest in a joint operation in which the activity constitutes a business to apply all of the principles on business combinations accounting in IFRS 3.  Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. IAS 16 and IAS 38 both establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset, effective day has not yet been endorsed The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances.

27 Slovak Telekom, a.s. F-29 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 2. Accounting policies (continued)

2.23 Adoption of IFRS during the year (continued)  Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture, effective day has not yet been endorsed The standard currently requires all biological assets related to agricultural activity to be measured at fair value less costs to sell. However, there is a subset of biological assets, known as bearer plants, which are used solely to grow produce over several periods. At the end of their productive lives they are usually scrapped. The IASB decided that bearer plants should be accounted for in the same way as property, plant and equipment in IAS 16 Property, Plant and Equipment, because their operation is similar to that of manufacturing. This amendment is not relevant for the Group.  Amendment to IAS 19 – Defined Benefit Plans: Employee Contributions, effective day has not yet been endorsed The amendment allows entities to recognize employee contributions as a reduction in the service cost in the period in which the related employee service is rendered, instead of attributing the contributions to the periods of service, if the amount of the employee contributions is independent of the number of years of service.  Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011), effective day has not yet been endorsed The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary.  Amendment to IAS 27 - Separate Financial Statements - Equity Method in Separate Financial Statements, effective day has not yet been endorsed The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements.  IFRIC 21 Levies, effective for annual periods beginning on or after 17 June 2014 The interpretation clarifies the accounting for an obligation to pay a levy that is not income tax. The obligating event that gives rise to a liability is the event identified by the legislation that triggers the obligation to pay the levy. The fact that an entity is economically compelled to continue operating in a future period, or prepares its financial statements under the going concern assumption, does not create an obligation. The same recognition principles apply in interim and annual financial statements. The application of the interpretation to liabilities arising from emissions trading schemes is optional.  Amendments to IAS 1 – Presentation of Financial Statements: Disclosure Initiative, effective day has not yet been endorsed The amendments are designed to further encourage companies to apply professional judgement in determining what information to disclose in their financial statements. For example, the amendments make clear that materiality applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures. Furthermore, the amendments clarify that companies should use professional judgement in determining where and in what order information is presented in the financial disclosures.  Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosures of Interests in Other Entities, and IAS 28 Associates and Joint Ventures, effective day has not yet been endorsed The amendment introduces clarifications to the requirements when accounting for investment entities. The amendment confirms that: o the exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value; o a subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity; o when applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries; o an investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12. The future implications of standards, interpretations and amendments that are relevant to the Group are being continuously evaluated and will be applied in accordance with the requirements if applicable.

28 Slovak Telekom, a.s. F-30 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

3. Financial risk management

The Group is exposed to a variety of financial risks. The Group’s risk management policy addresses the unpredictability of financial markets and seeks to minimize potential adverse effects on the performance of the Group. The Group’s financial instruments include cash and cash equivalents, loans, escrow, term deposits, investments at amortized cost and available-for-sale investments. The main purpose of these instruments is to manage the liquidity of the Group. The Group has various other financial assets and liabilities such as trade and other receivables and trade and other payables which arise from its operations. The Group enters also into derivative transactions. The purpose is to manage the foreign currency risk arising from the Group’s operations. The Group does not perform speculative trading with the derivative instruments. The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risk. The Treasury is responsible for financial risk management, in accordance with guidelines approved by the Board of Directors and the Deutsche Telekom Group Treasury. The Treasury works in association with the Group’s operating units and with the Deutsche Telekom Group Treasury. There are policies in place to cover specific areas, such as market risk, credit risk, liquidity risk, the investment of excess funds and the use of derivative financial instruments.

3.1 Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk.

3.1.1 Foreign currency risk Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in foreign exchange rates. The Group is exposed to transactional foreign currency risk arising from international interconnectivity. In addition, the Group is exposed to risks arising from capital and operational expenditures denominated in foreign currencies. The Group can use forward currency contracts, currency swaps or spot-market trading to eliminate the exposure towards foreign currency risk. It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximize hedge effectiveness. Such economic hedge however does not qualify for hedge accounting under the specific rules of IAS 39. For all planned, but not yet determined, foreign currency denominated cash flows (uncommitted exposure) of the following 12 months (rolling 12 month approach) a hedging ratio of at least 50% is applied. The Group uses term deposits in foreign currencies to hedge these uncommitted exposures (Note 23). Short-term cash forecasts are prepared on a rolling basis to quantify the Group’s expected exposure. The Group’s risk management policy requires the hedging of every cash flow denominated in foreign currency exceeding the equivalent of EUR 250 thousand. The Group’s foreign currency risk relates mainly to the changes in USD foreign exchange rates, with immaterial risk related to financial assets and financial liabilities denominated in other foreign currencies. The following table details the sensitivity of the Group’s profit before tax and equity to a 10% increase/decrease in the EUR against USD, with all other variables held as constant. The 10% change represents management’s assessment of the reasonably possible change in foreign exchange rate and is used when reporting foreign currency risk internally in line with treasury policies. 2014 2013 2012 Profit before tax Depreciation of EUR by 10% 373 (639) 406 Appreciation of EUR by 10% (306) 523 (332) Equity Depreciation of EUR by 10% 291 (492) 329 Appreciation of EUR by 10% (238) 402 (269)

29 Slovak Telekom, a.s. F-31 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

3. Financial risk management (continued)

3.1 Market risk (continued)

3.1.2 Interest rate risk The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group entered into a master agreement with DT AG in October 2008 based on which the Group provided loans to DT AG. Currently, there is outstanding loan in amount of EUR 150,000 thousand at fixed interest rate (Note 25). The term deposits outstanding at 31 December 2014 in the amount of EUR 219,596 thousand have been concluded with fixed interest rate (Note 23). The Group’s exposure to the risk of changes in market interest rates relates mainly to the Group’s available-for-sale investments. The Group seeks to optimize its exposure towards interest rate risk using a mix of fixed–rate and floating–rate securities. At the end of 2014, the securities portfolio consists of fixed-rate bonds and floated-rate bonds. The sensitivity of available-for-sale investments to changes in interest rates is detailed in Note 22.

3.1.3 Other price risk Other price risk arises on financial instruments because of changes in commodity prices or equity prices. The Group is not exposed to such risks.

3.2 Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group is exposed to credit risk from its operating activities and certain financing activities. The Group’s credit risk policy defines products, maturities of products and limits for financial counterparties. The Group limits credit exposure to individual financial institutions and securities issuers on the basis of the credit ratings assigned to these institutions by reputable rating agencies and these limits are reviewed on a regular basis. For credit ratings see Notes 22, 23, 24, 25 and 26. The Group is exposed to concentration of credit risk from holding state bonds in amount of EUR 102,958 thousand issued by the Netherlands, state bonds in amount of EUR 53,051 thousand issued by the Slovak Republic, state bonds in amount of EUR 52,120 thousand issued by Finland and loan receivable in the amount of EUR 150,000 thousand provided to DT AG (Germany). Further, counterparty credit limits and maximum maturity can be decreased based on recommendation by Deutsche Telekom Group Treasury in order to manage bulk risk steering of Deutsche Telekom Group. Group credit risk steering takes into account various risk indicators including, but not limited to CDS level, rating and negative movement of the share price of the counterparty. The Group establishes an allowance for impairment that represents its estimate of losses incurred in respect of trade and other receivables. Impairment losses are recognized to cover both individually significant credit risk exposures and a collective loss component for assets that are assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables includes the Group’s past experience of collecting payments, as well as changes in the internal and external ratings of customers. In respect of financial assets, which comprise cash and cash equivalents, loans, escrow, term deposits, investments at amortized cost, available-for-sale investments, trade and other receivables, the Group’s exposure to credit risk arises from the potential default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. In April 2012 the Group and Poštová banka, a.s. signed an Agreement about establishment of a right of lien on securities. The Group thus secured its receivables to maximum principal amount of EUR 15,000 thousand. In total, Poštová banka, a.s. pledged 35,000,000 pieces of the state bond SK4120006503 with a nominal value of EUR 17,500 thousand. No other significant agreements reducing the maximum exposure to credit risk had been concluded at 31 December 2014. The Group assesses its financial investments at each reporting date to determine whether there is any objective evidence that they are impaired. A financial investment is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that investment. Significant financial investments are tested for impairment on an individual basis. The remaining financial investments are assessed collectively in groups that share similar credit risk characteristics. An impairment loss in respect of a financial investment is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. The reversal of the impairment loss is recognized in profit or loss.

30 Slovak Telekom, a.s. F-32 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

3. Financial risk management (continued)

3.2 Credit risk (continued) The table summarises the ageing structure of receivables: Neither past due Past due but not impaired nor impaired < 30 days 31-90 days 91-180 days 181-365 days > 365 days Total At 31 December 2014 Trade and other receivables 94,925 252 39 51 65 92 95,424

At 31 December 2013 Trade and other receivables 121,363 321 80 42 113 134 122,053

At 31 December 2012 Trade and other receivables 101,320 1,102 124 60 110 232 102,948

No significant individually impaired trade receivables were included in the allowance for impairment losses in 2014, 2013 and 2012. Trade receivables that are past due as at the statement of financial position date, but not impaired, are from creditworthy customers who have a good track record with the Group and, based on historical default rates, management believes that no additional impairment allowance is necessary. For sensitivity of impairment charge of uncollectible receivables refer to Note 17.

3.3 Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group’s liquidity risk mitigation principles define the level of cash and cash equivalents, marketable securities and the credit facilities available to the Group to allow it to meet its obligations on time and in full. The funding of liquidity needs is based on comparisons of income earned on cash and cash equivalents and available-for-sale investments with the cost of financing available on credit facilities, with the objective of holding predetermined minimum amounts of cash and cash equivalents and credit facilities available on demand. The table summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments: Less than 3 3 to 12 On demand months months Over 1 year Total At 31 December 2014 Trade and other payables 6,415 106,721 15,823 638 129,597

At 31 December 2013 Trade and other payables 13,695 196,777 14,644 1,202 226,318

At 31 December 2012 Trade and other payables 13,007 108,275 12,259 250 133,791

31 Slovak Telekom, a.s. F-33 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 3. Financial risk management (continued)

3.3 Liquidity risk (continued)

Offsetting financial assets and liabilities The following financial assets and liabilities are subject to offsetting: Gross amounts Offsetting Net amounts At 31 December 2014 Current financial assets – Trade receivables 10,686 (5,756) 4,930 Current financial liabilities – Trade payables 9,897 (5,756) 4,141

At 31 December 2013 Current financial assets – Trade receivables 12,421 (6,210) 6,211 Current financial liabilities – Trade payables 12,831 (6,210) 6,621

At 31 December 2012 Current financial assets – Trade receivables 4,442 (1,404) 3,038 Current financial liabilities – Trade payables 1,687 (1,404) 283

For the Group’s accounting policy on offsetting refer to Note 2.8.

3.4 Capital risk management The Group manages its capital to ensure its ability to support its business activities on an ongoing basis. It takes into consideration any applicable guidelines of the parent company. No changes were made to the objectives, policies or processes in 2014. The capital structure of the Group consists of equity attributable to shareholders, comprising issued capital, share premium, statutory reserve fund, retained earnings and other components of equity (Note 27). The management of the Group manages capital measured in terms of shareholder’s equity amounting to at 31 December 2014 EUR 1,608,726 thousand (2013: EUR 1,585,279 thousand, 2012: EUR 1,605,368 thousand).

3.5 Fair value Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety.

32 Slovak Telekom, a.s. F-34 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 3. Financial risk management (continued)

3.5 Fair value (continued)

3.5.1 Recurring fair value measurements Recurring fair value measurements are those that the accounting standards require or permit in the statement of financial position at the end of each reporting period. The levels in the fair value hierarchy into which the recurring fair value measurements are categorised are as follows: At 31 December 2014 At 31 December 2013 Carrying Carrying Level 1 Level 2 Level 3 value Level 1 Level 2 Level 3 value Non-current assets Available-for-sale investments (Note 22) 32,102 - - 32,065 176,633 - - 176,583

Current assets Available-for-sale investments (Note 22) 171,965 - - 171,860 49,865 - - 49,862 Interest receivable on available-for- sale investments (Note 17) 4,063 - - 4,083 3,451 - - 3,468

The fair value of available-for-sale investments was established based on quoted unadjusted market values provided by banks who act as depositors of the securities. There were no transfers between fair value hierarchy levels. The Group had no available-for-sale investments at 31 December 2012.

3.5.2 Non-recurring fair value measurements In 2013 the Group has written down its non-current assets held for sale to fair value less costs to sell. The valuation was performed by external party using the income approach, so called the direct capitalization method. The main inputs of valuation include market prices for the rent of similar real estates, the cost incurred by the ownership and operation of the buildings, capitalization rates in range of 10.5-15% for occupied premises and 11.5-16% for unoccupied premises and intention of establishment of easements rights by the Group. When calculating the fair value using this method, cash flows generated by the real estates are discounted using appropriate capitalization rates to infinity. Valuation applies the period necessary for the rent of unoccupied premises as well as the period of a new rent of occupied premises after its termination. After that period the market prices for the rent are applied. In 2014 the valuation has been adjusted based on the market data from indicative offers from potential buyers in case a lower price was proposed. The levels in the fair value hierarchy into which the non-recurring fair value measurements are categorised are as follows: At 31 December 2014 At 31 December 2013 Carrying Carrying Level 1 Level 2 Level 3 value Level 1 Level 2 Level 3 value

Assets held for sale (Note 12) - - 8,647 8,647 - - 19,772 19,772

The Group had no assets held for sale at 31 December 2012.

3.5.3 Financial assets and financial liabilities not measured at fair value The fair value of other financial assets and financial liabilities approximate their carrying amounts at the statement of financial position date. Non-current trade receivables, non-current trade payables and finance lease receivables and payables are discounted unless the effect of discounting was inconsiderable. The main part of finance lease receivables was discounted using interest rates from 2.98% to 3.36%.

33 Slovak Telekom, a.s. F-35 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 3. Financial risk management (continued)

3.6 Presentation of financial instruments by measurement category Presentation of financial instruments by measurement category in accordance with IAS 39 is as follows: 2014 2013 2012 Loans and receivables Trade and other receivables (Note 17) 113,832 139,872 119,657 Term deposits (Note 23) 219,596 143,359 105,961 Escrow (Note 24) 1,000 13,000 - Loans (Note 25) 150,000 - - Cash and cash equivalents (Note 26) 93,067 229,084 371,488 Financial assets held-to-maturity Investments at amortized cost (Note 21) 3,120 3,120 74,326 Available-for-sale financial assets Available-for-sale investments (Note 22) 204,067 226,498 -

4. Segment reporting

The Group presents segment information for the current and comparative periods in accordance with IFRS 8 Operating segment. The Group’s operating segments are those used by the Executive Management Board to manage the Group’s business, allocate resources and make strategic and operating decisions. The Group’s activities are concentrated in the Slovak Republic. The Group identifies its segments following the original structure of legal entities. The Group’s operating segments are:  Fixed line business (“Fixed line”) - The fixed line segment consists of retail services such as voice, pay TV (except DIGI) and broadband internet rendered to residential and business customers as well as wholesale services provided for other telecommunication operators in Group’s fixed network. ICT (Information Communication Technology) revenue (except PosAm), as well as various non-recurring revenue, such as sales of hardware, activation and installation fees relating to fixed line services are also reported within this segment.  Mobile business (“Mobile”) - The mobile segment consists of services provided to residential and business customers such as voice, SMS, MMS and mobile data on the Group’s mobile network as well as wholesale services for other telecommunication operators, including termination of incoming voice, SMS and MMS traffic from other mobile operators (domestic as well as international) and national roaming. Non-recurring revenue from sales of subsidised and non-subsidised handsets, activation and prolongation fees charged for mobile services and similar charges are also reported within the mobile segment.  Other businesses (“Other”) – which includes the following: o PosAm, the Company’s subsidiary engaged in the ICT business; and o DIGI, the Company’s subsidiary providing satellite TV and broadband services; and o Zoznam, consisting of the results of operations of Zoznam and Zoznam Mobile, the Company’s subsidiaries engaged in the internet search and portal business. The main indicators used by the Executive Management Board in their decision making are revenue, direct costs and gross margin. The Executive Management Board separately monitors the operating results of the segments to take decisions on how to allocate the resources, to evaluate the effects of the allocation and to evaluate performance. Transactions with external parties are reported in a manner consistent with that in the consolidated income statement. Transactions between segments are eliminated upon consolidation.

34 Slovak Telekom, a.s. F-36 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 4. Segment reporting (continued)

Consolidated income statement for the year ended 31 December 2014: Elimina- Total revenue Indirect Fixed line Mobile Other tions / Direct costs cost Total

External revenue 326,357 372,774 68,420 - 767,551 - 767,551 Revenue within Slovak Telekom group 693 282 8,726 (9,701) - - - Bad debts expenses (2,031) (3,966) (201) - (6,198) - (6,198) Content fees (10,977) (3,290) (9,920) 4,239 (19,948) - (19,948) Customer solutions (12,323) (125) (11,871) 295 (24,024) - (24,024) Dealer commissions (6,380) (9,739) (1,264) 17 (17,366) - (17,366) Interconnection and other fees to operators (32,259) (33,536) (490) 623 (65,662) (79) (65,741) Material and equipment (14,265) (72,770) (10,616) 4,261 (93,390) (7,850) (101,240) Other direct costs (197) (1,840) (2,281) - (4,318) - (4,318) Subtotal (78,432) (125,266) (36,643) 9,435 (230,906) (7,929) (238,835) Gross margin 248,618 247,790 40,503 (266) 536,645 (7,929) 528,716 Other indirect costs 266 (472,075) Other operating income 12,638 Operating profit 69,279 Net financial income 1,682 Profit before tax 70,961 Taxation (27,395) Profit for the year 43,566

Consolidated income statement for the year ended 31 December 2013: Elimina- Total revenue Indirect Fixed line Mobile Other tions / Direct costs cost Total

External revenue 355,484 414,441 39,102 - 809,027 - 809,027 Revenue within Slovak Telekom group 676 232 7,009 (7,917) - - - Bad debts expenses (1,531) (4,046) (13) - (5,590) - (5,590) Content fees (9,605) (2,730) (3,311) 366 (15,280) - (15,280) Customer solutions (20,522) (24) (5,170) 331 (25,385) - (25,385) Dealer commissions (6,574) (11,465) (1,081) - (19,120) - (19,120) Interconnection and other fees to operators (31,033) (40,047) (180) 881 (70,379) (137) (70,516) Material and equipment (13,148) (78,809) (7,297) 2,709 (96,545) (7,990) (104,535) Other direct costs (117) (1,956) (804) - (2,877) - (2,877) Subtotal (82,530) (139,077) (17,856) 4,287 (235,176) (8,127) (243,303) Gross margin 273,630 275,596 28,255 (3,630) 573,851 (8,127) 565,724 Other indirect costs 3,630 (507,295) Other operating income 10,885 Operating profit 69,314 Net financial income 844 Profit before tax 70,158 Taxation (20,857) Profit for the year 49,301

35 Slovak Telekom, a.s. F-37 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 4. Segment reporting (continued)

Consolidated income statement for the year ended 31 December 2012: Elimina- Total revenue Indirect Fixed line Mobile Other tions / Direct costs cost Total

External revenue 361,016 437,428 28,368 - 826,812 - 826,812 Revenue within Slovak Telekom group 299 152 7,893 (8,344) - - - Bad debts expenses (1,215) (3,327) - - (4,542) - (4,542) Content fees (12,016) (1,784) (30) - (13,830) - (13,830) Customer solutions (11,994) - (4,031) 47 (15,978) - (15,978) Dealer commissions (10,082) (12,669) (1,196) 115 (23,832) - (23,832) Interconnection and other fees (35,560) (51,636) - 335 (86,861) (146) (87,007) to operators Material and equipment (9,566) (70,337) (8,164) 6,422 (81,645) (10,925) (92,570) Other direct costs (169) (2,215) (459) - (2,843) - (2,843) Subtotal (80,602) (141,968) (13,880) 6,919 (229,531) (11,071) (240,602) Gross margin 280,713 295,612 22,381 (1,425) 597,281 (11,071) 586,210 Other indirect costs 1,425 (486,174) Other operating income 10,489 Operating profit 110,525 Net financial income 3,117 Profit before tax 113,642 Taxation (50,495) Profit for the year 63,147

The numbers from management report for the years 2013 and 2012 were adjusted, for description see Note 2.21.

5. Revenue

2014 2013 2012 Fixed line business Service revenue 276,060 293,984 314,899 Terminal equipment 11,314 11,336 11,466 Systems solutions / IT 21,809 26,252 12,769 Other 17,174 23,912 21,882 326,357 355,484 361,016 Mobile business Service revenue 332,767 364,498 397,644 Terminal equipment 24,860 33,344 22,681 Other 15,147 16,599 17,103 372,774 414,441 437,428 Other businesses Service revenue 23,423 9,075 - System solutions / IT 34,424 24,224 22,805 Other 10,573 5,803 5,563 68,420 39,102 28,368

767,551 809,027 826,812

36 Slovak Telekom, a.s. F-38 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 6. Staff costs

2014 2013 2012

Wages and salaries 100,890 102,583 103,623 Defined contribution pension costs 13,453 13,091 14,009 Other social security contributions 15,734 16,765 12,123 130,077 132,439 129,755

2014 2013 2012

Number of employees at period end 3,649 3,890 3,835 Average number of employees during the period 3,741 3,800 3,893

Number of employees does not include expatriates working for the Group at 31 December 2014: 1 (2013: 1, 2012: 2).

7. Other operating income

2014 2013 2012

Gain on disposal of property and equipment and intangible assets, net 1,248 1,160 1,113 Income from material sold, net 836 557 681 Income from rental of premises 2,447 2,795 2,480 Reversal of impairment of property and equipment (Note 13) 2,456 51 553 Income from marketing activities 3,451 3,660 2,608 Other 2,200 2,662 3,054 12,638 10,885 10,489

8. Other operating costs

2014 2013 2012

Repairs and maintenance 21,371 22,750 25,472 Installation services 4,916 3,703 3,114 Marketing costs 20,747 22,362 23,070 Energy 16,282 17,410 18,029 Printing and postage 4,569 4,630 4,926 Logistics 2,349 2,822 3,301 Rentals and leases 18,627 18,614 18,160 IT services 7,345 8,516 8,518 Dealer commissions 17,366 19,120 23,832 Frequency and other fees to Telecommunications Office (Note 35) 2,773 2,454 3,507 Content fees 19,948 15,280 13,830 Legal and regulatory claims 42,335 26,073 - Consultancy 3,046 4,045 9,157 Bad debts expenses 6,198 5,590 4,542 Services related to delivery of solutions for customers 24,024 25,385 15,978 Fees paid to DT AG group 4,163 4,440 4,682 Other 20,010 20,228 19,110 Own work capitalized (17,173) (17,235) (18,136) 218,896 206,187 181,092

37 Slovak Telekom, a.s. F-39 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 9. Financial income

2014 2013 2012

Interest on term deposits and bank accounts 979 732 1,108 Interest on loans 45 - 1,806 Interest on available-for-sale investments and investments at amortized cost 561 314 1,016 Decrease of put option liability - 649 - Foreign exchange gains, net 402 - - Other 886 935 989 2,873 2,630 4,919

10. Financial expense

2014 2013 2012

Increase of put option liability 91 - 470 Dividends paid to minority owners of PosAm 573 599 580 Foreign exchange losses, net - 446 88 Interest costs on employee benefits provision 243 284 375 Interest cost on other non-current provisions 194 268 238 Bank charges and other financial expense 90 189 51 1,191 1,786 1,802

11. Taxation

The major components of income tax expense for the years ended 31 December are: 2014 2013 2012

Current tax expense 36,102 47,485 35,715 Deferred tax (income) / expense (11,191) (29,733) 12,662 Other income tax 2,484 3,105 2,118 Income tax expense reported in the income statement 27,395 20,857 50,495

Reconciliation between the reported income tax expense and the theoretical amount that would arise using the statutory tax rate is as follows: 2014 2013 2012

Profit before income tax 70,961 70,158 113,642

Income tax calculated at the statutory rate of 22% (2013: 23%, 2012: 19%) 15,611 16,136 21,592 Effect of income not taxable and expenses not tax deductible: Cost related to legal and regulatory claims 9,270 5,966 (195) Other tax non-deductible items, net (234) 975 509 Tax charge in respect of prior years 264 442 152 Other income tax 2,484 3,105 2,118 Effect of change in tax rate - (5,767) 26,319 Income tax at the effective tax rate of 39% (2013: 30%, 2012: 44%) 27,395 20,857 50,495

38 Slovak Telekom, a.s. F-40 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 11. Taxation (continued)

Deferred tax assets (liabilities) for the year ended 31 December are attributable to the following items: Through Through statement of 1 January income comprehen- Through 31 December 2014 statement sive income equity 2014

Difference between carrying and tax value of fixed assets (141,552) 10,363 - - (131,189) Allowance for investments at amortized cost 2,269 - - - 2,269 Staff cost accruals 3,339 (222) - - 3,117 Allowance for bad debts 2,491 (66) - - 2,425 Termination benefits 616 (26) - - 590 Retirement benefit obligation 1,667 (139) 402 679 2,609 Other 3,800 1,281 8 - 5,089 Net deferred tax liability (127,370) 11,191 410 679 (115,090)

Through statement of Through Through compre- 1 January business income hensive 31 December 2013 combination statement income 2013

Difference between carrying and tax value of fixed assets (162,343) (7,017) 27,808 - (141,552) Allowance for investments at amortized cost 2,372 - (103) - 2,269 Staff cost accruals 1,057 5 2,277 - 3,339 Allowance for bad debts 2,578 185 (272) - 2,491 Termination benefits 644 - (28) - 616 Retirement benefit obligation 2,003 - (26) (310) 1,667 Other 3,400 331 77 (8) 3,800 Net deferred tax liability (150,289) (6,496) 29,733 (318) (127,370)

Through Through statement of 1 January income comprehen- 31 December 2012 statement sive income 2012

Difference between carrying and tax value of fixed assets (148,921) (13,422) - (162,343) Allowance for investments at amortized cost 1,960 412 - 2,372 Staff cost accruals 2,213 (1,156) - 1,057 Allowance for bad debts 2,493 85 - 2,578 Termination benefits 436 208 - 644 Retirement benefit obligation 1,329 301 373 2,003 Other 2,490 910 - 3,400 Net deferred tax liability (138,000) (12,662) 373 (150,289)

39 Slovak Telekom, a.s. F-41 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

11. Taxation (continued)

Deferred tax asset of EUR 826 thousand is recognized in respect of subsidiaries DIGI and PosAm and deferred tax liabilities of EUR 115,916 thousand in respect of other entities within the Group. The Group offsets deferred tax assets and deferred tax liabilities if, and only if, those relate to income taxes levied by the same taxation authority on the same taxable entity. 2014 2013 2012

Deferred tax asset to be settled within 12 months 726 983 257 Deferred tax asset to be settled after more than 12 months 148 38 42 Deferred tax liability to be settled after more than 12 months (48) (103) (109) Net deferred tax asset 826 918 190

2014 2013 2012

Deferred tax asset to be settled within 12 months 10,778 10,405 8,639 Deferred tax asset to be settled after more than 12 months 5,872 4,359 4,598 Deferred tax liability to be settled within 12 months (2,989) (1,782) (969) Deferred tax liability to be settled after more than 12 months (129,577) (141,270) (162,747) Net deferred tax liability (115,916) (128,288) (150,479)

12. Assets held for sale

2014 2013 2012

At 1 January 19,772 - - Net transfer (to) / from property and equipment (Note 13) (8,501) 19,772 - Impairment charge (1,697) - - Assets sold (927) - - At 31 December 8,647 19,772 -

Assets held for sale at 31 December 2014 and 2013 comprise buildings and related land which are planned to be sold within one year. During the year 2014, based on recent development on real estate market the Group has changed its selling strategy from portfolio based strategy introduced in 2013 to the individual asset sale approach introduced in 2014. The Group started negotiation with potential buyers for those buildings classified as held for sale and as of 31 December 2014 these negotiations are still ongoing. In case a lower price from potential buyers’ indicative offers was proposed, the valuation of assets held for sale has been adjusted and impairment charge recognized. During 2014, the management have decided to continue to use certain buildings and related land previously designated for sale. Those buildings and land were reclassified to property and equipment.

40 Slovak Telekom, a.s. F-42 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated

13. Property and equipment

Duct, cable Telephone Radio and Construction and other exchanges trans- in progress Land and outside and related mission including buildings plant equipment equipment Other advances Total At 1 January 2014 Cost 122,253 994,528 1,060,574 348,320 340,636 67,005 2,933,316 Accumulated depreciation (57,087) (506,453) (1,002,984) (302,165) (246,553) (428) (2,115,670) Net book value 65,166 488,075 57,590 46,155 94,083 66,577 817,646 Additions 4,572 9,831 8,515 4,414 6,872 44,447 78,651 Depreciation charge (4,035) (33,476) (28,540) (18,123) (29,865) - (114,039) Impairment charge (17) (6) (60) - (156) - (239) Reversal of impairment 1,805 171 25 21 434 - 2,456 Disposals (355) (23) (83) - (172) (176) (809) Transfers 1,906 2,834 12,853 5,433 17,275 (40,301) - Transfers from assets held for sale (Note 12) 8,501 - - - - - 8,501 At 31 December 2014 Cost 152,417 1,006,902 870,870 342,623 339,090 70,975 2,782,877 Accumulated depreciation (74,874) (539,496) (820,570) (304,723) (250,619) (428) (1,990,710) Net book value 77,543 467,406 50,300 37,900 88,471 70,547 792,167

Property and equipment, excluding motor vehicles, is locally insured to a limit of EUR 26,035 thousand (2013: EUR 26,200 thousand, 2012: EUR 26,035 thousand). Any loss exceeding local limit is insured by DT AG Global Insurance Program up to EUR 700,000 thousand. Each motor vehicle is insured to a limit of EUR 5,000 thousand (2013 and 2012: EUR 5,000 thousand) for damage on health and expenses related to death and EUR 1,000 thousand (2013 and 2012: EUR 1,000 thousand) for damage caused by destroyed, seized or lost items, lost profits.

The reversal of impairment charge relates mainly to the land and buildings which were transferred from assets held for sale. The recoverable amount of assets was determined by reference to their value in use.

Duct, cable Telephone Radio and Construction and other exchanges trans- in progress Land and outside and related mission including buildings plant equipment equipment Other advances Total At 1 January 2013 Cost 182,548 987,141 1,145,742 363,930 350,298 64,601 3,094,260 Accumulated depreciation (79,732) (475,550) (1,059,073) (309,449) (251,310) (643) (2,175,757) Net book value 102,816 511,591 86,669 54,481 98,988 63,958 918,503 Acquisition through business combination 154 1,929 63 - 2,744 157 5,047 Additions 522 8,112 6,324 4,065 7,400 39,458 65,881 Depreciation charge (4,864) (32,893) (39,787) (22,799) (30,053) - (130,396) Impairment charge (16,654) (5) (2,285) (616) (1,218) - (20,778) Reversal of impairment - - 1 - - 50 51 Disposals (404) (3) (76) (42) (328) (37) (890) Transfers 3,368 (656) 6,681 11,066 16,550 (37,009) - Transfers to assets held for sale (Note 12) (19,772) - - - - - (19,772) At 31 December 2013 Cost 122,253 994,528 1,060,574 348,320 340,636 67,005 2,933,316 Accumulated depreciation (57,087) (506,453) (1,002,984) (302,165) (246,553) (428) (2,115,670) Net book value 65,166 488,075 57,590 46,155 94,083 66,577 817,646

41 Slovak Telekom, a.s. F-43 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 13. Property and equipment (continued)

Duct, cable Telephone Radio and Construction and other exchanges trans- in progress Land and outside and related mission including buildings plant equipment equipment Other advances Total At 1 January 2012 Cost 183,047 976,989 1,252,651 315,108 310,564 56,778 3,095,137 Accumulated depreciation (75,769) (444,223) (1,109,410) (260,559) (199,682) (1,337) (2,090,980) Net book value 107,278 532,766 143,241 54,549 110,882 55,441 1,004,157 Additions 392 9,909 9,878 2,776 13,537 35,317 71,809 Depreciation charge (5,042) (32,303) (53,614) (32,011) (33,558) - (156,528) Impairment charge (524) - (4) - (375) - (903) Reversal of impairment 80 - 8 - 89 376 553 Disposals (127) (5) (51) (7) (290) (105) (585) Transfers 759 1,224 (12,789) 29,174 8,703 (27,071) - At 31 December 2012 Cost 182,548 987,141 1,145,742 363,930 350,298 64,601 3,094,260 Accumulated depreciation (79,732) (475,550) (1,059,073) (309,449) (251,310) (643) (2,175,757) Net book value 102,816 511,591 86,669 54,481 98,988 63,958 918,503

14. Intangible assets

Internally developed Customer intangible relationships Licenses Goodwill Software assets Other Total At 1 January 2014 Cost 447,621 144,806 112,970 508,907 4,447 81,610 1,300,361 Accumulated amortization (330,883) (69,374) (3,000) (451,759) (1,424) (905) (857,345) Net book value 116,738 75,432 109,970 57,148 3,023 80,705 443,016 Additions - 9,294 - 17,532 573 12,925 40,324 Amortization charge (23,647) (16,855) - (37,887) (486) (22) (78,897) Impairment charge - - - - - (84) (84) Transfers - 62,511 - 13,480 337 (76,328) - At 31 December 2014 Cost 447,621 216,600 112,970 518,746 5,357 17,306 1,318,600 Accumulated amortization (354,530) (86,218) (3,000) (468,473) (1,910) (110) (914,241) Net book value 93,091 130,382 109,970 50,273 3,447 17,196 404,359

On 30 December 2013 the Telecommunications Office of the Slovak Republic granted the license for the provision of mobile services on 800 MHz and 2600 MHz frequency bands (LTE license). Acquisition cost of the license is EUR 62,522 thousand (Notes 1, 35) and the license is valid until 31 December 2028. The license was put in use in March 2014. Significant part of customer relationships was recognized at the acquisition of T-Mobile in December 2004. Net book values of those customer relationships at 31 December 2014 and remaining useful lives are: EUR 57,584 thousand and 3 years for post-paid business customers, EUR 1,462 thousand and 1 year for DNS customers. The remaining part of customer relationships was recognized at acquisition of subsidiaries DIGI and PosAm with total net book value at 31 December 2014 of EUR 34,045 thousand. Net book value of the category Other includes intangible assets in progress of EUR 17,196 thousand (2013: EUR 80,684 thousand, 2012: EUR 28,041 thousand). For cost and impairment of goodwill refer to Note 15.

42 Slovak Telekom, a.s. F-44 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 14. Intangible assets (continued)

Internally developed Customer intangible relationships Licenses Goodwill Software assets Other Total At 1 January 2013 Cost 418,322 135,309 84,349 461,123 3,818 29,406 1,132,327 Accumulated amortization (287,649) (62,554) (3,000) (418,872) (1,053) (1,081) (774,209) Net book value 130,673 72,755 81,349 42,251 2,765 28,325 358,118 Acquisition through business combination 29,299 3,663 28,621 7 - - 61,590 Additions - 5,812 - 27,364 464 75,416 109,056 Amortization charge (43,234) (6,820) - (35,057) (371) (265) (85,747) Disposals - - - - - (1) (1) Transfers - 22 - 22,583 165 (22,770) - At 31 December 2013 - Cost 447,621 144,806 112,970 508,907 4,447 81,610 1,300,361 Accumulated amortization (330,883) (69,374) (3,000) (451,759) (1,424) (905) (857,345) Net book value 116,738 75,432 109,970 57,148 3,023 80,705 443,016

Internally developed Customer intangible relationships Licenses Goodwill Software assets Other Total At 1 January 2012 Cost 423,381 133,379 84,349 427,133 3,733 35,892 1,107,867 Accumulated amortization (256,166) (55,322) (3,000) (385,245) (715) (2,982) (703,430) Net book value 167,215 78,057 81,349 41,888 3,018 32,910 404,437 Additions - 1,838 - 16,324 76 14,532 32,770 Amortization charge (36,542) (7,140) - (34,619) (338) (282) (78,921) Disposals - - - (135) - (33) (168) Transfers - - - 18,793 9 (18,802) - At 31 December 2012 Cost 418,322 135,309 84,349 461,123 3,818 29,406 1,132,327 Accumulated amortization (287,649) (62,554) (3,000) (418,872) (1,053) (1,081) (774,209) Net book value 130,673 72,755 81,349 42,251 2,765 28,325 358,118

43 Slovak Telekom, a.s. F-45 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 15. Impairment of goodwill

For impairment testing, the goodwill acquired in business combinations has been allocated to individual cash-generating units, as of 31 December 2014, 2013 and 2012: Zoznam & Zoznam T-Mobile DIGI PosAm Mobile Total (since 1 September 2013) Goodwill allocated to cash-generating units 73,313 28,621 6,368 4,668 112,970 Impairment - - - (3,000) (3,000) 73,313 28,621 6,368 1,668 109,970

Mobile telecommunication business (T-Mobile) The goodwill was recognized at the acquisition of T-Mobile in December 2004. The Group has an implemented policy to make the impairment test based on a 10-year cash flow projection on reasonable and supportable assumptions that present the management’s best estimate on market participants’ assumptions and expectations. The Group uses 10 year cash flow projections as the payback period of its investments in the telecommunications operations often exceeds 5 years. Cash flows beyond the ten-year period are extrapolated using a 2% growth rate (2013: 2%, 2012: 2%). This growth rate does not exceed the long-term average growth rate for the market in which the cash-generating unit operates. The Group uses discount rate of 6.93% (2013: 7.11%, 2012: 6.94%). Further key assumptions on which management has based its determination of the recoverable amount of cash-generating unit include the development of revenue, customer acquisition and retention costs, churn rates, capital expenditures and market share. The recoverable amount of the cash-generating unit based on fair value less costs of disposal calculation exceeded its carrying value. Management believes that any reasonably possible change in the key assumptions on which the cash-generating unit’s recoverable amount is based would not cause its carrying amount to exceed its recoverable amount.

TV business (DIGI) The Group acquired DIGI on 1 September 2013. The recoverable amount of the cash-generating unit was determined using cash flows projections based on the four-year financial plans that have been approved by management and are also used for internal purposes. Cash flows beyond the four-year period are extrapolated using a 1.5% growth rate (2013: 1.5%). This growth rate does not exceed the long-term average growth rate for the market in which the cash-generating unit operates. The Group uses discount rate of 7.12% (2013: 7.40%). Further key assumptions on which management has based its determination of the recoverable amount of the cash- generating unit include the development of revenue, customer acquisition and retention costs, capital expenditure and market share. The recoverable amount of the cash-generating unit based on fair value less costs of disposal calculation exceeded its carrying value. Management believes that any reasonably possible change in the key assumptions on which the cash-generating unit’s recoverable amount is based would not cause its carrying amount to exceed its recoverable amount.

IT solutions business (PosAm) The recoverable amount of the cash-generating unit was determined using cash flows projections based on the four-year financial plans that have been approved by management and are also used for internal purposes. Cash flows beyond the four-year period are extrapolated using a 1.5% growth rate (2013: 1.5%, 2012: 2%). This growth rate does not exceed the long-term average growth rate for the market in which the cash-generating unit operates. The Group uses discount rate of 7.68% (2013: 7.98%, 2012: 7.72%). Further key assumptions on which management has based its determination of the recoverable amount of the cash-generating unit include the development of revenue from sale of hardware and software licenses, IT services and software solutions, customer acquisition and retention costs, capital expenditure and market share. The recoverable amount of the cash-generating unit based on fair value less costs of disposal calculation exceeded its carrying value. Management believes that any reasonably possible change in the key assumptions on which the cash-generating unit’s recoverable amount is based would not cause its carrying amount to exceed its recoverable amount.

44 Slovak Telekom, a.s. F-46 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 15. Impairment of goodwill (continued)

Online business (Zoznam and Zoznam Mobile) The recoverable amount of the cash-generating unit was determined using cash flows projections based on the four-year financial plans that have been approved by management and are also used for internal purposes. Cash flows beyond the four-year period are extrapolated using a 1.5% growth rate (2013: 1.5%, 2012: 2%). This growth rate does not exceed the long-term average growth rate for the market in which the cash-generating unit operates. The Group uses discount rate of 8.15% (2013: 8.81%, 2012: 8.22%). Further key assumptions on which management has based its determination of the recoverable amount of the cash-generating unit include the development of revenue from banner advertising, priority listing, e-commerce, content, application development and /or new products launch, other IT services, customer acquisition and retention costs, capital expenditure and market share. In 2011, the carrying value of the cash generating unit exceeded its recoverable amount based on fair value less costs of disposal calculation by EUR 3,000 thousand and the Group allocated impairment to goodwill in the same amount. In 2014, 2013 and 2012, the recoverable amount of the cash-generating unit based on fair value less costs of disposal calculation exceeded its carrying value.

16. Business combinations

16.1 Subsidiary acquired On 1 September 2013, the Group acquired 100% share and voting rights in DIGI SLOVAKIA, s.r.o., an unlisted company with its registered seat at Röntgenova 26, 851 01 Bratislava, Slovak Republic, which specializes in offering TV services (via satellite and cable network), broadband services and TV channels production. The Group acquired DIGI because it expects to increase its share on TV market and to extend the range of TV channels and services that can be offered to its customers.

16.2 Consideration transferred 31 December 2014 Consideration paid in cash Net payments from the escrow account (see below) 50,362 Contingent consideration 1,000 51,362

During 2013 the Group paid to a separately established escrow account EUR 53,000 thousand in relation to the acquisition of DIGI. Cash and cash equivalents acquired during the acquisition amounted to EUR 254 thousand resulting in the net cash outflow related to the acquisition of EUR 52,746 thousand in 2013. The Group paid first part of the consideration in the amount of EUR 40,000 thousand from the escrow account to the former owner of DIGI in September 2013. Second part of the consideration was contracted in the amount of EUR 5,000 thousand and was subject to adjustments based on audited financial statements and working capital movements of DIGI as of 31 August 2013. The Group adjusted the amount of the consideration based on the audited financial statements of DIGI to the amount of EUR 3,362 thousand, which was paid in February 2014. As a result the amount of EUR 1,638 thousand was released from the escrow account to the Group. Third part of the consideration in the amount of EUR 5,000 thousand was conditional on the delivery of the migration database. The consideration was paid in March 2014 from the escrow account. Fourth part of the consideration was contracted in the amount of EUR 3,000 thousand and should have been payable net of any indemnity payments by the former owner of DIGI to the Group in August 2014. During 2014 the Group signed an amendment to the contract. Following this amendment part of the consideration in the amount of EUR 2,000 thousand was paid in September 2014 from the escrow account. Remaining part of the consideration in the amount of EUR 1,000 thousand shall be payable, net of any indemnity payments by the former owner of DIGI to the Group, on 31 August 2015. Consequently the net cash outflow related to the acquisition as of 31 December 2014 is EUR 51,108 thousand. For balances of escrow account, provisions and payables refer to Notes 24, 29 and 30 respectively. Acquisition-related costs of EUR 1,031 thousand have been recognized as an expense in the prior years, under other operating costs in the income statement.

45 Slovak Telekom, a.s. F-47 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 16. Business combinations (continued)

16.3 Assets acquired and liabilities assumed at the date of acquisition The table summarizes the amount of assets acquired and liabilities assumed recognized as at the acquisition date together with values recognized in business combination: Net book Values value (before recognized goodwill in business Fair value of calculation) combination net assets Non-current assets Property and equipment 3,291 1,755 5,046 Customer relationships - 29,299 29,299 Other intangible assets 3,670 - 3,670 Deferred tax 646 - 646 7,607 31,054 38,661 Current assets Inventories 240 - 240 Trade and other receivables 2,828 - 2,828 Prepaid expenses and other assets 281 - 281 Cash and cash equivalents 254 - 254 3,603 - 3,603 Non-current liabilities Deferred tax - 7,142 7,142 Other liabilities 23 - 23 23 7,142 7,165 Current liabilities Trade payables 7,709 - 7,709 Income tax liability 423 - 423 Other liabilities 2,162 - 2,162 Deferred income 2,064 - 2,064 12,358 - 12,358 NET ASSETS (1,171) 23,912 22,741

The fair value of receivables acquired is EUR 2,828 thousand, of which trade receivables amount to EUR 2,801 thousand. The gross contractual amount for trade receivables is EUR 3,819 thousand, of which EUR 1,018 thousand is expected to be non-collectable. In the business combination the Group recognized new intangible assets from customer relationships acquired in the fair value of EUR 29,299 thousand and the fair value adjustment to value of property and equipment in the amount of EUR 1,755 thousand. The deferred tax liability related to assets amounted to EUR 7,142 thousand. The key drivers for valuation of customer relationships were attrition rates, value of the revenue per customer and EBITDA margins of the customer base. Useful life of customer relationships was estimated to 15 years. The fair value adjustment to value of property and equipment was assessed based on technical useful lives of devices and considering expected replacement of devices, the useful life was estimated to 2 years.

16.4 Goodwill arising on acquisition 1 September 2013

Consideration transferred 51,362 Less fair value of identifiable net assets acquired (22,741) Goodwill arising on acquisition 28,621

Goodwill arose in the acquisition of DIGI because the consideration paid for the combination effectively included amounts in relation to the benefit from the expected synergies, revenue growth and future market development. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. None of the goodwill recognized is expected to be deductible for income tax purposes.

46 Slovak Telekom, a.s. F-48 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 16. Business combinations (continued)

16.5 Net cash outflow on acquisition of subsidiary

Consideration paid in cash to escrow account during 2013 53,000 Less cash and cash equivalent balances acquired (254) Net cash outflow on acquisition of subsidiary in year 2013 52,746 Payment received from escrow account during year 2014 (1,638) 51,108

The cash outflow of EUR 2,438 thousand in 2012 related to acquisition of PosAm, which was acquired in 2010.

16.6 Impact of acquisition on the results of the Group From the date of acquisition, DIGI has contributed EUR 9,075 thousand of revenue (net of intercompany revenue) and EUR 1,531 thousand to the profit before tax of the Group (net of intercompany revenues and expenses) for the year 2013. If the combination had taken place at the beginning of the year 2013, contribution to the revenue of the Group for the year 2013 would have been EUR 27,795 thousand and the profit before tax of the Group for the year 2013 would have been by EUR 1,621 thousand lower.

17. Trade and other receivables

2014 2013 2012 Non-current Trade receivables 730 7,667 6,228 Finance lease receivables (Note 18) 995 1,475 2,907 1,725 9,142 9,135 Current Trade receivables 105,676 125,064 108,804 Other receivables 190 190 116 Interest receivable on available-for-sale investments 4,063 3,451 - Finance lease receivables (Note 18) 2,178 2,025 1,602 112,107 130,730 110,522

Trade receivables are net of an allowance of EUR 20,685 thousand (2013: EUR 22,383 thousand, 2012: EUR 22,717 thousand). If the allowance percentage increases by 1% in each relevant ageing group, the charge for the period would be by EUR 217 thousand higher. Movements in the allowance for impaired trade receivables from third parties were as follows: 2014 2013 2012

At 1 January 22,383 22,717 22,549 Additions from business combinations - 1,239 - Charge for the year, net 5,082 5,508 4,865 Utilised (6,780) (7,081) (4,697) At 31 December 20,685 22,383 22,717

18. Finance lease – the Group as lessor

The Group has entered into several finance lease agreements as lessor. The main part of the finance lease receivables relate to the contract with the terms as follows: a) The Group leases terminal equipment (PCs, routers) to the customer. The non-cancellable lease period is 53 months from May 2011 until September 2015 and it covers the major part of the economic life of the leased assets; b) Ownership of the assets will be transferred to the lessee at the end of the lease period for its residual value (if any) in a case that lessee will request such ownership transfer at least one month before the end of the period; c) The present value of the minimum lease payments amounts to all of the fair value of the leased assets.

47 Slovak Telekom, a.s. F-49 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 18. Finance lease – the Group as lessor (continued)

2014 2013 2012 Gross investment in the lease Not later than 1 year 2,259 2,102 1,716 Later than 1 year and not later than 5 years 995 1,497 2,987

Unearned finance income (81) (99) (194) Present value of minimum lease payments 3,173 3,500 4,509

2014 2013 2012 Present value of minimum lease payments Not later than 1 year (Note 17) 2,178 2,025 1,602 Later than 1 year and not later than 5 years (Note 17) 995 1,475 2,907 3,173 3,500 4,509

Minimum lease payments receivable are at the statement of financial position date not past due and from creditworthy customers; therefore the Group does not create any allowance for uncollectible minimum lease payments receivable.

19. Prepaid expenses and other assets

2014 2013 2012 Non-current Easements 9,764 9,654 9,801 Subscriber acquisition costs 1,719 1,473 1,885 Other prepaid expenses 1,689 1,679 2,528 13,172 12,806 14,214 Current Subscriber acquisition costs 1,901 2,654 3,202 Other prepaid expenses 3,482 4,233 3,922 Other assets 1,162 941 2,639 6,545 7,828 9,763

20. Inventories

2014 2013 2012

Materials 3,260 2,388 2,329 Goods 8,849 11,804 11,709 12,109 14,192 14,038

Inventories are net of an allowance of EUR 1,930 thousand (2013: EUR 2,352 thousand, 2012: EUR 2,422 thousand). The write-down of inventories in amount of EUR 186 thousand (2013: EUR 200 thousand, 2012: EUR 357 thousand) was recognized in cost of material and equipment.

21. Investments at amortized cost

2014 2013 2012

State bonds - - 41,227 State treasury bill - - 29,979 Bank bond 3,120 3,120 3,120 3,120 3,120 74,326

The bank bond is net of impairment and the amount of EUR 3,120 thousand approximates the fair value of the bond.

48 Slovak Telekom, a.s. F-50 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 21. Investments at amortized cost (continued)

In 2012 the Group held state bonds and state treasury bill with short term maturity of up to 1 year. The Group held these investments till maturity. If the interest rates of state bonds and state treasury bill were 15 basis points higher/20 basis points lower and all other variables were held constant, the Group’s profit for the year ended 31 December 2012 would increase/decrease by EUR 50 thousand/ EUR 66 thousand.

22. Available-for-sale investments

2014 2013 2012

At 1 January 226,498 - - Additions 32,661 229,415 - Disposals (49,861) - - Amortisation of premium paid (5,321) (2,969) - Remeasurement recognised in other comprehensive income 90 52 - At 31 December 204,067 226,498 -

Non-current 32,102 176,633 - Current 171,965 49,865 -

For interest receivable on available-for-sale investments refer to Note 17. Available-for-sale investments are measured at fair value. In 2014 the Group recognized unrealized gain of EUR 86 thousand (2013: EUR 36 thousand) in other comprehensive income and reclassified EUR 3 thousand from other comprehensive income to income statement (2013: EUR 0). Available-for-sale investments comprise of state bonds. Credit quality of non-current available-for-sale investments is as follows: rating A2: EUR 32,102 thousand (2013: rating A2: EUR 19,980 thousand, rating AAA: EUR 156,653 thousand). Credit quality of current available-for-sale investments is as follows: rating AAA: EUR 151,963 thousand, rating A2: EUR 20,002 thousand (2013: rating A2: EUR 49,865 thousand). If the interest rates of available-for-sale investments were 15 basis points higher/20 basis points lower and all other variables were held constant, the Group’s profit for the year ended 31 December 2014 would increase/decrease by EUR 283 thousand/ EUR 377 thousand (2013: EUR 219 thousand/ EUR 293 thousand).

23. Term deposits

2014 2013 2012

Non-current - 1,088 - Current 219,596 142,271 105,961 219,596 143,359 105,961

Term deposits include deposits at banks with original maturity more than 3 months from the date of acquisition. Short-term deposits with original maturity of three months or less from the date of acquisition are presented as cash and cash equivalents. Credit quality of current term deposits is as follows: rating A2: EUR 156,608 thousand, rating A3: EUR 62,988 thousand (2013: rating A2: EUR 129,971 thousand, rating A3: EUR 12,300 thousand, 2012: rating A2: EUR 105,961 thousand). Credit quality of non-current term deposits in 2013 was as follows: rating A2: EUR 1,088 thousand.

49 Slovak Telekom, a.s. F-51 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 24. Escrow

2014 2013 2012

Escrow 1,000 13,000 - 1,000 13,000 -

The escrow represents the remaining deposit for the purchase price of DIGI (Note 16). It is expected to be settled within one year. During 2014 the Group signed an amendment to the purchase contract with former owner of DIGI regarding postponement of indemnity payment of EUR 1,000 thousand by one year. Credit quality of escrow is as follows: rating A2: EUR 1,000 thousand (2013 rating A3: EUR 13,000 thousand).

25. Loans

2014 2013 2012

Loans to Deutsche Telekom AG 150,000 - - 150,000 - -

The loans granted to Deutsche Telekom AG were not secured. Deutsche Telekom AG has rating BAA1. Loans were provided in November 2014 with interest rate of 0.18% and are repayable in May 2015. The commercial terms of the loans are strictly based on the current financial market conditions.

26. Cash and cash equivalents

2014 2013 2012

Cash and cash equivalents 93,067 229,084 371,488 93,067 229,084 371,488

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term investments are made for varying periods between one day and three months and earn interest at the respective rates. Credit quality of cash at banks is as follows: rating A2: EUR 29,001 thousand, rating A3: EUR 35,425 thousand, rating BAA1: EUR 27,354 thousand, rating BAA2: EUR 607 thousand and rating BAA3: EUR 5 thousand (2013: rating A2: EUR 14,153 thousand, rating A3: EUR 187,879 thousand, rating BAA1: EUR 26,111 thousand and rating BAA3: EUR 447 thousand, 2012: rating A2: EUR 94,652 thousand, rating A3: EUR 201,562 thousand, rating BAA1: EUR 73,893 thousand, rating BAA2: EUR 2 thousand and rating BAA3: EUR 957 thousand).

27. Shareholders’ equity

On 1 April 1999, Slovak Telekom became a joint-stock company with 20,717,920 ordinary shares authorized, issued and fully paid at a par value of EUR 33.20 per share. Deutsche Telekom AG acquired 51% of Slovak Telekom through a privatization agreement effective from 4 August 2000, by which the Company issued 5,309,580 new ordinary shares with a par value of EUR 33.20 per share. The shares were issued at a premium totalling EUR 386,139 thousand. All the newly issued shares were subscribed and fully paid by Deutsche Telekom AG. The privatization transaction also involved the purchase by Deutsche Telekom AG of 7,964,445 existing ordinary shares from the National Property Fund of the Slovak Republic. By acquiring 51% share of Slovak Telekom, Deutsche Telekom obtained 51% of the total voting rights associated with the shares. On 13 December 2013 Deutsche Telekom AG transferred 51% share of Slovak Telekom and voting rights associated with the shares to T-Mobile Global Holding Nr. 2 GmbH, and on 17 December 2013 T-Mobile Global Holding Nr. 2 GmbH transferred 51% share and voting rights associated with the shares to CMobil B.V. The change of the shareholders came into effect by registering in the Central Securities Depository of the Slovak Republic. T-Mobile Global Holding Nr. 2 GmbH became the shareholder of Slovak Telekom on 18 December 2013 and CMobil B.V. became the shareholder of Slovak Telekom on 10 January 2014. As of 31 December 2014, Slovak Telekom had authorized and issued 26,027,500 ordinary shares (2013 and 2012: 26,027,500) with a par value of EUR 33.20 per share. All the shares issued were fully subscribed.

50 Slovak Telekom, a.s. F-52 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 27. Shareholders’ equity (continued)

The Extraordinary General Meeting held on 9 February 2015 approved the transformation of the form of shares of Slovak Telekom, a.s. from physical registered shares to book-entered registered shares and the change of nominal value of shares of Slovak Telekom, a.s. from the current nominal value of EUR 33.20 to a new nominal value of EUR 10.00, whereby the current amount of registered capital of Slovak Telekom, a.s. shall remain unaltered. The change came into effect by registering in the Commercial register of the Slovak Republic in February 2015. Total number of shares after the change is 86,411,300. The structure of shareholders of the Company at 31 December 2014, 2013 and 2012 (before any effect of change in number of shares): Number of Value of acquired Acquired Acquired Shareholder’ name shares acquired shares in EUR share voting rights

CMobil B.V. (2013: T-Mobile Global Holding Nr. 2 GmbH, 2012: Deutsche Telekom AG) 13,274,025 440,697,630 51% 51% Ministry of the Economy of the Slovak Republic 8,849,350 293,798,420 34% 34% National Property Fund of the Slovak Republic 3,904,125 129,616,950 15% 15% 26,027,500 864,113,000

The new number of shares acquired after the change (value of acquired shares in EUR, acquired share in % and acquired voting rights in % remain unchanged): Number of Shareholder’ name shares acquired

CMobil B.V. 44,069,763 Ministry of the Economy of the Slovak Republic 29,379,842 National Property Fund of the Slovak Republic 12,961,695 86,411,300

In December 2009, the Board of Directors of Slovak Telekom approved the concept of the integration of Slovak Telekom with its 100% subsidiary T-Mobile. T-Mobile ceased to exist with effect from 1 July 2010 and was wound up without liquidation as of 30 June 2010 on the basis of a merger agreement concluded between Slovak Telekom and T-Mobile (Note 1). Due to the change in the functional currency of the Company from the Slovak Crown to EUR as at 1 January 2009, there was an increase in the share capital of the Company of EUR 158 thousand. The statutory reserve fund of the Company was used to cover the increase in share capital. The statutory reserve fund is set up in accordance with Slovak law and is not distributable. The reserve is created from retained earnings to cover possible future losses. In 2013, after the distribution of 2012 statutory profit, the statutory reserve fund reached the level required by the Slovak law and the Articles of Association of Slovak Telekom, a.s. Financial statements of the Group for the year ended 31 December 2013 were authorized for issue on behalf of the Board of Directors of Slovak Telekom on 20 March 2014. On 30 April 2014, the Ordinary General Meeting of Slovak Telekom approved distribution of the prior year profit in the form of dividends with the remaining part of the 2013 profit being retained. On the basis of this proposed appropriation, total dividends of EUR 16,400 thousand were paid in May 2014 (2013: EUR 70,568 thousand, 2012: EUR 92,000 thousand). Dividend per share calculated based on new number of shares for the years 2014, 2013 and 2012 are: EUR 0.19 per share, EUR 0.82 per share and EUR 1.06 per share. Dividend per share calculated based on former number of shares for the years 2014, 2013 and 2012 are: EUR 0.63 per share, EUR 2.71 per share and EUR 3.53 per share. Approval of the 2014 profit distribution will take place at the Annual General Meeting scheduled for 31 March 2015.

51 Slovak Telekom, a.s. F-53 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 28. Earnings per share

Earnings per share are calculated in accordance with IAS 33.64 based on new number of shares (as described in Notes 27 and 38) as follows: 2014 2013 2012

Profit attributable to the owners of the parent (profit for the year) 43,566 49,301 63,147 Number of ordinary shares issued 86,411,300 86,411,300 86,411,300 Basic / diluted earnings per share (EUR) 0.50 0.57 0.73

The calculation of basic earnings per share is based on the time-weighted number of all ordinary shares outstanding. There are currently no diluted shares. Diluted earnings per share equal to basic earnings per share for all the years presented.

29. Provisions

Legal and Asset regulatory retirement Acquisition Termination Employee claims obligation of subsidiary benefits benefits Other Total (Note 36) At 1 January 2014 27,026 8,154 3,000 2,800 7,806 2,423 51,209 Arising during the year 29,305 63 - 2,680 5,422 1,817 39,287 Reversals (327) - - - (1,344) (69) (1,740) Utilised (117) - (2,000) (2,800) (46) (1,445) (6,408) Transfer to current liabilities, net (23,742) - - - - (23,742) Interest impact - 4,308 - - 251 6 4,565 At 31 December 2014 32,145 12,525 1,000 2,680 12,089 2,732 63,171

Non-current - 12,525 - - 12,089 1,137 25,751 Current 32,145 - 1,000 2,680 - 1,595 37,420 32,145 12,525 1,000 2,680 12,089 2,732 63,171

Analysis of total provisions: 2014 2013 2012

Non-current 25,751 16,915 18,215 Current 37,420 34,294 5,243 63,171 51,209 23,458

Asset retirement obligation The Group is subject to obligations for dismantlement, removal and restoration of assets associated with its cell site operating leases (Note 2.20). Cell site lease agreements may contain clauses requiring restoration of the leased site at the end of the lease term, creating an asset retirement obligation.

Acquisition of subsidiary The Group recognized the provision related to unpaid part of the purchase price for the acquisition of DIGI (Note 16). Remaining part of the purchase price in the amount of EUR 1,000 thousand shall be payable, net of any indemnity payments by the former owner of DIGI to the Group, on 31 August 2015.

52 Slovak Telekom, a.s. F-54 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 29. Provisions (continued)

Termination benefits The restructuring of the Group’s operations resulted in headcount reduction of 510 employees in 2014. The Group expects a further headcount reduction of 241 employees in 2015 as a result of an ongoing restructuring program. A detailed formal plan that specifies the number of staff involved and their locations and functions was defined and authorized by management and announced to the trade unions. The amount of compensation to be paid for terminating employment was calculated by reference to the collective agreement. The termination payments are expected to be paid within twelve months of the statement of financial position date and are recognized in full in the current period. In 2014 the Group recognized an expense resulting from termination benefits in amount of EUR 4,446 thousand (2013: EUR 5,408 thousand, 2012: EUR 6,057 thousand) in staff costs.

Retirement and jubilee benefits The Group provides benefit plans for all its employees. Provisions are created for benefits payable in respect of retirement and jubilee benefits. One-off retirement benefits are dependent on employees fulfilling the required conditions to enter retirement and jubilee benefits are dependent on the number of years of service with the Group. The benefit entitlements are determined from the respective employee’s monthly remuneration or as a defined particular amount. Retirement benefits Jubilee Total

Present value of the defined benefit obligation At 1 January 2014 7,577 229 7,806 Interest costs 244 7 251 Current service cost 491 19 510 Benefits paid (28) (18) (46) Remeasurement of defined benefit plans 1,825 (4) 1,821 Other movements 3,087 - 3,087 Curtailment gain (1,340) - (1,340) At 31 December 2014 11,856 233 12,089

Remeasurement of defined benefit plans related to retirement benefits in amount of EUR 1,825 thousand consists of experience adjustments (EUR (261) thousand) and change in financial assumptions (EUR 2,086 thousand). The curtailment gain in amount of EUR 1,340 thousand resulted mainly from a reduction in the number of participants covered by the retirement and jubilee benefit plans that occurred in 2014 or was announced for 2015. There were no special events causing any new past service cost during 2014 other than the curtailment mentioned above. Principal actuarial assumptions used in determining the defined benefit obligation and the curtailment effect in 2014 include the discount rate of 1.84%. The expected expense for 2014 has been determined based on the discount rate as at the beginning of the accounting period of 3.25%. Average retirement age is 62 years. The expected growth of nominal wages over the long term is 2.2% with minor adjustments for the first two years. The weighted average duration of the defined benefit obligation is 13.4 years. The sensitivity analysis for the significant actuarial assumptions as at 31 December 2014 is as follows: Change of employee Change of actuarial assumption benefits provision Discount rate change +100 bp / -100 bp (1,418) / 1,711 Salary change +0.50% / -0.50% 798 / (733) Change in life expectation +1 year / -1 year 14 / (15)

53 Slovak Telekom, a.s. F-55 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 30. Trade and other payables

2014 2013 2012 Non-current Trade payables - - 250 Financial payables 325 1,088 - Finance lease 313 - 5 638 1,088 255 Current Trade payables 73,110 100,631 76,537 Uninvoiced deliveries 36,945 97,612 44,784 Put option 11,603 11,512 12,161 Payable for DIGI acquisition - 8,362 - Financial payables 6,251 6,411 - Finance lease 313 5 53 Other payables 737 697 1 128,959 225,230 133,536

31. Finance lease – the Group as lessee

In 2014 the Group has entered into new finance lease agreement as lessee. The non-cancellable lease period is 24 months ending December 2016. Until 2014 the Group leased vehicles under finance leases. Net book value of vehicles was EUR 5 thousand at 31 December 2013 (2012: EUR 79 thousand). The average lease term was 4 years. The leases terminated during 2014 and the group purchased vehicles for its residual value at the end of the lease terms. 2014 2013 2012 Minimum lease payments Not later than one year 313 5 53 Later than one year and not later than three years 313 - 5 626 5 58

32. Other liabilities and deferred income

2014 2013 2012 Non-current Deferred income 3,511 2,810 4,830 3,511 2,810 4,830 Current Deferred income 36,635 36,616 36,936 Amounts due to employees 22,479 23,876 17,760 Other tax liabilities 9,110 9,919 10,829 Liability for legal and regulatory claims (Note 36) 38,838 - - Other liabilities 3,570 3,584 6,673 110,632 73,995 72,198

Amounts due to employees include social fund liabilities: 2014 2013 2012

At 1 January 75 320 221 Additions from business combinations - 23 - Additions 1,585 1,486 1,708 Utilisation (1,503) (1,754) (1,609) At 31 December 157 75 320

54 Slovak Telekom, a.s. F-56 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 33. Commitments

The Group’s purchase commitments were as follows: 2014 2013 2012

Acquisition of property and equipment 14,557 15,274 10,717 Acquisition of intangible assets 1,833 1,309 14,943 Purchase of services and inventory 62,677 97,306 74,425 79,067 113,889 100,085

34. Operating lease – the Group as lessee

The future minimum operating lease payments were as follows: 2014 2013 2012

Operating lease payments due within one year 12,433 12,923 10,613 Operating lease payments due between one and five years 24,675 23,065 12,378 Operating lease payments due after five years 18,943 19,831 5,951 56,051 55,819 28,942

During 2013 the Group has entered into an operating lease contract for the period of 10 years. The Group has an option to extend the lease term for the next 2 years and the Group has a right to exercise the option repeatedly, maximum five times. Since 2015 rental payments shall increase annually by the portion contingent on the index of the consumer prices increase in the Eurozone, maximum 3.5% annually.

35. Related party transactions

Other entities in Other shareholders DT AG DT AG group of the Company Total Receivables At 31 December 2014 155,264 2,157 5 157,426 At 31 December 2013 3,296 3,899 5 7,200 At 31 December 2012 2,196 5,109 2 7,307 Payables At 31 December 2014 7,285 2,358 - 9,643 At 31 December 2013 6,756 4,745 - 11,501 At 31 December 2012 8,105 4,411 5 12,521 Sales and income Year ended 31 December 2014 4,359 10,639 52 15,050 Year ended 31 December 2013 4,551 22,510 54 27,115 Year ended 31 December 2012 5,720 13,174 58 18,952 Purchases Year ended 31 December 2014 6,981 10,464 7 17,452 Year ended 31 December 2013 6,171 16,798 11 22,980 Year ended 31 December 2012 6,536 13,536 14 20,086 Commitments At 31 December 2014 4,431 442 - 4,873 At 31 December 2013 3,807 13,620 - 17,427 At 31 December 2012 6,179 21,007 - 27,186

55 Slovak Telekom, a.s. F-57 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 35. Related party transactions (continued)

The Group conducts business with its ultimate parent, Deutsche Telekom AG and its subsidiaries, associates and joint ventures. Business transactions relate mainly to telephone calls and other traffic in the related parties’ networks. Other transactions include data services, management, consultancy, other services and purchases of fixed assets. The Group purchased fixed assets in amount of EUR 1,191 thousand (2013: EUR 7,265 thousand, 2012: EUR 1,220 thousand) from related parties. In 2014 the Group granted Deutsche Telekom AG a short-term loan of EUR 150,000 thousand. Interest related to the loan amounted to EUR 45 thousand (Notes 9, 25). The Slovak Government has significant influence over the financial and operating policy decisions of the Group through 49% of the shares of the Slovak Telekom. The shares are owned by the Slovak Republic through the Ministry of the Economy of the Slovak Republic (34%) and by the National Property Fund of the Slovak Republic (15%). Therefore the Slovak Government and the companies controlled or jointly-controlled by the Slovak Government are classified as related parties of the Group (“Slovak Government related entities”). In 2014 the Group paid to the Telecommunications Office of the Slovak Republic a fee of EUR 62,522 thousand for the granted license for the provision of mobile services on 800 MHz and 2600 MHz frequency bands (LTE license). In 2013 the Group paid to the Telecommunications Office of the Slovak Republic a fee of EUR 970 thousand for the prolongation of the license for the provision of mobile services under the frequencies of 900 MHz, 1800 MHz and 450 MHz (Notes 1, 14). The Group also incurred expenses of EUR 2,773 thousand (2013: EUR 2,454 thousand, 2012: EUR 3,507 thousand) with respect to other frequency and telecommunication equipment related fees to the Telecommunications Office (Note 8). During 2013 the Group has entered into a contract for the period of 2 years with the Slovak Government related entity on development, implementation and support of software solution of municipalities portal. The total value of the contract was approximately EUR 38,225 thousand. In 2014, the Group recognized revenue related to this contract of EUR 15,852 thousand (2013: EUR 3,904 thousand). During 2010 the Group has entered into a contract for the period of 5 years with the Slovak Government related entity on establishment and delivery of communication system, lease of terminal equipment, delivery of internet connectivity and other telecommunications services. The total value of the contract was approximately EUR 23,859 thousand. In 2014, the Group recognized revenue related to this contract of EUR 5,353 thousand (2013: EUR 5,287 thousand, 2012: EUR 5,351 thousand). During 2001 the Group has signed a master agreement with the Slovak Government related entity on providing services of communications infrastructure. The contract amount depends on actual services provided during the financial period. In 2014, the Group recognized revenue related to this contract of EUR 10,284 thousand (2013: EUR 9,784 thousand, 2012: EUR 8,940 thousand). During 2014 the Group purchased electricity and electricity distribution services from the Slovak Government related entities for EUR 7,981 thousand (2013: EUR 8,315 thousand, 2012: EUR 8,614 thousand). During 2014 the Group purchased postal and cash collection services for EUR 4,381 thousand (2013: 4,745 thousand, 2012: EUR 5,413 thousand) and leased space for EUR 1,909 thousand (2013: EUR 2,448 thousand, 2012: EUR 1,938 thousand) from the Slovak Government related entity. The Group routinely provides telecommunication and other electronic communication services to the Slovak Government and its related entities as part of its normal business activities. The Group also purchases services and goods from the Slovak Government related entities in the normal course of business. Deutsche Telekom as the ultimate parent company controlling Slovak Telekom is a related party to the Federal Republic of Germany. Slovak Telekom had no individually significant transactions with the Federal Republic of Germany or entities that it controls, jointly controls or where Federal Republic of Germany can exercise significant influence in either 2014, 2013 or 2012.

56 Slovak Telekom, a.s. F-58 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 35. Related party transactions (continued)

Compensation of key management personnel The key management personnel, 21 in number (2013: 21, 2012: 21) include members of the Executive Management Board, Board of Directors and Supervisory Board. 2014 2013 2012

Short term employee benefits 2,967 2,193 2,578 Defined contribution pension plan benefits 63 58 45 Share matching plan 18 14 12 3,048 2,265 2,635

2014 2013 2012

Executive Management Board 2,950 2,167 2,533 Board of Directors 54 55 57 Supervisory Board 44 43 45 3,048 2,265 2,635

The benefits of Executive Management Board include amount of EUR 71 thousand (2013: EUR 70 thousand, 2012: EUR 90 thousand) for private spending of members charged to the Group.

36. Contingencies

Legal and regulatory cases On 9 May 2012 the Company has received a Statement of Objections (“SO”) issued by the European Commission (“Commission”), addressed to DT AG as well. In the SO, the Commission preliminary accused the Company of ongoing refusal to supply and margin squeeze for unbundled local loops and wholesale broadband access. The Commission alleged on a preliminary basis that the Company implemented a strategy designed to exclude competitors from retail broadband access markets in the Slovak Republic. On 6 September 2012 the Company sent the response to SO inclusive several Annexes, rebutting all Commission’s accusations. On 6 and 7 November 2012 the oral hearing took place. On 6 December 2013 the Company received a Letter of Facts, with which the Commission has continued its investigation. On 16 September 2014 State of Play meeting with the Commission took place, where the Company was informed about latest Commission’s view on alleged abuse. On 17 October 2014 the Commission sent an infringement decision to the Company in case AT 39.523 (hereinafter “the Decision”). The Decision found the Company (and DT AG, as parental company) liable for breach of competition law (margin squeeze and refusal to deal) in relation to ULL for the period 12 August 2005 – 31 December 2010 and imposed a fine of EUR 38,838 thousand on DT AG and the Company, jointly and severally. On 26 December 2014 the Company filed an appeal against the Decision to the General Court of the European Union. The competitors that would have been harmed by the Company anti-competitive conduct during the infringement period may decide to lodge actions in damages before the Slovak courts. As of the date of these financial statements the Company is not aware of any such action. In 1999, a lawsuit was brought against Company for compensation of damages and loss of profit allegedly caused by switch-off of the Radio CD International (“CDI”) broadcasting in 1996. Radio CDI was a program of Slovak Radio directed to the territory of Austria and broadcasted by Company. In 1996, the broadcasting of the Radio CDI was switched off, based on the request of the Council for Radio and Television Broadcasting stating that Radio CDI broadcasting violated the law. In 2011, the first instance court decided that Company is obliged to pay the plaintiff the amount of EUR 32,179 thousand of the principal and 17.6% late interest since 4 September 1996 until fully paid. Company filed an appeal against that judgment as it is of the opinion that the first instance court did not deal with a number of proofs and assertions provided by Company. Additionally, Company believes that serious errors were committed in the matter at issue on the part of the first instance court, which errors prove the incorrectness of the judgement and should be sufficient enough to consider that whilst the loss in this lawsuit is possible, it is not likely. During 2012 the Regional Court made a decision on trial costs, when the Company is obliged to pay the plaintiff of EUR 3,652 thousand. The Company appealed to the Supreme Court against the decision on additional trial costs. Such appeal has a suspensive effect, i.e. the Company is not obliged to pay at least until the decision of the Supreme Court on the appeal. The case is currently pending at the Supreme Court. Both parties of the dispute agreed to commence further negotiations of settlement agreement’s details. The settlement agreement is subject to approval by Board of Directors of the Company and the competent court.

57 Slovak Telekom, a.s. F-59 Consolidated Financial Statements Notes All amounts are in thousands of Euro, unless otherwise stated 36. Contingencies (continued)

In 2009, the Anti-Monopoly Office (“AMO”) imposed on Company a penalty of EUR 17,453 thousand for abusing its dominant position and violating competition law by price squeeze and tying practices on several relevant markets (voice, data and network access services). Company filed an administrative complaint to the Regional Court in Bratislava in 2009. In January 2012, the Regional Court cancelled the challenged AMO decision. The Regional Courtʼs judgment, however, is not final as it was cancelled by the Supreme Court in February 2014 upon AMO’s appeal. The Supreme Court referred the case back to the Regional Court for further proceedings. In 2013, two companies filed actions against Company seeking damages allegedly resulting from an unfair conduct of Company. The companies contend that they incurred lost profit amounting to EUR 62,236 thousand plus interest as a consequence of the said conduct. In 2014 both companies increased their claim against the Company by EUR 16,507 thousand. Both proceedings are pending before the first instance District Court Bratislava II. In 2005, the former supplier brought a lawsuit against Company for compensation of damages in total amount of EUR 2,310 thousand. The supplier alleges that by ceasing cooperation with it Company breached the contract between the Company and the supplier. In addition, another company contends that by breaching the said contract Company caused damages not only to the supplier but to the supplier’s shareholders as well. Therefore, in 2013, this company, which the supplier’s shareholders ceded their claims to, brought three lawsuits against Company and Deutsche Telekom AG, one of which has been dismissed by the court in 2014. As of 31 December 2014, there are two lawsuits, where the plaintiff is seeking damages in total amount of EUR 6,857 thousand plus interest. All the above lawsuits are still pending at the first instance. The Group is involved in legal and regulatory proceedings in the normal course of business. As at 31 December 2014, the Group recognized provision for known and quantifiable risks related to proceedings against the Group, which represent the best estimate of the amounts, which are more likely than not to be paid. The actual amounts of penalties, if any, are dependent on a number of future events the outcome of which is uncertain, and, as a consequence, the amount of provision may change at a future date.

37. Audit fees

In 2014 the Group obtained from the audit company PricewaterhouseCoopers Slovensko, s.r.o. audit services in amount of EUR 286 thousand (2013: EUR 279 thousand, 2012: EUR 287 thousand), other assurance services in amount of EUR 62 thousand (2013: EUR 64 thousand, 2012: EUR 64 thousand), tax advisory services in amount of EUR 5 thousand (2013: EUR 0, 2012: EUR 3 thousand) and other non-audit services in amount of EUR 54 thousand (2013: EUR 4 thousand, 2012: EUR 9 thousand).

38. Events after the reporting period

The Extraordinary General Meeting held on 9 February 2015 approved the transformation of the form of shares of Slovak Telekom, a.s. from physical registered shares to book-entered registered shares and the change of nominal value of shares of Slovak Telekom, a.s. from the current nominal value of EUR 33.20 to a new nominal value of EUR 10.00, whereby the current amount of registered capital of Slovak Telekom, a.s. shall remain unaltered. For details refer to Notes 27 and 28. CMobil B.V., the parent company of the Company, changed its name to Deutsche Telekom Europe B.V. in March 2015. The liability for legal and regulatory claims (Note 32) in the amount of EUR 38,838 thousand was paid by the Group in January 2015. There were no other events, which have occurred subsequent to the year-end, which would have a material impact on the financial statements at 31 December 2014.

58 Slovak Telekom, a.s. F-60 THE COMPANY Slovak Telekom, a.s. Bajkalska´28 817 62 Bratislava Slovak Republic

THE SELLING SHAREHOLDER National Property Fund of the Slovak Republic Trnavska´ cesta 486/100 821 01 Bratislava Slovak Republic

JOINT GLOBAL COORDINATORS Citigroup Global Markets Limited J.P. Morgan Securities plc Citigroup Centre, Canada Square 25 Bank Street London E14 5LB London E14 5JP United Kingdom United Kingdom

JOINT LEAD MANAGER AND REGIONAL JOINT LEAD MANAGER AND RETAIL OFFERING CO-ORDINATOR OFFERING CO-ORDINATOR WOOD & Company Financial Services a.s. Erste Group Bank AG Palladium, Na´m. Republiky 1079/1a Graben 21 110 00 Prague 1 1010 Vienna Czech Republic Austria

LEGAL ADVISERS TO THE COMPANY As to U.S. and English law As to Slovak law As to Czech law Allen & Overy LLP Allen & Overy Bratislava, s.r.o. Allen & Overy (Czech Republic) One Bishops Square Eurovea Central 1, Pribinova 4 LLP, organizac˘nı´ sloz˘ka London E1 6AD 811 09 Bratislava V Celnici 4 United Kingdom Slovak Republic Prague 11000 Czech Republic

LEGAL ADVISERS TO THE UNDERWRITERS As to U.S. and English law As to Slovak law White & Case LLP White & Case s.r.o. 5 Old Broad Street Hlavne´na´mestie 5 London EC2N 1DW 811 01 Bratislava United Kingdom Slovak Republic

DEPOSITARY Citibank, N.A. 388 Greenwich Street, 14th Floor New York, NY 10013 United States of America

AUDITORS TO THE COMPANY PricewaterhouseCoopers Slovensko, s.r.o. Na´mestie 1. ma´ja 18 815 32 Bratislava Slovak Republic

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