O2 experienced a record interest in its O2 TV digital television thanks to the new sport events proposition

• Number of O2 TV customers subscribed for any of M, L or XL monthly tariffs and those watching television on the web or in application increased by close to 22% year-on-year; thus O2 registers already 673 thousand active devices.
• O2 Spolu bundled packages containingO2 TV tariffs and newly also interest in attractive exclusive sport content remain the key drivers of the customers' growth.
• O2 newly offers the sport content also in a monthlyO2 TV Sport Packpackage, which allows watching viaset top box, on the web or in a mobile application.
• Consolidated revenue went up 1.1% year-on-year to CZK 28.2 billion in the first nine months 2018, EBITDA grew by close to 7% to CZK 8.3 billion.

"I am glad that our decision to bring to the customers the most attractive sports content - the first Czech football league, the UEFA Champions League and the domestic ice hockey league, has proved positive results already in the first months. The number of customers of our traditional monthly O2 TV tariffs increased by more than 20 thousand in the last three months, the same as in the previous three quarters. For fans who want to watch only our exclusive sports content, we have introduced a new O2 TV Sport Pack package with sport programs that offers all the benefits of IPTV. In addition to watching TV on the set top box, hundreds of thousands of viewers regularly take advantage of watching the whole O2 TV program on the web or in the application," comments Jindřich Fremuth, Chief Executive Officer and the Chairman of the Board of Directors of O2 Czech Republic on the results, and adds: "Our customers continue being interested in O2 Spolu bundled packages as well as in new O2 Data mobile tariffs with a significantly higher data volumes."

"In line with our plan, in the third quarter we have significantly intensified investments in the Czech Republic. Thus we expect the 2018 full year total consolidated capex to revenue ratio will exceed 10 percent," explains Tomáš Kouřil, company's Chief Financial Officer and Vice-Chairman of the Board of Directors, and adds: "Thanks to these billions investments and the success of O2 Spolu packages we have been able to maintain strong financial performance."

Overview of the key events in the third quarter

Since 23rd July, O2 has been offering its O2 TV customers the next-generation set-top box. Following the smart O2 Smart Box this is the second device developed by internally by O2. In addition to the modern design, users can enjoy a clear content sorting in enhanced My Menu. Thanks to the new remote blue tooth driver that communicates with the TV set even without directing it to the new set-top box, customers can turn off and turn on set-top-box as well as TV set just by pressing the button.

During the third quarter, O2 TV began broadcasting the most popular sport matches. Until 2021, it will exclusively offer the prestigious football UEFA Champions League. From the 2018/2019 season till 2023, only O2 TV customers can watch all the broadcasted matches of ice hockey Tipsport League, including play-off or a final matches. O2 TV Sport holds the rights for three matches per week, while two ice hockey league matches per week will be broadcasted by ČT Sport (Czech TV) channel, which is included in all O2 TV tariffs. Thanks to the new contract, in next four seasons, for the first time ever O2 TV will be offering
all matches of the football Fortuna League exclusively.

For the sports fans, O2 has been offering a new O2 TV Sport Pack package since August, which allows watching exclusive O2 TV Sport, O2 TV Football and O2 TV Tennis channels for 30 days for a CZK 199 fee. This can be paid comfortably by a credit card. The O2 TV Sport Pack offers all the benefits of a unique multidimension that has been appreciated for a long time by O2 TV customers. This package works both for watching over the set top box, on the web or in the applications and is currently being used by tens of thousands of viewers.

Since September, O2 has increased the speed of its fixed xDSL internet for 1.5 million households. Approximately 900,000 of them can get a more powerful Internet ACTIV HD with up to 50 Mbps speeds instead of OPTIMAL HD (20 Mbps), and 600,000 other households can now use the Premium Internet HD tariff offering up to 100Mbps.
These tariffs can also be enjoyed by those interested in combination with O2 Smart Box, the heart of the smart home. Since mid-September, this device has been offering a new Parental Supervision feature that enables the O2 Smart Box application owner actively receive automatic alerts on their mobile phone on home arrival of their offspring,
and connect their smartphone and desktop to their home network.

Operating overview

Mobile segment

O2 customers has been demanding new O2 Data tariffs with 4 GB to 20 GB data volumes. These tariffs are designed not only for browsing on small screens, but also on tablets and notebooks. These tariffs, together with O2 Spolu packages, continuous customers' upsell to rich data tariffs and growing number of mobile home broadband internet customers contributed to over 100% year-on-year growth of data consumption generated by O2 customers in mobile network in the first nine months 2018. In O2 network, smartphones represent already 68% of handsets and 54% of smartphones support LTE technology.

Fixed segment

The number of any O2 TV tariffs' customers provided over O2 fixed line (IPTV) as well as over internet connection from any provider (OTT), including Multi service, reached 308 thousand as at 30 September 2018. Of that 40 thousand households subscribed for a still more popular complementary MULTIservice, which enables customers to watch TV on multiple TV sets at once. Customers are granted up to 4 free of charge licenses to each tariff enabling to watch complete O2 TV content on web or in mobile applications. About 365 thousand viewers uses this opportunity on a regular basis, including customers of O2 TV Sport Pack package. At the end of September 2018 O2 registered already 673 thousand O2 TV devices.

Slovakia

O2 Slovakia keeps recording increasing demand for its smartphone portfolio.As of 30 September 2018, the LTE smartphone penetration reached 54.9%. Thanks to the 4G LTE network expansion, growing LTE smartphone penetration and continuous customers' demand for tariffs with higher data volumes data consumption in the mobile network went up by over 100% year-on-year in the first nine months 2018.

Financial overview

Total consolidated operating revenue reached CZK 28,209 million in the first nine months of 2018, up 1.1% year-on-year. Operating revenue in the Czech Republic grew slightly by 0.1% to CZK 22,849 million. Mobile operating revenue reported a 1.8% growth to CZK 15,081 million despite a negative impact of the European roaming regulation and continuous decline in voice, SMS and MMS revenue. These declines were more than compensated by growing mobile data and hardware sales revenue. Fixed business operating revenue declined by 3.0% year-on-year to CZK 7,768 million, as lower revenue from traditional voice and data services was not fully compensated by growing O2 TV revenue.

In Slovakia, total operating revenueimproved by 9.7% to EUR 216 million. The year-on-year growth in Czech koruna (CZK) has been negatively impacted by strengthening CZK against EUR. Thus denominated in Czech koruna the operating revenue reached CZK 5,524 million, up 5.6% year-on-year. Similarly to the Czech Republic, higher data and hardware sales revenue were the key growth drivers.

Consolidated earnings before depreciation and amortisation EBITDA improved by 6.9% year-on-year to CZK8,342 million in the first nine months of 2018 thanks to the higher revenue and savings in majority of cost categories. In the Czech Republic, EBITDA grew by 4.9% to CZK 6,343 million, while Slovakia reported a 13.8% increase to CZK 1,997 million (+18.1% to EUR 78 million). Consolidated net profit in the first nine months of 2018 improved by 2.5% year-on-year reaching CZK 4,217 million.

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