O2 | About us - EUROTEL AND ČESKÝ TELECOM ARE JOINING FORCES

1.3.2006

New integrated telecommunications operator Telefónica O2 Czech Republic, a.s. to be formed. Today the Board of Directors and the Supervisory Board of Český Telecom, a.s. have approved an intention to integrate Eurotel Praha, spol. s r.o., and Český Telecom, a.s., into a new telecommunications player, Telefónica O2 Czech Republic, a.s. designed to benefit from the know-how and expertise of Eurotel, Český Telecom, Telefónica, and O2. The integrated company will provide both immediate and long-term benefits to its customers. The Board of Directors of Český Telecom will ask the General Meeting, planned for April 2006, to approve the integration and to adopt the company’s new name Telefónica O2 Czech Republic, a.s. The integrated organization is expected to become effective in mid-2006 after all required preparatory and legal steps have been completed.

"I am excited to be part of the process of Eurotel and Český Telecom joining forces to create the telecommunications company of the future. Like its predecessors, this company will remain committed to delivering distinctive, innovative products and services by staying on the cutting edge of technology and customer service. Together we will build the world\'s leading integrated telecommunications company!" Jaime Smith, CEO of Český Telecom.

Both individual customers and the Czech Information Society as a whole will benefit from innovative, integrated telecommunications services. Telefónica O2 Czech
Republic, a.s. will develop a distinctive value proposition for the benefit of all its customers. Converged mobile-fixed products and services and integrated product packages will be among the first novelties available to individuals, families and small businesses, while corporations will be provided with integrated business solutions. Customers will also have the chance to purchase all these products and content services at a single point of sale, to obtain assistance from a single point of customer care, and to have the option of receiving a single bill. We will accomplish this by building on the unique strengths of each of the combined entities: namely, by leveraging Eurotel’s product innovation, flexibility, and customer focus; Český Telecom’s long-term customer relations and a high-quality fixed network; and Telefónica’s and O2’s global expertise in fixed and mobile telecommunications. The new brand under which the integrated company will operate, to be announced in the near future, will build on the successes O2 has achieved in its markets and will benefit from being part of the Telefónica Group. Telefónica O2 Czech Republic, a.s. will also contribute to the advancement of the Information Society in the Czech Republic by making broadband Internet access available to a wide range of customers, including households, schools, libraries, government agencies, and more.

"By combining mobile and fixed services we will offer enormous opportunities and benefits to our customers. This is especially important in the Czech market, where consumers appreciate progressive technologies and innovations. It has always been a matter of pride at Eurotel to bring the latest telecommunications developments to market. This integration opens the door for new ideas that we, together, can convert into new products and services." Salvador Anglada, CEO of Eurotel.

Czechs are at the forefront of fixed-mobile convergence.

The Czech telecommunications market is one of the most advanced in Europe, characterized by a high level of fixed-mobile substitution and by consumers who are quick to adopt new technologies. Recent technology developments will allow us to combine mobile and fixed voice, Internet, and TV into innovative products. Our own market research indicates significant demand for one-stop shopping, single billing and customer service, and integrated voice and data services. This fixed-mobile convergence trend is apparent in other European countries as well, with several other operators already pursuing it, and it is the aspiration of Telefónica O2 Czech Republic, a.s. to lead this new group of integrated operators.

Telefónica O2 Czech Republic, a.s. will be led by a motivated, experienced management team. The new integrated entity will be led by the current CEO of Český Telecom, Mr. Jaime Smith, who will supervise an organization consisting of integrated Business segment and Consumer segment, merged Operations division including IT and networks, and consolidated general support functions:

The Consumer Division, led by Mr. Salvador Anglada, will be responsible for serving our residential customers;

The Business Division, led by Mr. Fernando Astiaso, will be responsible for serving our Corporate and SME customers;

Operations, led by Mr. Petr Slováček, will be a single Division, including integrated telecommunication networks and IT infrastructure and services;

The Finance Division will be led by Mr. Juraj Šedivý;

The HR and Support Services Unit led by Mr. Martin Bek;

The Wholesale Unit led by Mr. Pavel Jiroušek;

The Product Development Unit led by Mr. Stanislav Kůra;

The Regulatory Unit led by Mr. David Šita;

The Business Development Unit led by Mr. Ramon Ros;

The Legal Unit led by Mr. Jakub Chytil;

The Transformation & Convergence Unit led by Mr. Antonio Botas;

The Public Affairs Unit led by Mr. Jaroslav Kubišta.

Telefónica O2 Czech Republic, a.s.’s new leaders have the superior experience and qualifications necessary to build the new integrated organization and to lead it toward future growth. Indeed, not only they, but all of the new company’s current and future employees will discover many exciting opportunities for personal and professional development under this new flagship.

After a short transition period customers will start benefiting from the change.

Following the announcement, management will initiate the legal procedures necessary to create the newly integrated organization. After the General Meeting of Český Telecom approves the integration, the compnies will file a joint application for the registration of the integration into the Commercial Registry and wait for a court decision upon which the integration will become effective effective. During this period customers of both Eurotel and Český Telecom will not experience any interruptions in the products, services, and dedication they have received so far. After the effective date of the integration, currently expected in mid-2006, Telefónica O2 Czech Republic, a.s. will gradually implement the new organizational structure, area by area, and begin delivering all the new customer benefits made possible by its distinctive new product and service offering.

Martin Zabka

Spokesperson
ČESKÝ TELECOM, a. s.

Pavel Kaidl

Spokesperson

Eurotel Praha, spol. s r.o.

ČESKÝ TELECOM, a. s., member of the Telefónica Group is the leading telecommunications company in the Czech Republic. Through its subsidiary company Eurotel Praha, spol. s r.o., it also has a significant presence in the Czech mobile services market. Further information about the firm and the services it offers is available at www.telecom.cz, which was rated as BestWeb 2003 in the WebTop100 survey.

Signum Temporis has consistently awarded ČESKÝ TELECOM for being one of the domestic capital market's most transparent firms in terms of providing information. Based on an open vote of specialists, members of the press and a nine-member committee, ČESKÝ TELECOM placed first in 2003, just as it did in 2001.

ČESKÝ TELECOM ranks among the most prominent firms on the Czech capital market in terms of capitalization and trading volumes. Its shares are also traded on the London Stock Exchange in the form of GDRs. ČESKÝ TELECOM's credit rating is the highest a Czech corporation can receive from top international rating agencies.

About Telefónica

Telefónica is one of the largest telecommunications companies in the world in terms of market capitalisation. Its activities are centered mainly on the fixed and mobile telephony businesses with broadband as the key tool for the development of both.

The company has a significant presence in 19 countries and a customer base that amounts more than 180 million accesses around the world. Telefónica has a strong presence in Latin America, where the company focuses an important part of its growth strategy.

Telefónica is a 100% listed company, with more than 1.5 million direct shareholders. Its share capital currently comprises 4,921,130,397 ordinary shares traded on the Spanish Stock Market (Madrid, Barcelona, Bilbao and Valencia) and on those in London, Paris, Frankfurt, Tokyo, New York, Lima, Buenos Aires and São Paulo.