Annual Report Polkomtel S.A.

Transcription

1 Annual Report Polkomtel S.A.

2 Introduction BThis document contains information on the most significant events occurring in the financial year 2008, which significantly influenced the operations of Polkomtel S.A. company. It presents also information on the market position of Polkomtel S.A., its important technical achievements and the financial situation in 2008.

3 Table of contents T h e l a r g e s t Letter from the President of the Management Board Management Board Members Supervisory Board Members Shareholders of Polkomtel S.A The mobile telephony market in Strategy and market position of Polkomtel S.A. in Cooperation among Operators Customer service New products and product innovation Technological innovations Sales Infrastructure and network development Employees Operating results and financial statements Selected financial data Statutory Auditor s opinion Abbreviated financial statements of Polkomtel S.A. Company.. 49 Balance sheet assets Balance sheet liabilities Profit and loss account Statement of changes in equity Cash flow statement Corporate social responsibility and sponsoring activity Awards

4 Letter from the President of the Management Board T h e l a r g e s t Dear Sirs, munication sector due to the above tioned offer 36.6 are only some of ets. In response to customers needs, I am happy to open this report by stat- factors, we took appropriate steps at the solutions introduced in 2008, we have also enriched the range of ing that at the end of 2008, the largest the appropriate early moment. This which enabled the customers of Plus information, entertainment and loca- number of Polish mobile telephone action allowed us to reduce the nega- to optimize the use of services in tion services. users chose the Polkomtel S.A. net- tive consequences for the Company. line with their needs and financial work. This means that Polkomtel S.A. In 2008, Polkomtel S.A. remained capacities. became the operator of the largest the leader in the most valuable seg- A ttractive and diversified product telephony network in Poland, and ment of contract customers, whose and services offer, and the grow- came ahead of the second largest number, compared to the same pe- T he expressive Polkomtel S.A. im- ing subscriber base, allowed us to player who dominated the market riod of 2007, grew by 13.1%. It is age has, for years, consisted in prod- achieve satisfactory financial re- since 2006, winning by almost three worth stating that almost every sec- uct innovation and an innovative sults at the end of 2008, including hundred thousand customers. ond Polish customer of the mix type approach to the market was an- growth of revenues and net profit in offer uses MixPlus. Our Company has other year in which we offered many comparison to the past year. This de- also strengthened its leading posi- new solutions. The launch of the serves special emphasis in the situ- A chievement of the position of tion in prepaid services, which was brand with the Chill Bill offer brought ation of decreasing retail prices and market leader in terms of custom- largely due to the introduction of the Polkomtel S.A. into the mobile ad- unfavorable changes for the opera- ers number is a particularly valuable new brand, vertising market, as the first mobile tors introduced into the regulatory success, given the current market telephony operator in Poland. The environment in which the Company environment was a year full of Muzodajnia music store, launched operates, and also in the context of marketing challenges new entrants I n 2008, also in the mobile Internet in 2008, is another one of such inno- worsened macroeconomic situation. appeared in the market, the attitudes access, Polkomtel S.A. maintained the vative projects. The opportunity of It was also possible thanks to strict and behaviors of consumers changed. leading position, by refreshing the paying a subscription fee for music cost control. Other significant factors included the brand image and the product offer. downloaded not only to the compu- worsening macroeconomic situation, According to research conducted by ter, but also directly to one s mobile whose consequences were visible al- independent entities, Polkomtel S.A. phone, eliminates the price barrier to ready during the last quarter of 2008, offers the fastest wireless Internet purchasing legal music pieces. More- Yours sincerely as well as market maturity and asym- access in the market. over, the Company, as the pioneer of metry in settlements with the opera- mobile payments known under the tors established by the regulator. brand Płać komórką ( Pay with your T he successful year proves our flex- mobile phone ) has developed this ibility, openness and reactivity to attractive offer by adding another Jarosław Bauc A s we expected the weakening signals coming from the market. The practical solution the opportunity President of the Management Board, growth dynamics of the telecom- Minute Contract or the aforemen- to purchase city public transport tick- General Director of Polkomtel S.A. 6 7

5 Company Management Board Composition as of 31 December 2008: Supervisory Board Composition as of 31 December 2008: Jarosław Bauc President of the Management Board, General Director; Tomasz Zadroga Chairman Marek Trawiński Mirosław Krutin Arkadiusz Gierałt Krzysztof Kilian Vice President of the Management Board, Marketing and Customer Relations Director; Tim Harrabin Ian Gray Dariusz Jacek Krawiec Sławomir Jędrzejczyk Wojciech Dylewski Member of the Management Board, Operating Director; Miguel Marin Member of the Management Board, Technical Director; Martin Moorhouse Member of the Management Board, Financial Director. Jarosław Bauc Company Shareholders 21.85% PGE Polska Grupa Energetyczna S.A. Węglokoks S.A. 4.98% 24.39% Polski Koncern Naftowy Orlen S.A. Vodafone Americas, Inc % 24.39% KGHM Polska Miedź S.A. Vodafone International Holdings B.V. 4.78% Krzysztof Kilian Wojciech Dylewski Miguel Marin Martin Moorhouse 8 9

6 The mobile telephony market in 2008 The four Poland s largest mobile operators service almost 44 millions of SIM cards. In 2008, market growth amounted to 6%. The mobile telephony market has become saturated, with the network of PTC Sp. z o.o.; CP Telecom Sp. z o.o. (Carrefour Mova) MVNO within the network of Polkomtel S.A.; MediaTel S.A. (telepin mobi) obtained reservation of frequencies in the 1800 MHz range namely CenterNet Sp. z o.o. and Mobyland Sp. z o.o. were supposed to commence operations by the end of penetration reaching 115.2%. In terms MVNO within the network of PTK None of them succeeded, but in De- of market penetration, Poland ranks Centertel Sp. z o.o.; cember 2008 the President of the For the Polish mobile telephony sector, 2008 was a year of heightened competi- 22nd among all 27 Member Countries of the European Union (according to report of the European Commission). For another subsequent year, the mobile telephony is squeezing fixed-line Cyfrowy Polsat S.A. MVNO within the network of PTC Sp. z o.o.; Aster Sp. z o.o. MVNO in cooperation with PTK Centertel Sp. z o.o.; Crowley Data Poland Sp. z o.o. Office of Electronic Communications (UKE) offered both companies the opportunity to extend the deadline for the fulfillment of their obligations, due to difficult economic situation. tion in the mobile market telephony out of the market. In 2008, significant growth was noted in the number of users, the number of calls (CROWLEY TeleMobile) MVNO within the network of PTK Centertel Sp. z o.o.; Mobile Television and their durations. New operators Netia S.A. MVNO within the net- A tender has been opened for fre- appeared in the market, offering new work of P4 Sp. z o.o. quencies in the range MHz, packages of services. designated for mobile television. Two T ender procedure was conducted companies participated in the tender: New operators and completed for the frequencies in the 900 MHz range. Due to preferenc- Mobile TV Sp. z o.o., which is a consortium of four mobile operators, and In 2008, the rates for inter-operator es granted to small players and to new INFO-TV-FM Sp. z o.o., a local televi- settlements were reduced among the market entrants, frequencies were al- sion provider. three players with significant market located to Aero2 Sp. z o.o. a company position. A very high asymmetry of rates was maintained in the market to established a few months before the tender and to P4 Sp. z o.o. Mobile Internet the benefit of P4 Sp. z o.o. and Cyfrowy Owing to the ever-wider reach of the Polsat S.A. In 2008, the following new U nder regulatory requirements, UMTS technology, there has been MVNO players entered the market of entities which in November 2007 a growing interest in the Internet mobile telephony: Mobile Entertainment Company Sp. z o.o. (Mobilking) MVNO within The Company maintained the position of a leader in the segment of contract customers

7 In 2008, significant growth was noted in the number of users, the number of calls and their duration. access offered by mobile operators. In 2008, mobile operators focused largely on mobile data transmission very favorable tariffs were offered, which significantly lowered costs and were competitive in relation to fixed Internet offers. Subscription was offered in package with an appropriate device. Here, Polkomtel S.A. was the I n 2008, Polkomtel S.A. became the leader of the mobile telephony market, with its subscriber base of 14.5 million customers. The Company came ahead of the second largest operator by almost 300 thousand customers, and achieved a 33% market share. The Company maintained the position of a leader in the segment In 2008, mobile operators focused largely on mobile data transmission very favorable tariffs were offered which significantly leader, offering the iplus subscription of contract customers, whose base together with a netbook. The number of customers using mobile Internet increased significantly. amounted to 6.6 million at the end of 2008 and grew by 13.1%, compared to the same period of lowered costs and were competitive in relation to fixed Internet offers. 12

8 Strategy and market position of Polkomtel S.A. in 2008 The introduction of innovative solutions, overcoming of new market barriers and effective communication were the keys to success in 2008 the achievement of the position of the largest mobile network in the Polish market by Polkomtel S.A. In 2008, Polkomtel S.A. introduced a number of innovations into its offer, which largely contributed to the achievement of market leader position. The Company has for years led the segment of the largest Polish enterprises (CMA and SME). In 2008, it confirmed its domination in the market of contract offers and mobile Internet. Polkomtel S.A., owner of the strongest prepaid brand Simplus set out to grow its share in the pre-paid market, by introducing the 36.6 brand. T he innovative pre-paid offer of 36.6 is targeted at the young people. It is based on a lump-sum SMS payment which enables freedom of communication and supplements the previous pre-paid offer of Plus with an opportunity to receive top-ups in return for listening to commercials (the Chill Bill service). This innovative solution brought Polkomtel S.A. into the mobile advertising market, as the first operator in Poland. Leader in post-paid and MixPlus The aggressive action undertaken by competitors did not threaten the position of Polkomtel S.A. as the leader in the individual post-paid and mix market. This result is supported by the success of MixPlus, which is used by almost every second user of mix offers in Poland. The flexible payment model, combined with the service portfolio enriched with a wide range of value added services especially the music-related ones which are particularly popular among customers is the reason why MixPlus maintains its leading position for a subsequent year. T he consistent extension of the flexible products portfolio was also seen in the subscription offer, where the unique Minute Contract was introduced in mid-year. This is the firstever offer for persons whose calls exceed the number of minutes under their subscription which defines not the contract duration but the number of minutes they can use. It allows the customers to replace their phone with a new one, or to profit from a new promotion earlier than under a standard contract. Mobile Internet market In 2008, Polkomtel S.A. confirmed its domination in the market of contract offers and mobile Internet. In the market of mobile Internet access, iplus maintained the leading position thanks to both effective brand image communication and the attractive product offer. F rom June 2008 to December 2008, Polkomtel S.A. has seen the largest market growth dynamics among all Internet providers in Poland. According to research conducted by independent sources (including Audytel S.A. and Komputer Świat), iplus offers the fastest wireless Internet access in the market. New directions Another innovative solution is the music store Muzodajnia, launched in This is the first music store in Poland that offers access to legal music in exchange for a lump-sum subscription fee. Each of the users can download the music not only to his/her computer, but also directly to the mobile phone. All customers are welcome to use the Muzodajnia, 14 15

9 Polkomtel S.A. maintained regardless of the network in which reflection of the positive perception of Operators share of the prepaid market * the highest level of they have their telephones. the Plus brand. spontaneous awareness of commercials in the A s the pioneer of mobile payments, Polkomtel S.A. developed this area in T he commercials of the Plus brand are well known to the Polish viewers, and 31% 31% 35% 33% 29% 33% mobile telephony sector 2008, enabling its customers to use for years have been produced in the ex- its result was over three times better than in the case of other operators. their mobile phones to purchase city public transport tickets and to pay for car parking in Warsaw. The Company plans to continue to extend tremely effective creative format with the cooperation of the Mumio cabaret group. Another undisputed success is the very characteristic format of Simplus 3% 6% the range of services which could be paid for with the mobile phone. commercials, which alludes to various movie genders. The consumers received Polkomtel S.A. PTC Sp. z o.o. PTK Centertel Sp. z o.o. P4 Sp. z o.o. Polkomtel S.A. PTC Sp. z o.o. PTK Centertel Sp. z o.o. P4 Sp. z o.o. Positive brand reception very well the humor and direct style of new advertising messages of the 36.6 brand, targeted at the young people. The commercials promoting the iplus mobile Source: data from the operators quarterly reports * 4 operators (without MVNOs) For the Plus brand, the year 2008 was Internet access, and the Plus for compa- a very successful one also in terms of nies corporate offer are seen as factual, results of marketing communication. convincing and encouraging. Operators shares individual post-paid and mix market Operators shares of the mobile Internet market It is confirmed by results of consumer research conducted in the course of 2008: spontaneous awareness of the T he highest quality, innovation and effectiveness of the Polkomtel S.A. mar- 35% 36% Plus brand, and the intention to purchase are significantly higher than keting communication have been appreciated both by consumers (such awards 29% 32% 27% 29% results obtained by competitors. as Trusted Brand, Superbrands, Premium Polkomtel S.A. also maintained the Brands, most trusted brand), as well highest level of spontaneous awareness of commercials in the mobile telephony sector its result was over as by the experts from the advertising and media sector (e.g. Kreatura, several awards of the KTR (Club of Advertising 4% 8% three times better than in the case of other operators. The brand rejection Creators) including the very prestigious award for advertiser of the year, Impac- Polkomtel S.A. PTC Sp. z o.o. PTK Centertel Sp. z o.o. P4 Sp. z o.o. Polkomtel S.A. PTC Sp. z o.o. PTK Centertel Sp. z o.o. P4 Sp. z o.o. ratio is the lowest among all mobile tor most admired advertiser, and Gold operators, which certainly is a good Effie for long-term activities). Source: market situation IQS AND QUANT, November 2008 Source: UKE s report Retail Market of Broadband Internet Access 16 17

10 Cooperation among operators In 2008, the Company commenced rendering of services stemming from Domestic cooperation Polkomtel S.A. has agreements on net- on the connection of the fixed network of Polkomtel S.A. with the regulatory obligations: work connections and points of net- network of TP S.A. for voice calls providing Polkomtel S.A. subscrib- work interconnection with all operators without the NDS, originating from Cooperation among operators in 2008 was characterized by significant dynamics of ers with access to non-geographical numbers in the fixed telephony operators networks; launch of a nation-wide toll free helpline for children ( ), in of mobile networks in Poland, as well as with the largest operators of fixed line networks. This not only means access to all networks for the customers of Polkomtel S.A., but also enables co- the TP S.A. network to the fixed network of Polkomtel S.A., within the whole territory of Poland; on the connection of the fixed network of Polkomtel S.A. with changes. These changes were caused by the competitive nature of the market, the appear- cooperation with the Nobody s Children Foundation. Polkomtel S.A. is the first Polish, and fifth European entrepreneur from the telecommunication sector to offer a European operation with other operators in the area of call transfer. The offer formulated in this area has a positive influence on the growth of Polkomtel S.A. s revenues. It also means that fixed line the network of TP S.A. for the services of local calls with the Polkomtel S.A. NDS prefix, within the whole territory of Poland; on the connection of the mobile ance of new entrants, numerous regulatory obligations and by the activity of regulator, helpline of social value. P olkomtel S.A. has also developed and implemented, by entering into contracts with mobile networks op- operators using our services are not obliged to establish points of network interconnection with all operators of mobile and fixed line networks. network of Polkomtel S.A. with the network of TP S.A. regarding the introduction of lump-sum settlements for traffic terminating in the TP S.A. network (the so-called flat whose interventions into the relations among various business entities were becoming in- erators, a cooperation model for access from other mobile networks to telephone numbers starting with 080x, allocated by the President of the Office of Electronic Communica- I n the area of cooperation with TP SA, Polkomtel S.A. managed to reach an agreement on the interpretation of the agreement on the connection of the Polkomtel S.A. s mobile network with interconnect rate). T hese decisions are expected to result in improved traffic exchange between the TP S.A. and Polkomtel S.A. creasingly broad. Such interventions which were of particular importance for the Company were the decisions regarding the mobile termination rates (MTR). tion (UKE) for the fixed line network of Polkomtel S.A. This will allow access to 080x numbers from the whole area of Poland. In addition, under the contracts signed with fixed and mobile networks operators, nationwide access has been provided to the information line , serviced under Polkomtel S.A. s fixed line network. the network of TP S.A. This agreement resulted in reduction of costs of terminating in the TP S.A. network the calls coming from Polkomtel S.A. s mobile network. Polkomtel S.A. succeeded also in obtaining administrative decisions of President of UKE, beneficial to the Company, changing the following agreements with TP S.A.: networks, and a reduction of costs tied to the exchange of inter-network traffic, incurred by Polkomtel S.A. Service Providers/MVNO In 2008, Polkomtel S.A. continued and developed the formula, created in 2006, for cooperation with enti

11 ties which do not own public mobile mobile network operator using the R endering services to partners calls and SMS in roaming, and other area of determining market position Company decided to employ avail- telephone networks and commence Polkomtel S.A. network. In 2008, the who cooperate with Polkomtel S.A. Premium Rate services. A function- of new players, such as P4 Sp. z o.o. able measures to appeal against the their business under the Service Company started negotiations with under the SP/MVNO model requires ality was also developed that allows and Cyfrowy Polsat S.A. (which has decision of President of UKE, includ- Provider/MVNO model. The active new potential partners and the tech- the design and implementation of to reduce the costs of SP/MVNOs a direct influence on the situation ing filing a formal complaint to the approach to potential partners plan- nical implementation of contracts technical and IT solutions that match tied to the maintenance of SIM cards of other mobile operators) and the European Commission. ning such activity allowed the Com- signed with GG Network S.A. and Tel- their specific needs, and the assur- designated for replacement and to lineup of regulatory obligations that Wholesale sales of telecommunication services is becoming an important source of increasing the Company s revenues. pany to gain the status of leader in efonia Dialog S.A.. The said contracts ance of appropriate processes within the Company, necessary for the performance of signed contracts. This calls both for the development of systems that integrate the Polkomtel S.A. network with service systems of external suppliers, and service the number portability process (MNP), as well as to launch new functionalities in the future. Important regulatory decisions is favorable for these entities; as well as in the area covering allocation of scarce resources (radio frequencies) for selected market players. U nder the actions falling within the first of the above described areas I 2008, President of UKE has declared P4 Sp. z o.o. as operator with significant position in the wholesale market of voice calls terminating in the P4 Sp. z o.o. network. The manner for determining regulatory obligations under this decision enables the this market segment, and also to ac- were developed in the direction of for formal arrangements meant to The regulatory environment in which regulation of the MTR rates the President of UKE to set MTR rates for quire the most attractive partners. In early 2008, Polkomtel S.A. had delivering subsequent services meant to increase the chances of SP/MVNO assure favorable terms of solutions provided by these suppliers for the the Company operates undergoes continuous changes, which have a di- The regulatory environment in which the Company active contracts with emfinanse Sp. z o.o. (a company of the BRE Group, operating under the brand mbank Mobile), GG Network S.A. and Tel- in competing in the market, and simultaneously offering the opportunity to raise Polkomtel S.A. revenues on the wholesale cooperation with these SP/MVNOs. In 2008, Polkomtel S.A. continued work on developing the functionality that would allow to deliver a broad range of information on rect influence on business situation and on the conditions for rendering services to customers. A number of administrative decisions of the Presi- operates undergoes continuous changes, which have a direct influence on business situation and on the conditions for rendering services to customers. efonia Dialog S.A.. In the course of partners. This included wholesale the use of telecommunication serv- dent of the UKE raised serious ob- 2008, the position of market leader access to SMSC and MMSC, operat- ices by the end users. Implementa- jections of operators, both in terms President of UKE issued on 30th Sep- the P4 Sp. z o.o. network on a level sig- was strengthened by signing subse- ing procedures for breakdowns and tion of this solution would allow the of assessment of their influence on tember 2008 the so-called new MTR nificantly higher than the MTR rates quent contracts with new partners: outages in the rendering of services. SP/MVNOs to deliver a broad range competition development in the decision. This decision changed to that Polkomtel S.A. is authorized to CP Telecom Sp. z o.o. (a subsidiary In 2008, Polkomtel S.A. continued to of services that would be competi- Polish telecommunication market, the disadvantage of Polkomtel S.A. charge. In addition, on 16th December of Carrefour and Effortel, operat- perform the contract for wholesale tive with offers of other operators. and in terms of their compliance with the schedule for adapting the MTR 2008, President of UKE has issued an ing under the name Carrefour Mova) access to its mobile network under Entrepreneurs operating on the basis the current Polish and EU legislation. rates, which had been set earlier (in official statement on the subject of and QXL Poland Sp. z o.o. the larg- the national roaming model with the of the Polkomtel S.A. network would This statement is illustrated by the April 2007) for the years admissible asymmetry of MTR rates, est auction service in Poland and fourth market operator P4 Sp. z o.o. be able to offer their customers, actions undertaken by President of by means of the so-called old MTR stating that new entrants in the mobile Central and Eastern Europe. In April trading as Play. Wholesale sales of without obstacles and with no fear the UKE in 2008 in the area of de- decision. Changes introduced by the telephony market would be authorized 2008, CP Telecom Sp. z o.o. trading telecommunication services have be- of abuse, the packet data transmis- termining mobile termination rates new MTR decision included not only to charge rates that are higher even as Carrefour Mova started commer- come a significant source of increas- sion services on both standard and in the mobile Polkomtel S.A. net- the reduction of set rates, but also by 141% from MTR rates applied by cial operations as another virtual ing the Company s revenues. lump-sum settlement basis, voice work (the so-called MTR rates); in the their earlier implementation. The Polkomtel S.A., PTC Sp. z o.o. and PTK 20 21

12 Centertel Sp. z o.o. which is the level ervation decisions, issued on 9th sions that would lead to excessive and in the consultations for a number of ous years. In comparison to 2007, ers and users across 197 countries. unheard-of in the whole European Un- December 2008 for P4 Sp. z o.o. and unjustified costs, or that would reduce other legislation pertaining to the tel- the amount of numbers transferred Polkomtel S.A. maintained also ion. On 5th December 2008, President Aero2 Sp. z o.o. the revenues of operators. The draft ecommunications market, presenting among Polish mobile telephony op- its leadership in the packet data of UKE launched the consultation proc- of the so-called EU amendment, sent via the Polish Chamber of Informa- erators rose by over 30% (from al- transmission service, available in ess for the draft of decision similar as T he President of UKE launched and to the Polish Parliament takes into ac- tion Technology and Telecommuni- most 115 thousands in 2007 to over 124 countries. In 2008, Polkomtel S.A. in the case of P4 Sp. z o.o., to be issued led the proceedings whose goal was count a number of comments raised cations and the Polish Confederation 150 thousands in 2008). successfully negotiated preferential for the company Cyfrowy Polsat S.A. to demonstrate the oligopoly of three by Polkomtel S.A. and by other opera- of Private Employers Lewiatan its wholesale financial terms for inter- MNO operators in the market of pro- tors. This is reflected in the limiting or opinions and proposals meant to im- T he Company entered into six new national roaming in foreign networks, I n the course of actions that fall viding access services and calls origi- abandoning of certain obligations pro- prove the conditions under which the agreements on the numbers portabil- which enabled the Company to design under the third of the described ar- nation in mobile public networks. In posed under earlier drafts, that would Company operates. ity service (with the following com- very competitive offers for its custom- eas radio frequencies allocation August 2008, the President of UKE fi- have been particularly burdensome panies: Aster Sp. z o.o., CP Telecom ers. In addition, thanks to its very ac- for the operators, such as: limiting the I n 2008, Polkomtel S.A. com- Sp. z o.o., Cyfrowy Polsat S.A., Mobile tive attempts, Polkomtel S.A. acquired Polkomtel S.A. has also actively participated in the consultations for a number of legislation pertaining to the telecommunications market, presenting its opinions and proposals meant to improve the conditions under which the Company operates. right of the subscriber to terminate the contract in the case where the service regulations are changed due to the need to adapt them to the current provisions of the law; abandoning the need to guarantee the subscriber the possibility to limit the monthly invoice amount; abandoning the imme- menced the implementation of a number of regulatory obligations, consisting in the launch of services or other solutions defined under the telecommunication law. The possibility to localize calls made to emergency numbers was of particular importance (in cooperation Entertainment Company Sp. z o.o., Netia S.A. and Telogic Poland Sp. z o.o.). The total number of such agreements amounts to 11. International cooperation roaming traffic from other international networks outside the Vodafone group, by directing other networks users to the Polkomtel S.A. network. The outcome of these intense market activities was the acquisition of additional international transit traffic from the wholesale market, with in 2008 the President of UKE an- nally declared this market as competi- diate enforcement of penalties levied with the Ministry of Interior and In the area of roaming and internation- the use of vacant frequencies at the nounced and conducted a tender tive one, not subject to regulation. on entrepreneurs by President of UKE Administration, location of these al wholesale services, Polkomtel S.A. network interconnection points. This for reservation of frequencies in the This was the outcome of effective ac- (through payments into an escrow ac- calls was made possible on the ba- maintained in 2008 the leading posi- allowed to increase revenues and to E-GSM range. The tender has been tions undertaken by Polkomtel S.A. count). sis of the Polkomtel S.A. solution tion among all Polish mobile opera- obtain additional margin without the awarded to Play Sp. z o.o. and Aero2 that is, with the use of the website tors in terms of international roaming involvement of additional resources Sp. z o.o. Tender conditions have been clearly discriminating against Polkomtel S.A. and its main competitors, in practice precluding any chances of the Company to obtain rights to the discussed resources. Polkomtel S.A. filed for invalidating the tender, and challenging the res- Changes in the telecommunication law Under the process of consultations for the amendment of telecommunication law, Polkomtel S.A. worked actively to rationalize certain solutions, in particular to abandon proposal for provi- H owever, it should be stressed that the amended telecommunication law would lead to a new quality in the conditions under which the telecommunication companies operate, mainly as it significantly strengthens the position of President of UKE. Polkomtel S.A. has also actively participated Number portability In 2008 the customers interest in the number portability service clearly grew, although this growth was less dynamic than during the previ- offering its services to subscrib- by Polkomtel S.A. In the area of roaming and international wholesale services, in 2008 Polkomtel S.A. maintained the leading position among all Polish mobile operators in terms of international roaming

13 Customer service It is the reason why we constantly improve our processes, research the self-service channels (www, IVR, SMS, USSD), to accelerate implemen- 2008, enables the ongoing monitoring of traffic post-paid and and analyze the rapidly changing tation of new products and services pre-paid alike including roaming telecommunication market, and in these channels, and to increase traffic. It defines effective rules that It would not have been possible to achieve the leading position among all companies most importantly, listen to the comments and suggestions of our customers, considering these as a gift from them. All these actions increase the satisfaction of cus- the share of self-service. I n mid-2008, a new, fully redesigned version of the Polkomtel S.A. e-store, based on state-of-the-art IT solutions identify potential fraud and allow to block services in case where the fraud is probable. Those action limit the losses of operator, arising with relation to use of services contrary operating in the Polish mobile telephony market without competent and friendly tomers with services offered by our network, and build durable relations between the customer and our Company. provided by IBM, was implemented. The new e-store has advanced presentation capabilities for the offered handsets, and a user-friendly purchase mechanism for products and to the contract. They also guarantee safety for customers, and full access to information about the amount of their future bill. customer service. The highest quality of services to our customers is the goal that I n 2008, our Customer Service Center implemented a new service philosophy, to meet the wishes and expectations of our customers. The fully automated outgoing phone- services. The new design, adapted to needs of customers, further emphasizes its modern nature. Launch of the modern version of e-store led to a dynamic growth in the sales of new I n order to protect safety of customers, real-time monitoring of roaming calls made by Polkomtel S.A. customers was launched (the so-called NRTRDE). we have set for ourselves years ago in order to meet, and even exceed, their ex- based campaigns, during which our consultants present dedicated packages, developed especially for specific customers, have introduced a new quality in customer activations and products in the rapidly growing Polish e-commerce market, and contributed to strengthen the in-house distribution network of Polkomtel S.A. Customers about the Company In July 2008, our Company commis- pectations. service. New initiatives T he new system for identification of fraud, implemented in December sioned a qualitative research of satisfaction of customers serviced under the usage monitoring process. Result In 2008, a new strategic project called Self Care was initiated and launched. Its main goals, for the nearest future, are to further improve customers satisfaction with In mid-2008, a new, fully redesigned version of the Polkomtel S.A. e-store, based on state-of-the-art IT solutions provided by IBM, was implemented

14 The cyclical audit conducted in 2008, of the research has demonstrated a very high level of respondents sat- T he audit conducted in 2008, which covered customer service and per- students, by enabling them participation in practical training and in- which covered customer service and isfactions with the preventive actions, and with service by employees participating in this process. Among oth- sonnel management in accordance with ISO requirements, proved that the friendly and com- ternships and to popularize this form of acquiring valuable employees among the employers. In the course personnel management in accordance ers, the most appreciated one as an expression of care for customer was the information on current usage level (both in the form of SMS and direct petent service, as well as new initiatives in the customer service area constantly increase satisfaction of our customers. It was confirmed that of the internship, the students could learn about the specific features and environment of work in the customer service area. This initiative supported with ISO requirements, contact with the consultant). Contact with employees has received positive opinions from most of respondents the Customer Service Center fully adheres to the standards, and the management system is effectively the process of search for candidates to work at the telephone Customer Service Centers. proved that the friendly and competent and was described as courteous, competent and exhaustive was full of various actions maintained. Social initiatives O ur Company, as the only one among all telecommunication operators in the Polish market, supported service, as well as new initiatives in the promoting alternative payment forms primarily direct debit. The customers were sent over 2 million Polkomtel S.A. actively participated in the project meant to increase the professional activity of disabled for another time the Great Orchestra of Christmas Charity. Consultants of the Polkomtel S.A. Customer Service customer service area constantly increase of leaflets promoting direct debit as the most convenient and the safest method for paying for telecommuni- persons. Under this project, the first disabled persons were hired on 1st October 2008 as consultants in the Center have supported the Orchestra in 2008, working as volunteers on the Orchestra s hotlines. cation services in the Polkomtel S.A. Telephone Customer Service Center satisfaction of Polkomtel S.A. customers. network. The number of services settled with a direct debit reached in 2008 the level of about 400 thou- located in Łódź. D uring third quarter of 2008, sands, which corresponds to a growth Polkomtel S.A. took part in the pro- by 18%, in comparison to The gram The Young Ones in Łódź, or- share of direct debit in the total ganized in cooperation with the Łódź number of payments was slightly City Hall. The program s purpose is higher than 11%. to increase professional activity of 27

15 New products and product innovation In 2008 Polkomtel S.A., responding to the customers needs, developed the information services which offer each customer access to information, sports or business news via the mobile portal. The customers can also use location services, and services tied to delivery of music as well as video content, among other things. The Company is the pioneer of mobile payments, provided under the brand name Pay with your mobile ( Płać komórką ). Currently customers can use this method to pay for city public transport tickets or car parking time in Warsaw. The Company plans to extend the range of services which could be paid for with the mobile phone. T he Company is consistently broadening its portfolio of flexible products. One of such innovations is the Minute Contract, described earlier. A nother innovative solution is the musical store Muzodajnia, launched in This is the first music store in Poland that offers access to legal music in exchange for a lump-sum subscription fee. Each of the users can download the music not only to his/her computer, but also directly to the mobile phone. This manner of access to music practically eliminates the price barrier to purchasing legal music. Muzodajnia is open to all customers, regardless of the network in which they have their telephones. T he offer at the wap.plus.pl was developed effectively. This portal was given new image and functionalities, which brought the Plus Product World closer to the customers. As a result, the number of users of wap.plus.pl grew, and so did the revenues. In the future, wap.plus.pl is to become the main channel for contact between the customers and the operator. Novelty entertainment and information services Czasoumilacz the Time Charmer Przygotowywarka (Preparer) and Mixer. New functionalities intended for the mass and business customer market which allow to: prepare one s own recording from an existing music file; making an own recording using a microphone and computer (so far it was possible only via IVR); adding musical background (ready or custom-made) to one s recording. Flirtoteka Flirting Board a voicebased dating service which allows to establish new contacts. Voice Mail via MMS a mail profile which sends each received message to the mailbox user in the form of a MMS with the original voice message sent as attachment. Kontaktoutrwalacz Contact Preserver a service that enables the users to copy, store and record all contacts from their telephones, at any given time and any given number of times, to any number of telephones which operate under the standard Sync ML protocol. MultiInfo an Internet platform for the exchange of SMS, providing mass and bilateral communication among single and group mobile network users via an online inter- Muzodajnia (muzodajnia.pl) is the first music store in Poland that offers access to legal music in exchange for a lump-sum subscription fee. Each of the users can download the music not only to his/her computer, but also directly to the mobile phone

16 face. The platform s development the year, several dedicated WAP red and used it. Advantages of this and the opportunity to broadcast phones, containing data on com- tariff plans, toll-free GPRS con- was continued in New mod- services were launched, with new communication channel are more TV channels on-line; panies and their services from all nection with wap.plusgsm.pl and ules were introduced SMSschool, services and content tied to holi- appreciated by a growing number over Poland. a MMS profile for voice mail; Reception, as well as a number days, movie premieres and other of advertisers. Over a hundred of new BlackBerry offers, including of additional new functionalities which increase the platform s flex- important cultural events. campaigns were conducted. This channel has been used by such up-to-date, improved software and reduced prices of services. Tariff products Na Rozmowy For Calls a promotional tariff dedicated for ibility. Chill Bill in June 2008, users well-known brands as: Tiger, Red Aside from the described earlier 36.6 the SOHO market, under which Automotive service a video of the 36.6 brand were offered the Chill Bill service. This is the Bull, Lotto, Cubus, Speak Up or Cinema City. The feature that Convergent services and the Minute Contract, the tariff products launched in 2008 included: call minutes are included in the subscription fee, replacing the streaming service on the latest first solution in Poland that makes Chill Bill stand out the the Prefix 1069 service intro- Taryfy Syberyjskie Siberian packages based on monthly bill news from the world of vehicles, gives free top-ups to be used most among other channels is duction of local calls for subscrib- Tariffs new tariffs for the mass amount, which were used so far tests of cars, reports from car fairs for calls and SMS in return for the extremely high response rate ers of the service located all over market, characterized by a large for all corporate customers; and car shows. listening to commercials. Use of even after a one-time listening Poland, with the exception of tran- amount of call minutes, and pack- this service is very simple all to the commercial and full me- sit zone in Lublin; ages of minutes to be used for Eurotaryfa Euro Tariff reduc- Video streaming package based the user needs to do is to reg- asurability of the campaign (all calls to all networks; plus the tion of the Euro Tariff prices for on the offer of MTV the most ister at the website contacts with the commercials commercial launch of points of Złocimierz Zloty Meter serv- voice calls originated and re- popular shows of this TV channel, plus. pl/oferta_indywidualna/ are recorded). interconnection LPSS all over Po- ice, under which the customer re- ceived under roaming. Prices are such as Pimp my room. mix/ chillbill/, and next call the land, with the exception of tran- ceives automatic notifications on independent of roaming partners Sportownia Sports house a new section of the wap.plus.pl toll-free number 6666 to listen to a set of three commercials. After each of the commercials, Dedicated data transmission services sit zones located in Lublin and Szczecin; exceeding his/her selected permanent bill amount, and subsequently on multiple excess of the tariffs, identical for all countries of the European Union; portal, which replaced the former the user receives a simple ques- The following were introduced: new types of calls were intro- bill amount; New rates for voice calls and SMS sports news. This section includes tion on its content three cor- new dedicated applications (iplus duced to the following number under roaming, intended for special several information categories, rect answers are rewarded with Manager 2.0, ZeroCD) that facili- types: Premium Rate, Split Charge, Ważny Telefon Important Tel- offers for Corporate Customers. as well as entertainment services 1.00 PLN for calls, SMS and tate the use of data transmission AUS, Paging Networks for UK cus- ephone promotional tariffs for and sports content. The important MMS. The maximum monthly services; tomers; as well as the opportunity persons who make a lot of calls sports events of 2008 had special top-up that can be obtained in to use SS7 signaling on the sub- and spend over PLN per dedicated sections under Spor- this way is set at PLN, and new offers for packet data trans- scriber line; month on their phone bills. The townia. this amount can be used for 30 mission under roaming; tariffs include extra packages of days. From the launch of this se hotline for Eniro minutes, discount for the iplus Occasional centers on the rvice till the end of 2008, over videostreaming a new platform launch of a fee-for-service infor- service via the mobile phone, a wap.plus.pl portal throughout 210 thousand persons registe- aimed at increasing effectiveness, mation hotline for users of mobile gold number under 250 and

17 Technological innovations Polkomtel S.A. is a company that values innovation saw the introduction of one of the first solutions. From the planned series of technologically innovative IT implementations Polkomtel S.A. launched a new billing system for its pre-paid customers. The modernization program for the architecture of new solutions in the area of new products and services development, initiated at the end of 2006, allowed the Company to launch a new billing system for customers of pre-paid services. As the result of implementation of one of the world s latest solution of that type, Polkomtel S.A. was able to offer a number of innovative services, extremely favorable for the customers. A good example are two of these services: the first one that allows to use the mobile phone even when the customer account is exhausted, and the second one that offers cheaper calls within community groups. In 2008, the Company introduced also projects targeted at further modernization of the IT infrastructure, focused on billing systems for contract customers and the CRM systems that support sales and customer service. The purpose of the actions undertaken by the Company in this area is to build in the future a comprehensive and innovative solution that would enable the offering of new products, such as convergent services, subscription services and pre-paid services. knowledge, necessary competen- that would provide the desirable Investment into modern information technologies is justified ing the Company to cope with the cies and specialist skills, allow- primarily by the economic calculation. Implementation of solutions challenges it faces. based on SOA (Service Oriented F ocus on innovation is a well Architecture), as continuation of thought-out strategy, which gives the modernization processes of the Company ample room to design IT infrastructure, will facilitate its own new products. The initiated the integration of new solutions changes would assure the Company with existing ones. This will allow Polkomtel S.A. to optimize the rich the range of offered products the opportunity to continuously en- time and costs of new products and services, and increase their competitiveness in terms of implementation. The launch of the quality. Implementation of architecture based on SOA will facilitate the integration of new solutions with existing ones. This will allow Polkomtel S.A. to optimize the time and cost of new products implementation. Muzodajnia service in the second T he solutions to be introduced half of 2008 confirmed this approach is right. challenges for the coming years. As into the IT infrastructure are the key The standardization of IT processes, currently implemented, and maintaining the necessary software a result, by optimizing costs while their linking to business services, quality, we shall be able to cope with would have a significant influence the increasing pressure and demands on future effectiveness growth. from the dynamically changing market environment. This shall be followed by organizational and structural changes 32 33

18 Sales The priority sales activities of Polkomtel S.A. in 2008 focused on the enlargement of packages of additional services matching the needs of individual customers, and on development of tailor-made solutions for business customers 26 Company stores 955 agency POS 441 sales outlets 55 distributors of pre-paid products 12 Telesales partners Internet store In 2008, the sales network structure 441 points of sales (developed T he channel responsible for the ac- 548 agency commercial advisers comprised: by 10 commercial partners), dedi- quisition of and comprehensive serv- Channels responsible for the acquisition and complex servicing of individual customers and small busi- cated to the sales of mobile data transmission solutions; 55 distributors of the pre-paid ices to medium and large businesses, represented by the own sales channel of Polkomtel S.A., responsible 38 telemarketing partners nesses, represented by: products, including 26 distribu- for the cooperation with the largest 26 Company stores; tors of electronic top-ups; 40 customers of Polkomtel S.A., and ex- 955 agency-based POS, including thousand points of sale of start- ternal sales channels, i.e.: 133 company POS, 643 specialist er packages and about 100, agency commercial advisers POS and 179 non-specialist sales outlets where electronic top-ups of Polkomtel S.A., outlets. This network was serviced are sold; 38 telemarketing partners. by 10 network partners and 10 indi- 12 Telesales partners; vidual partners; Internet store. 34

19 Infrastructure and network development Investments into the telecommunication network were induced by the increase in traffic generated by new customers, rising interest in services among the existing cus- In 2008, Polkomtel S.A. investment outlays exceeded the level of PLN 1.1 billion for the second subsequent time. This was attributed primarily to the rapid growth of UMTS transmission capacity in the transport network, at 30 Mb/s per NodeB, based on the IP technology. This is one of the first projects of this type in Europe. It allows to meet the ex- tomers, as well as by investments network coverage, network modern- pectations of customers who use into new technologies aimed at in- ization to extend the reach of EDGE the currently available technolo- In 2008, Polkomtel S.A. continued its invest- creasing the comfort of using the fastest Internet access available in the mobile network. The Company technology outside the UMTS coverage, and evolution of the high speed data transmission technology in the gies, and enables the implementation of HSPA+. ment into the telecommunication network, developing the UMTS network, increasing increased also the capacity of numerous platforms delivering value added services, such as MMS, SMS, voice mail, video streaming, Czasoumilacz, Kto Dzwonił identification UMTS network (HSPA). Within the 10 largest Polish cities and metropolitan areas, and in zones of increased traffic, the HSPA technology allows to use data transmission and D evelopment of the UMTS network was complemented by network development on the basis of EDGE technology. This technology has been developed simultaneously in data transmission capacity and network capacity for the services offered. of callers, and location services. In 2008, Polkomtel S.A. launched also the IMS technical infrastructure, which is the technological root from which new generations of network Internet access at the speed of up to 7.2Mb/s towards the subscriber terminal and 1.4 Mb/s from the terminal towards the network. Within the remaining coverage area of the urban areas and in locations where there is large interest in data transmission in the GSM network (it applies especially to users who do not yet have UMTS terminals). The EDGE architecture will grow. Thanks to UMTS network, the speed of data technology is currently available for this solution, we can already of- transmission under the HSPA tech- 83% of Poland s population. The fer advanced, highly personalized nology is up to 3.6 Mb/s towards the area in which it is available gener- services to our key customers, re- subscriber terminal and 384 kb/s ates over 95% of data transmission gardless of whether their network from the terminal towards the net- traffic. access solution is the classical GSM work. At the end of 2008, the UMTS or VoIP. Primary investments technology in Polkomtel S.A. network was available in almost 1500 cities and municipalities, inhabited by over 50% of the population. The 2G and 3G technologies Growth in network capacity for The main group of the Company s expenditure are investments into A new solution was implement- voice services reached 17% per year, which matched the increase the telecommunication network. ed in Wrocław, offering high data in voice traffic in the 2G network 36 37

20 by 22% compared to the previous the capacity of many platforms for ity of the OCP nodes at the end of the Sigtran protocol. This is tied to the rush hours. In absolute values, work based on the Sigtran protocol year. In the last week of 2008, the value added services. At present, 2008 amounted to 5.39 millions of the development of network tech- this means a growth of the monthly and IP transport. network was capable of transferring the Polkomtel S.A. network is capa- call set-up attempts per hour. nology towards IP-based common volume by as much as 206 TB. The almost 200,000 erlangs during rush ble of servicing 100 MMS messages packet transport. growth rate was over twice as high R ollout 2008 was once again im- hours. During 2008, the number of per second, and 8500 SMS messag- I n view of the planned mass mi- as during the previous year. In or- plemented under the process of GSM base stations rose by 5%, and the number of UMTS base stations es per second. The MMSC platform was also upgraded its architecture gration of pre-paid users from the SICAP system, in 2008 the Company Network development der to service the future traffic with such growth rate, and due to voice turnkey construction of base stations, with the participation of by 74%. In 2008, the development was modified and adapted to ensure undertook actions meant to increase In terms of Inter-network traffic traffic serviced on the basis of Re- external partners. In 2008, the of the voice core network was based the failure-free service of traffic with the capacity of the Alcatel-Lucent s exchange, at the end of 2008 the lease 4 of the 3GPP architecture, Company implemented solutions primarily on the 3GPP Release changed profile, especially at inter- Intelligent Network platform, which Company had 19 points of inter- which requires an effective pack- meant to improve process capac- 4 architecture, using IP technology faces to other mobile networks. The constitutes an integral element of connection with international op- age transport network, aside from ity of both Polkomtel S.A. and its for transport. The share of traffic investments into development and the target pre-paid solution in the erators (POI), and three subsequent development of infrastructure to principal partners, namely Erics- served by this infrastructure ex- modernization of the voice mail sys- form of Convergent Billing. Thus, ones were being tested. The range service packet transmission of the son and Nokia Siemens Networks. ceeded 23% in 2008 and shall con- tem allowed to increase its capacity. the Alcatel-Lucent s Intelligent Net- of available points of interconnec- users data, the Company made fur- In terms of network development tinue to increase significantly in the This was possible in part thanks to the work at the end of 2008 was ready tion with domestic operators was ther investments. After selection of in 2008, the goals regarding the coming years. It is also worth noting initiation of a new node. The capac- to service 9 millions of active pre- also extended to include another the winning tender already in 2007, number of integrated new 2G and that traffic migration from 2G to 3G ity of the voice mail system amounts paid users. A number of other serv- 34, and their total number amount- a completely new packet transport 3G base stations, and moderniza- network increased significantly in currently to 10,320,000 boxes, and ice platforms were also modernized ed to 198 at the end of The At the end of the year, voice services under 3G network amounted to 8.5% of all voice calls in the whole network, and almost 14% in most of the voice mail nodes in the network are already adapted to service multimedia messages. in Reliable infrastructure network developed visibly towards packet transport technology and packet data transmission, which was determined by the demand of In 2008, Polkomtel S.A. launched the IMS technical infrastructure, which is the technological root from which new generations of network architecture will grow. the nine largest cities and metro- I n order to assure capacity need- Due to the 35-percent growth of mobile users to access fast data politan areas. ed to service the current number signaling traffic in the network, the transmission technologies, and by network was built, based on the IP/ tion of 2G networks in terms of the of pre-paid customers using the existing STP nodes were expanded the significant scale of voice traf- MPLS technology. This network took EDGE technology (by replacement Service platforms CAMEL technology, in 2008 the Company undertook actions meant to the maximum possible capacity. The network was enlarged by fic migration to the 3GPP Release 4 architecture. Users of data trans- over the whole traffic and replaced the previous IP backbone network. of equipment in over 800 stations) were achieved in practically 100%. In order to serve the constantly to enlarge the capacity of the OCP adding two new nodes, already mission services have sent 330 This network serves also as the ba- The 2008 rollout was the largest growing number of subscribers nodes which are part of the SICAP equipped with processors dedicat- terabytes (TB) of data in December sis for continuing migration of the ever in the Company s history. and the increasing network traffic, pre-paid platform. After completion ed to service the signaling traffic 2008, and the upstream of Internet SS7 signaling network based on the Polkomtel S.A. has also increased of this enlargement, the total capac- on the basis of IP technology under traffic reached 2.2 Gbit/s during TDM technology to signaling net