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Annual Report 2007 Content Annual Report 2007 Content I. Slovak Telekom Group Milestones of 2007 3 Slovak Telekom Group Companies 7 Corporate Identity 8 Slovak Telekom Group Profile 9 Letter to Shareholders 16 Slovak Telekom - statutory bodies 19 Corporate Governance 24 II. Shaping development in the telecommunications market Increasing competition, higher quality services 28 III. Report of the Company’s Management Products and Services of Slovak Telekom Group: Connecting People and Companies 37 Information Technologies: System Support for Effective Business and New Service Launch 54 It Pays To Be a Slovak Telekom Group employee 58 Communication opens the door for our new products 63 Corporate Social Responsibility of Slovak Telekom Group 75 IV. Financial Results Consolidated Financial Statements 80 Financial Statements 121 I. Slovak Telekom Group Milestones of 2007 January New Programme: T-Mobile Slovensko, a.s. (hereinafter also T-Mobile Slovensko) launched Easy Plus loyalty program for prepaid cards. Modernisation: Slovak Telekom, a.s. (hereinafter also Slovak Telekom) switched off the very last telegraph exchange in Slovakia after 160 years of successful operation. Price Unification: Slovak Telekom providing its services under T-Com brand, unified prices of the Hlas cez internet service (VoIP) for all customers, regardless of type of their internet connection used. Improved Service: The number of games of the Hry (Games) service offered by T-Com through the T-Station portal exceeded one hundred and new smashing games for demanding players as well as simple games for the youngest were added. February Lower Prices: Calls from fixed line to all mobile networks dropped in price thanks to the change of Mobill packages for residential and business customers. Service Availability Expanded: – T-Com continued with rapid increase of DSL coverage and enhanced high-speed 4G internet service availability. Over 3.8 million inhabitants of Slovakia could have used high-speed internet access as at the end of February 2007. – After launching the Magio service in December 2006, T-Com expanded the availability of this break-through Triple Play service, offering 4G internet, telephony and digital television in one package. Magio has been available in six Slovak towns since mid February. – T-Mobile Slovensko extended its Wi-Fi spot network and launched HotSpot OpenPoint service offering internet provi- sion for free to keepers of hotels, restaurants, cafés and other facilities. March 4G Internet Milestone: T-Com welcomed the 200,000th 4G internet customer on 5 March 2007. Market Leadership: Slovak Telekom Group (hereinafter also referred to as “Group”) announced its financial results for 2006. Despite the growing competition, the Group succeeded in keeping the leading market position and increased its market share to 51 %. Competition Case Won: The Antimonopoly Office of the Slovak Republic (AMO SR) rejected the petition of Slovanet, a.s., to issue a preliminary injunction imposing Slovak Telekom the duty to stop the provision of Magio and Magio TV services. New Internet Services: – T-Com brand introduced the Ready card as innovation for internet telephony. This prepaid service enables the custo mers to call without invoices and at highly favourable prices. – In cooperation with ICQ, Inc. Company, Zoznam.sk Internet portal made it possible for its users to send short text mes- sages to T-Mobile Slovensko network for free. –T-Mobile Slovensko launched the smallest BlackBerry Pearl model at the first anniversary of BlackBerry service provi- sion. Support to Culture: By supporting the literature contest Román 2006 (Novel 2006) Slovak Telekom promoted the origi- nal Slovak novel writing and publication of the 2006 Best Novel – Námestie kozmonautov by Viliam Klimáček. Changes in the Management: – Milan Vašina became the Chief Executive Officer of T-Mobile Slovensko. – Dušan Švalek became the Marketing Director of T-Mobile Slovensko. Partnership: T-Mobile Slovensko developed an associating programme of partner solutions T-Mobile Partner for compa- nies involved in development, production or sale of mobile solutions based on technologies used by T-Mobile Slovensko. April New Revolutionary Service: T-Mobile Slovensko launched a new service web ‘n‘ walk enabling a fully-fledged internet access in your mobile. Higher Speed for 4G Internet: All 4G internet customers were provided with the transmission speed faster by 512 kbps download while programme prices remained unaltered. Thus T-Com accelerated its DSL programmes for the third time. Slovak Telekom Group > Milestones of 2007 3 Creativity Awarded: Slovak Telekom and its product brand T-Com were awarded three nails in the national creativity con- test Zlatý klinec (Golden Nail) 2007 for T-Com advertising and one nail for the Annual Report of Slovak Telekom. The Com- pany has also won the award of Zlatý klient roka 2007 (2007 Golden Client) leaving other contestants well behind. Shareholders Decided on Dividends: The Ordinary General Meeting of Slovak Telekom approved the dividend pay- ment to shareholders of SKK 2 billion in aggregate. Fond národného majetku SR (National Property Fund SR) was paid 300 million Slovak crown (SKK), the Slovak Republic represented by the Ministry of Transport, Posts and Telecommunica- tions SR was paid 680 million SKK. Dividends paid to Deutsche Telekom AG totalled 1.02 billion SKK. May Support to Culture: Slovak Telekom announced the second annual of the prestigious national competition for teachers, Cena Slovak Telekom (The Slovak Telekom Award). Rádiokomunikácie Sale Finishing: Companies Slovak Telekom and TRI R, executed a Master Agreement based on which TRI R became 100 % owner of TBDS, a.s. (a company established by transformation of Rádiokomunikácie branch and subsidiary Tower Slovakia, s. r. o. v likvidácii) in October 2007, after the approval position of the Antimonopoly Office of the SR World-class Concert: T-Mobile Slovensko offered a unique music experience to thousands of people in Slovakia, by staging the concert of a British pop star George Michael. Product Innovations: – T-Mobile Slovensko launched a new service called Medzi nami (In between of us), offering unlimited calls among family members. – In cooperation with Národná lotériová spoločnosť TIPOS (national lottery company), T-Mobile Slovensko introduced numerical and internet games in mobile version. – T-Mobile Slovensko launched a new service Full Songs, which offers downloading of full song versions to mobile phones and PC. June New Address: Slovak Telekom changes its registered offices. New registered offices of the Company are at Karadžičova 10, 825 13 Bratislava. Better 4G Internet Portfolio: T-Com brought numerous benefits for ADSL-based high-speed internet services to cele- brate their fourth year on the market. New 4G internet packages called Turbo priced from SKK 399/month excl. VAT re- placed the to-date Vysokorýchlostný internet (High-speed Internet) portfolio. The new offering gave basis for 4G internet price unification for customers who have no fixed line. Magio in Ten Cities: After five months of successful sales of the Magio service, T-Com extended the availability of a high- quality digital television to ten cities. T-Com started to broadcast some television stations in the modern 16:9 format, as part of Magio. Entertainment with T-Com: The second annual of summer street festival called T-Com Fiesta was kicked off, taking place in Bratislava, Košice and Banská Bystrica in 2007. Along with that, T-Com made the first city T-Com Fiesta beach with the area exceeding 3,000 m2 available to all Bratislava citizens and visitors. Support to Film: Slovak Telekom was the general partner to 15th annual of Artfilm Medzinárodný filmový festival (Interna- tional Film Festival) which took place in Trenčín and Trenčianske Teplice. Awarded Service: The Hry (Games) section of T-Station.sk portal, which offers the latest service Games on Demand which is unique also in the Europe-wide context, i.e. paid downloading of games from the internet upon demand, was awarded the Najlepší herný produkt roka (Best Gaming Product of the Year) at the meeting of Slovak gaming community – Movie Making War. Innovations for a Life More Entertaining: – Slovak Telekom successfully handed the first optical FttB (Fibre to the Building) solution over to operation in the Bratislava apartment house Koloseo. – T-Mobile Slovensko started providing the data transmission over HSDPA, UMTS, EDGE, and GPRS networks for customers of Easy and Fix price plans. Change in the Management: Petra Berecová became Human Resources Director of T-Mobile Slovensko. General Partnership: T-Mobile Slovensko became the general partner to the Slovensko hľadá SuperStar 3 (Slovak Pop Idol 3) project. Cheaper Calling from Abroad: T-Mobile Slovensko launched the Euro roaming service. July Help to Customer Welcomed: T-Com offered all its customers a unique servicing called SuperServis, which provides clients with installation, configuration and CPE maintenance services. The new service was valued especially by less PC-literate clients. Change in the Management: Igor Matejov assumed the position of Customer Care Director of T-Mobile Slovensko. Slovak Telekom Group > Milestones of 2007 4 August Decreased Roaming Prices: T-Mobile Slovensko decreased roaming call prices with Euro roaming, Smart roaming and Easy roaming services. Closer to Euro: Companies of the Group - Slovak Telekom and T-Mobile Slovensko ratified the Etický kódex pre zavede- nie eura (Code of Conduct for Euro Changeover).
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