ANNUAL REPORT 2012 IME NA TEMATA 1 AD – Skopje PODNASLOV & T-Mobile Macedonia AD Skopje

We generate ideas We turn them into reality We create better living

LIFE IS FOR SHARING. 2IMAGINE A REALITY WITHOUT It’s impossible, not in the 21st BEAUTY AND HAPPINESS century, not when the IMAGE A DREAM WITHOUT A COLOR … communication and technology have come so deeply into our lives …When everybody runs IMAGINE A VILLAGE, CITY, A COUNTRY, somewhere, chases people, places, A WORLD WITHOUT THE MEANS carriers, better living, more OF COMMUNICATION… comfortable life.

THIS IS WHERE WE STEP IN … SO, WE CAN CREATE ADDITIONAL VALUE TO LIVES OF THE PEOPLE.

WE ARE HERE AND WE DO OUR BEST TO: · make the world an even better place for our customers · create better careers, to enrich the days with moments worth of sharing · make life easier · we offer content and entertainement · to innovate for better future of all the citizens AND WE DO THIS WITH YOUR SUPPORT… WITH OUR SHAREHOLDERS, WITH OUR EMPLOYEES, PARTNERS, OUR MOST VALUABLE CUSTOMERS!

TOGETHER WITH YOU… WE ARE LEADING THE MACEDONIAN MARKET TOWARDS THE NEW ERA OF

ANNUAL REPORT 2012|MAKEDONSKI TELEKOM AD – SKOPJE & T-MOBILE MACEDONIA AD SKOPJE IME NA TEMATA PODNASLOV 3

CONTENTS

04 CORPORATE GOVERNANCE 07 SHORT PROFILE OF THE COMPANIES 08 LETTER TO OUR SHAREHOLDERS 13 THE BOARD OF DIRECTORS OF MAKEDONSKI TELEKOM AD – SKOPJE 13 THE BOARD OF DIRECTORS OF T-MOBILE MACEDONIA AD 18 MARKET – REGULATION AND PRICING 24 THE MANAGEMENT COMMITTEE 28 CORPORATE STRATEGY „CHANGE-INNOVATE-TEAM“ 31 THE EMPLOYEES 37 PRODUCT AND SERVICES 46 CORPORATE SOCIAL RESPONSIBILITY 52 TECHNOLOGY AND IT SOLUTIONS 56 CONSOLIDATED FINANCIAL STATEMENTS FOR YEAR 2012 102 2013 ROADMAP 104 GLOSSARY 106 DISCLAIMER 4 CORPORATE GOVERNANCE

MANAGEMENT AND GOVERNANCE OF MAKEDONSKI TELEKOM AD– SKOPJE Under Macedonian law and Statute of Makedonski Telekom AD – Skopje (Makedonski Telekom/Company), the bodies of Makedonski Telekom are the Shareholders’ Assembly and the Board of Directors. Corporate governance of Makedonski Telekom aims to be more transparent by providing information as follows:

· Competences of the Shareholders’ Assembly of Makedonski Telekom · Roles, responsibilities and members of the Board of Directors · The independent auditor · Other relevant information (Acts of Makedonski Telekom and Risk management)

MAKEDONSKI TELEKOM STRUCTURE Makedonski Telekom AD – Skopje is a Joint Stock Company for Electronic Communications with a one-tier management system, as follows:

SHAREHOLDERS’ ASSEMBLY In accordance with the Law on Trade Companies and the Statute of Makedonski Telekom AD - Skopje, the Shareholders’ Assembly, the Board of Directors and the BOARD OF DIRECTORS Chief Executive Officer of the Company are authorized to adopt resolutions within their competence. T – Mobile Macedonia (TM MK) is 100% fully owned CHIEF EXECUTIVE OFFICER subsidiary of Makedonski Telekom AD - Skopje.

SHAREHOLDERS’ ASSEMBLY THE SHAREHOLDERS’ ASSEMBLY SHALL ONLY PASS RESOLUTIONS UPON ISSUES EXPRESSLY SET OUT BY THE LAW ON TRADE COMPANIES AND THE STATUTE OF MAKEDONSKI TELEKOM, AND IN PARTICULAR THE:

1. Modifications to the Statute of the Company 2. Approval of the Annual Account, Financial Statements and Annual Report on the operations of the Company in the previous business year, deciding upon the distribution of the profit and defining the amount and method of dividend payments 3. Defining the means of covering losses incurred in the accounting period, additional approval of the method of utilization of the proceeds from the Reserve Fund 4. Appointment and releasing of the members of the Board of Directors and determining the remuneration which will be paid to the non-executive members of the Board of Directors for their operation 5. Approval of the operation and manag