Heavy regulatory and competitive pressure on CEE telecom sector, Turkey faring considerably better

Erste Group Research Erste Sector Telecom TELECOMMUNICATIONS Erste Sector Telecom Heavy regulatory and competitive pressure on CEE telecom sector, Turkey faring considerably better Vera Sutedja, CFA, MBA mariaveronika.sutedja@erstegroup.com +43 (0)50100 11905 Contents Executive summary 2 Recommendation 3 Valuation 5 Shrinking telecom market 8 EU single telecoms market 10 Phasing out roaming premiums 14 Competitive landscape 16 Individual company reports Individual company reports Magyar Telekom 21 Netia 27 T-Hrvatski Telekom 33 Telefónica Czech Republic 37 Telekom Austria 41 Telekom Slovenije 48 TPSA 52 Turk Telekom 57 Turkcell 62 Contacts 68 Disclosures 69 We expect CEE telecom sector to remain under regulatory and competitive pressure in 2013e and 2014e. Regulatory pressure includes a reduction in mobile termination rates and roaming tariffs. Furthermore, the spectrum auction in the Czech Republic, Hungary and Austria allows possible new mobile entrants. Special telecom taxes continue to be implemented in Hungary. Competitive pressure leads to further falling average mobile tariffs, despite a growing subscriber base. In addition, it leads to higher mobile subscriber retention and acquisition costs for some operators. We see the proposal from the EU Commission on an EU single telecoms market as a mix of good and bad news for our coverage universe. Positives include single EU authorization and coordinated spectrum assignment. Negatives include removal of roaming premiums and fixed inter-eu call premiums, new customer rights to cancel contracts after six months and reluctance to promote market consolidation. The Turkish telecoms fare much better than their CEE peers. This is because of their growth profile and supportive regulation. Recommendation. Our top pick is Turkcell, followed by Turk Telekom. We do not have any top pick among our covered CEE companies. We assign TLSG an Accumulate recommendation, but its liquidity is far below that of its CEE peers. We have a neutral recommendation on TPSA, Netia and T-HT. We give MTel, TCR and TKA Reduce calls. Erste Group Research Sector Report Page 1

Executive summary Strong regulatory pressure Large CAPEX for spectrum EU single telecoms market a mix of good and bad news Competitive pressure remains high We expect the CEE telecom sector to remain under regulatory and competitive pressure in 2013e and 2014e. The regulatory pressure includes a reduction in mobile termination rates and roaming tariffs. Furthermore, the spectrum auction in the Czech Republic, Hungary and Austria allows possible new mobile entrants. We only see PPF in the Czech Republic as a credible candidate for a new mobile entrant. We do not expect any new entrant in Hungary, following the state-owned and failed MPVI Mobile. We also do not expect any new entrant in Austria, considering the recent Orange acquisition by Drei and the intense competition. MTel is burdened by a higher telecom usage tax for corporates and will continue to see such telecom taxes indefinitely. Spectrum auction would lead to higher CAPEX for TPSA (our estimate: PLN 2bn), MTel (our estimate: HUF 31bn), TCR (our estimate: CZK 3bn) and TKA (our estimate: EUR 320mn). We expect MTel to drop its dividend from HUF 50 to HUF 10, due to the high spectrum CAPEX and higher telecom taxes. MTel recently announced an early extension to its existing spectrum, which would cost HUF 34bn in 4Q13e. The spectrum price in Hungary is the highest in our coverage universe. We see the proposal from the EU Commission on a EU single telecoms market as a mix of good and bad news for our covered companies. Positives: o Single EU authorization should ease expansion to other EU countries. o Coordinated spectrum assignment in terms of timing, duration and conditions would support mobile operators in network planning. Network and spectrum sharing is encouraged. Negatives: o Removing roaming premiums. The EU Commission gives mobile operators two choices: 1) Provide roam-like-at-home (RLAH) voluntarily or; 2) Provide roaming at the usual regulated prices. We do not expect many operators to choose RLAH, considering that domestic prices are far lower than the regulated roaming prices. o No more fixed inter-eu call premiums. As of July 2016, such calls should be charged at long-distance local calls, meaning calling Bucharest from Vienna should cost the same as calling Tyrol from Vienna. This would be negative for most operators, though the implementation time is still sometime away. o New customer rights: Most of our CEE companies offer tariffs with a 24-month binding period. The EU proposal would allow customers to terminate contracts after six months without penalties. This would lead to a higher churn rate. o Consolidation? The EU Commission sees no reason to change competition rules because they pose few problems for cross-border mergers. We therefore expect domestic market consolidation to remain difficult in terms of gaining EU approval. Competitive pressure leads to further falling average mobile tariffs, despite a growing subscriber base. We saw unlimited tariffs launched by TCR in 2Q13. TPSA launched no-frill NJU Mobile tariffs to attract low-end clients. Drei in Austria keeps its popular SIM-only tariff for EUR 7.5. Nevertheless, Drei also launched unlimited tariffs with a pricing level similar to other competitors, which might indicate price stabilization in Austria. Erste Group Research Sector Report Page 2

Competitive pressure also leads to higher mobile subscriber retention and acquisition costs. This is highly visible at TKA, as it wants to retain and acquire high-value subscribers. Higher handset subsidies squeezed its Austria segment s comparable EBITDA margin to below 30% for the first time. Turkish telecoms perform much better than CEE peers The Turkish telecoms fare much better than their CEE peers. This is because of their growth profile. Fixed broadband is still growing, albeit at a slower pace. There is a five-year regulatory holiday for FTTH network rollout. Pay TV penetration is still low in Turkey at ~35% of households (vs. Western Europe s ~55%), giving ample potential for IPTV and web-tv. Mobile broadband is growing rapidly and operators generate handsome revenues from it. TCELL Turkey generated almost 15% of its revenues from mobile broadband, which grew 41.7% in 2Q13. Avea (the mobile subsidiary of TTKOM) generated 17% of its service revenues from non-sms data, which grew 42% y/y. There is no roaming tariff regulation. CAPEX is high, but this is due to 3G coverage expansion, which should support mobile broadband growth. It is therefore unsurprising that our top picks are TCELL and TTKOM. Recommendation Top pick Turkcell, followed by Turk Telekom Our top pick is Turkcell, due to its combination of high growth and stable margins. Its large USD 1bn cash position provides a natural hedge against TRY devaluation. The dividend is highly uncertain, depending on the outcome of the shareholder dispute. We do not consider dividends part of TCELL s investment story. We assign TTKOM an Accumulate recommendation, due to its dividend and growth combination. We do not have any top pick among our CEE companies. MTel faces high CAPEX spending, which consists of HUF 34bn for extension of existing spectrums and possible HUF 31bn for new spectrums. We think that the large spending will lead to a dividend cut. TCR might face high CAPEX spending (auction to start in October 2013), a possible fourth mobile operator and a possibly higher corporate income tax rate, from 19% to 25-30%. We have a Reduce recommendation for TKA. The Austrian mobile market remains highly competitive, but prices seem to be stabilizing. Roaming premiums will eventually be eliminated after 2016. TKA generated EUR 285mn in revenues and EUR 225mn in EBITDA in 2012 from roaming premiums. If TKA makes a large acquisition on the scale of Serbia Broadband, it would need a capital increase for financing. We give TLSG an Accumulate call, due to the looming privatization. However, its liquidity is far below that of its CEE peers. We have a neutral recommendation on TPSA, Netia and T-HT. TPSA is bottoming out. We expect that the DPS of PLN 0.5 would be sustainable if Wirtualna Polska could be sold. Netia performed better than expected in terms of OPEX savings, leading to an FCF upgrade. The neutral call on T-HT reflects the balance between the strong regulatory pressure post EU accession for Croatia, the Optima bankruptcy risk, T-HT s strong balance sheet, the possible acquisition of TLSG as well as high margins. Erste Group Research Sector Report Page 3

Overview of target price and recommendations Companies Currency Current Price Target price Potential upside New Recommendation Previous recommendation Turkcell TRY 11.8 14.5 23% Buy Accumulate Turk Telekom TRY 7.0 8.0 14% Accumulate Accumulate Telekom Slovenije EUR 113.9 125.0 10% Accumulate Hold T-Hrvatski Telekom HRK 177.0 190.0 7% Hold Hold Netia PLN 4.8 5.0 5% Hold Reduce TP SA PLN 7.8 8.0 2% Hold Hold Telekom Austria EUR 5.5 5.0-10% Reduce Sell Magyar Telekom HUF 312.0 285.0-9% Reduce Reduce Telefónica CR CZK 298.5 280.0-6% Reduce Reduce Source: Erste Group estimates Erste Group Research Sector Report Page 4

Valuation Share price change in 12M Share price % 12M TPSA -52.2 Magyar Telekom -27.1 Telefónica CR -22.5 Netia -20.6 Telekom Austria -13.4 Turk Telekom -1.1 T-Hrvatski Telekom -9.7 Turkcell 4.9 Telekom Slovenije 73.8 Source: Factset The share prices of our covered telecoms have been very weak in the past 12 months, as seen in the side table. This performance could be explained by: Dividend reduction: TPSA, TCR, TKA Special telecom tax: MTel Threat of new mobile entrant: TCR Lower outlook: TPSA, MTel Large FX losses: TTKOM Corporate governance issue: Turkcell (2x failed AGM, further dividend delay) Telekom Slovenije s share price rose sharply, due to progress in the privatization process, which could trigger a mandatory takeover bid. Dividend is a crucial investment story for the telecom sector. The past reduction in dividends was driven by the following factors: Falling revenues: Strong price competition, regulatory pressure, such as the MTR and roaming reductions, weak consumer and corporate spending leading to falling revenues for CEE telecoms. MTel is an exception, thanks to its low-to-negative-margin energy business. Turkish telecoms are also growing, due to much better market dynamics (growing subscribers, not heavily regulated). OPEX reduction could not compensate for lower revenues, leading to falling EBITDA. CAPEX is expected to rise, due to LTE spectrum purchases in Austria, the Czech Republic, Poland and Hungary. Pressure to maintain a certain credit rating level. Companies such as TKA and TPSA lowered their dividends in order to preserve their credit ratings. DPS cut expected in 2013e for MTel (large spectrum costs) and TTKOM (falling EPS, due to FX losses) Dividend development in local currency Dividend Incumbents 2010 2011 2012 2013e 2014e 2015e Magyar Telekom 50.0 50.0 50.0 10.0 10.0 10.0 T-Hrvatski Telekom 22.8 22.1 20.5 16.2 15.2 13.7 Telefónica CR 40.0 40.0 30.0 30.0 30.0 30.0 Telekom Austria 0.8 0.4 0.1 0.1 0.1 0.1 Telekom Slovenije 3.4 5.2 5.2 6.1 6.9 7.9 TPSA 1.5 1.5 0.5 0.5 0.5 0.5 Turkcell 0.0 0.0 0.0 1.6 0.5 0.6 Turk Telekom 0.6 0.5 0.7 0.5 0.6 0.6 Netia 0.0 0.0 0.0 0.4 0.4 0.4 Source: Erste Group Research, companies data TCELL dividends for 2010 to 2012 are based on a 50% payout ratio. TCELL has not been able to pay dividends so far, due to a severe shareholder dispute. We assume that TCELL will pay a dividend in 2014, with the precondition that the shareholder dispute is resolved. Otherwise, TCELL should pay a dividend by 2015. Netia will start paying dividends in 2014, with the precondition that it will not book such large impairments in 4Q13e that lead to any FY13 net loss. Erste Group Research Sector Report Page 5

TCR, T-HT and Netia will have highest dividend yield for 2013e Strong CAPEX requirement for LTE spectrum in 2012/13 for MTel, TCR, TKA and TPSA Most CEE telecoms show revenue decline, due to competition, regulatory and macroeconomic pressure Dividend yield: historical* vs. Forecast Dividend yield Incumbents 2010 2011 2012 2013e 2014e 2015e Magyar Telekom 9.7% 9.6% 13.3% 3.2% 3.2% 3.2% T-Hrvatski Telekom 7.9% 9.1% 10.4% 9.1% 8.6% 7.7% Telefónica CR 10.5% 10.4% 9.3% 10.1% 10.1% 10.1% Telekom Austria 7.1% 4.1% 0.9% 0.9% 0.9% 0.9% Telekom Slovenije 4.0% 8.2% 5.4% 5.4% 6.1% 7.0% TPSA 9.2% 8.7% 4.1% 6.4% 6.4% 6.4% Turkcell 0.0% 0.0% 0.0% 13.9% 4.5% 4.7% Turk Telekom 9.9% 7.7% 10.0% 7.1% 8.8% 8.7% Netia 0.0% 0.0% 0.0% 8.7% 9.0% 9.3% Median CEE 7.9% 8.7% 5.4% 6.4% 6.4% 7.0% Median all 7.9% 8.2% 5.4% 7.1% 6.4% 7.0% Source: Erste Group Research. *) Based on end-of-period stock price. CAPEX development CAPEX/sales Incumbents 2010 2011 2012 2013e 2014e 2015e Magyar Telekom 15.3% 14.5% 17.4% 24.4% 13.5% 13.0% T-Hrvatski Telekom 15.9% 10.9% 15.8% 13.1% 13.0% 13.0% Telefónica CR 9.9% 11.3% 11.2% 18.4% 12.5% 12.6% Telekom Austria 16.3% 19.6% 16.8% 33.7% 17.0% 17.1% Telekom Slovenije 15.1% 9.7% 12.8% 16.8% 16.7% 15.4% TPSA 17.3% 17.5% 16.5% 30.6% 14.3% 12.6% Turkcell 15.7% 13.3% 12.9% 15.0% 14.1% 13.8% Turk Telekom 16.6% 19.5% 18.5% 16.5% 14.9% 14.2% Netia 13.3% 77.9% 13.2% 13.7% 12.0% 12.0% Median CEE 15.3% 14.5% 15.8% 18.4% 13.5% 13.0% Median all 15.7% 14.5% 15.8% 16.8% 14.1% 13.0% Source: Erste Group Research, companies data Revenue growth? Revenue growth Incumbents 2010 2011 2012 2013e 2014e 2015e Magyar Telekom -5.3% -2.0% 1.6% 3.0% 0.7% 1.2% T-Hrvatski Telekom -1.7% -3.7% -7.6% -7.9% -5.5% -4.5% Telefónica CR -7.0% -5.7% -3.5% -5.6% -3.2% -0.5% Telekom Austria -3.1% -4.2% -2.8% -3.4% -1.8% -0.5% Telekom Slovenije -1.0% -2.9% -3.7% -1.2% 0.1% 0.1% TPSA -5.1% -5.0% -5.2% -9.8% -4.2% -0.2% Turkcell 0.8% 4.1% 12.1% 8.2% 5.8% 5.8% Turk Telekom 2.7% 10.0% 6.4% 5.0% 5.5% 5.2% Netia 4.2% 3.2% 31.0% -10.4% -6.5% -4.2% Median CEE -3.1% -3.7% -3.5% -5.6% -3.2% -0.5% Median all -1.7% -2.9% -2.8% -3.4% -1.8% -0.2% Source: Erste Group Research. Companies with strong balance sheets can afford to maintain their dividend level, in contrast with their indebted peers. Among our covered companies, TCELL and T-HT have net cash, while TKA is the most indebted. Erste Group Research Sector Report Page 6

Balance sheet comparison Net debt/equity Net debt/ebitda Telecoms 2012 2013e 2014e 2015e 2012 2013e 2014e 2015e Magyar Telekom 54% 83% 87% 92% 1.5 2.3 2.4 2.4 T-Hrvatski Telekom -32% -30% -31% -31% -1.0-1.1-1.2-1.3 Telefónica O2 CR 0% 8% 8% 8% 0.0 0.2 0.2 0.2 Telekom Austria 398% 211% 187% 165% 2.3 2.5 2.4 2.3 Telekom Slovenije 47% 39% 32% 25% 1.6 1.3 1.1 0.8 TPSA 44% 57% 53% 45% 1.2 1.8 1.7 1.4 Turkcell -27% -33% -25% -29% -1.1-1.4-0.9-1.1 Turk Telekom 98% 124% 107% 105% 1.2 1.4 1.4 1.4 Netia 18% 15% 11% 7% 0.9 0.6 0.5 0.3 Average 67% 53% 48% 43% 0.7 0.9 0.8 0.7 Source: Erste Group Research TPSA has highest P/E, followed at distance by Netia; Turkish telecoms have high EV/EBITDA, due to large communication tax Peer group comparison CEE, Turkey Cur Price M Cap P/E EV/EBITDA EURmn 2013e 2014e 2015e 2013e 2014e 2015e Magyar Telekom HUF 312.0 1,086 17.5 25.7 27.0 4.5 4.6 4.7 T-Hrvatski Telekom HRK 177.0 1,903 10.9 11.7 12.9 3.9 4.2 4.6 Telefónica CR CZK 298.5 3,665 17.5 18.7 19.3 5.4 5.6 5.8 Telekom Austria EUR 5.5 2,447 23.8 24.2 24.3 4.9 4.9 4.8 Telekom Slovenije EUR 113.9 740 14.8 13.3 11.4 4.3 4.1 3.8 TPSA PLN 7.8 2,457 50.7 50.9 39.3 4.5 4.4 4.1 Turkcell TRY 11.8 9,689 12.0 11.1 10.6 6.2 6.2 5.6 Turk Telekom TRY 7.0 9,197 13.0 10.4 10.5 6.3 6.2 6.1 Netia PLN 4.8 437 38.1 29.0 27.3 3.7 3.7 3.8 Median 17.5 18.7 19.3 4.5 4.6 4.7 Source: Erste Group Research Within our CEE coverage universe, we see T-HT and TLSG as having the most attractive valuations. TTKOM and TCELL have lower P/E ratios than their CEE peers. TCELL, TTKOM and T-HT have attractive valuations and above-average margins Margin comparison CEE, Turkey EBITDA margin Net margin 2013e 2014e 2015e 2013e 2014e 2015e Magyar Telekom 26.9% 25.7% 24.9% 3.7% 2.5% 2.4% T-Hrvatski Telekom 42.0% 41.1% 39.6% 19.3% 19.1% 18.1% Telefónica CR 37.1% 36.9% 36.1% 11.2% 10.7% 10.4% Telekom Austria 30.5% 29.9% 29.8% 3.2% 3.3% 3.3% Telekom Slovenije 31.6% 32.0% 32.6% 6.5% 7.2% 8.4% TPSA 30.5% 31.3% 31.0% 1.6% 1.7% 2.1% Turkcell 29.9% 30.3% 30.4% 18.8% 19.3% 19.2% Turk Telekom 38.2% 36.5% 35.2% 14.1% 16.8% 16.0% Netia 28.4% 28.5% 28.3% 2.4% 3.2% 3.6% Median 30.5% 31.3% 31.0% 6.5% 7.2% 8.4% Source: Erste Group Research T-HT, TTKOM and TCR have the highest EBITDA margins in our coverage universe. The net margin of TCELL is high, due to high interest income from the net cash position. Margins of MTel have fallen from around 33% to the lowest in the peer group. This is due to special telecom taxes as well as the higher contribution from low-margin energy and equipment sales. Erste Group Research Sector Report Page 7

Shrinking telecom market EU telecom revenues down 2.2% in 2011 and 1.1% in 2012 in real terms The EU telecom sector shrank in revenue terms by 1.1% in 2012, driven by falling fixed and mobile voice revenues. Telecom service revenues were estimated at EUR 234.5bn (source: EU Commission). Within our coverage universe, the revenue decline has been persistent until now. Both fixed and mobile revenues are declining. The fixed-line revenue decline can be attributed to fixed-to-mobile substitution and cheaper bundled products. The mobile revenue decline, despite the rising number of subscriber cases, can be explained by: Price war o Austria: H3G tariff of EUR 10 for 1000 min, 1000 SMS and 1GB data is the cheapest tariff in the country and among our coverage universe o Czech Republic: Telefónica CR introduced unlimited tariffs in 2Q13 that are more than 50% cheaper than its existing tariffs. Unlimited voice and SMS plus 1GB is offered at CZK 749 (EUR 29) o Poland: TPSA introduced no-frill NJU mobile in 2Q13, whose tariffs at PLN 57 (EUR 13.6) for unlimited voice and SMS plus 1 GB data are the cheapest in the country Special taxes o The budget deficit has led the Hungarian government to levy special taxes on mobile revenues. Initiated in 2010, the special taxes have changed names and the amount has increased. Moreover, they are valid indefinitely. The case was brought by the EU Commission to the EU Court of Justice, but a similar case in France was already ruled out. As a result, the EU Commission dropped its case. Special telecom taxes for Magyar Telekom HUFbn Robin Hood Usage tax Duct km tax Total 2010 27.0 27.0 2011 25.3 25.3 2012 24.4 8.7 33.1 2013 20.0 9.4 29.4 2014 onwards 20.0 12.3 32.3 Source: MTel, Erste Group estimate o o Croatia: 6% mobile fee based on revenues implemented from 2010 to July 2012 Czech Republic: There is a plan by the Social Democrats to raise the corporate income tax for telecoms, banks and utilities from 19% to 25-30% if the party wins the election in late October 2013; the party is leading polls with around 28% of votes MTR reduction: There is no doubt that the EU recommendation to cut MTR to 1.5-3 eurocents by the end of 2012 led to falling interconnection revenues. The MTR reduction also encourages lower retail prices and enables unlimited tariffs to flourish. Erste Group Research Sector Report Page 8

Mobile Termination Rate glide path EUR cent/minute 1H12 2H12 1H13 2H13 Austria 2.0 0.8 Slovenia 3.8 3.5 3.2 1.1 Bulgaria 6.4 2.7 2.3 1.2 Croatia 4.0 4.0 2.6 2.6 Hungary 3.5 2.6 Poland 3.5 3.0 2.0 1.0 Serbia 4.7 4.2 Macedonia 6.5 2.0 Czech Republic 4.2 2.1 1.6 1.1 Turkey Turkcell 1.57 1.0 Source: National telecom regulators Roaming reduction: This topic will be thoroughly discussed in a later chapter. Weak macroeconomic situation. Consumer and corporate spending continues to decline, leading to a higher churn rate, renegotiation of existing tariffs and optimization of usage. Private consumption growth y/y in % Private Consumption (grow 2009th y/y 2010 %) 2011 2012 2013 Croatia -7.6-0.9 0.2-1.8-0.5 Czech Republic -0.3 0.5-0.6-2.9-0.4 Hungary -5.7-2.7 0.2-1.7-0.7 Poland 2.4 3.1 3.0 1.6 1.4 Turkey -2.3 6.7 7.8 1.5 4.1 Austria -0.3 2.1 1.0 0.5 0.7 Source: Erste Group Research Corporate investments y/y in % Fixed Capital Formation (growth 2009 y/y %) 2010 2011 2012 2013 Croatia -14.2-15.0-7.2-3.7 3.0 Czech Republic -11.2 0.0-0.9-0.1-2.6 Hungary -11.0-9.7-5.5-6.5-3.3 Poland -1.0-0.9 8.3 3.7 3.3 Turkey -19.0 30.5 18.5 1.0 6.5 Austria -8.3 0.1 6.0 0.9 1.5 Source: Erste Group Research Technology development: Applications such as Whats App are replacing the once-popular SMS. Voice-over IP applications such as Skype and Viber for smartphones are replacing traditional voice minutes. Erste Group Research Sector Report Page 9

EU single telecoms market Aware of the sector being in difficulty, the EU Commission adopts regulatory proposals for a Connected Continent, which is about faster connections, easier business, simpler life, single market, net neutrality, no roaming premiums and no red tape. Reducing red tape Single EU authorization There are more than 200 operators in the EU (28 Member States), of which more than 100 are mobile operators. None is active in all Member States. The EU Commission will introduce a single EU authorization that enables the operator to provide services in more than one Member State by using only one notification from the reference regulator. Coordinated spectrum assignment The stronger coordination of timing, duration and conditions of assignments of spectrum is encouraged. Member States would remain in charge. The EU Commission explicitly endorses spectrum trading and sharing, as well as promoting infrastructure sharing. An operator can even include the shared network in its coverage calculation to fulfill the criteria of spectrum purchase, which is positive for operators. Spectrum price EUR/population/MHz Mobile market in AT 800 MHz 2600 MHz Germany 0.73 0.022 France 0.68 0.103 Spain 0.47 0.023 Italy 0.82 0.06 Netherlands 0.5 0.002 Portugal 0.28 0.028 UK 0.48 0.054 Croatia 0.26 Source: EU Commission, T-HT Spectrum auction allows new mobile entrants Within our coverage universe, Poland, Austria, Hungary and the Czech Republic have yet to conclude their LTE spectrum auctions this year. PL and HU have not started any public consultation process, while AT and CZ are on track to complete the auction by the end of 2013. Some spectrum is reserved for new entrants in AT and CZ. We see PPF as a credible candidate for a new entrant in CZ, as we have heard that it has started hiring employees and negotiating with equipment suppliers. We do not expect any new entrant in AT, considering its low price level and strong competition. We do not expect any new entrant in PL, as it already has four operators/mno and plenty of MVNOs. The fourth mobile operator in HU, MPVI Mobile, is dissolving, after the initial LTE spectrum auction was annulled. We therefore do not expect any new entrant in Hungary. Removing roaming premiums Incoming call charges while travelling in the EU would be banned from July 1, 2014. There are two options for a mobile operator: 1. Roam like home: The operator could voluntarily offer domestic rates throughout the EU. In order to do so, the operator should create bilateral or multilateral roaming agreements with roaming providers in other Member States. A reasonable use criterion will be applied, in order to avoid usage abuse or roaming arbitrage. For example, a Erste Group Research Sector Report Page 10

German could not buy cheaper Austrian domestic tariffs from A1 to be used in Germany. This would lead to almost complete roaming traffic for the user. Such abuse could be avoided by the reasonable use criterion. Nevertheless, it is unclear how the reasonable use criterion would be calculated. According to the EU Commission, the reasonable use criterion will be applied in such a way that consumers are able to confidently replicate their domestic consumption pattern while travelling in the EU. How many minutes/sms/gb would that be? 2. Apply the regulated roaming tariffs, but allow customers to decouple. The customer could choose a separate roaming provider when travelling in the EU, without having to buy a new SIM card. The EU Commission provides an estimate of annual loss in revenues at the EU level resulting from the implementation of roam like home with fixed roaming volumes. The annual revenue loss is seen by the EU Commission as a wealth transfer from the mobile sector to end-users. Annual revenue loss EURmn Remove incoming roaming call charges 300 Roaming calls at domestic price 580 Roaming data at domestic price 540 Roaming SMS at domestic price 230 Total loss in revenues 1,650 Source: EU Commission EU Commission estimated annual revenue loss at ~EUR 600mn from removing fixed international call premium within EU No more international call premiums within EU Fixed intra EU calls cannot be charged more than long-distance local calls as of July 2016. The extension of the roaming price cap to the fixed-line calls is new. The likely impact is difficult to quantify. Positives: Lower charges are likely to be followed by higher volumes, as demand for international call is more elastic, near -1. Intra EU international fixed calls represent only a tiny fraction of all fixed calls, estimated at around 1.1% (source: ARCEP, CMT). Corporate clients who are the majority user of fixed intra EU calling probably have package rates. Usage of VoIP such as Skype and Viber has already reduced the fixed intra EU call market. Negatives: The price difference between intra EU international fixed call and longdistance local call is significant. The following table shows how big such a price difference is for Telekom Austria. Telekom Austria s exposure to this segment was EUR 150mn in FY12, or below 3.6% of group revenues. Erste Group Research Sector Report Page 11

Telekom Austria fixed line tariffs Eurocents Peak Off Peak Fixed domestic calls 5.4 1.9 Fixed international calls Zone 1* 22.0 11.0 Zone 2* 35.1 25.9 Zone 3* 40.6 36.7 Mobile roaming calls 18.9 14.9 Source: A1. *) Zone 1: DE, IT, FR, GB, SK, SI, CZ, HU, UK Zone 2: BE, BG, DK, ES, PT, FI, EE, IE, HR, LU, NL, PL, SE, EL, MT, LT, LV, CY Zone 3: RO Net neutrality Blocking and throttling of Internet content such as Whats App or Skype would be banned. Customers can cancel their contracts after 6M without penalties New harmonized consumer rights These include the right to have a 12-month contract, the right to walk away from a contract if commitments are not fulfilled, and the right to cancel contracts after six months without any penalties. As most current mobile contracts have a 24-month binding period, we expect such a regulation to lead to a more rapid churn rate. Harmonizing network access cost methodology The price of wholesale copper unbundled local loop ranges from EUR 4 to 14 per month. Such a cost should be harmonized and based on bottom-up long-run incremental costs plus (BU LRIC+): incremental capital (including sunk) plus operating costs borne by efficient operators plus mark-up for recovery of common costs. o Since no operator would today build any pure copper network, the BU LRIC+ calculates the current costs of deploying a modern efficient next generation network (NGA). o When modeling an NGA network, a national regulator should not assume the construction of an entirely new civil infrastructure NGA network. Wholesale access to NGA networks should not be regulated if some criteria are met, such as a competitive retail price resulting from infrastructurebased competition. We see that it is far from straightforward as to how access to an NGA network could be excluded from the regulated price. Still no pro-consolidation Consolidation? In this sensitive topic, the EU Commission refuses to back down from its current position. The EU Commission sees no reason to change competition rules, because those rules pose few problems for cross-border mergers. Consolidation, on its own, cannot be a policy objective. Creating a single telecoms market would allow operators to expand more easily to other EU markets and change the way in which consolidation is looked at under applicable EU competition rules. We therefore would expect domestic market consolidation to remain difficult to gain EU approval. The following table shows recent transaction in the telecom sector. Most transactions involved mobile and cable companies. Orange sold its Switzerland and Austrian operations. Telefónica sold its Germany and Irish operations. Erste Group Research Sector Report Page 12

Recent privatization and acquisition deals in telecom market Privatisation/ acquisition target Country Additional information Buyer Telekom Austria AMX acquires 20.97% stake of TA from Ronny Pecik. Price undisclosed. AMX Austria Orange Switzerland 100% stake for EUR 1.5bn or CHF 1.83bn. EV of CHF 2bn. EV/EBITDA 2011 of 6.4x APAX Telefonica Germany IPO for 23.2% of stake for around EUR 1.5bn, range 5.25-6.5, IPO 5.6, EV/EBITDA 2011 of 5.8 to 5.9x Megafon Russia IPO for 15.2% of stake for USD 1.7bn, range 20-25 USD, IPO 20, EV/EBITDA 2013 of 4.2x Yesss! Austria EUR 390mn, EV/Sales 6.9x Telekom Austria Orange Austria EUR 1.3bn, EV/EBITDA 6.9x H3G Globul Bulgaria EUR 717mn, EV/EBITDA 2012 5.3x, EV/EBITDA 2013e of 6x. Seller: OTE. Stake 100%. Telenor Kabel Germany EUR 7.7bn, EV/EBITDA 2014 11x Vodafone Deutschland Telefonica Ireland EUR 780mn plus EUR 70mn deferred payment, EV/EBITDA 2013e 7.1x Hutchison Verizon Wireless Source: Erste Group Research USA USD 130.1bn for 45% stake, EV/EBITDA LTM of 9.4x Verizon Communications Erste Group Research Sector Report Page 13

Phasing out roaming premiums Option 1: Roam like home Operators offer roaming at the domestic rate. The roaming provider could provide such tariffs by using its own network or using a bilateral/multilateral roaming agreement. Target coverage o July 1, 2014: at least 10 Member States, representing 30% of EU population o July 1, 2015: at least 15 Member States, representing 50% of EU population o July 1, 2016: at least 17 Member States, representing 70% of EU population Benefits for operators: 1. If a provider could cover at least 17 Member States (70% of EU population) with its roam like home tariffs, it may add 50% roaming surcharges to the domestic rate. 2. The operator does not need to offer decoupling, i.e. allowing a customer to choose their own roaming provider when abroad. 3. The operator does not need to apply the regulated retail roaming charges. However, the regulated retail roaming should be treated as a ceiling. Analysis: It is difficult to imagine how an operator would voluntarily lower its roaming price to the domestic rate when it can continue to charge the higher regulated retail roaming price. We can imagine that the operator would charge lower prices due to competition. However, the roaming market is still far from competitive. All operators (existing mobile network operators in the visited country) are charging almost the same price, i.e. the regulated retail price. Furthermore, demand for voice roaming was proven in the past to be inelastic. Demand elasticity for data roaming could potentially be high, though. In our opinion, the benefit would only be valuable if there are enough numbers of alternative roaming providers to make the roaming market competitive. We have yet to see this development. At the moment, there is rarely any alternative roaming provider in the EU. Large operators such as DT, FT, Telefónica and Vodafone could implement such agreements more easily and quickly at their own subsidiaries. However, we are doubtful as to whether they would do so in a timely manner, rather than waiting until July 2016. Smaller operators would even find it challenging or time consuming to conclude such agreements. Again, there is no motivation to reduce their prices voluntarily in an uncompetitive market before July 2016. Erste Group Research Sector Report Page 14

Option 2: Existing regulated roaming prices Roaming glide path Roaming, EURc Before July 2012 July 2013 July 2014 Retail Data per MB none 70 45 20 Voice calls made 35 29 24 19 Voice calls received 11 8 7 0 SMS 11 9 8 6 Wholesale Data per MB 50 25 15 5 Voice per minute 18 14 10 5 SMS 4 3 2 2 Source: EU Commission. Valid until June 30, 2017 In addition to applying the aforementioned rates, providers must as of July 2014 offer their customers the possibility to roam with competitors, such as a local company in the visited country or a rival company in the home country. At the moment, alternative roaming providers are still hard to find. According to the EU Commission, European mobile users paid 9.1 eurocents per voice minute in 2011. This domestic rate is considerably lower than the regulated roaming tariffs Average revenue per minute (EUR cents) in mobile calls, 2011 4.4 4.6 6 6.9 7.9 9.1 9.7 10.4 10.6 12.7 14.7 BG PL HU IT AT EU UK CZ SI FR NL Source: EU Commission Analysis: This is probably the better option for any mobile operators, large or small. Given the limited competition in roaming, the lower domestic rate vs. the roaming rate, as well as the certainty that the roaming premium will eventually be eliminated, operators would make use of this use as long as they can. Erste Group Research Sector Report Page 15

Competitive landscape The telecom sector market in the EU shrank 1.1% in real terms in 2012. The industry is dominated by mobile, as seen in the following table. Revenue split Segment 2011 Fixed 44.0% Mobile 46.0% Pay TV 6.0% Other 6.0% Source: EU Commission Mobile revenues continued to decline until 3Q12, despite a higher subscriber base and mobile Internet usage. The decline was driven by price competition and regulatory pressures such as MTR and roaming reduction. Mobile revenue growth 2012 2013e Telefonica CR -6.10% -10.30% Magyar Telekom -1.20% -0.20% TPSA -9.30% -12.50% T-Hrvatski Tel -6.20% -10.30% Turk Telekom 12.80% 18.60% Turkcell 8.40% 5.30% Source: Companies data, Erste Group Research Mobile penetration in the EU reached 130% in Oct. 2012, up from 127.3% in Oct. 2011 (source: EU Commission). In Turkey, the low mobile penetration is caused by the considerable size of the young population. Excluding kids between 0 and 9 years old, the penetration rate amounted to 107.5% in 2Q13. Mobile penetration 2Q13 vs. 2Q12 160% 140% 120% 100% 80% 60% 40% 20% 0% Austria Bulgaria Poland Czech Republic Croatia Hungary Slovenia Turkey Source: Erste Group Research 2Q12 2Q13 Mobile broadband penetration in EU reached 54%, of which 45% from handheld devices Growing mobile penetration has been driven by mobile data connections. The mobile broadband penetration in the EU reached 54.5% per 100 inhabitants in Jan. 2013. Some countries even have more than 100%, Erste Group Research Sector Report Page 16

implying one user has more than one mobile broadband device (smartphones, tablets, notebook). Mobile broadband penetration in selected EU Members and Turkey, Jan. 2013 74.1% 84.0% 107.1% 105.9% 97.6% 16.5% 23.0% 36.9% 41.1%43.6%44.9% 53.5%54.1%54.5% TR HU SI DE FR CZ AT ES EU PL UK DK SE FI Source: EU Commission. *) Turkey: as of June 2013 Mobile Internet revenues continue to grow rapidly, supported by higher smartphone penetration and growing 3G coverage. The 3G coverage in the EU stood at 96.3% of the population as of Dec. 2012. The LTE coverage stood at 26.2% of the EU population in 2012. Turkcell Turkey generated 14.8% of its revenues from mobile broadband, which grew by 41.7% y/y. TCR posted 20.5% y/y growth of non-messaging data, mainly due to mobile Internet. Non-messaging data contributed 15.4% to TCR s domestic mobile revenues in 2Q13. Mobile broadband revenues of Turkcell (TRY mn) 340 240 60 107 166 2Q09 2Q10 2Q11 2Q12 2Q13 Source: TCELL Erste Group Research Sector Report Page 17

Smartphone penetration as % mobile user Countries Oct 2011 Oct 2012 Spain 48.4% 63.2% UK 48.1% 62.3% France 38.1% 51.4% Italy 42.1% 51.2% Germany 34.2% 48.4% Austria 40.0% 63.0% Covered operators 2Q12 2Q13 TPSA Poland 17.5% 23.6% Telefonica Czech Rep 23.0% 30.0% Avea Turkey 19.0% 30.0% Turkcell 15.0% 24.0% Magyar Telekom 31.3% 37.1% T-Hrvatski Telekom 21.0% 27.0% Source: comscore MobiLens, companies data, RTR Fixed broadband penetration continues to grow, albeit at a slower rate. The number of fixed broadband lines grew by 3.9% y/y to 144.8mn as of Jan. 2013, according to the EU Commission. The penetration rate reached 28.8% as of Jan. 2013, up from 27.7% a year before. All of the countries in our coverage universe showed fixed broadband penetration below the EU average. xdsl remains the dominant method with 74%, followed by cable modem with 17%, as of Jan. 2013. Fixed broadband penetration in selected EU Members and Turkey, Jan. 2013 18.8% 19.0% 22.5% 22.9% 24.7% 24.8% 25.3% 39.8% 36.7% 33.6%34.2% 30.6% 28.8% 10.6% TR PL BG IT HU AT ES CZ EU FI UK DE FR DK Source: EU Commission. *) Turkey: as of June 2013 Revenues from fixed broadband products have either stopped growing or are growing only slowly in our CEE coverage universe. Competition with cable operators and mobile Internet, as well as lower average prices due to bundled products, contributed to such a development. The Turkish peers posted higher growth, thanks to the lower penetration rate. Erste Group Research Sector Report Page 18

Fixed broadband revenue growth y/y in 2Q13 for our coverage universe 37.3% 1.8% 6.6% 9.3% Netia TCR MTel T-HT TPSA TTKOM TCELL -6.5% -3.9% -2.0% Source: Companies data Fixed lines (excluding broadband) continue to decline, as proven in the following diagram. MTel reduced the rate of the access decline considerably, from around 10% in early 2011 to just 3% in 2Q13. This was due to the launch of the Hoppa tariff, a flat tariff with unlimited minutes to on-net mobile and fixed at a 30% lower ARPU. We think that the rapid churn at Netia, TPSA and TKA could be attributed to the strong mobile price competition in Poland and Austria, which encouraged fixed to mobile substitution. Fixed access y/y decline in our covered telecoms, 2Q13 Netia TPSA TKA TLSG TCR TTKOM MTEL T-HT -3.1% -3.0% -6.7% -6.6% -5.4% -8.6% -8.0% -7.9% Pay TV is crucial in driving fixed broadband growth and maintaining competitiveness against cable operators. It is normally sold together with fixed broadband access, as a bundle. Some operators such as MTel and T-HT are highly successful in the pay TV market. T-HT is the market leader with a 59.3% market share in 2Q13, while MTel is the second largest provider with 25.7% in 2Q13. Turk Telekom is catching up fast with its web TV and IPTV offers. Erste Group Research Sector Report Page 19

Fixed broadband and pay TV access development Fixed broadband access (000) TV (000) TV as % of fixed BB 2Q12 2Q13 % y/y 2Q12 2Q13 % y/y 2Q12 2Q13 Magyar Telekom 879 906 3.1% 822 855 4.0% 93.6% 94.4% T-Hrvatski Telekom 653 664 1.7% 347 374 7.8% 53.1% 56.3% Turk Telekom 7000 7100 1.4% 100 1300 1200.0% 1.4% 18.3% TPSA 4434 4193-5.4% 676 699 3.4% 15.2% 16.7% Telefonica CR 894 921 3.1% 139 142 2.2% 15.6% 15.4% Netia 908 863-5.0% 9 10 1.8% 1.0% 1.1% Telekom Austria 1281 1346 5.1% Source: Companies data Erste Group Research Sector Report Page 20

TEST Erste Gr oup R esearch C ompany R eport Magyar T elekom Integrated Tel ecoms Hungar y 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom Magyar Telekom Integrated Telecoms Hungary Magyar Telekom Reduce HUF mn 2012 2013e 2014e 2015e Net sales 607,128.0 625,633.1 629,956.6 637,818.3 EBITDA 194,818.0 168,594.8 161,676.4 159,034.6 EBIT 87,921.0 60,927.5 55,969.0 55,080.3 Net result after min. 36,859.0 18,554.2 12,675.7 12,050.3 EPS (HUF) 35.36 17.80 12.16 11.56 CEPS (HUF) 135.96 120.88 113.46 111.37 BVPS (HUF) 445.11 399.74 388.80 377.26 Div./share (HUF) 50.00 10.00 10.00 10.00 EV/EBITDA (x) 3.8 4.5 4.6 4.7 P/E (x) 10.6 17.5 25.7 27.0 P/CE (x) 2.8 2.6 2.7 2.8 Dividend Yield 13.3% 3.2% 3.2% 3.2% 460 440 420 400 380 360 340 320 300 52 weeks Magyar Telekom BUX Performance 12M 6M 3M 1M in HUF -27.1% -23.3% -1.9% 2.6% Share price (HUF) close as of 23/09/2013 312.0 Reuters MTEL.BU Free float 40.7% Number of shares (mn) 1,040.3 Bloomberg MTEL HB Shareholders Deutsche Tel. (59.2%) Market capitalization (HUF mn / EUR mn) 324,580 / 1,086 Div. Ex-date 07/05/13 Treasury (0.14%) Enterprise value (HUF mn / EUR mn) 759,678 / 2,541 Target price 285.0 Homepage: www.magyartelekom.hu Dividend drop anticipated Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We confirm our Reduce recommendation and lower our target price from HUF 330 to HUF 285. The lower target price is driven by higher estimates for spectrum CAPEX. MTel announced that it would pay HUF 34bn for early extension of its existing spectrums. In addition, there will be an auction for new spectrums by the end of 2013, which we estimate to cost MTel HUF 31bn. As a result, we expect net debt to increase considerably and to lead to a significant dividend cut. We run several scenarios for DPS level. According to our calculation, DPS of HUF 10 would lead to net gearing of around 40% on a sustainable level. Parent company Deutsche Telekom provides more than 80% of MTel s financing and receives each year 59.21% of the dividends from MTel. We are doubtful that DT would approve a significant increase in leverage at MTel and leave the dividends unchanged. MTel is heavily burdened by large special communication taxes (~5% of sales) and the high price for spectrum renewal and purchases (in total HUF 75.9bn, or 12.1% of sales), negatively affecting EBITDA down to net profit. The company s EBITDA to net margin is now the lowest in our peer group. Erste Group Research Sector Report Page 21

Magyar Telekom Integrated Telecoms Hungary Large CAPEX for spectrum. MTel will spend HUF 34bn on early extension of its existing spectrums in the 900 MHz and 1800 MHz bands. In addition, there will be an auction for new spectrums as follows: Frequencies that had belonged to failed mobile entrant MPVI Mobile before: o 5 MHz on 900 MHz band o 15 MHz on 1800 MHz band o 15 MHz on 2100 MHz band The telecom regulator has said that the auction would enable a new mobile entrant. Therefore, we assume that the aforementioned 900 MHz band would be reserved for a new entrant. New frequencies for all mobile operators: o 30 MHz of 800 MHz band o 70 MHz of 2600 MHz band We assume that MTel would bid for roughly a third of these available frequencies. The total CAPEX estimate for spectrum would be HUF 65bn, as seen in the following table. CAPEX estimate for spectrums New spectrums Size (MHz) Price HUFbn Price/pop/MHz in EUR Auction time 800 MHz 10 30.0 1.01 4Q13e 2600 MHz 20 1.0 0.02 4Q13e Renewal of existing spectrums* 900 MHz 8 32.5 1.37 3Q13 1800 MHz 15 1.5 0.03 3Q13 Total 65.0 Source: Erste Group estimates. *) Individual spectrum price is estimated Debt goes up, dividend goes...? We estimate that MTel would have to increase its debt by 27% y/y to HUF 454.7bn, as seen in the following table. If we assume that the dividend of HUF 50 would be maintained, net gearing would exceed 50% next year and even 70% in five years. MTel receives more than 80% of its debt from parent company Deutsche Telekom. We are doubtful that DT would allow leverage to go up considerably while dividends remain unchanged. After all, DT only receives 59.21% of the annual dividend. We can therefore conclude that MTel can no longer afford its HUF 50 dividend. Debt estimates with DPS of HUF 50 2012 2013e 2014e 2015e 2016e 2017e Debt 342.3 434.7 479.2 526.6 573.1 619.0 % y/y -7% 27.0% 10.3% 9.9% 8.8% 8.0% Net debt 273.1 374.4 419.0 466.3 512.6 558.3 EBITDA 194.8 168.6 161.7 159.0 161.4 166.0 Debt/EBITDA 1.8 2.6 3.0 3.3 3.6 3.7 Net debt/ebitda 1.4 2.2 2.6 2.9 3.2 3.4 Net gearing 34.3% 44.6% 51.1% 58.4% 66.1% 74.2% Source: Erste Group Research *) Debt excludes pension obligations Erste Group Research Sector Report Page 22

Magyar Telekom Integrated Telecoms Hungary Even our current DPS of HUF 30 looks unaffordable, as seen in the following table. Net gearing would exceed 40% next year and 50% the year after. Debt estimates with DPS of HUF 30 2012 2013e 2014e 2015e 2016e 2017e Debt 342.3 434.7 457.7 481.9 503.7 523.1 % y/y -5% 27.0% 5.3% 5.3% 4.5% 3.9% Net debt 273.1 374.4 397.4 421.6 443.2 462.5 EBITDA 194.8 168.6 161.7 159.0 161.4 166.0 Debt/EBITDA 1.8 2.6 2.8 3.0 3.1 3.2 Net debt/ebitda 1.4 2.2 2.5 2.7 2.7 2.8 Net gearing 34.3% 44.6% 48.5% 52.8% 57.2% 61.5% Source: Erste Group Research *) Debt excludes pension obligations According to our estimates, if the dividends are reduced to HUF 10, then net gearing could be within the 40% range. In fact, dividends could be eliminated and net gearing would still be between 40% and 50%. Debt estimates with DPS of HUF 10 2012 2013e 2014e 2015e 2016e 2017e Debt 342.3 434.7 425.2 414.8 399.3 378.9 % y/y -7% 27.0% -2.2% -2.5% -3.7% -5.1% Net debt 273.1 374.4 365.0 354.6 339.1 318.7 EBITDA 194.8 168.6 161.7 159.0 161.4 166.0 Debt/EBITDA 1.8 2.6 2.6 2.6 2.5 2.3 Net debt/ebitda 1.4 2.2 2.3 2.2 2.1 1.9 Net gearing 34.3% 44.6% 44.5% 44.4% 43.7% 42.4% Source: Erste Group Research *) Debt excludes pension obligations We therefore reduce our DPS 2013e and onward estimate from HUF 30 to HUF 10. Update on taxes. The Hungarian government levied a large amount of special taxes on the telecom industry. This was contested by the EU Commission, but a precedent case in France was already decided favorably. Therefore, the EU Commission has withdrawn its case from the EU Court of Justice. We summarize the amount of special taxes below. Special telecom taxes for Magyar Telekom HUFbn Robin Hood Usage tax Duct km tax Total 2010 27.0 27.0 2011 25.3 25.3 2012 24.4 8.7 33.1 2013 25.0 7.3 32.3 2014 onw ards 28.0 7.3 35.3 Source: Company data and estimate Erste Group Research Sector Report Page 23

Magyar Telekom Integrated Telecoms Hungary Change in estimates. We lower our EPS 2013 and 2014 estimates by 25% and 40%, respectively, mainly due to our higher financial expenses estimate. We increase our CAPEX estimate from HUF 87.8bn to HUF 152.8bn, due to actual spectrum renewal (HUF 34bn) and expected new spectrum (HUF 31bn). This leads to a considerably higher net debt and, consequently, higher financial expenses. We also lower our DPS 2013 and onward estimate from HUF 30 to HUF 10, as discussed earlier. Change in estimates HUF mn 2013e 2014e New Old +/-% New Old +/-% Revenues 625,633 607,131 3% 629,957 609,861 3% EBITDA 168,595 171,827-2% 161,676 166,784-3% EBIT 60,928 68,303-11% 55,969 63,809-12% Net income 18,554 24,787-25% 12,676 21,242-40% EPS 17.8 23.8-25% 12.2 20.4-40% DPS 10.0 30.0-67% 10.0 30.0-67% Source: Erste Group estimates Valuation and recommendation. We confirm our Reduce recommendation and lower our target price from HUF 330 to HUF 285. The lower target price is largely driven by much higher net debt, resulting in higher than expected spectrum costs. We expect dividends to fall from HUF 50 in 2012 to HUF 10 in 2013e and onward. This would lead to a yield of 3-4%, well below the government bond yield of around 6% and peer group average of 6-7%. CEE and Turkey dividend yield CEE, Turkey Dividend Yield 2013e 2014e 2015e Magyar Telekom 3.2% 3.2% 3.2% T-Hrvatski Telekom 9.1% 8.6% 7.7% Telefónica CR 10.1% 10.1% 10.1% Telekom Austria 0.9% 0.9% 0.9% Telekom Slovenije 5.4% 6.1% 7.0% TPSA 6.4% 6.4% 6.4% Turkcell 13.9% 4.5% 4.7% Turk Telekom 7.1% 8.8% 8.7% Netia 8.7% 9.0% 9.3% Median 7.1% 6.4% 7.0% Source: Erste Group Research Erste Group Research Sector Report Page 24

WACC WACC Erste Group Research Erste Sector Telecom Magyar Telekom Integrated Telecoms Hungary WACC calculation 2014e 2015e 2016e 2017e 2018e Terminal Risk free rate 5.8% 5.8% 5.8% 5.8% 5.8% 6.5% Equity risk premium 7.6% 7.6% 7.6% 7.6% 7.6% 7.0% Beta 1.0 1.0 1.0 1.0 1.0 1.0 Cost of equity 13.4% 13.4% 13.4% 13.4% 13.4% 13.5% Cost of debt 8.3% 8.3% 8.3% 8.3% 8.3% 9.0% Effective tax rate 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% After-tax cost of debt 6.4% 6.4% 6.4% 6.4% 6.4% 6.9% Equity weight 50% 50% 50% 50% 50% 50% WACC 9.9% 9.9% 9.9% 9.9% 9.9% 10.2% DCF valuation (HUF mn) 2014e 2015e 2016e 2017e 2018e Terminal Sales growth 0.7% 1.2% 2.5% 2.4% 2.4% 2.0% EBIT 55,969 55,080 58,508 63,525 67,208 75,298 EBIT margin 8.9% 8.6% 8.9% 9.5% 9.8% 10.8% Tax rate 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% Taxes on EBIT -12,873-12,668-13,457-14,611-15,458-17,319 NOPLAT 43,096 42,412 45,051 48,914 51,750 57,979 + Depreciation 105,707 103,954 102,860 102,514 102,237 80,000 Capital expenditures / Depreciation 80.6% 79.5% 77.9% 78.0% 78.2% 100.0% +/- Change in working capital 69 125 257 246 252 0 Chg. working capital / chg. Sales 1.6% 1.6% 1.6% 1.6% 1.6% 0.0% - Capital expenditures -85,166-82,611-80,133-80,000-80,000-80,000 Free cash flow to the firm 63,706 63,880 68,035 71,674 74,239 57,979 Terminal value growth 1.0% Terminal value 635,476 Discounted free cash flow - Dec 31 2013 57,983 52,918 51,297 49,186 46,369 396,912 Enterprise value - Dec 31 2013 654,664 Minorities 0 Non-operating assets 0 Net debt 385,142 Other adjustments 0 Equity value - Dec 31 2013 269,521 Number of shares outstanding (mn) 1,040 Cost of equity 13.4% 12M target price per share (HUF) 285 Current share price (HUF) 312 Up/Downside -8.8% Enterprise value breakdown PV of terminal value 61% PV of detailed period 39% Sensitivity (per share) Terminal value EBIT margin 285 8.8% 9.8% 10.8% 11.8% 12.8% 9.2% 248 292 336 379 423 9.7% 226 268 309 350 391 10.2% 207 246 285 324 362 10.7% 189 226 263 300 337 11.2% 173 208 244 279 314 Terminal value growth 285 0.0% 0.5% 1.0% 1.5% 2.0% 9.2% 280 306 336 369 406 9.7% 259 283 309 338 371 10.2% 240 261 285 311 340 10.7% 222 242 263 287 313 Source: Factset, Erste Group Research 11.2% 206 224 244 265 289 Erste Group Research Sector Report Page 25

Magyar Telekom Integrated Telecoms Hungary Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, HUF mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 609,579.00 597,617.00 607,128.00 625,633.09 629,956.56 637,818.31 Invent. changes + capitalized costs 0.00 0.00 0.00 0.00 0.00 0.00 Total revenues 609,579.00 597,617.00 607,128.00 625,633.09 629,956.56 637,818.31 Other operating revenues 0.00 0.00 0.00 0.00 0.00 0.00 Material costs -63,373.00-61,602.00-193,978.00-239,304.66-251,982.62-261,505.51 Personnel costs -93,884.00-91,823.00-94,084.00-92,839.90-92,193.92-92,656.75 Other operating expenses -239,356.00-248,110.00-124,248.00-124,893.70-124,103.61-124,621.47 EBITDA 212,966.00 196,082.00 194,818.00 168,594.84 161,676.40 159,034.59 Depreciation/amortization -100,872.00-132,915.00-106,897.00-107,667.30-105,707.35-103,954.24 EBIT 112,094.00 63,167.00 87,921.00 60,927.54 55,969.05 55,080.35 Financial result -28,140.00-32,450.00-28,598.00-31,334.43-35,751.93-35,860.71 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 83,954.00 30,717.00 59,323.00 29,593.10 20,217.12 19,219.64 Income taxes -6,583.00-27,538.00-13,468.00-6,510.48-4,447.77-4,228.32 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital -12,993.00-10,636.00-8,996.00-4,528.43-3,093.69-2,941.05 Net result after minorities 64,378.00-7,457.00 36,859.00 18,554.19 12,675.66 12,050.27 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, HUF mn, 31/12) Intangible assets 332,993.00 308,313.00 311,066.00 311,066.00 311,066.00 311,066.00 Tangible assets 549,752.00 536,224.00 510,962.00 556,094.70 535,553.35 514,210.13 Financial assets 26,262.00 36,755.00 21,678.00 21,678.00 21,678.00 21,678.00 Total fixed assets 909,007.00 881,292.00 843,706.00 888,838.70 868,297.35 846,954.13 Inventories 9,592.00 9,904.00 12,400.00 12,777.95 12,866.25 13,026.82 Receivables and other current assets 117,093.00 126,345.00 132,029.00 136,038.00 136,974.65 138,677.84 Other assets 913.00 750.00 532.00 532.00 532.00 532.00 Cash and cash equivalents 72,401.00 79,737.00 69,177.00 60,222.33 60,265.57 60,344.18 Total current assets 199,999.00 216,736.00 214,138.00 209,570.28 210,638.46 212,580.84 TOTAL ASSETS 1,109,006.00 1,098,028.00 1,057,844.00 1,098,408.98 1,078,935.81 1,059,534.97 Shareholders'equity 531,512.00 488,015.00 463,056.00 415,860.95 404,481.44 392,476.53 Minorities 63,200.00 68,076.00 59,027.00 49,955.43 39,449.12 28,790.17 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 12,298.00 11,236.00 10,858.00 10,714.42 10,639.87 10,693.28 LT provisions 7,722.00 3,703.00 5,668.00 5,593.05 5,554.13 5,582.02 Interest-bearing LT debts 242,992.00 248,094.00 266,624.00 356,658.21 357,545.16 357,746.22 Other LT liabilities 12,187.00 27,217.00 23,372.00 23,400.77 23,407.50 23,419.72 Total long-term liabilities 255,179.00 275,311.00 289,996.00 380,058.99 380,952.66 381,165.94 Interest-bearing ST debts 118,855.00 120,020.00 75,685.00 77,991.86 78,530.82 79,510.88 Other ST liabilities 120,240.00 131,667.00 153,554.00 158,234.28 159,327.77 161,316.15 Total short-term liabilities 239,095.00 251,687.00 229,239.00 236,226.14 237,858.59 240,827.03 TOTAL LIAB., EQUITY 1,109,006.00 1,098,028.00 1,057,844.00 1,098,408.98 1,078,935.81 1,059,534.97 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,HUF mn, 31/12) Cash flow from operating activities 164,670.00 168,781.00 145,227.00 126,296.30 118,338.08 116,210.43 Cash flow from investing activities -52,848.00-77,752.00-72,875.00-152,800.00-85,166.00-82,611.02 Cash flow from financing activities -161,640.00-84,502.00-82,382.00 17,549.03-33,128.85-33,520.79 CHANGE IN CASH, CASH EQU. -49,480.00 7,336.00-10,560.00-8,954.67 43.23 78.62 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth -5.3% -2.0% 1.6% 3.0% 0.7% 1.2% EBITDA margin 34.9% 32.8% 32.1% 26.9% 25.7% 24.9% EBIT margin 18.4% 10.6% 14.5% 9.7% 8.9% 8.6% Net profit margin 12.7% 0.5% 7.6% 3.7% 2.5% 2.4% ROE 12.0% -1.5% 7.8% 4.2% 3.1% 3.0% ROCE 11.0% 0.5% 8.7% 5.5% 5.0% 5.1% Equity ratio 53.6% 50.6% 49.4% 42.4% 41.1% 39.8% Net debt 301,744.0 299,613.0 283,990.0 385,142.2 386,450.3 387,606.2 Working capital -40,009.0-35,701.0-15,633.0-27,187.9-27,752.1-28,778.2 Capital employed 916,365.0 886,624.0 835,113.0 879,952.4 859,342.5 837,874.6 Inventory turnover 6.5 6.3 17.4 19.0 19.7 20.2 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 26

TEST Erste Gr oup R esearch C ompany R eport Netia Integrated T elecoms Pol and 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom Netia Integrated Telecoms Poland Netia from Reduce to Hold PLN mn 2012 2013e 2014e 2015e Net sales 2,121.4 1,900.4 1,776.6 1,701.9 EBITDA 461.5 539.8 506.4 480.9 EBIT -21.0 100.0 99.5 100.4 Net result after min. -87.7 46.0 57.4 60.9 EPS (PLN) -0.23 0.13 0.16 0.18 CEPS (PLN) 1.15 1.32 1.33 1.27 BVPS (PLN) 5.94 6.31 6.06 5.80 Div./share (PLN) 0.00 0.42 0.43 0.45 EV/EBITDA (x) 4.5 3.7 3.7 3.8 P/E (x) nm 38.1 29.0 27.3 P/CE (x) 3.7 3.6 3.6 3.8 Dividend Yield 0.0% 8.7% 9.0% 9.3% 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 52 weeks Netia WIG 20 Performance 12M 6M 3M 1M in PLN -20.6% 10.4% 15.2% -6.1% Share price (PLN) close as of 23/09/2013 4.78 Reuters NTIA.WA Free float 53.0% Number of shares (mn) 386.3 Bloomberg NET PW Shareholders Third Avenue M (15.0%) Market capitalization (PLN mn / EUR mn) 1,846 / 437 Div. Ex-date ING OFE (15.29%) Enterprise value (PLN mn / EUR mn) 1,994 / 472 Target price 5.00 Homepage: www.netia.pl Better than expected OPEX control Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We upgrade Netia from Reduce to Hold, while raising our target price from PLN 4.0 to PLN 5.0. The higher target price is driven by a higher profitability assumption. We had expected worse profitability due to declining RGUs and revenues. However, the rapid decline in off-net services, such as bitstream access and wholesale line rental, has led to a correspondingly rapid decline in direct costs, which we had underestimated. Netia recently upgraded its FY13 adjusted EBITDA and FCF, due to strong OPEX reductions from integration projects, lower off-net sales and a lower interconnection rate. Netia s upside potential should come mainly from acquisitions and OPEX reduction. Shareholder remuneration as support for share price. Netia will distribute PLN 145mn or PLN 0.42 per share next year. If Netia posts net profit after impairment tests in 4Q13e, it will distribute dividends. Otherwise, Netia will conduct a share buyback instead. Erste Group Research Sector Report Page 27

Netia Integrated Telecoms Poland Update on 2013 targets. Netia lowered its RGU and revenues targets for 2013, as we had expected. However, it unexpectedly upgraded its adjusted EBITDA, adjusted EBIT and FCF targets. The CAPEX target remained unchanged. Lower RGU target from 2.65mn to 2.525mn, mainly due to the weak residential segment. Rapidly falling voice and - especially - wholesale line rental should contribute to 80% of the decline, while slower than expected on-net and TV additions 20%. Lower revenue target from PLN 1.925bn to PLN 1.9bn, mainly due to weak RGU. Double MTR cuts this year are already included. Raise adjusted EBITDA target from PLN 525mn to PLN 550mn, as 1H13 adjusted EBITDA reached PLN 282mn. Lower interconnection costs post MTR reductions, a relatively faster decline in off-net services and synergies from Crowley and Dialog integration were the main drivers of cost reduction. Raise adjusted EBIT from PLN 65mn to PLN 100mn. Raise adjusted FCF from PLN 300mn to PLN 325mn (CAPEX unchanged). Update on Crowley and Dialog integration. Netia acquired Crowley Data Poland and Telefonia Dialog in December 2011. The integration process is well on track. The synergy target is PLN 130mn by the end of 2014, of which PLN 120mn from cost synergies and PLN 10mn from CAPEX synergies. Synergy realization delivered in 1H13 alone amounted to PLN 72.3mn on OPEX and PLN 11.9mn on CAPEX. The development can be seen as follows. Synergy effects and realization (PLNmn) Synergies 2012 2013e 2014e OPEX 76.2 115 120 CAPEX 22 10 10 Special costs 2012 2013e 2014e OPEX -49-10 -5 CAPEX -22-35 -15 Total synergies 27 80 110 Source: Erste Group Research, company data Shareholder remuneration. Netia is committed to distributing PLN 145mn or PLN 0.42/share in 2014e to shareholders. Netia does impairment tests every 4Q. If there is still net profit after any impairment, Netia distributes dividends. If Netia turns into a net loss, then it will conduct a share buyback instead. Acquisition of UPC network. Netia bought cable networks in Warsaw and Krakow (excluding the customer base) from UPC Polska for PLN 5.8mn in May 2013. As a result, Netia s next generation access (NGA) will increase from 1.172mn to 1.715mn (12% of households). Netia is connecting the cable networks to its backbone network. A commercial launch in these new networks is expected in early 2014. This would support the provision of triple play service (IPTV, fixed broadband, fixed voice). CIT tax refund. The Supreme Administrative Court overruled the judgment of the Voivodship Administrative Court and remanded the case for reconsideration to the court of first instance. It will probably take the whole next year for the court of first instance to reach a decision. Netia claims PLN Erste Group Research Sector Report Page 28

Netia Integrated Telecoms Poland 51.9mn plus interest. Overall, there is a greater likelihood than not that Netia will receive its claim, but the timing is unknown. Possible claim damages against TPSA. The EU Commission imposed on TPSA a EUR 127.6mn (PLN 508mn) fine for abuse of its dominant position in the wholesale broadband access market before October 2009. TPSA is appealing against the decision to the General Court of the EU and a decision can be expected this year. If TPSA is proven guilty, Netia might sue TPSA and claim damages for abusing its dominant position. A claim of PLN 50-100mn might be considered. Change in estimates. We raise our 2013 earnings estimate, mainly due to better than expected OPEX savings. Netia lowered its OPEX 11.4% y/y in 1H13, thanks to strong cost control from integration projects and lower customer acquisition costs, due to lower off-net sales. We assume a dividend of PLN 0.42, rather than a share buyback. Change in estimates 2013e 2014e PLN mn New Old % New Old % Revenues 1,900.4 1,925.6-1% 1,776.6 1,825.3-3% EBITDA 539.8 515.0 5% 506.4 479.5 6% Adjusted EBITDA 549.8 525.0 5% 507.4 480.5 6% EBIT 100.0 80.5 24% 99.5 83.1 20% Net income 46.0 35.8 29% 57.4 43.4 32% EPS in PLN 0.13 0.10 25% 0.16 0.12 37% DPS in PLN 0.42 0.40 4% 0.43 0.40 8% Source: Erste Group Research Regulated access to decline by a 13% CAGR in 2012-2015e Revenue decline is driven by falling RGUs Revenue generating units of Netia Thousands 2011 2012 2013e 2014e 2015e CAGR Fixed voice 1,745 1,644 1,460 1,292 1,143-11% own network 656 648 631 610 587-3% regulated access 1,089 996 829 681 555-18% Fixed broadband 912 875 844 816 793-3% own network 416 400 394 388 385-1% regulated access 496 474 450 428 408-5% Mobile broadband 30 30 27 23 20-13% Mobile voice 52 60 44 34 26-25% TV 51 79 125 177 233 43% Total 2,789 2,688 2,500 2,342 2,215-6% % y/y organic -3.6% -7.0% -6.3% -5.4% % own network 40.3% 41.9% 46.0% 50.2% 54.4% Source: Netia, Erste Group estimates. Revenue breakdown by service 2011 2012e 2013e 2014e 2015e CAGR Voice 760 983 846 757 685-11% Data (internet) 604 766 729 705 683-4% Others* 255 372 325 315 334-4% Total 1,619 2,121 1,900 1,777 1,702-7% % y/y 3.2% 31.0% -10.4% -6.5% -4.2% Source: Netia, Erste Group estimates.*)interconnection, wholesale, TV, mobile Erste Group Research Sector Report Page 29

Netia Integrated Telecoms Poland Acquisitions? According to the media, Deutsche Telekom is close to completing due diligence on GTS Central Europe. Netia is only interested in the Polish operation of GTS. It depends on DT whether it will acquire GTS Central Europe and then sell the PL operation to Netia. Exatel and TK Telekom are also potential targets. Upgrade to Hold Attractive peer group comparison Valuation and recommendation. We upgrade Netia from Reduce to Hold, while increasing our target price from PLN 4.0 to PLN 5.0. The higher target price is driven mainly by a higher profitability assumption. We had assumed that the fall in RGUs and revenues would lead to a worse decline in EBITDA. The rapid decline in sales of off-net services, such as bitstream access and wholesale line rental, has led to a correspondingly rapid decline in direct costs, which we had underestimated. Netia s upside potential should come mainly from acquisitions and OPEX reduction. Netia is traded at discounts to peers in terms of EV/EBITDA. Its FCF and dividend yield is above the peers. The shareholder remuneration of PLN 0.42/share should provide decent support to the share price. Peer group comparison CEE, Turkey Cur Price P/E EV/EBITDA FCF yield Dividend Yield 2013e 2014e 2015e 2013e 2014e 2015e 2013e 2014e 2015e 2013e 2014e 2015e Magyar Telekom HUF 312.0 17.5 25.7 27.0 4.5 4.6 4.7 2.1% 10.2% 10.3% 3.2% 3.2% 3.2% T-Hrvatski Telekom HRK 177.0 10.9 11.7 12.9 3.9 4.2 4.6 17.6% 16.2% 14.6% 9.1% 8.6% 7.7% Telefónica CR CZK 298.5 17.5 18.7 19.3 5.4 5.6 5.8 9.3% 11.7% 11.3% 10.1% 10.1% 10.1% Telekom Austria EUR 5.5 23.8 24.2 24.3 4.9 4.9 4.8-2.2% 8.7% 8.9% 0.9% 0.9% 0.9% Telekom Slovenije EUR 113.9 14.8 13.3 11.4 4.3 4.1 3.8 10.8% 11.7% 14.0% 5.4% 6.1% 7.0% TPSA PLN 7.8 50.7 50.9 39.3 4.5 4.4 4.1-0.1% 12.4% 14.4% 6.4% 6.4% 6.4% Turkcell TRY 11.8 12.0 11.1 10.6 6.2 6.2 5.6 8.1% 8.6% 9.9% 13.9% 4.5% 4.7% Turk Telekom TRY 7.0 13.0 10.4 10.5 6.3 6.2 6.1 9.1% 9.6% 9.8% 7.1% 8.8% 8.7% Netia PLN 4.8 38.1 29.0 27.3 3.7 3.7 3.8 14.0% 15.5% 15.3% 8.7% 9.0% 9.3% Median 17.5 18.7 19.3 4.5 4.6 4.7 9.1% 11.7% 11.3% 7.1% 6.4% 7.0% Source: Erste Group Research Erste Group Research Sector Report Page 30

WACC WACC Erste Group Research Erste Sector Telecom Netia Integrated Telecoms Poland WACC calculation 2014e 2015e 2016e 2017e 2018e Terminal Risk free rate 4.4% 4.4% 4.4% 4.4% 4.4% 5.0% Equity risk premium 6.0% 6.0% 6.0% 6.0% 6.0% 5.7% Beta levered 1.0 1.0 1.0 1.0 1.0 1.0 Cost of equity 10.4% 10.4% 10.4% 10.4% 10.4% 10.7% Cost of debt 6.4% 6.4% 6.4% 6.4% 6.4% 7.0% Effective tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% After-tax cost of debt 5.1% 5.1% 5.1% 5.1% 5.1% 5.6% Equity weight 70% 70% 70% 70% 70% 70% WACC 8.8% 8.8% 8.8% 8.8% 8.8% 9.2% DCF valuation (PLN thousands) 2014e 2015e 2016e 2017e 2018e Terminal Sales growth -6.5% -4.2% -3.6% -3.2% -2.8% -2.5% EBIT 99,492 100,415 96,754 106,337 117,228 114,297 EBIT margin 5.6% 5.9% 5.9% 6.7% 7.6% 7.6% Tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Taxes on EBIT -19,898-20,083-19,351-21,267-23,446-22,859 NOPLAT 79,593 80,332 77,404 85,069 93,782 91,438 + Depreciation 406,923 380,506 359,920 327,724 299,784 160,000 Capital expenditures / Depreciation 52.4% 53.7% 54.7% 58.1% 61.7% 70.0% +/- Change in working capital -4,131-1,739-1,444-1,229-1,039 0 Chg. working capital / chg. Sales 3.3% 2.3% 2.3% 2.3% 2.3% 0.0% - Capital expenditures -213,197-204,233-196,789-190,454-185,097-112,000 Free cash flow to the firm 269,189 254,866 239,090 221,111 207,431 139,438 Terminal value growth 0.0% Terminal value 1,520,587 Discounted free cash flow - Dec 31 2013 247,380 215,241 185,560 157,702 135,959 996,661 Enterprise value - Dec 31 2013 1,938,504 Minorities 0 Non-operating assets 0 Net debt including pension obligations 331,271 Equity value - Dec 31 2013 1,607,233 Number of shares outstanding (mn) 347,911 Cost of equity 10.4% 12M target price per share (PLN) 5.0 Current share price (PLN) 4.8 Up/Downside 4.1% Enterprise value breakdown PV of terminal value 51% PV of detailed period 49% Sensitivity (per share) Terminal value EBIT margin 5 5.6% 6.6% 7.6% 8.6% 9.6% 8.2% 4.8 5.1 5.4 5.7 6.0 8.7% 4.6 4.9 5.2 5.4 5.7 9.2% 4.4 4.7 5.0 5.2 5.5 9.7% 4.3 4.6 4.8 5.1 5.3 10.2% 4.2 4.4 4.7 4.9 5.2 Terminal value growth 5-1.0% -0.5% 0.0% 0.5% 1.0% 8.2% 4.9 5.1 5.4 5.6 5.9 8.7% 4.8 5.0 5.2 5.4 5.6 9.2% 4.6 4.8 5.0 5.2 5.4 9.7% 4.5 4.7 4.8 5.0 5.2 Source: Factset, Erste Group Research 10.2% 4.4 4.5 4.7 4.8 5.0 Erste Group Research Sector Report Page 31

Netia Integrated Telecoms Poland Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, PLN mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 1,569.30 1,618.80 2,121.36 1,900.38 1,776.64 1,701.94 Cost of goods sold -1,075.98-1,103.03-1,484.22-1,275.15-1,192.12-1,136.90 Gross profit 493.32 515.77 637.14 625.22 584.51 565.05 SG&A -455.11-449.73-599.68-537.81-495.68-474.84 Other operating revenues 0.00 0.00 0.00 0.00 0.00 0.00 Other operating expenses 247.55 236.65-58.43 12.54 10.66 10.21 EBITDA 586.44 611.45 461.53 539.83 506.41 480.92 Depreciation/amortization -300.68-308.76-482.49-439.87-406.92-380.51 EBIT 285.76 302.70-20.96 99.96 99.49 100.41 Financial result 3.01 14.58-39.94-31.27-26.85-23.32 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 288.77 317.28-60.91 68.69 72.64 77.10 Income taxes -24.87-68.49-26.80-22.67-15.26-16.19 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 0.00 0.00 0.00 0.00 0.00 0.00 Net result after minorities 263.90 248.79-87.70 46.02 57.39 60.91 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, PLN mn, 31/12) Intangible assets 389.44 769.79 597.46 498.31 418.99 355.53 Tangible assets 1,520.77 2,210.55 2,093.05 2,012.33 1,897.92 1,785.10 Financial assets 0.23 0.33 0.12 0.12 0.12 0.12 Total fixed assets 1,910.44 2,980.68 2,690.62 2,510.75 2,317.02 2,140.75 Inventories 11.39 5.31 2.09 1.94 1.80 1.73 Receivables and other current assets 371.99 254.75 251.12 224.96 210.31 201.47 Other assets 101.15 151.94 146.43 141.77 139.16 137.58 Cash and cash equivalents 173.60 156.51 142.70 142.70 160.58 245.92 Total current assets 658.13 568.51 542.34 511.37 511.85 586.70 TOTAL ASSETS 2,568.57 3,549.18 3,232.96 3,022.11 2,828.87 2,727.45 Shareholders'equity 2,297.55 2,500.37 2,296.30 2,196.01 2,108.32 2,019.28 Minorities 0.00 0.01 0.00 0.00 0.00 0.00 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 0.00 0.00 0.00 0.00 0.00 0.00 LT provisions 0.99 3.04 18.19 18.19 18.19 18.19 Interest-bearing LT debts 0.00 514.58 390.19 390.19 390.19 390.19 Other LT liabilities 9.26 9.39 21.92 21.47 21.23 21.08 Total long-term liabilities 9.26 523.98 412.11 411.67 411.42 411.27 Interest-bearing ST debts 0.03 180.59 166.20 83.78 0.00 0.00 Other ST liabilities 260.74 341.20 340.17 312.46 290.94 278.71 Total short-term liabilities 209.09 455.59 447.77 343.76 241.87 231.70 TOTAL LIAB., EQUITY 2,568.57 3,549.18 3,232.96 3,022.11 2,828.87 2,727.45 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,PLN mn, 31/12) Cash flow from operating activities 289.39 419.80 430.62 489.16 460.18 439.67 Cash flow from investing activities -289.06-1,072.71-279.10-260.00-213.20-204.23 Cash flow from financing activities -7.83 634.85-34.58-229.16-229.11-150.10 CHANGE IN CASH, CASH EQU. -7.60-17.09 116.95 0.00 17.88 85.34 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth 4.2% 3.2% 31.0% -10.4% -6.5% -4.2% EBITDA margin 37.4% 37.8% 21.8% 28.4% 28.5% 28.3% EBIT margin 18.2% 18.7% -1.0% 5.3% 5.6% 5.9% Net profit margin 16.8% 15.4% -4.1% 2.4% 3.2% 3.6% ROE 12.2% 10.4% -3.7% 2.0% 2.7% 3.0% ROCE 13.1% 9.2% -1.0% 2.5% 3.2% 3.5% Equity ratio 89.4% 70.4% 71.0% 72.7% 74.5% 74.0% Net debt -173.6 538.7 413.7 331.3 229.6 144.3 Working capital 347.9-39.0-51.9 25.8 130.8 217.4 Capital employed 2,134.2 3,051.5 2,750.1 2,566.9 2,377.4 2,202.8 Inventory turnover 148.0 132.0 400.7 632.4 637.2 644.1 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 32

TEST Erste Gr oup R esearch C ompany R eport T-Hrvatski T elekom Integrated T elecoms Croati a 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom T-Hrvatski Telekom Integrated Telecoms Croatia T-Hrvatski Telekom Hold HRK mn 2012 2013e 2014e 2015e Net sales 7,456.0 6,867.2 6,491.2 6,202.1 EBITDA 3,376.0 2,886.0 2,670.8 2,456.4 EBIT 2,050.0 1,625.3 1,492.4 1,322.3 Net result after min. 1,683.0 1,324.6 1,240.8 1,121.8 EPS (HRK) 20.55 16.18 15.15 13.70 CEPS (HRK) 36.05 31.38 29.42 27.46 BVPS (HRK) 133.10 129.09 128.40 127.27 Div./share (HRK) 20.51 16.18 15.15 13.70 EV/EBITDA (x) 3.8 3.9 4.2 4.6 P/E (x) 9.6 10.9 11.7 12.9 P/CE (x) 5.5 5.6 6.0 6.4 Dividend Yield 10.4% 9.1% 8.6% 7.7% 240 230 220 210 200 190 180 170 160 52 weeks T-Hrvatski Telekom CROBEX Performance 12M 6M 3M 1M in HRK -9.7% -18.1% -0.6% -0.4% Share price (HRK) close as of 23/09/2013 177.0 Reuters HT.ZA Free float 38.5% Number of shares (mn) 81.9 Bloomberg HTRA CZ ShareholdersDeutsche Telekom (51.0%) Market capitalization (HRK mn / EUR mn) 14,494 / 1,903 Div. Ex-date 13/06/13 Enterprise value (HRK mn / EUR mn) 11,303 / 1,484 Target price 190.0 Homepage: www.t.ht.hr Regulatory pressure Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We confirm our Hold recommendation and lower our target price from HRK 220 to HRK 190. The lower target price is driven by higher risk free rate and lower profitability estimates resulting from regulatory pressure. The neutral rating reflects the balance between strong regulatory pressure, Optima bankruptcy risk, and T-HT s strong balance sheet, possible acquisition as well as high margins. We expect regulatory pressure to increase, as Croatia is now part of the European Union. There is a steep mobile termination rate (MTR) glide path. Current MTR at 19.3 lipas should come down to 6.3 lipas as of 2015. T-HT is also now bound by the EU roaming regulation to reduce roaming premiums accordingly and eventually eliminate them. Ample cash. T-HT had HRK 5.15bn (~EUR 677.6mn) cash and financial assets as of 2Q13, and no debt at all. LTE spectrum was already bought at very reasonable price. CAPEX to sales ratio should remain at around 16-17% of sales. Dividend policy is 100% payout ratio. T-HT has the highest FCF yield in our coverage at around 14-17%. T-HT management said that they would prefer investment opportunities, rather than an extraordinary dividend. Acquisitions? T-HT is interested in the privatisation of Telekom Slovenije (TLSG) with a market capitalisation of ~EUR 930mn. The Slovenian government is expected to announce the privatisation time table by the end of Sept 2013. Locating in a neighbouring country, TLSG would provide synergy to T-HT s existing business. Erste Group Research Sector Report Page 33

T-Hrvatski Telekom Integrated Telecoms Croatia The share price of TLSG has come down so much from above EUR 300 during the first privatisation attempt in 2008 to currently around EUR 110. Legal risk is, however, high as TLSG has more than EUR 400mn litigation claims, mostly from its mobile competitors. We cannot assess whether an acquisition of TLSG would be positive for T-HT without knowing the bid price. Change in estimates. We lower our 2013 earnings estimate, due to lower than expected mobile revenues and net financial income in 1H13. Furthermore, we also raise our OPEX estimates, as savings in 1H13 were lower than anticipated. The transformation program which should improve efficiency and competitiveness has yet to demonstrate its effects. Change in estimates Consolidated, IFRS 2013e 2014e (HRK, mn) Now Old Change Now Old Change Revenues 6,867 6,895-0.4% 6,491 6,570-1.2% EBITDA 2,886 2,931-1.5% 2,671 2,766-3.4% EBIT 1,625 1,670-2.7% 1,492 1,587-6.0% Net income 1,325 1,385-4.4% 1,241 1,339-7.4% EPS (HRK) 16.18 16.92-4.4% 15.15 16.36-7.4% Dividend (HRK) 16.18 16.92-4.4% 15.15 16.36-7.4% Source: Erste Group Research Optima Telekom 1H13: Sales: HRK 277mn (-4.5%) EBITDA: HRK 41mn (-8.8%) Optima pre-bankruptcy settlement. Optima Telekom is the largest alternative operator in Croatia and is now preparing a pre-bankruptcy and debt restructuring process. Its largest creditors are Zagrebacka Banka (ZABA) with around HRK 600mn outstanding claims and T-HT with around HRK 120mn outstanding receivables. The market capitalisation of Optima is HRK 19.6mn. T-HT is conducting a pre-bankruptcy settlement process, which should lead to debt-to-equity swap giving T-HT a minority stake in Optima. ZABA would transfer its future management rights to T-HT. The whole deal is subject to the Competition Regulator (AZTN) approval. This might not be easy; as such takeover would further increase T-HT s dominance in the fixed line market. The new deadline is beginning of November 2013. If a solution is not reached by then, Optima will go into bankruptcy and T-HT would face potentially large receivables impairment. Erste Group Research Sector Report Page 34

WACC WACC Erste Group Research Erste Sector Telecom T-Hrvatski Telekom Integrated Telecoms Croatia WACC calculation 2014e 2015e 2016e 2017e 2018e Terminal Risk free rate 5.3% 5.3% 5.3% 5.3% 5.3% 5.0% Equity risk premium 7.2% 7.2% 7.2% 7.2% 7.2% 6.7% Beta 1.0 1.0 1.0 1.0 1.0 1.0 Cost of equity 12.5% 12.5% 12.5% 12.5% 12.5% 11.7% Cost of debt 6.8% 6.8% 6.8% 6.8% 6.8% 6.5% Effective tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% After-tax cost of debt 5.4% 5.4% 5.4% 5.4% 5.4% 5.2% Equity weight 100% 100% 100% 100% 100% 100% WACC 12.5% 12.5% 12.5% 12.5% 12.5% 11.7% DCF valuation (HRK mn) 2014e 2015e 2016e 2017e 2018e Terminal Sales growth -5.5% -4.5% -2.3% -1.5% 0.6% 0.5% EBIT 1,492.4 1,322.3 1,223.7 1,219.4 1,266.8 1,533.2 EBIT margin 23.0% 21.3% 20.2% 20.4% 21.1% 25.4% Tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Taxes on EBIT -298.5-264.5-244.7-243.9-253.4-306.6 NOPLAT 1,193.9 1,057.8 979.0 975.5 1,013.4 1,226.6 + Depreciation 1,178.4 1,134.1 1,119.4 1,060.6 1,022.5 1,000.0 Capital expenditures / Depreciation 93.3% 92.1% 88.7% 88.9% 87.6% 100.0% +/- Change in working capital 28.4 25.2 8.1 6.3 3.1 0.0 Chg. working capital / chg. Sales -7.6% -8.7% -5.8% -7.2% 8.2% 0.0% - Capital expenditures -1,100.0-1,045.0-992.8-943.1-896.0-1,000.0 Free cash flow to the firm 1,300.8 1,172.2 1,113.8 1,099.4 1,143.1 1,226.6 Terminal value growth 1.0% Terminal value 11,632.3 Discounted free cash flow - Dec 31 2013 1,156.8 927.0 783.3 687.5 635.7 6,469.4 Enterprise value - Dec 31 2013 10,659.8 Minorities 0.0 Non-operating assets: HT Mostar 398.0 Net debt -3,191.0 Other adjustments 0.0 Equity value - Dec 31 2013 14,248.8 Number of shares outstanding (mn) 81.9 Cost of equity 12.5% 12M target price per share (HRK) 190.0 Current share price (HRK) 177.1 Up/Downside 7.3% Enterprise value breakdown PV of terminal value 61% PV of detailed period 39% Sensitivity (per share) Terminal value EBIT margin 190 21.4% 23.4% 25.4% 27.4% 29.4% 10.7% 183.9 191.4 198.9 206.5 214.0 11.2% 180.0 187.1 194.3 201.4 208.5 11.7% 176.4 183.2 190.0 196.8 203.6 12.2% 173.2 179.6 186.1 192.6 199.1 12.7% 170.2 176.4 182.6 188.8 195.0 Terminal value growth 190 0.0% 0.5% 1.0% 1.5% 2.0% 10.7% 189.2 193.8 198.9 204.6 211.0 11.2% 185.3 189.6 194.3 199.4 205.1 11.7% 181.8 185.7 190.0 194.7 199.9 12.2% 178.6 182.2 186.1 190.4 195.2 Source: Factset, Erste Group Research 12.7% 175.7 179.0 182.6 186.5 190.9 Erste Group Research Sector Report Page 35

T-Hrvatski Telekom Integrated Telecoms Croatia Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, HRK mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 8,374.60 8,067.00 7,456.00 6,867.15 6,491.22 6,202.07 Invent. changes + capitalized costs 0.00 0.00 0.00 0.00 0.00 0.00 Total revenues 8,374.60 8,067.00 7,456.00 6,867.15 6,491.22 6,202.07 Other operating revenues 341.00 382.00 343.00 342.29 337.31 333.39 Material costs -2,325.00-2,175.00-1,914.00-1,922.78-1,888.93-1,854.41 Personnel costs -1,198.00-1,296.00-1,208.00-1,123.39-1,071.15-1,033.82 Other operating expenses -1,530.60-1,359.00-1,301.00-1,277.28-1,197.62-1,190.79 EBITDA 3,662.00 3,619.00 3,376.00 2,885.99 2,670.83 2,456.44 Depreciation/amortization -1,415.00-1,414.00-1,326.00-1,260.73-1,178.43-1,134.15 EBIT 2,247.00 2,205.00 2,050.00 1,625.26 1,492.40 1,322.30 Financial result 29.00 50.00 42.00 21.22 49.96 72.15 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 2,276.00 2,255.00 2,092.00 1,646.48 1,542.35 1,394.44 Income taxes -455.00-435.00-409.00-321.90-301.54-272.62 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 0.00 0.00 0.00 0.00 0.00 0.00 Net result after minorities 1,821.00 1,820.00 1,683.00 1,324.58 1,240.81 1,121.82 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, HRK mn, 31/12) Intangible assets 1,162.00 999.00 1,142.00 1,069.72 1,004.81 940.63 Tangible assets 6,336.00 5,953.00 5,734.00 5,715.56 5,702.03 5,677.07 Financial assets 422.00 434.00 897.00 924.00 951.00 978.00 Total fixed assets 7,920.00 7,386.00 7,773.00 7,709.27 7,657.84 7,595.69 Inventories 216.00 175.00 155.00 155.71 152.97 150.17 Receivables and other current assets 1,510.00 1,330.00 1,240.00 1,236.09 1,168.42 1,116.37 Other assets 192.00 178.00 213.00 213.00 213.00 213.00 Cash and cash equivalents 3,747.00 4,067.00 3,732.00 3,463.38 3,476.48 3,471.24 Total current assets 5,665.00 5,750.00 5,340.00 5,068.18 5,010.87 4,950.79 TOTAL ASSETS 13,585.00 13,136.00 13,113.00 12,777.46 12,668.71 12,546.48 Shareholders'equity 11,054.00 11,019.00 10,899.00 10,571.05 10,514.28 10,422.29 Minorities 0.00 0.00 0.00 0.00 0.00 0.00 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 293.00 271.00 227.00 211.10 201.28 194.27 LT provisions 0.00 0.00 0.00 0.00 0.00 0.00 Interest-bearing LT debts 43.00 32.00 50.00 55.26 61.08 67.51 Other LT liabilities 74.00 2.00 2.00 2.00 2.00 2.00 Total long-term liabilities 117.00 34.00 52.00 57.26 63.08 69.51 Interest-bearing ST debts 13.00 9.00 6.00 6.00 0.00 0.00 Other ST liabilities 2,108.00 1,803.00 1,929.00 1,932.04 1,890.07 1,860.42 Total short-term liabilities 1,871.00 1,661.00 1,813.00 1,816.04 1,768.07 1,738.42 TOTAL LIAB., EQUITY 13,585.00 13,136.00 13,113.00 12,777.46 12,668.71 12,546.48 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,HRK mn, 31/12) Cash flow from operating activities 3,267.00 2,988.00 2,982.00 2,575.65 2,437.87 2,274.14 Cash flow from investing activities -1,389.00-696.00-1,718.00-1,170.00-1,100.00-1,045.00 Cash flow from financing activities -2,585.00-1,976.00-1,603.00-1,674.27-1,324.77-1,234.38 CHANGE IN CASH, CASH EQU. -707.00 320.00-335.00-268.62 13.10-5.24 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth -1.7% -3.7% -7.6% -7.9% -5.5% -4.5% EBITDA margin 43.7% 44.9% 45.3% 42.0% 41.1% 39.6% EBIT margin 26.8% 27.3% 27.5% 23.7% 23.0% 21.3% Net profit margin 21.7% 22.6% 22.6% 19.3% 19.1% 18.1% ROE 15.8% 16.5% 15.4% 12.3% 11.8% 10.7% ROCE 22.8% 23.9% 22.7% 17.9% 16.6% 15.0% Equity ratio 81.4% 83.9% 83.1% 82.7% 83.0% 83.1% Net debt -3,398.0-3,755.0-3,449.0-3,191.0-3,214.1-3,209.5 Working capital 3,602.0 3,911.0 3,314.0 3,039.1 3,029.8 2,999.4 Capital employed 7,730.0 7,266.0 7,452.0 7,382.0 7,302.2 7,214.8 Inventory turnover 9.9 11.1 11.6 12.4 12.2 12.2 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 36

TEST Erste Gr oup R esearch C ompany R eport Telefónica CR Integrated Tel ecoms Czech R epublic 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom Telefónica CR Integrated Telecoms Czech Republic Telefónica CR Reduce CZK mn 2012 2013e 2014e 2015e Net sales 50,647.0 47,819.5 46,274.2 46,026.4 EBITDA 19,781.0 17,756.3 17,057.4 16,628.1 EBIT 8,344.0 6,719.2 6,283.6 6,089.3 Net result after min. 6,776.0 5,333.5 4,936.5 4,790.4 EPS (CZK) 21.25 17.07 15.96 15.49 CEPS (CZK) 55.43 51.81 50.48 49.52 BVPS (CZK) 191.90 176.28 162.24 147.73 Div./share (CZK) 30.00 30.00 30.00 30.00 EV/EBITDA (x) 5.2 5.4 5.6 5.8 P/E (x) 15.2 17.5 18.7 19.3 P/CE (x) 5.8 5.8 5.9 6.0 Dividend Yield 9.3% 10.1% 10.1% 10.1% 440 420 400 380 360 340 320 300 280 260 240 52 weeks Telefónica CR Performance 12M 6M 3M 1M in CZK -22.5% -2.5% 12.6% 3.7% Share price (CZK) close as of 23/09/2013 298.5 Reuters SPTT.Pr Free float 28.6% Number of shares (mn) 318.9 Bloomberg SPTT CP Shareholders Telefónica (69.4%) Market capitalization (CZK mn / EUR mn) 95,182 / 3,665 Div. Ex-date 10/10/13 Treasury (2%) Enterprise value (CZK mn / EUR mn) 96,543 / 3,717 Target price 280.0 Homepage: www.telefonica.cz PX Threat of new entrant and higher CIT Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We confirm our Reduce recommendation and target price of CZK 280. We expect the share price to remain stable in the short term, due to the exdividend date on October 10, 2013. However, two important developments should also take place in October that might negatively influence the share price. The first is the LTE spectrum auction. The spectrum auction should pave the way for a new entrant. We see PPF as a credible candidate and we have heard that the company is hiring employees and talking with equipment suppliers. The second is the early legislative election, scheduled for Oct. 25-26, 2013. The Social Democrats, who led the polls in September with 28%, have announced plans to increase the corporate income tax rate (CIT) for utilities, banks and telecoms from 19% to 25%-30%. We estimate the tax hike impact on our valuation at around CZK 30 per share. Price competition has heated up since April 2013, when TCR launched the unlimited tariffs called FREE. Competitors immediately matched the tariffs. T-Mobile showed the highest sequential net additions in 2Q13 with 9,700, followed by TCR with 3,400. TCR s market share remained unchanged sequentially in 2Q13, despite launching the aggressive tariffs. The initial idea of the tariff was to deter a new mobile player from entering CZ and locking in customers with 24-month contracts. However, the new EU single telecom market proposal, if it is approved and becomes law in 2Q14, would allow customers to cancel contract after six months without any penalty. Catalysts include the potential sale of TCR by its parent company Telefónica SA to reduce debts. PPF denied that it would buy TCR. We are not aware of any potential buyer. However, we think that a buyer would Erste Group Research Sector Report Page 37

Telefónica CR Integrated Telecoms Czech Republic rather wait until the spectrum auction is completed to know the number of players in the mobile market and/or until the CIT rate is decided. Initial impact of FREE tariff. The launch of the FREE tariff did not boost the customer base as much as we had expected. In fact, T-Mobile gathered the most net adds in the market in 2Q13. The revenue impact in the quarter was also negative, as there were more customers migrating from higher tariffs to cheaper FREE tariffs, rather than customers from lower tariffs. The impact on EBITDA was not significant. Interconnection costs rose by 7% sequentially, despite a 34% reduction in the mobile termination rate. However, there should be savings coming from lower mobile subsidy, e-bill and simpler customer service. We have yet to see whether the impact of FREE tariffs on revenues and EBITDA would improve in the coming quarters. Czech mobile market Subscriber (mn) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 T-Mobile 5.35 5.38 5.42 5.50 5.57 5.67 growth%yoy -1.7% -0.9% 0.3% 2.2% 4.0% 5.4% market share 39.4% 39.3% 39.2% 39.4% 39.9% 40.2% Vodafone 3.30 3.32 3.37 3.38 3.36 3.33 growth%yoy 3.3% 2.8% 2.0% 1.9% 1.8% 0.4% market share 24.3% 24.3% 24.4% 24.2% 24.0% 23.7% Telefónica CR 4.94 4.97 5.02 5.08 5.05 5.08 growth%yoy 2.3% 2.0% 2.9% 2.9% 2.2% 2.3% Telefonica O2 36.3% 36.4% 36.4% 36.4% 36.1% 36.1% Market subscribers 13.59 13.67 13.80 13.96 13.98 14.08 growth%yoy 0.9% 1.1% 1.6% 2.3% 2.8% 3.1% Penetration rate 133.2% 134.0% 135.3% 136.8% 137.0% 138.1% Contract customer 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 T-Mobile 54.1% 54.8% 55.5% 55.9% 56.3% 56.6% Vodafone 55.0% 55.5% 55.6% 55.9% 56.1% 56.6% Telefónica CR 62.3% 62.7% 62.5% 62.8% 61.8% 62.4% Market 57.3% 57.9% 58.1% 58.4% 58.3% 58.7% ARPU monthly (CZK) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 T-Mobile 351 379 376 327 307 310 growth%yoy -3.9% -3.4% -3.6% -13.7% -12.7% -18.2% Telefonica O2 394 397 396 367 338 336 growth%yoy -7.3% -7.5% -6.7% -12.2% -14.1% Source: Company data -15.2% Change in estimates We lower our 2014 earnings estimate slightly, mainly due to a higher OPEX assumption. We maintain our CAPEX for LTE spectrum estimate at CZK 3bn. Change in estimates Consolidated, IFRS 2013e 2014e (CZK, mn) Now Before Change Now Before Change Revenues 47,820 47,532 0.6% 46,274 46,218 0.1% OIBDA 17,756 17,841-0.5% 17,057 17,476-2.4% EBIT 6,719 6,712 0.1% 6,284 6,537-3.9% Net profit 5,333 5,329 0.1% 4,936 5,152-4.2% EPS 17.1 17.1 0.1% 16.0 16.7-4.2% Dividend/share 30.0 30.0 0.0% 30.0 30.0 0.0% Source: Erste Group Research Erste Group Research Sector Report Page 38

WACC WACC Erste Group Research Erste Sector Telecom Telefónica CR Integrated Telecoms Czech Republic WACC calculation 2014e 2015e 2016e 2017e 2018e 2019e (TV) Risk free rate 2.5% 2.5% 2.5% 2.5% 2.5% 4.0% Equity risk premium 5.3% 5.3% 5.3% 5.3% 5.3% 5.1% Beta 1.0 1.0 1.0 1.0 1.0 1.0 Cost of equity 7.8% 7.8% 7.8% 7.8% 7.8% 9.1% Cost of debt 3.8% 3.8% 3.8% 3.8% 3.8% 5.3% Effective tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% After-tax cost of debt 3.0% 3.0% 3.0% 3.0% 3.0% 4.2% Equity weight 90% 90% 90% 90% 90% 90% WACC 7.3% 7.3% 7.3% 7.3% 7.3% 8.6% DCF valuation (CZK mn) 2014e 2015e 2016e 2017e 2018e 2019e (TV) Sales growth -3.2% -0.5% -0.2% 0.1% 0.4% 0.0% EBIT 6,283.6 6,089.3 5,926.2 6,079.2 6,559.6 6,390.2 EBIT margin 13.6% 13.2% 12.9% 13.2% 14.2% 13.8% Tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Taxes on EBIT -1,256.7-1,217.9-1,185.2-1,215.8-1,311.9-1,278.0 NOPLAT 5,026.9 4,871.4 4,741.0 4,863.3 5,247.7 5,112.1 + Depreciation 10,773.7 10,538.8 10,415.2 10,026.0 9,590.3 6,000.0 Capital expenditures / Depreciation 53.8% 55.0% 55.7% 57.8% 60.5% 100.0% +/- Change in working capital -119.8-24.0-8.5 1.5 15.1 0.0 Chg. working capital / chg. Sales 7.8% 9.7% 11.9% 2.7% 7.8% - Capital expenditures -5,800.0-5,800.0-5,800.0-5,800.0-5,800.0-6,000.0 Free cash flow to the firm 9,880.8 9,586.3 9,347.6 9,090.9 9,053.0 5,112.1 Terminal value growth 1.0% Terminal value 67,848.2 Discounted free cash flow - Dec 31 2013 9,210.8 8,330.1 7,571.9 6,864.6 6,372.4 47,758.0 Enterprise value - Dec 31 2013 86,107.7 Minorities 0.0 Non-operating assets 0.0 Net debt 4,244.8 Other adjustments 0.0 Equity value - Dec 31 2013 81,862.9 Number of shares outstanding (mn) 309.2 Cost of equity 7.8% 12M target price per share (CZK) 280.0 Current share price (CZK) 298.5 Up/Downside -6.2% Enterprise value breakdown PV of terminal value 55% PV of detailed period 45% Sensitivity (per share) Terminal value EBIT margin 280 11.8% 12.8% 13.8% 14.8% 15.8% 7.6% 277.5 291.1 304.7 318.3 331.9 8.1% 266.2 278.8 291.5 304.1 316.8 8.6% 256.4 268.2 280.0 291.8 303.6 9.1% 247.8 258.8 269.9 281.0 292.1 9.6% 240.1 250.6 261.0 271.5 281.9 Terminal value growth 280 0.0% 0.5% 1.0% 1.5% 2.0% 7.6% 278.4 290.6 304.7 321.1 340.4 8.1% 268.4 279.2 291.5 305.6 322.1 8.6% 259.6 269.2 280.0 292.3 306.6 9.1% 251.7 260.3 269.9 280.8 293.2 Source: Factset, Erste Group Research 9.6% 244.7 252.4 261.0 270.7 281.6 Erste Group Research Sector Report Page 39

Telefónica CR Integrated Telecoms Czech Republic Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, CZK mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 55,655.00 52,471.00 50,647.00 47,819.55 46,274.23 46,026.37 Invent. changes + capitalized costs 0.00 0.00 0.00 0.00 0.00 0.00 Total revenues 55,655.00 52,471.00 50,647.00 47,819.55 46,274.23 46,026.37 Other operating revenues 637.00 670.60 628.50 750.00 630.00 633.91 Material costs -13,971.00-13,088.00-12,975.00-12,146.16-11,730.52-11,805.76 Personnel costs -6,613.00-6,005.00-5,573.00-5,355.79-5,182.71-5,154.95 Other operating expenses -8,327.60-12,258.20-12,946.50-13,311.28-12,933.65-13,071.49 EBITDA 27,380.40 21,790.40 19,781.00 17,756.31 17,057.35 16,628.08 Depreciation/amortization -11,856.00-11,651.00-11,437.00-11,037.15-10,773.71-10,538.81 EBIT 15,524.40 10,139.40 8,344.00 6,719.16 6,283.64 6,089.26 Financial result -206.00-131.00-188.00-134.65-189.24-175.16 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 15,318.40 10,008.40 8,156.00 6,584.51 6,094.41 5,914.10 Income taxes -3,038.00-1,324.00-1,380.00-1,251.06-1,157.94-1,123.68 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 0.00 0.00 0.00 0.00 0.00 0.00 Net result after minorities 12,280.40 8,684.40 6,776.00 5,333.46 4,936.47 4,790.42 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, CZK mn, 31/12) Intangible assets 21,437.00 20,658.00 20,330.00 18,389.45 16,739.98 15,337.94 Tangible assets 56,651.00 51,525.00 46,691.00 46,394.40 43,070.16 39,733.39 Financial assets 204.00 172.00 141.00 141.00 141.00 141.00 Total fixed assets 78,292.00 72,355.00 67,162.00 64,924.85 59,951.14 55,212.33 Inventories 606.00 488.00 487.00 455.89 440.29 443.11 Receivables and other current assets 9,091.00 8,438.00 7,833.00 7,395.71 7,156.71 7,118.38 Other assets 5.00 746.00 673.00 673.00 673.00 673.00 Cash and cash equivalents 4,798.00 6,955.00 3,044.00 478.20 478.20 478.20 Total current assets 14,500.00 16,627.00 12,037.00 9,002.80 8,748.20 8,712.69 TOTAL ASSETS 92,792.00 88,982.00 79,199.00 73,927.65 68,699.34 63,925.02 Shareholders'equity 73,176.00 69,097.00 60,574.00 54,505.47 50,165.76 45,679.99 Minorities 0.00 0.00 0.00 0.00 0.00 0.00 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 51.00 69.00 29.00 27.87 26.97 26.82 LT provisions 0.00 0.00 0.00 0.00 0.00 0.00 Interest-bearing LT debts 2,883.00 0.00 3,000.00 3,000.00 3,000.00 3,000.00 Other LT liabilities 4,003.00 3,863.00 3,293.00 3,109.16 3,008.69 2,992.57 Total long-term liabilities 6,886.00 3,863.00 6,293.00 6,109.16 6,008.69 5,992.57 Interest-bearing ST debts 141.00 3,061.00 31.00 1,695.14 1,282.31 1,069.50 Other ST liabilities 12,538.00 12,892.00 12,272.00 11,590.00 11,215.62 11,156.13 Total short-term liabilities 12,679.00 15,953.00 12,303.00 13,285.14 12,497.93 12,225.63 TOTAL LIAB., EQUITY 92,792.00 88,982.00 79,199.00 73,927.65 68,699.34 63,925.02 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,CZK mn, 31/12) Cash flow from operating activities 21,739.00 20,532.00 17,236.00 16,155.88 15,589.49 15,305.12 Cash flow from investing activities -5,315.00-5,515.00-5,765.00-8,800.00-5,800.00-5,800.00 Cash flow from financing activities -12,876.00-12,880.00-15,358.00-9,921.68-9,789.49-9,505.12 CHANGE IN CASH, CASH EQU. 3,529.00 2,157.00-3,911.00-2,565.80 0.00 0.00 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth -7.0% -5.7% -3.5% -5.6% -3.2% -0.5% EBITDA margin 49.2% 41.5% 39.1% 37.1% 36.9% 36.1% EBIT margin 27.9% 19.3% 16.5% 14.1% 13.6% 13.2% Net profit margin 22.1% 16.6% 13.4% 11.2% 10.7% 10.4% ROE 16.7% 12.2% 10.5% 9.3% 9.4% 10.0% ROCE 16.1% 12.2% 10.4% 8.7% 8.6% 9.0% Equity ratio 78.9% 77.7% 76.5% 73.7% 73.0% 71.5% Net debt -1,723.0-3,825.0 16.0 4,244.8 3,831.1 3,618.1 Working capital 1,816.0-72.0-939.0-4,955.3-4,422.7-4,185.9 Capital employed 75,456.0 69,135.0 63,883.0 61,859.4 57,005.5 52,290.7 Inventory turnover 22.8 23.9 26.6 25.8 26.2 26.7 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 40

TEST Erste Gr oup R esearch C ompany R eport Telekom Austria Integrated T elecoms Austri a 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom Telekom Austria Integrated Telecoms Austria Telekom Austria from Sell to Reduce EUR mn 2012 2013e 2014e 2015e 52 weeks Net sales 4,329.7 4,183.3 4,107.8 4,087.1 7.5 EBITDA 1,420.8 1,273.8 1,226.2 1,215.9 7.0 EBIT 456.8 353.1 322.2 310.5 6.5 Net result after min. 103.6 102.8 100.9 100.6 6.0 EPS (EUR) 0.23 0.23 0.23 0.23 5.5 CEPS (EUR) 2.77 2.16 2.14 2.16 5.0 BVPS (EUR) 1.89 2.07 2.25 2.42 4.5 Div./share (EUR) 0.05 0.05 0.05 0.05 Telekom Austria ATX EV/EBITDA (x) 4.1 4.9 4.9 4.8 P/E (x) 24.5 23.8 24.2 24.3 Performance 12M 6M 3M 1M P/CE (x) 2.1 2.6 2.6 2.6 in EUR -13.4% 4.1% 11.0% -3.1% Dividend Yield 0.9% 0.9% 0.9% 0.9% Share price (EUR) close as of 23/09/2013 5.53 Reuters TELA.VI Free float 45.7% Number of shares (mn) 442.6 Bloomberg TKA AV Shareholders ÖIAG (28.4%) Market capitalization (EUR mn) 2,447.4 Div. Ex-date 03/06/13 America Movil (22.76%) Enterprise value (EUR mn) 6,256.2 Target price 5.00 Homepage: www.telekomaustria.com Uncertainties ahead Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We upgrade Telekom Austria from Sell to Reduce, while raising our target price from EUR 4.5 to EUR 5.0. We believe that the Austrian mobile market remains competitive post consolidation, but prices seem to be stabilizing. It is clear that the roaming premium will eventually be eliminated. The new EU single telecom market proposal allows a voluntary roam-like-at-home (RLAH) option or the usual regulated roaming tariff option. Operators have been given until mid-2016 to show their initiatives. We do not expect TKA to adopt RLAH anytime soon. EU roaming. Revenue exposure to EU roaming amounted to EUR 285mn or 6.6% of 2012 group revenues. The respective EBITDA exposure amounted to EUR 225mn, or 15.8% of 2012 group EBITDA. According to our estimate, we expect a EUR 180mn loss in revenues and EUR 145mn in EBITDA, spread over four years between 2012 and 2016. Uncertainties. TKA confirmed that it re-joined the bidding process for Serbia Broadband. The financing of such a large acquisition would need a capital increase. If core shareholders ÖIAG and AMX were to participate accordingly to maintain their stake, then large dilution should be expected. If AMX were to participate more than its stake so as to breach the 30% threshold and the Austrian government would approve of such move, a mandatory takeover bid would be triggered. Erste Group Research Sector Report Page 41

Telekom Austria Integrated Telecoms Austria TKA maintains price premium; existing fixedline clients get better deal Austrian competition post consolidation Drei launched its new tariffs in August 2013, following the acquisition of Orange. The cheapest and very popular EUR 7.5 SIM-only tariff is retained. Drei introduced unlimited tariffs, the prices of which are comparable to T- Mobile. Unlimited data is back in all tariffs, with speed slowed down after a certain number of GB. A1 s tariffs are the highest in the market. In our example below, one can see that A1 charges 33% more than the next competitor. However, existing fixed-line or internet clients receive a EUR 10/month discount. A1 s tariffs are thus only attractive for them. We have observed that Drei is less aggressive than before. Its unlimited tariffs are priced much closer to those of T-Mobile. iphone 5 (retail price EUR 679) as of 18.9.2013 Voice SMS Data GB Tariff Name Handset Total in 24M Drei unlimited unlimited unlimited/4 30.0 Hallo XL 249 969 T-Mobile* unlimited unlimited unlimited/3 27.0 Smart net unlimited M 249 897 A1** unlimited unlimited 3 39.9 A1 GO M 199 1157 Drei 1000 1000 unlimited/1 7.5 HalloSIM M 679 859 Source: Erste Group Research. *) Promotional price, otherwise EUR 29.9 **) Price for existing fixed line/internet client EUR 29.9 Roaming exposure We have devised a roaming model based on available information from the company, as seen in the following table. Close to 40% of roaming revenue losses should come from the elimination of the retail roaming calls received tariff as of July 2014. Roaming model of Telekom Austria Roaming 2012 2013e 2014e 2015e Change Revenues 285 226 151 101-184 Retail 214 175 118 78-136 Wholesale 71 52 33 24-47 EBITDA 225 179 121 80-145 Retail 154 128 88 56-98 Wholesale 71 52 33 24-47 Margin 78.9% 79.1% 80.1% 78.6% -0.4% Retail 71.9% 73.0% 74.5% 72.1% 0.1% Wholesale 100.0% 100.0% 100.0% 100.0% 0.0% Source: Erste Group Research We assume that TKA would apply the usual regulated roaming tariffs, rather than RLAH, because: Most of TKA s roaming revenues come from customer roaming, i.e. own TKA customers who travel abroad within the EU and make use of roaming calls/sms/data. Domestic prices remain lower than the retail regulated prices. Regulated retail roaming price > domestic price According to the EU Commission, European mobile users paid 9.1 eurocents per voice minute in 2011 (-12.1% y/y). We think that users are likely to pay an even lower price/voice minute in 2012, thanks to a lower mobile termination rate and competition. This domestic price is considerably lower than the current retail roaming call of 24 eurocents or next year s 19 eurocents. It is therefore very economically challenging to offer domestic rates for roaming. Erste Group Research Sector Report Page 42

Telekom Austria Integrated Telecoms Austria Roaming glide path EUR cents Before July 2012July 2013July 2014 Retail Data/MB none 70 45 20 Voice calls made 35 29 24 19 Voice calls received 11 8 7 0 SMS 11 9 8 6 Wholesale Data/MB 50 25 15 5 Voice per minute 18 14 10 5 SMS 4 3 2 2 Source: EU Commission. Valid until June 30, 2017 Average revenue per minute (EUR cents) in mobile calls, 2011 Source: EU Commission Fixed intra EU calls. The EU Commission proposed the reduction of fixed intra-eu calls to the level of long-distance domestic calls. For example, an Austrian calling Bucharest is currently charged 35 eurocents/minute. As of July 2016, the same call should be charged 5.4 eurocents/minute. Calling Bucharest should not cost more than calling Tyrol. Telekom Austria fixed line tariffs Eurocents Peak Off Peak Fixed domestic calls 5.4 1.9 Fixed international calls Zone 1* 22.0 11.0 Zone 2* 35.1 25.9 Zone 3* 40.6 36.7 Mobile roaming calls 18.9 14.9 Source: A1. *) Zone 1: DE, IT, FR, GB, SK, SI, CZ, HU, UK Zone 2: BE, BG, DK, ES, PT, FI, EE, IE, HR, LU, NL, PL, SE, EL, MT, LT, LV, CY Zone 3: RO TKA s revenue exposure to this segment was roughly EUR 150mn or 3.4% of 2012 group revenues. If such a proposal is implemented, we would expect considerable revenue decline from July 2016. Our rough estimate indicates revenue decline of more than 70%, or more than EUR 100mn on an annual basis. Erste Group Research Sector Report Page 43

Telekom Austria Integrated Telecoms Austria Serbia Broadband (SBB) bid. TKA confirmed that it has rejoined the bidding process for SBB Telemach. The bid price from TKA is undisclosed. Previous acquisitions of cable operators ranged from roughly 7x EV/EBITDA for B.net in Croatia and Aster in Poland to 11x EV/EBITDA for Kabel Deutschland. Serbia Broadband Telemach 2012/2011 SBB Telemach Total Revenues 109.6 47.5 157.1 EBITDA 44.8 25.1 69.9 EBIT 25.0 12.1 37.1 Net profit -9.6 5.0-4.6 Debt 129.2 82.6 211.7 Cash 38.4 22.5 60.9 Net debt 90.7 60.1 150.9 Source: EMIS Valuation scenario in EURmn EV/EBITDA 8 9 10 11 12 13 EV 559 629 699 769 839 909 Equity 408 478 548 618 688 758 Source: Erste Group Research Capital increase leads to dilution or mandatory takeover bid by AMX? Capital increase? Financing for such an acquisition would not bode well for the current credit rating. A capital increase might be considered in the event of acquisition financing. According to Austrian newspaper Der Standard, the management board presented a need for EUR 500mn (around 20% of current market capitalization) capital increase to the supervisory board meeting in August 2013. ÖIAG head Kemler said that a capital increase ahead of the elections (September 29, 2013) would be difficult to decide, but he does not want the ÖIAG stake (28.4%) to be diluted. The CEO and CFO of Telekom Austria would like to know ÖIAG's decision by the end of September. AMX would agree and participate in the capital increase to avoid any dilution to its 23.7% stake. ÖIAG could participate in the capital increase without any approval from the ministry. In practice, it would need consent from the Finance Ministry in order to finance the capital increase. Change in estimates. We raise our 2013 and 2014 earnings considerably, mainly due to lower depreciation assumptions. This was due to the fully depreciated subscriber base in Bulgaria and some fully depreciated fixedline assets in Austria. In addition, we lower our financial costs estimate, due to the falling average interest rate. Change in estimates Consolidated 2013e 2014e (EUR, mn) Now Old Change Now Old Change Revenues 4,183.3 4,148.5 1% 4,107.8 4,090.1 0% EBITDA 1,273.8 1,271.5 0% 1,226.2 1,257.7-3% Comparable EBITDA 1,293.8 1,291.5 0% 1,236.2 1,267.7-2% EBIT 353.1 321.5 10% 322.2 308.0 5% Net income 102.8 74.8 37% 100.9 72.5 39% EPS (EUR) 0.23 0.17 37% 0.23 0.16 43% DPS (EUR) 0.05 0.05 0% 0.05 0.05 0% Source: Erste Group estimates Erste Group Research Sector Report Page 44

Telekom Austria Integrated Telecoms Austria Valuation and recommendation. We upgrade TKA from Sell to Reduce, while raising the target price from EUR 4.5 to EUR 5.0. The higher target price was driven by higher revenue growth assumptions, due to the better than expected performance of Belarus and Serbia. The Austrian mobile market remains competitive post consolidation, although we see prices stabilizing. The Bulgarian segment remains under pressure, due to macroeconomic and regulatory pressures. The SBB acquisition should provide synergy for the existing business. Its corresponding financing, if in the form of capital increase, might lead to dilution or a potential mandatory takeover bid from AMX. We are waiting for the spectrum auction results, which we estimate at EUR 320mn. A considerably lower amount would be positive for TKA. Finally, the EU telecom single market proposal has yet to be accepted as law (due in 2Q14). We do not expect it to be rejected, but if this were to happen, it would be positive for TKA. Erste Group Research Sector Report Page 45

WACC WACC Erste Group Research Erste Sector Telecom Telekom Austria Integrated Telecoms Austria WACC calculation 2014e 2015e 2016e 2017e 2018e 2019e (TV) Risk free rate 2.5% 2.5% 2.5% 2.5% 2.5% 4.5% Equity risk premium 5.4% 5.4% 5.4% 5.4% 5.4% 5.5% Beta levered 1.7 1.7 1.7 1.7 1.7 1.5 Cost of equity 11.7% 11.7% 11.7% 11.7% 11.7% 12.8% Cost of debt 4.3% 4.3% 4.3% 4.3% 4.3% 6.0% Effective tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% After-tax cost of debt 3.4% 3.4% 3.4% 3.4% 3.4% 4.8% Equity weight 30% 30% 30% 30% 30% 30% WACC 5.9% 5.9% 5.9% 5.9% 5.9% 7.2% DCF valuation (EUR mn) 2014e 2015e 2016e 2017e 2018e 2019e (TV) Sales growth -1.8% -0.5% 1.2% 1.6% 1.6% 1.5% EBIT 322 311 328 351 374 516 EBIT margin 7.8% 7.6% 7.9% 8.3% 8.8% 11.9% Tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Taxes on EBIT -64-62 -66-70 -75-103 - Cash costs of redundant civil servants -96-89 -89-89 -89-89 NOPLAT 161 159 173 191 209 323 + Depreciation 904 905 907 908 910 750 Capital expenditures / Depreciation 77.4% 77.3% 77.2% 77.1% 77.0% 93.3% +/- Change in working capital -7-1 -1 2 4 0 Chg. working capital / chg. Sales 8.9% 3.3% -1.4% 2.5% 5.6% 0.0% - Capital expenditures -700-700 -700-700 -700-700 Free cash flow to the firm 359 364 379 401 423 373 Terminal value growth 0.5% Terminal value 5,610 Discounted free cash flow - Dec 31 2013 339 324 319 318 317 4,210 Enterprise value - Dec 31 2013 5,827 Minorities 0 Non-operating assets 0 Hybrid bonds 600 Net debt 3,205 Other adjustments 0 Equity value - Dec 31 2013 2,022 Number of shares outstanding (mn) 442.6 Cost of equity 11.7% 12M target price per share (EUR) 5.0 Current share price (EUR) 5.5 Up/Downside -9.8% Enterprise value breakdown PV of terminal value 72% PV of detailed period 28% Sensitivity (per share) Terminal value EBIT margin 5 9.9% 10.9% 11.9% 12.9% 13.9% 6.2% 4.5 5.7 6.8 7.9 9.0 6.7% 3.7 4.8 5.8 6.8 7.9 7.2% 3.0 4.0 5.0 5.9 6.9 7.7% 2.5 3.3 4.2 5.1 6.0 8.2% 1.9 2.8 3.6 4.5 5.3 Terminal value growth 5 0.0% 0.3% 0.5% 0.8% 1.0% 6.2% 5.7 6.2 6.8 7.4 8.0 6.7% 4.9 5.3 5.8 6.3 6.8 7.2% 4.2 4.6 5.0 5.4 5.9 7.7% 3.6 3.9 4.2 4.6 5.0 Source: Factset, Erste Group Research 8.2% 3.0 3.3 3.6 3.9 4.3 Erste Group Research Sector Report Page 46

Telekom Austria Integrated Telecoms Austria Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, EUR mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 4,650.84 4,454.63 4,329.70 4,183.26 4,107.77 4,087.07 Invent. changes + capitalized costs 0.00 0.00 0.00 0.00 0.00 0.00 Total revenues 4,650.84 4,454.63 4,329.70 4,183.26 4,107.77 4,087.07 Other operating revenues 89.16 100.38 82.09 94.12 92.42 91.96 Material costs -403.62-442.04-474.68-556.37-546.33-543.58 Personnel costs -930.90-1,038.75-868.26-857.57-862.63-866.46 Other operating expenses -1,890.28-1,750.50-1,648.10-1,589.64-1,565.06-1,553.08 EBITDA 1,515.21 1,323.72 1,420.75 1,273.80 1,226.17 1,215.90 Depreciation/amortization -1,077.31-1,331.36-963.97-920.72-903.95-905.38 EBIT 437.90-7.64 456.78 353.09 322.22 310.52 Financial result -196.27-246.82-212.69-185.02-158.26-147.00 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 241.64-254.46 244.10 168.06 163.96 163.52 Income taxes -46.46 1.65-140.32-34.28-29.27-29.17 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 0.18 0.83-0.14-30.94-33.75-33.75 Net result after minorities 195.35-251.97 103.64 102.84 100.94 100.60 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, EUR mn, 31/12) Intangible assets 3,207.30 2,909.05 2,812.08 2,539.56 2,316.10 2,121.69 Tangible assets 2,548.97 2,462.17 2,426.44 3,188.24 3,207.75 3,196.78 Financial assets 35.50 38.35 35.31 35.31 35.31 35.31 Total fixed assets 5,791.77 5,409.58 5,273.82 5,763.11 5,559.16 5,353.78 Inventories 150.24 157.71 152.94 147.77 145.10 144.37 Receivables and other current assets 911.49 837.45 862.85 844.14 837.13 836.99 Other assets 364.20 404.24 268.17 264.56 262.70 262.19 Cash and cash equivalents 338.13 639.82 693.76 693.76 693.76 693.76 Total current assets 1,764.05 2,039.22 1,977.72 1,950.23 1,938.68 1,937.31 TOTAL ASSETS 7,555.82 7,448.80 7,251.54 7,713.33 7,497.84 7,291.09 Shareholders'equity 1,474.38 882.18 835.09 915.81 994.62 1,073.09 Minorities 2.55 0.93 1.05 1.05 1.05 1.05 Hybrid capital and other reserves 0.00 0.00 0.00 600.00 600.00 600.00 Pension and other LT personnel accruals 131.58 128.98 138.97 137.25 138.06 138.68 LT provisions 761.77 888.21 923.15 859.40 802.78 750.04 Interest-bearing LT debts 3,077.24 2,934.93 2,831.98 2,962.36 3,083.27 3,209.12 Other LT liabilities 225.34 201.56 199.21 199.21 199.21 199.21 Total long-term liabilities 3,302.58 3,136.49 3,031.19 3,161.56 3,282.47 3,408.32 Interest-bearing ST debts 506.65 1,014.19 1,049.42 799.48 458.32 101.44 Other ST liabilities 1,376.31 1,397.83 1,272.67 1,238.78 1,220.54 1,218.47 Total short-term liabilities 1,720.00 2,245.50 2,158.38 1,870.93 1,510.43 1,148.25 TOTAL LIAB., EQUITY 7,555.82 7,448.80 7,251.54 7,713.33 7,497.84 7,291.09 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,EUR mn, 31/12) Cash flow from operating activities 1,397.50 1,213.28 1,047.91 951.70 942.38 953.16 Cash flow from investing activities -617.07-854.75-636.29-1,410.00-700.00-700.00 Cash flow from financing activities -1,523.50-58.10-357.68 458.30-242.38-253.16 CHANGE IN CASH, CASH EQU. -745.10 301.70 53.94 0.00 0.00 0.00 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth -3.1% -4.2% -2.8% -3.4% -1.8% -0.5% EBITDA margin 32.6% 29.7% 32.8% 30.5% 29.9% 29.8% EBIT margin 9.4% -0.2% 10.6% 8.4% 7.8% 7.6% Net profit margin 4.2% -5.7% 2.4% 3.2% 3.3% 3.3% ROE 12.7% -21.4% 12.1% 11.7% 10.6% 9.7% ROCE 5.4% -0.7% 3.4% 4.6% 4.2% 4.3% Equity ratio 19.5% 11.9% 11.5% 19.7% 21.3% 23.0% Net debt 3,377.3 3,438.3 3,326.6 3,205.3 2,985.9 2,755.5 Working capital -320.2-610.5-448.8-185.3 165.6 526.9 Capital employed 5,841.4 5,411.1 5,285.1 5,780.8 5,583.5 5,378.9 Inventory turnover 0.0 0.0 0.0 0.0 0.0 0.0 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 47

TEST Erste Gr oup R esearch C ompany R eport Telekom Slovenije Integrated Tel ecoms Sl oveni a 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchange s vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom Telekom Slovenije Integrated Telecoms Slovenia Telekom Slovenije from Hold to Accumulate EUR mn 2012 2013e 2014e 2015e Net sales 785.1 775.6 776.6 777.4 EBITDA 241.6 244.9 248.7 253.8 EBIT 62.5 74.7 84.6 94.6 Net result after min. 43.7 50.2 55.6 65.2 EPS (EUR) 6.72 7.71 8.55 10.01 CEPS (EUR) 34.45 33.45 33.60 34.49 BVPS (EUR) 125.20 127.75 130.21 133.31 Div./share (EUR) 5.16 6.10 6.91 7.93 EV/EBITDA (x) 4.1 4.3 4.1 3.8 P/E (x) 14.2 14.8 13.3 11.4 P/CE (x) 2.8 3.4 3.4 3.3 Dividend Yield 5.4% 5.4% 6.1% 7.0% 115 110 105 100 95 90 85 80 75 70 65 52 weeks Telekom Slovenije SBI TOP Performance 12M 6M 3M 1M in EUR 73.8% 37.3% 6.4% 1.7% Share price (EUR) close as of 23/09/2013 113.9 Reuters TLSG.LJ Free float 25.7% Number of shares (mn) 6.5 Bloomberg TLSG SV Shareholders Rep. of Slovenia (62.5%) Market capitalization (EUR mn) 740.0 Div. Ex-date 11/02/13 Slovenska odskodninska druzba (4.25%) Enterprise value (EUR mn) 1,062.7 Target price 125.0 Homepage: www.telekom.si Takeover target Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We upgrade Telekom Slovenije (TLSG) from Hold to Accumulate, while raising our target price from EUR 74 to EUR 125. The considerable increase is driven largely by the addition of a 20% takeover premium. Moreover, the litigation risk is reduced, as a litigation claim of EUR 129.56mn from T2 was rejected by the Ljubljana District Court. Looming privatization. We are finally seeing serious progress toward the sale of the TLSG stake owned by the government. The Parliament has approved the plan to sale the stake. The state and other major shareholders directly/indirectly owned by the state have confirmed their interest in selling their shares, in total around a 75% stake. The state is seeking a financial advisor for the sale; the selection process should be completed in early October. The timeline of the sale should be announced by the end of September. Any sale of more than 25% would trigger a mandatory takeover bid, with at least the same price as its last transaction. We see T-HT as a strong candidate to buy the stake. Improving results. Compared to its CEE peers, TLSG performed better in 1H13. Its revenue and EBITDA declines were limited to 1.4% y/y and 4.6% y/y, respectively. Its EBITDA margin of 32.3% is in line with the CEE average. Domestic business contributes more than 80% to group revenues and EBITDA. The operations in Kosovo and Macedonia continued to increase their revenues and profitability. Both operations could compensate partially for the revenue and EBITDA decline in the domestic operation. TLSG is on track to meet its 2013 targets: EBITDA of EUR 245mn, net profit of EUR 50mn and CAPEX of EUR 130mn. Erste Group Research Sector Report Page 48

Telekom Slovenije Integrated Telecoms Slovenia Valuation. We provide a range for TLSG s share price and its implied valuation in the following table. The current share price level of around EUR 110 represents a below-cee-average valuation, based on EV/EBITDA and P/E. Valuation of Telekom Slovenije Share price EUR 110 120 150 170 200 Peers Implied valuation: EV/EBITDA 2013e 4.2 4.5 5.3 5.8 6.6 4.5 EV/EBITDA 2014e 4.0 4.2 5.0 5.5 6.3 4.6 EV/EBITDA 2015e 3.7 3.9 4.7 5.2 6.0 4.7 P/E 2013e 14.3 15.6 19.4 22.0 25.9 17.4 P/E 2014e 12.9 14.0 17.5 19.9 23.4 18.6 P/E 2015e 11.0 12.0 15.0 17.0 20.0 19.2 Dividend yield 2014e 5.5% 5.1% 4.1% 3.6% 3.0% 7.0% Dividend yield 2015e 6.3% 5.8% 4.6% 4.1% 3.5% 6.4% Dividend yield 2016e 7.2% 6.6% 5.3% 4.7% 4.0% 7.0% Source: Erste Group Research Change in estimates. We raise our earnings estimates for 2013e and 2014e, due to lower depreciation assumptions, compensated for partially by higher net financial expenses. We extend the existing dividend policy of 1/3 of retained earnings throughout our forecast period. The implied payout ratio would be around 80%, compared to our initial forecast of 40%. Change in estimates Consolidated, IFRS 2013e 2014e (EUR, mn) Now Old Change Now Old Change Revenues 775.6 767.3 1% 776.6 753.0 3% EBITDA 244.9 251.1-2% 248.7 254.4-2% EBIT 74.7 71.4 5% 84.6 77.9 9% Net income 50.2 45.8 10% 55.6 53.2 5% EPS (EUR) 7.71 7.04 10% 8.55 8.18 5% DPS (EUR) 6.10 5.96 2% 6.91 3.27 111% Source: Erste Group estimates Macedonia and Kosovo should compensate for decline in domestic operation Revenues and EBITDA drivers of TLSG 2012 2013e 2014e 2015e 2016e CAGR Consolidated revenues 785.1 775.6 776.6 777.4 777.9-0.2% Slovenia 747.9 740.4 733.0 725.7 718.4-1.0% Macedonia 73.6 82.3 86.4 90.8 95.4 6.7% Ipko 69.5 72.9 77.3 81.2 84.4 5.0% Consolidated EBITDA 241.6 244.9 248.7 253.8 256.4 1.5% Slovenia 208.4 202.1 201.6 201.0 199.7-1.1% Macedonia 9.5 14.0 16.4 20.0 23.9 25.9% Ipko 24.5 28.4 30.9 32.9 34.2 8.7% EBITDA margin 30.8% 31.6% 32.0% 32.6% 33.0% Slovenia 27.9% 27.3% 27.5% 27.7% 27.8% Macedonia 12.9% 17.0% 19.0% 22.0% 25.0% Ipko 35.2% 39.0% 40.0% 40.5% 40.5% Source: Erste Group Research Erste Group Research Sector Report Page 49

WACC WACC Erste Group Research Erste Sector Telecom Telekom Slovenije Integrated Telecoms Slovenia WACC calculation 2014e 2015e 2016e 2017e 2018e 2019e (TV) Risk free rate 6.5% 6.5% 6.5% 6.5% 6.5% 5.0% Equity risk premium 6.0% 6.0% 6.0% 6.0% 6.0% 5.7% Beta 1.0 1.0 1.0 1.0 1.0 1.0 Cost of equity 12.5% 12.5% 12.5% 12.5% 12.5% 10.7% Cost of debt 8.5% 8.5% 8.5% 8.5% 8.5% 7.0% Effective tax rate 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% After-tax cost of debt 7.1% 7.1% 7.1% 7.1% 7.1% 5.8% Equity weight 75% 75% 75% 75% 75% 85% WACC 11.1% 11.1% 11.1% 11.1% 11.1% 10.0% DCF valuation (EUR mn) 2014e 2015e 2016e 2017e 2018e 2019e (TV) Sales growth 0.1% 0.1% 0.1% 0.1% 0.2% 0.0% EBIT 84.6 94.6 101.0 104.2 105.7 105.9 EBIT margin 10.9% 12.2% 13.0% 13.4% 13.6% 13.6% Tax rate 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% Taxes on EBIT -14.4-16.1-17.2-17.7-18.0-18.0 NOPLAT 70.3 78.5 83.8 86.5 87.8 87.9 + Depreciation 179.1 170.3 164.1 159.2 155.4 110.0 Capital expenditures / Depreciation 72.6% 70.5% 67.1% 69.1% 70.8% 100.0% +/- Change in working capital 0.0 0.0 0.0 0.0 0.0 0.0 Chg. working capital / chg. Sales -2.1% -2.1% -2.1% -2.1% -2.1% - Capital expenditures -130.0-120.0-110.0-110.0-110.0-110.0 Free cash flow to the firm 119.4 128.7 137.9 135.7 133.1 87.9 Terminal value growth 1.5% Terminal value 1,054.0 Discounted free cash flow - Dec 31 2013 107.4 104.2 100.4 88.9 78.5 621.6 Enterprise value - Dec 31 2013 1,101.1 Net debt 322.1 Other adjustments 0.0 Equity value - Dec 31 2013 779.0 Number of shares outstanding (mn) 6.5 Cost of equity 12.5% Net present value per share (EUR) 130.8 Litigation risk, assume to pay 1/3 of claim -26.7 Takeover premium 20% 20.8 12M target price per share (EUR) 125.0 Current share price (EUR) 113.9 Up/Downside 10% Enterprise value breakdown PV of terminal value 56% PV of detailed period 44% Sensitivity (per share) Terminal value EBIT margin 125 12.6% 13.1% 13.6% 14.1% 14.6% 9.0% 131.3 136.5 141.7 147.0 152.2 9.5% 123.0 127.9 132.8 137.7 142.6 10.0% 115.8 120.4 125.0 129.6 134.2 10.5% 109.3 113.6 118.0 122.3 126.7 11.0% 103.5 107.6 111.7 115.9 120.0 Terminal value growth 125 0.5% 1.0% 1.5% 2.0% 2.5% 9.0% 123.7 132.2 141.7 152.7 165.3 9.5% 116.8 124.4 132.8 142.4 153.4 10.0% 110.6 117.4 125.0 133.5 143.1 10.5% 105.1 111.2 118.0 125.6 134.1 Source: Factset, Erste Group Research 11.0% 100.0 105.6 111.7 118.6 126.2 Erste Group Research Sector Report Page 50

Telekom Slovenije Integrated Telecoms Slovenia Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, EUR mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 839.34 815.09 785.12 775.60 776.58 777.36 Invent. changes + capitalized costs 0.00 0.00 0.00 0.00 0.00 0.00 Total revenues 839.34 815.09 785.12 775.60 776.58 777.36 Other operating revenues 8.72 14.39 12.74 23.05 14.10 14.25 Material costs -395.09-390.89-393.01-390.12-382.08-377.80 Personnel costs -162.52-150.16-157.21-147.36-143.67-143.81 Other operating expenses -254.46-32.81-6.08-16.21-16.23-16.25 EBITDA 35.97 255.62 241.56 244.94 248.70 253.75 Depreciation/amortization -214.45-192.37-179.03-170.26-164.06-159.20 EBIT -178.48 63.25 62.53 74.68 84.64 94.55 Financial result -23.91-14.43-16.27-19.54-17.62-16.06 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT -202.39 48.82 46.26 55.14 67.02 78.49 Income taxes -7.93-14.81-2.58-4.96-11.39-13.34 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 0.00 0.00 0.00 0.00 0.00 0.00 Net result after minorities -210.32 34.01 43.69 50.18 55.63 65.15 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, EUR mn, 31/12) Intangible assets 162.87 157.42 148.92 115.38 86.20 60.82 Tangible assets 1,108.41 994.44 937.26 930.54 925.66 911.85 Financial assets 84.51 85.85 76.18 76.18 76.18 76.18 Total fixed assets 1,355.79 1,237.71 1,162.37 1,122.10 1,088.05 1,048.85 Inventories 20.96 22.79 22.63 22.35 22.38 22.40 Receivables and other current assets 197.00 204.93 238.57 235.68 235.98 236.22 Other assets 18.68 22.56 21.24 21.24 21.24 21.24 Cash and cash equivalents 65.81 87.33 109.73 131.07 182.63 244.86 Total current assets 302.44 337.61 392.17 410.34 462.23 524.72 TOTAL ASSETS 1,658.23 1,575.31 1,554.53 1,532.44 1,550.28 1,573.57 Shareholders'equity 807.81 815.28 814.50 831.10 847.06 867.27 Minorities 0.00 0.00 0.00 0.00 0.00 0.00 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 37.81 45.62 45.71 42.84 41.77 41.81 LT provisions 0.00 0.00 0.00 0.00 0.00 0.00 Interest-bearing LT debts 443.45 436.38 407.81 410.31 412.95 415.74 Other LT liabilities 9.65 10.07 6.82 6.74 6.74 6.75 Total long-term liabilities 453.10 446.45 414.63 417.05 419.69 422.49 Interest-bearing ST debts 125.45 35.58 35.28 0.00 0.00 0.00 Other ST liabilities 234.05 232.39 244.42 241.45 241.75 242.00 Total short-term liabilities 327.04 235.38 261.33 223.30 223.59 223.81 TOTAL LIAB., EQUITY 1,658.23 1,575.31 1,554.53 1,532.44 1,550.28 1,573.57 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,EUR mn, 31/12) Cash flow from operating activities 264.32 241.65 245.62 182.50 218.59 224.37 Cash flow from investing activities -140.22-91.30-163.61-130.00-130.00-120.00 Cash flow from financing activities -81.21-128.83-59.51-31.15-37.03-42.14 CHANGE IN CASH, CASH EQU. 42.89 21.53 22.50 21.34 51.56 62.23 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth -1.0% -2.9% -3.7% -1.2% 0.1% 0.1% EBITDA margin 4.3% 31.4% 30.8% 31.6% 32.0% 32.6% EBIT margin -21.3% 7.8% 8.0% 9.6% 10.9% 12.2% Net profit margin -25.1% 4.2% 5.6% 6.5% 7.2% 8.4% ROE -22.7% 4.2% 5.4% 6.1% 6.6% 7.6% ROCE -12.2% 3.4% 4.8% 5.8% 6.1% 7.1% Equity ratio 48.7% 51.8% 52.4% 54.2% 54.6% 55.1% Net debt 540.9 430.2 379.1 322.1 272.1 212.7 Working capital -43.3 79.7 109.6 165.8 217.4 279.7 Capital employed 1,358.4 1,255.6 1,200.4 1,159.9 1,125.9 1,086.7 Inventory turnover 17.2 17.9 17.3 17.3 17.1 16.9 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 51

TEST Erste Gr oup R esearch C ompany R eport TPSA Integr ated Tel ecoms Poland 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom TPSA Integrated Telecoms Poland TPSA Hold PLN mn 2012 2013e 2014e 2015e Net sales 14,147.0 12,759.3 12,226.9 12,206.9 EBITDA 4,850.0 3,885.2 3,820.9 3,778.0 EBIT 1,573.0 724.0 732.1 769.8 Net result after min. 855.0 203.0 202.0 261.5 EPS (PLN) 0.65 0.15 0.15 0.20 CEPS (PLN) 1.51 2.56 2.49 2.49 BVPS (PLN) 9.87 9.53 9.18 8.88 Div./share (PLN) 0.50 0.50 0.50 0.50 EV/EBITDA (x) 4.5 4.5 4.4 4.1 P/E (x) 18.8 50.7 50.9 39.3 P/CE (x) 8.1 3.1 3.1 3.1 Dividend Yield 4.1% 6.4% 6.4% 6.4% 20 18 16 14 12 10 8 6 52 weeks TPSA WIG 20 Performance 12M 6M 3M 1M in PLN -52.2% 16.1% 4.5% 3.0% Share price (PLN) close as of 23/09/2013 7.84 Reuters TPSA.WA Free float 48.8% Number of shares (mn) 1,324.3 Bloomberg TPS PW Shareholders France Telecom (49.8%) Market capitalization (PLN mn / EUR mn) 10,383 / 2,457 Div. Ex-date 25/06/13 Treasury shares (1.4%) Enterprise value (PLN mn / EUR mn) 17,427 / 4,124 Target price 8.00 Homepage: www.tp.pl Bottoming up Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We confirm our Hold recommendation and target price of PLN 8.0. We believe that the current share price level already takes into account the poor results for the year. EBITDA fell 19.3% y/y in 1H13, mainly due to falling revenues (-8.6% y/y). This could be attributed to mobile price competition, which has intensified since 3Q12. TPSA launched a new no-frills SIM-only tariff called NJU in April 2013. As a result, TPSA now offers two price segments: Orange for high-value customers and NJU for low-end customers. Therefore, TPSA will not need to reduce prices for premium customers. So far, NJU has been attracting clients of Play and T-Mobile. On track to meet targets. Management saw even an upside to the PLN 800mn organic cash flow target (1H13: PLN 399mn). According to our estimate, the DPS of PLN 0.5 could be sustained. We assume spectrum costs of PLN 2bn. TP might pay the EU fine of PLN 508mn. However, TP is selling Wirtualna Polska, whose price is estimated at PLN 300-400mn. We therefore expect to see TP s net debt/ebitda 2013e exceeding the 1.5x threshold to around 1.7x. Nevertheless, the level could come down to 1.5x range in 2014e. For that to happen, organic cash flow 2014e needs to improve considerably to at least PLN 1.4bn. Improvements should come from lower CAPEX (network sharing with T-Mobile) and CAPEX payables. The network sharing agreement, which was initiated in 2011 for 3G sites, has been extended to include 4G technology. TP would be able to rent 1800 MHz spectrum from T-Mobile, as TP did not win any 1800 MHz spectrum in the auction in 1Q13. This should ease 4G implementation generally. Erste Group Research Sector Report Page 52

TPSA Integrated Telecoms Poland New CEO. Witucki has resigned as CEO and will assume the position of chairman of TPSA. He has been replaced by Bruno Duthoit, who was a management board member of TPSA in 2001-06. We do not expect any significant changes to TPSA s strategy. During an interview, Duthoit plans to focus on controlling costs while slowing down the revenue decline. He has no plans to split the fixed and mobile units. He also stated that his coming to the company meant an evolution, no revolution. Catalysts include the possible sale of Wirtualna Polska (WP), depending on the price. The deadline to submit binding bids is in the second half of Sept. 2013. We think that WP could fetch PLN 300-400mn (10x EV/EBITDA), based on an earlier similar transaction (Onet.pl). The book value of WP is PLN 197mn. Dividend sustainable. It is uncertain whether TP would need to pay the EU fine of PLN 508mn and how much price TP would receive for its Wirtualna Polska sale. If we assume a low price for WP and the fine to be paid, net debt/ebitda would exceed the 1.7x in 2013e as seen below. Net debt/ebitda estimate in 2013e Ratios PLN mn Net debt 2Q13 4,381 FCF -400 Dividend payment 656 Spectrum costs 2,000 WP sale -300 EU fine 508 Net debt 4Q13e 6,845 EBITDA 2013e 3,885 Net debt/ebitda 2013e 1.76 Source: Erste Group estimate It is important that organic CF exceeds dividend and that net debt/ebitda would come back to 1.5x, when deciding the dividend level. We expect net debt/ebitda in 2014e to decline from above 1.7x to around 1.5x levels, only if the organic CF in 2014e were increase to PLN 1.4bn. This would be possible, due to lower CAPEX (network sharing effect with T-Mobile to be visible from 2014e) and CAPEX payables. Organic CF in 2014e Ratios 2014e PLNmn EBITDA 3,821 Minus Capex 1,750 Capex payables 150 Working capital changes 100 Interests, asset sale, tax 384 Organic CF 1,437 Source: Erste Group estimate We therefore continue to assume that DPS of PLN 0.5 could be maintained. Erste Group Research Sector Report Page 53

TPSA Integrated Telecoms Poland Change in estimates. We increase our 2013 earnings estimates considerably, as 1H13 profit already exceeded our FY13 profit estimates. We had overestimated the net financial expenses. This could be attributed to the new funding agreement with France Telecom signed in April 2013. Consolidated, IFRS 2013e 2014e (PLN, mn) New Old Change New Old Change Net revenues 12,759 12,644 1% 12,227 12,148 1% EBITDA 3,885 3,837 1% 3,821 3,724 3% EBIT 724 663 9% 732 705 4% Net income 203 93 119% 202 105 92% EPS 0.15 0.07 121% 0.15 0.08 94% Dividend 0.50 0.50 0% 0.50 1.50 0.5% We assume PLN 2bn for LTE spectrum purchase Spectrum purchase scenario for TPSA Spectrum band Size Price/pop/MHz (eurocents) CAPEX (PLNbn) 800 MHz 2*2*5 0.52 1.65 2600 MHz 3*2*5 0.08 0.36 Total 2.01 TP's target 1 to 2 Source: Erste Group estimates Erste Group Research Sector Report Page 54

WACC WACC Erste Group Research Erste Sector Telecom TPSA Integrated Telecoms Poland WACC calculation 2014e 2015e 2016e 2017e 2018e Terminal Risk free rate 4.4% 4.4% 4.4% 4.4% 4.4% 5.0% Equity risk premium 6.0% 6.0% 6.0% 6.0% 6.0% 5.7% Beta 1.0 1.0 1.0 1.0 1.0 1.0 Cost of equity 10.4% 10.4% 10.4% 10.4% 10.4% 10.7% Cost of debt 6.4% 6.4% 6.4% 6.4% 6.4% 7.0% Effective tax rate 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% After-tax cost of debt 5.2% 5.2% 5.2% 5.2% 5.2% 5.7% Equity weight 60% 60% 60% 60% 60% 60% WACC 8.3% 8.3% 8.3% 8.3% 8.3% 8.7% DCF valuation (PLN mn) 2014e 2015e 2016e 2017e 2018e Terminal Sales growth -4.2% -0.2% 0.5% 0.7% 2.3% 0.5% EBIT 732.1 769.8 855.8 946.9 1,137.0 1,398.2 EBIT margin 6.0% 6.3% 7.0% 7.7% 9.0% 11.0% Tax rate 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% Taxes on EBIT -139.1-146.3-162.6-179.9-216.0-265.6 NOPLAT 593.0 623.5 693.2 767.0 921.0 1,132.5 + Depreciation 3,088.9 3,008.2 2,942.7 2,891.8 2,802.6 1,500.0 Capital expenditures / Depreciation 56.7% 51.2% 52.3% 53.3% 54.9% 100.0% +/- Change in working capital -84.1 12.0 5.8 7.8 24.8 0.0 Chg. working capital / chg. Sales 15.8% -60.1% 8.7% 8.7% 8.7% 0.0% - Capital expenditures -1,750.0-1,540.0-1,540.0-1,540.0-1,540.0-1,500.0 Free cash flow to the firm 1,847.7 2,103.8 2,101.8 2,126.7 2,208.3 1,132.5 Terminal value growth 0.0% Terminal value 13,035.3 Discounted free cash flow - Dec 31 2013 1,705.9 1,793.3 1,654.0 1,545.2 1,481.3 8,743.9 Enterprise value - Dec 31 2013 16,923.5 Minorities 0.0 Non-operating assets 0.0 Net debt including pension obligations 7,136.4 Equity value - Dec 31 2013 9,787.1 Number of shares outstanding (mn) 1,312.4 Cost of equity 10.4% 12M target price per share (PLN) 8.0 Current share price (PLN) 7.8 Up/Downside 2.5% Enterprise value breakdown PV of termina l value 52% PV of detaile d period 48% Sensitivity (per share) Terminal value EBIT margin 8 10.0% 10.5% 11.0% 11.5% 12.0% 7.7% 8.2 8.6 9.0 9.3 9.7 8.2% 7.8 8.1 8.5 8.8 9.2 8.7% 7.4 7.7 8.0 8.4 8.7 9.2% 7.0 7.3 7.6 8.0 8.3 9.7% 6.7 7.0 7.3 7.6 7.9 Terminal value growth 8 0.0% 0.1% 0.0% 0.5% 1.0% 7.7% 9.0 9.1 9.0 9.6 10.3 8.2% 8.5 8.6 8.5 9.0 9.6 8.7% 8.0 8.1 8.0 8.5 9.0 9.2% 7.6 7.7 7.6 8.1 8.5 Source: Factset, Erste Group Research 9.7% 7.3 7.4 7.3 7.7 8.1 Erste Group Research Sector Report Page 55

TPSA Integrated Telecoms Poland Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, PLN mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 15,715.00 14,922.00 14,147.00 12,759.29 12,226.95 12,206.92 Invent. changes + capitalized costs 0.00 0.00 0.00 0.00 0.00 0.00 Total revenues 15,715.00 14,922.00 14,147.00 12,759.29 12,226.95 12,206.92 Other operating revenues 0.00 0.00 0.00 0.00 0.00 0.00 Material costs -6,144.00-5,996.30-5,902.00-5,371.66-5,049.73-5,078.08 Personnel costs -2,252.00-2,203.00-2,033.00-2,028.73-1,944.08-1,940.90 Other operating expenses -2,608.00-794.40-1,362.00-1,473.70-1,412.21-1,409.90 EBITDA 4,711.00 5,928.30 4,850.00 3,885.20 3,820.92 3,778.04 Depreciation/amortization -3,803.00-3,711.50-3,277.00-3,161.25-3,088.85-3,008.25 EBIT 908.00 2,216.80 1,573.00 723.95 732.07 769.79 Financial result -459.00-432.00-557.00-470.25-479.57-442.94 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 449.00 1,784.80 1,016.00 253.70 252.50 326.85 Income taxes -341.00 133.00-161.00-50.74-50.50-65.37 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital -1.00-1.00 0.00 0.00 0.00 0.00 Net result after minorities 107.00 1,916.80 855.00 202.96 202.00 261.48 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, PLN mn, 31/12) Intangible assets 6,877.00 6,971.00 6,974.00 6,403.65 5,918.85 5,506.77 Tangible assets 16,500.00 14,912.00 13,935.00 15,244.10 14,390.05 13,333.88 Financial assets 131.00 309.00 162.00 162.00 162.00 162.00 Total fixed assets 23,508.00 22,192.00 21,071.00 21,809.75 20,470.90 19,002.65 Inventories 272.00 214.00 194.00 174.97 167.67 167.40 Receivables and other current assets 1,949.00 1,976.00 1,542.00 1,390.74 1,332.72 1,330.53 Other assets 697.00 977.00 941.00 934.43 931.91 931.81 Cash and cash equivalents 2,447.00 2,860.00 390.00 141.47 141.47 141.47 Total current assets 5,365.00 6,027.00 3,067.00 2,641.61 2,573.76 2,571.21 TOTAL ASSETS 28,873.00 28,219.00 24,138.00 24,451.36 23,044.66 21,573.86 Shareholders'equity 14,620.00 14,331.00 12,956.00 12,502.78 12,048.60 11,653.91 Minorities 14.00 3.00 2.00 2.00 2.00 2.00 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 608.00 525.00 579.00 577.78 553.68 552.77 LT provisions 2,431.00 3,434.00 1,216.00 1,216.00 1,216.00 1,216.00 Interest-bearing LT debts 4,737.00 4,288.00 3,273.00 3,273.00 3,273.00 3,273.00 Other LT liabilities 760.00 840.00 766.00 690.86 662.04 660.95 Total long-term liabilities 5,497.00 5,128.00 4,039.00 3,963.86 3,935.04 3,933.95 Interest-bearing ST debts 1,656.00 767.00 2,304.00 3,427.07 2,679.47 1,595.87 Other ST liabilities 4,047.00 4,031.00 3,042.00 2,761.87 2,609.88 2,619.36 Total short-term liabilities 5,104.00 4,205.00 4,804.00 5,700.10 4,820.91 3,747.56 TOTAL LIAB., EQUITY 28,873.00 28,219.00 24,138.00 24,451.36 23,044.66 21,573.86 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,PLN mn, 31/12) Cash flow from operating activities 4,530.00 5,168.30 1,864.00 3,259.72 3,182.60 3,280.86 Cash flow from investing activities -2,015.00-1,090.00-2,729.00-3,900.00-1,750.00-1,540.00 Cash flow from financing activities -2,286.00-3,663.00-1,623.00 391.75-1,432.60-1,740.86 CHANGE IN CASH, CASH EQU. 229.00 413.00-2,470.00-248.53 0.00 0.00 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth -5.1% -5.0% -5.2% -9.8% -4.2% -0.2% EBITDA margin 30.0% 39.7% 34.3% 30.5% 31.3% 31.0% EBIT margin 5.8% 14.9% 11.1% 5.7% 6.0% 6.3% Net profit margin 0.7% 12.9% 6.0% 1.6% 1.7% 2.1% ROE 0.7% 13.2% 6.3% 1.6% 1.6% 2.2% ROCE 0.9% 10.4% 6.0% 2.4% 2.4% 2.7% Equity ratio 50.7% 50.8% 53.7% 51.1% 52.3% 54.0% Net debt 4,554.0 2,720.0 5,766.0 7,136.4 6,364.7 5,280.2 Working capital -436.0 845.0-2,678.0-3,992.9-3,179.0-2,108.2 Capital employed 22,379.0 21,328.0 20,706.0 21,548.0 20,293.3 18,813.0 Inventory turnover 24.5 24.7 28.9 29.1 29.5 30.3 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 56

TEST Erste Gr oup R esearch C ompany R eport Tur k T elekomuni kasyon AS Integrated Tel ecoms Tur key 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other ven dors. Erste Group Research Erste Sector Telecom Turk Telekomunikasyon AS Integrated Telecoms Turkey Turk Telekomunikasyon AS Accumulate TRY mn 2012 2013e 2014e 2015e Net sales 12,706.1 13,345.6 14,077.5 14,803.6 EBITDA 5,096.4 5,096.3 5,135.6 5,210.9 EBIT 3,399.7 3,370.4 3,322.1 3,302.6 Net result after min. 2,637.1 1,901.6 2,370.1 2,338.8 EPS (TRY) 0.75 0.54 0.68 0.67 CEPS (TRY) 1.29 1.05 1.21 1.23 BVPS (TRY) 1.84 1.70 1.88 1.92 Div./share (TRY) 0.69 0.50 0.62 0.61 EV/EBITDA (x) 6.0 6.3 6.2 6.1 P/E (x) 9.2 13.0 10.4 10.5 P/CE (x) 5.4 6.7 5.8 5.7 Dividend Yield 10.0% 7.1% 8.8% 8.7% 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 52 weeks Turk Telekomunikasyon AS ISE 100 Performance 12M 6M 3M 1M in TRY -1.1% -12.0% 0.6% 9.7% Share price (TRY) close as of 23/09/2013 7.04 Reuters TTKOM.IS Free float 12.5% Number of shares (mn) 3,500.0 Bloomberg TTKOM TI Shareholders Oger Telecom (55.8%) Market capitalization (TRY mn / EUR mn) 24,640 / 9,197 Div. Ex-date 31/05/13 Turkish Treasury (31.7%) Enterprise value (TRY mn / EUR mn) 31,983 / 11,938 Target price 8.00 Homepage: www.turktelekom.com.tr Temporary FX pressure Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We confirm our Accumulate recommendation on Turk Telekom, based on its combination of dividend and growth. The growth is supported by the mobile business Avea and fixed broadband business, which together contribute more than 50% of group revenues. Avea benefits from its growing post-paid subscribers at 44% of the subscriber base, rising smartphone penetration at 30% and the rapid increase in mobile Internet, by 42% y/y in 2Q13. Furthermore, its partnerships with large retailer BIM and the Turkish State Postal Service enable a far wider distribution channel. Fixed broadband business is being expanded by the roll-out of FTTH/B, currently reaching 2.2mn homes. The FTTC network has reached 5.1mn homes. The five-year regulatory holiday supports the roll-out decision. Around 79% of subscribers were in an unlimited data package in 2Q13, up from 68% a year ago. The aim is to move subscribers to unlimited data and higher speed, as well as to upsell TV products. Risks from FX exposure. TTKOM had USD 1.96bn and EUR 1.17bn in debt at the end of 2Q13 that was not hedged. The TRY has devaluated a further 3.3% q/q against the USD and 6.4% q/q against the EUR in 3Q13. According to our estimates, this would lead to around a TRY 300mn FX loss in 3Q13. Depending on the TRY development by the end of 2003, earnings and consequently dividends would be reduced by the FX losses. We assume 2.03/USD and 2.58/EUR by year-end, which would lead to around TRY 740mn of FX losses. DPS in 2013e should fall 28% y/y to 0.5 kurus, before rising again to above 0.6 kurus from 2014 onwards. Erste Group Research Sector Report Page 57

Turk Telekomunikasyon AS Integrated Telecoms Turkey Digiturk sale. TTKOM issued a USD 530mn non-binding offer for a 53% stake in Digiturk. The Savings Deposit Insurance Fund (TMSF) seized control of Digiturk from Cukurova, in connection with failure of payments. Providence Equity Partners owns 47% of Digiturk. Digiturk is the largest pay TV provider with a 62% market share and more than 3mn satellite TV subscribers. Digiturk has broadcasting rights for Super League and 1st League for four football seasons (until the end of 2013/14 season), worth USD 321mn. Recently, Dogan Group gave a USD 742mn offer for Digiturk, dwarfing the offer of TTKOM. However, Dogan owns the second largest pay TV provider, D-Smart, with a 38% market share. We are doubtful that Dogan s offer would be approved by the Competition Regulator. We would expect pressure on TTKOM to increase its bid price, considering the large gap between the two offers. According to our estimate, Digiturk generates annual revenues of around TRY 850mn or USD 447mn, based on the July exchange rate when the offer was submitted. The bid implies USD 1bn for the entire company. P/Sales of TTKOM s offer = 2.2x P/Sales of Dogan s offer = 3.1x P/Sales of average peer group = 2.1x Synergies should come from cross selling of TV products to existing TTKOM customers and bundled product opportunities. The satellite TV business would also be complemented with TT s pay TV offerings. The current offer of TTKOM is within the peer group average, but it is unlikely to be accepted. We are generally positive about the potential deal, but 3x P/Sales would be too expensive. One should also consider the TRY devaluation against the USD from July to date, which makes the implied TRY sale price even more expensive. FX risks. We assess the impact of TRY devaluation against the USD and TRY as follows: Assumption: 2.03 TRY/USD and 2.578 TRY/EUR at year-end 2013 EPS and DPS 2013e: FX losses of TRY 740mn would lead to 25.4% lower EPS and 25.4% lower dividend Net debt 2013e would increase 9.6% in TRY terms to TRY 7.343bn DCF valuation would decline TRY 0.2/share or 2.4% to TRY 8.0 Overall, the impact on EPS and DPS in the particular year when the TRY devaluation takes place would be significant. However, the impact on the overall target price is marginal. Erste Group Research Sector Report Page 58

Turk Telekomunikasyon AS Integrated Telecoms Turkey Change in estimates. We lower our 2013 earnings estimate, as we increase our FX loss estimate from TRY 400mn to TRY 740mn. Dividend estimates for 2013 are consequently reduced. We lower our 2014 earnings estimates, mainly due to higher depreciation resulting from the FTTx network roll-out. Change in estimates Consolidated, IFRS 2013e 2014e (TRY, mn) Now Old Change Now Old Change Revenues 13,346 13,376 0% 14,078 13,806 2% EBITDA 5,096 5,077 0% 5,136 5,179-1% EBIT 3,370 3,381 0% 3,322 3,482-5% Net income 1,902 2,173-12% 2,370 2,536-7% EPS 0.54 0.62-12% 0.68 0.72-7% Dividend 0.50 0.57-12% 0.62 0.67-7% Source: Erste Group Research Mobile and ADSL as revenue growth drivers Expect slow improvement of Avea s EBITDA margin Revenue development TRY mn 2012 2013e 2014e 2015e 2016e 2017e 2018e Fixed line 6,509 6,240 6,021 5,817 5,659 5,593 5,584 % y/y 3.8% -4.1% -3.5% -3.4% -2.7% -1.2% -0.2% % of group 49.9% 45.4% 41.6% 38.2% 35.3% 33.2% 31.5% ADSL 3,069 3,367 3,695 4,054 4,406 4,765 5,129 % y/y 4.9% 9.7% 9.7% 9.7% 8.7% 8.2% 7.6% % of group 23.5% 24.5% 25.5% 26.6% 27.5% 28.3% 29.0% Mobile 3,475 4,123 4,767 5,359 5,949 6,509 7,001 % y/y 12.8% 18.6% 15.6% 12.4% 11.0% 9.4% 7.6% % of group 26.6% 30.0% 32.9% 35.2% 37.1% 38.6% 39.5% Group revenues 12,706 13,346 14,078 14,804 15,565 16,395 17,218 % y/y 6.4% 5.0% 5.5% 5.2% 5.1% 5.3% 5.0% Source: Erste Group Research, Company data EBITDA development TRY mn 2012 2013 2014e 2015e 2016e 2017e 2018e Fixed line, ADSL 4,614 4,400 4,246 4,146 4,036 4,009 4,028 % y/y -1.9% -4.6% -3.5% -2.4% -2.7% -0.7% 0.5% margin 48.2% 45.8% 43.7% 42.0% 40.1% 38.7% 37.6% Mobile 486 691 896 1,072 1,279 1,432 1,624 % y/y 27.9% 42.1% 29.8% 19.6% 19.3% 12.0% 13.4% margin 14.0% 16.8% 18.8% 20.0% 21.5% 22.0% 23.2% Group EBITDA 5,096 5,096 5,136 5,211 5,308 5,437 5,647 % y/y 0.4% 0.0% 0.8% 1.5% 1.9% 2.4% 3.9% margin 40.1% 38.2% 36.5% 35.2% 34.1% 33.2% 32.8% Source: Erste Group Research, Company data Valuation and risks. We lower our target price from TRY 8.2 to TRY 8.0, mainly due to the higher risk-free rate resulting from the recent increase in government bond yields. The higher net debt in TRY terms post-devaluation also contributes to a lower target price. Aside from the FX and risk-free rate volatility, we see SPO as the key risk to our target price. The state is to sell a 6.7% stake in TTKOM by the end of 2013, which is material compared to the current free float of 12.5%. However, we expect the impact on the share price to be temporary. Erste Group Research Sector Report Page 59

WACC WACC Erste Group Research Erste Sector Telecom Turk Telekomunikasyon AS Integrated Telecoms Turkey WACC calculation 2014e 2015e 2016e 2017e 2018e Terminal Risk free rate 9.0% 9.0% 9.0% 9.0% 9.0% 8.5% Equity risk premium 7.2% 7.2% 7.2% 7.2% 7.2% 6.7% Beta 0.9 0.9 0.9 0.9 0.9 0.9 Cost of equity 15.1% 15.1% 15.1% 15.1% 15.1% 14.2% Cost of debt 11.8% 11.8% 11.8% 11.8% 11.8% 11.3% Effective tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% After-tax cost of debt 9.4% 9.4% 9.4% 9.4% 9.4% 9.0% Equity weight 70% 70% 70% 70% 70% 70% WACC 13.4% 13.4% 13.4% 13.4% 13.4% 12.7% DCF valuation (TRY mn) 2014e 2015e 2016e 2017e 2018e Terminal Sales growth 5.5% 5.2% 5.1% 5.3% 5.0% 5.0% EBIT 3,322.1 3,302.6 3,299.8 3,364.0 3,516.9 4,194.3 EBIT margin 23.6% 22.3% 21.2% 20.5% 20.4% 23.2% Tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Taxes on EBIT -664.4-660.5-660.0-672.8-703.4-838.9 NOPLAT 2,657.7 2,642.0 2,639.8 2,691.2 2,813.5 3,355.5 + Depreciation 1,813.5 1,908.4 2,008.0 2,072.8 2,130.5 2,000.0 Capital expenditures / Depreciation 115.8% 110.0% 104.6% 101.3% 103.3% 100.0% +/- Change in working capital -34.0-33.7-35.4-38.6-38.2 0.0 Chg. working capital / chg. Sales -4.6% -4.6% -4.6% -4.6% -4.6% 0.0% - Capital expenditures -2,100.0-2,100.0-2,100.0-2,100.0-2,200.0-2,000.0 Free cash flow to the firm 2,337.2 2,416.7 2,512.5 2,625.4 2,705.8 3,355.5 Terminal value growth 5.0% Terminal value 45,979.6 Discounted free cash flow - Dec 31 2013 2,061.5 1,880.2 1,724.1 1,589.1 1,444.5 24,546.7 Enterprise value - Dec 31 2013 33,246.0 Minorities (Is Bank's 18.63% stake in Avea) 697.9 Non-operating assets 0.0 Net debt 7,343.2 Other adjustments 0.0 Equity value - Dec 31 2013 25,204.9 Number of shares outstanding (mn) 350,000 Cost of equity 15.1% 12M target price per share (TRY) 8.00 Current share price (TRY) 7.04 Up/Downside 13.7% Enterprise value breakdown PV of terminal value 74% PV of detailed period 26% Sensitivity (per share) Terminal value EBIT margin 8 13.2% 18.2% 23.2% 28.2% 33.2% 11.7% 5.3 7.2 9.2 11.1 13.0 12.2% 5.0 6.7 8.5 10.3 12.1 12.7% 4.6 6.3 8.0 9.7 11.4 13.2% 4.4 5.9 7.5 9.1 10.7 13.7% 4.1 5.6 7.1 8.6 10.1 Terminal value growth 8 4.0% 4.5% 5.0% 5.5% 6.0% 11.7% 7.9 8.5 9.2 9.9 10.9 12.2% 7.5 8.0 8.5 9.2 10.0 12.7% 7.0 7.5 8.0 8.6 9.3 13.2% 6.7 7.1 7.5 8.0 8.6 Source: Factset, Erste Group Research 13.7% 6.3 6.7 7.1 7.6 8.1 Erste Group Research Sector Report Page 60

Turk Telekomunikasyon AS Integrated Telecoms Turkey Income Statement 2010 2011 2012 2013e 2014e 2015e (CMB, TRY mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 10,852.47 11,940.56 12,706.14 13,345.57 14,077.53 14,803.61 Cost of goods sold -4,917.51-5,279.18-6,102.08-6,839.60-7,461.09-7,993.95 Gross profit 5,934.96 6,661.38 6,604.07 6,505.96 6,616.44 6,809.66 SG&A -3,064.72-3,475.29-3,331.18-3,273.03-3,422.00-3,624.96 Other operating revenues 563.27 467.54 317.02 317.02 317.02 317.02 Other operating expenses -122.34-153.12-190.17-179.55-189.39-199.16 EBITDA 4,834.70 5,077.04 5,096.38 5,096.32 5,135.62 5,210.95 Depreciation/amortization -1,523.54-1,576.53-1,696.65-1,725.92-1,813.55-1,908.39 EBIT 3,311.17 3,500.51 3,399.73 3,370.41 3,322.07 3,302.55 Financial result -184.16-891.41-33.33-934.94-283.53-273.84 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 3,127.01 2,609.10 3,366.40 2,435.46 3,038.54 3,028.72 Income taxes -798.58-709.57-773.27-560.16-668.48-666.32 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 122.43 169.15 43.98 26.25 0.00-23.62 Net result after minorities 2,450.86 2,068.68 2,637.11 1,901.56 2,370.06 2,338.77 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (CMB, TRY mn, 31/12) Intangible assets 3,569.66 3,593.31 4,098.98 3,614.70 3,169.15 2,759.25 Tangible assets 7,435.30 8,156.42 8,346.51 9,304.88 10,036.88 10,638.39 Financial assets 73.11 46.39 15.07 15.07 15.07 15.07 Total fixed assets 11,078.07 11,796.13 12,460.56 12,934.64 13,221.10 13,412.70 Inventories 81.44 106.61 128.11 134.55 141.93 149.25 Receivables and other current assets 2,462.85 3,031.31 3,395.86 3,566.76 3,762.38 3,956.43 Other assets 258.65 261.69 262.53 262.53 262.53 262.53 Cash and cash equivalents 1,219.01 978.68 960.79 291.05 291.05 291.05 Total current assets 4,021.95 4,378.28 4,747.29 4,254.89 4,457.90 4,659.27 TOTAL ASSETS 15,100.02 16,174.41 17,207.85 17,189.53 17,678.99 18,071.97 Shareholders'equity 6,174.76 5,769.37 6,455.15 5,943.43 6,564.06 6,722.37 Minorities 0.00 0.00 0.00 0.00 0.00 0.00 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 615.94 574.11 758.27 796.43 840.11 883.44 LT provisions 0.00 0.00 0.00 0.00 0.00 0.00 Interest-bearing LT debts 2,884.15 3,606.21 5,189.71 5,483.22 5,793.32 6,120.97 Other LT liabilities 604.65 617.53 516.44 530.53 546.67 562.68 Total long-term liabilities 3,488.80 4,223.74 5,706.15 6,013.75 6,340.00 6,683.65 Interest-bearing ST debts 1,914.92 2,333.32 1,354.57 1,354.57 684.48 364.52 Other ST liabilities 2,905.61 3,273.86 2,933.71 3,081.35 3,250.35 3,417.99 Total short-term liabilities 4,820.53 5,607.18 4,288.28 4,435.92 3,934.83 3,782.51 TOTAL LIAB., EQUITY 15,100.02 16,174.41 17,207.85 17,189.53 17,678.99 18,071.97 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (CMB,TRY mn, 31/12) Cash flow from operating activities 3,844.23 3,970.16 3,578.70 4,368.66 4,429.12 4,484.92 Cash flow from investing activities -1,760.83-2,059.73-1,971.62-2,200.00-2,100.00-2,100.00 Cash flow from financing activities -1,608.03-2,167.39-1,620.46-2,838.40-2,329.12-2,384.92 CHANGE IN CASH, CASH EQU. 465.31-240.33-17.89-669.74 0.00 0.00 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth 2.7% 10.0% 6.4% 5.0% 5.5% 5.2% EBITDA margin 44.5% 42.5% 40.1% 38.2% 36.5% 35.2% EBIT margin 30.5% 29.3% 26.8% 25.3% 23.6% 22.3% Net profit margin 21.5% 15.9% 20.4% 14.1% 16.8% 16.0% ROE 42.3% 34.6% 43.1% 30.7% 37.9% 35.2% ROCE 22.7% 17.3% 21.9% 14.9% 18.5% 18.1% Equity ratio 40.9% 35.7% 37.5% 34.6% 37.1% 37.2% Net debt 4,196.0 5,535.0 6,341.8 7,343.2 7,026.9 7,077.9 Working capital -1,057.2-1,490.6 196.5-443.6 260.5 614.2 Capital employed 10,975.4 11,921.9 13,313.4 13,817.1 14,137.6 14,362.9 Inventory turnover 68.1 56.1 52.0 52.1 54.0 54.9 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 61

TEST Erste Gr oup R esearch C ompany R eport Tur kcell Iletisim Hizmetleri AS Wirel ess Tur key 24 September 2013 All prices are those current at the end of the previ ous tr adi ng session unl ess other wise indicated and ar e sourced fr om local exchanges vi a Reuters, Bl oomberg and other vendors. Erste Group Research Erste Sector Telecom Turkcell Iletisim Hizmetleri AS Wireless Turkey Turkcell Iletisim Hizmetleri AS from Accumulate to Buy TRY mn 2012 2013e 2014e 2015e 52 weeks Net sales 10,507.0 11,365.1 12,027.8 12,725.9 16 EBITDA 3,168.7 3,393.3 3,639.7 3,868.6 15 EBIT 1,729.7 1,876.1 2,105.8 2,304.4 14 Net result after min. 2,083.0 2,158.9 2,331.7 2,455.3 13 EPS (TRY) 0.95 0.98 1.06 1.12 12 CEPS (TRY) 1.65 1.69 1.77 1.84 11 BVPS (TRY) 5.85 6.83 6.26 6.84 10 Div./share (TRY) 0.00 1.64 0.53 0.56 Turkcell Iletisim Hizmetleri AS ISE 100 EV/EBITDA (x) 6.9 6.2 6.2 5.6 P/E (x) 12.2 12.0 11.1 10.6 Performance 12M 6M 3M 1M P/CE (x) 7.0 7.0 6.7 6.4 in TRY 4.9% -2.1% 8.3% 7.8% Dividend Yield 0.0% 13.9% 4.5% 4.7% Share price (TRY) close as of 23/09/2013 11.8 Reuters TCELL.IS Free float 34.7% Number of shares (mn) 2,200.0 Bloomberg TCELL TI Shareholders Turkcell Holding (51.0%) Market capitalization (TRY mn / EUR mn) 25,960 / 9,689 Div. Ex-date Sonera Holding (13.07%) Enterprise value (TRY mn / EUR mn) 20,886 / 7,796 Target price 14.5 Homepage: www.turkcell.com.tr Growth story remains intact Analyst: Vera Sutedja, MBA, CFA +43 (0)5 0100-11905 mariaveronika.sutedja@erstegroup.com We upgrade Turkcell from Accumulate to Buy, while maintaining our target price of TRY 14.5. Turkcell offers strong domestic revenue growth, stable margins and large amounts of USD cash as a natural hedge against TRY devaluation. We expect EBITDA margin improvement in Ukraine and Superonline and a slightly declining domestic EBITDA margin in the medium term. We estimate an EBITDA CAGR 2012-2017e of 6.5%, which is among the highest in our coverage. Not a dividend story. We expect shareholder disputes to continue and delay any dividend decisions. Based on the new law, the CMB would appoint an Investor Compensation Committee if TCELL fails to hold AGM for two years (2014 and 2015). This committee could exercise general assembly rights, including dividend decisions, without convening any general assembly. Therefore, TCELL should pay a dividend by 2015 at the latest. Regulatory measures as of July 1, 2013, mean that a higher minimum onnet voice price should affect TCELL s competitiveness negatively. Its pricing would remain at a premium compared to competitors. Nevertheless, its superior network quality, with 3G coverage at 84%, its own series of smartphones and tablets, and various innovative services for customers and corporates should compensate for the premium price. Erste Group Research Sector Report Page 62

Turkcell Iletisim Hizmetleri AS Wireless Turkey Update on BoD structure The BoD of TCELL is now complete, consisting of five independent members and two from TeliaSonera. Some decisions, such as dividends and the approval of historical accounts can only be approved by the General Assembly (GA). As long as the dispute between Alfa and Cukurova continues, a GA is unlikely to take place, and consequently dividends are unlikely to be approved. Latest status on shareholder dispute The Privy Council has granted Cukurova more time (on top of the original 60 days) to raise the USD 1.56bn needed to redeem its stake in Turkcell from Alfa. No deadline for payment, but parties could ask for one after December 1 or if circumstances change, such as if the US Court of Appeal allows Cukurova to put up its Turkcell shares as loan collateral. Payment of interest to Alfa was suspended as of July 29, 2013. The Privy Council implied that the court action in the US could prevent Cukurova from raising the necessary funds to redeem the Turkcell shares. Background: TeliaSonera sued Cukurova in the International Chamber of Commerce for selling Turkcell shares to Alfa in 2005, despite a binding purchase agreement between TeliaSonera and Cukurova. TeliaSonera won the case and was granted a final award of USD 932mn + interest, to be paid by Cukurova. As Cukurova did not pay, TeliaSonera went to the US Court, asking it to freeze Cukurova s assets including the Turkcell shares. Turkcell is also registered as a company in the US. This resulted in considerable difficulties for Cukurova when raising financing using Turkcell stake as collateral. Next events to be expected: The US Court of Appeal is due to decide in September or October 2013 whether to unfreeze Cukurova s Turkcell stake After a decision is made, any dissatisfied party could ask for a hearing in the Supreme Court The Supreme Court would decide to conduct or reject any hearing We therefore think that the shareholder dispute is likely to continue for some time. Change in estimates. We lower our 2013 earnings, as we estimate higher direct cost of revenues (mainly driven by interconnection costs). We also estimate lower net financial results, as interest incomes were smaller than expected, despite rising net cash. We assume dividends for 2010-13 to be paid together in 2014, based on a 50% payout ratio. However, we cannot rule out further delay in dividend payment, due to shareholder dispute. Erste Group Research Sector Report Page 63

Turkcell Iletisim Hizmetleri AS Wireless Turkey Change in estimates Consolidated, CMB 2013e 2014e (TRY, mn) Now Old Change Now Old Change Revenues 11,365 11,205 1.4% 12,028 11,973 0.5% EBITDA 3,393 3,459-1.9% 3,640 3,698-1.6% EBIT 1,876 1,972-4.9% 2,106 2,227-5.4% Net income 2,159 2,335-7.5% 2,332 2,558-8.8% EPS (TRY) 0.98 1.06-7.4% 1.06 1.16-8.6% Dividend (TRY) 1.64 0.53 208.6% 0.53 0.58-8.6% Source: Erste Group Research Turkcell Turkey and domestic fiber-based broadband Superonline as revenue growth drivers We expect slight EBITDA margin erosion for Turkcell Turkey, driven by competition Revenue development in TRY TRYmn 2011 2012 2013e 2014e 2015e 2016e 2017e Turkcell 8,009 8,679 9,136 9,435 9,765 10,126 10,511 % yoy 0.5% 8.4% 5.3% 3.3% 3.5% 3.7% 3.8% % of sales 85.5% 82.6% 80.4% 78.4% 76.7% 75.4% 74.4% Superonline 461 684 903 1,129 1,355 1,558 1,713 % yoy 37.4% 48.6% 32.0% 25.0% 20.0% 15.0% 10.0% % of sales 4.9% 6.5% 7.9% 9.4% 10.6% 11.6% 12.1% Euroasia (Ukraine) 612 721 819 921 1,027 1,135 1,254 % yoy 21.6% 17.8% 13.6% 12.4% 11.6% 10.5% 10.4% % of sales 6.5% 6.9% 7.2% 7.7% 8.1% 8.5% 8.9% Belarussian Tel 90 111 134 153 176 201 226 % yoy 23.2% 22.5% 20.5% 14.9% 15.0% 13.8% 12.7% % of sales 1.0% 1.1% 1.2% 1.3% 1.4% 1.5% 1.6% Others 199 312 374 390 402 405 423 % yoy 61.7% 57.0% 19.6% 4.3% 3.2% 0.7% 4.5% Group revenues 9,370 10,507 11,365 12,028 12,726 13,425 14,128 % yoy 4.1% 12.1% 8.2% 5.8% 5.8% 5.5% 5.2% Source: Erste Group estimates, Company data EBITDA development in TRY TRYmn 2011 2012 2013e 2014e 2015e 2016e 2017e Turkcell 2,514 2,710 2,786 2,878 2,969 3,068 3,174 % yoy -6.2% 7.8% 2.8% 3.3% 3.2% 3.4% 3.5% margin 31.4% 31.2% 30.5% 30.5% 30.4% 30.3% 30.2% Euroasia (Ukraine) 158 205 241 280 323 368 401 % yoy 62.8% 29.8% 17.3% 16.2% 15.3% 14.0% 9.1% margin 25.8% 28.5% 29.4% 30.4% 31.4% 32.4% 32.0% Belarussian Tel -23-10 0 4 9 15 23 % yoy nm. nm. nm. nm. 130.0% 70.6% 50.3% margin -25.4% -8.7% 0.0% 2.5% 5.0% 7.5% 10.0% Superonline 82 143 226 327 420 514 600 % yoy 148.0% 74.6% 58.4% 45.0% 28.3% 22.4% 16.7% margin 17.7% 20.8% 25.0% 29.0% 31.0% 33.0% 35.0% Others 88 121 140 151 149 144 138 % yoy -46.8% 38.2% 15.8% 7.6% -1.6% -2.9% -4.3% margin 44.0% 38.8% 37.5% 38.7% 36.9% 35.6% 32.6% Group EBITDA 2,818 3,169 3,393 3,640 3,869 4,109 4,336 % yoy -3.7% 12.4% 7.1% 7.3% 6.3% 6.2% 5.5% margin 31.1% 30.9% 29.9% 30.3% 30.4% 30.6% 30.7% Erste Group Research Sector Report Page 64

Turkcell Iletisim Hizmetleri AS Wireless Turkey Much lower USD and EUR net exposure leads to limited FX losses during TRY devaluation Limited FX impact. Turkcell had a large amount of cash denominated in USD USD 829.1mn in 2Q13. This provides a natural hedge against the current TRY devaluation. The TRY has depreciated by 4.9% q/q against the USD and 6.4% q/q against the EUR in 3Q13. We estimate slight FX losses of TRY 28mn for TCELL, compared to TRY 300mn for TTKOM in 3Q13e. Net USD and EUR exposure in 2Q13 Operator USDmn EURmn Turkcell -641.0 56.5 Turk Telekom -2,051.3-1,214.1 Source: Companies data Erste Group Research Sector Report Page 65

WACC WACC Erste Group Research Erste Sector Telecom Turkcell Iletisim Hizmetleri AS Wireless Turkey WACC calculation 2014e 2015e 2016e 2017e 2018e 2019e (TV) Risk free rate 9.0% 9.0% 9.0% 9.0% 9.0% 8.5% Equity risk premium 7.2% 7.2% 7.2% 7.2% 7.2% 6.7% Beta 0.9 0.9 0.9 0.9 0.9 0.9 Cost of equity 15.1% 15.1% 15.1% 15.1% 15.1% 14.2% Cost of debt 11.0% 11.0% 11.0% 11.0% 11.0% 10.5% Effective tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% After-tax cost of debt 8.8% 8.8% 8.8% 8.8% 8.8% 8.4% Equity weight 100% 100% 100% 100% 100% 100% WACC 15.1% 15.1% 15.1% 15.1% 15.1% 14.2% DCF valuation (TRY mn) 2014e 2015e 2016e 2017e 2018e 2019e (TV) Sales growth 5.8% 5.8% 5.5% 5.2% 5.0% 5.0% EBIT 2,105.8 2,304.4 2,498.0 2,671.4 2,804.8 3,099.6 EBIT margin 17.5% 18.1% 18.6% 18.9% 18.9% 19.9% Tax rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Taxes on EBIT -421.2-460.9-499.6-534.3-561.0-619.9 NOPLAT 1,684.6 1,843.5 1,998.4 2,137.1 2,243.9 2,479.7 + Depreciation 1,533.9 1,564.2 1,611.3 1,664.7 1,770.4 1,400.0 Capital expenditures / Depreciation 110.8% 111.9% 114.8% 114.1% 110.1% 110.0% +/- Change in working capital -55.2-46.2-49.9-27.3-39.1-14.8 Chg. working capital / chg. Sales -8.3% -6.6% -7.1% -3.9% -5.5% -2.0% - Capital expenditures -1,700.0-1,750.0-1,850.0-1,900.0-1,950.0-1,540.0 Free cash flow to the firm 1,463.3 1,611.5 1,709.9 1,874.5 2,025.2 2,324.8 Terminal value growth 6.0% Terminal value 30,228.0 Discounted free cash flow - Dec 31 2013 1,271.6 1,216.9 1,122.0 1,068.9 1,003.5 14,978.1 Enterprise value - Dec 31 2013 20,661.0 Minorities 0.0 Litigation risks -303.6 incl. dispute with TTKOM regarding intl voice traffic Net debt as of Dec 31 2013-4,912.4 Fintur at 5x EV/EBITDA 3,493.4 Equity value - Dec 31 2013 28,763.1 Number of shares outstanding (mn) 2,200.0 Cost of equity 15.1% 12M target price per share (TRY) 14.5 Current share price (TRY) 11.8 Up/Downside 23.1% Enterprise value breakdown PV of terminal value 72% PV of detailed period 28% Sensitivity (per share) Terminal value EBIT margin 15 15.9% 17.9% 19.9% 21.9% 23.9% 13.2% 13.7 14.7 15.6 16.5 17.4 13.7% 13.3 14.2 15.0 15.9 16.7 14.2% 12.9 13.7 14.5 15.3 16.1 14.7% 12.6 13.3 14.1 14.9 15.6 15.2% 12.3 13.0 13.7 14.4 15.1 Terminal value growth 15 4.0% 5.0% 6.0% 7.0% 8.0% 13.2% 13.6 14.5 15.6 17.1 19.2 13.7% 13.2 14.0 15.0 16.3 18.1 14.2% 12.9 13.6 14.5 15.7 17.2 14.7% 12.6 13.3 14.1 15.1 16.4 Source: Factset, Erste Group Research 15.2% 12.4 13.0 13.7 14.6 15.7 Erste Group Research Sector Report Page 66

Turkcell Iletisim Hizmetleri AS Wireless Turkey Income Statement 2010 2011 2012 2013e 2014e 2015e (IAS, TRY mn, 31/12) 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 Net sales 9,003.61 9,370.07 10,507.03 11,365.08 12,027.79 12,725.92 Cost of goods sold -5,030.19-5,948.76-6,482.15-7,137.27-7,457.23-7,851.89 Gross profit 3,973.43 3,421.31 4,024.88 4,227.81 4,570.56 4,874.03 SG&A -2,155.79-2,095.81-2,189.90-2,284.38-2,393.53-2,494.28 Other operating revenues 22.56 53.99 32.35 34.99 37.03 39.18 Other operating expenses -96.84-271.25-137.64-102.29-108.25-114.53 EBITDA 2,926.32 2,818.34 3,168.73 3,393.25 3,639.73 3,868.55 Depreciation/amortization -1,182.96-1,710.10-1,439.04-1,517.12-1,533.93-1,564.16 EBIT 1,743.36 1,108.24 1,729.69 1,876.13 2,105.81 2,304.39 Financial result 448.70 517.83 855.93 857.33 855.22 822.90 Extraordinary result 0.00 0.00 0.00 0.00 0.00 0.00 EBT 2,192.06 1,626.07 2,585.62 2,733.46 2,961.02 3,127.29 Income taxes -485.37-486.06-523.59-595.90-645.50-681.75 Result from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 Minorities and cost of hybrid capital 64.91 43.26 21.01 21.38 16.21 9.78 Net result after minorities 1,771.60 1,183.26 2,083.05 2,158.94 2,331.73 2,455.33 Balance Sheet 2010 2011 2012 2013e 2014e 2015e (IAS, TRY mn, 31/12) Intangible assets 2,617.54 2,332.51 2,292.15 1,917.27 1,598.63 1,334.15 Tangible assets 4,729.32 5,106.43 5,447.16 6,004.91 6,489.63 6,939.94 Financial assets 884.26 1,270.51 1,112.15 1,639.53 1,721.38 1,810.18 Total fixed assets 8,231.11 8,709.45 8,851.45 9,561.72 9,809.63 10,084.27 Inventories 37.70 49.24 87.18 95.99 100.29 105.60 Receivables and other current assets 1,714.03 2,047.67 2,649.53 2,865.90 3,033.01 3,209.06 Other assets 4.47 6.23 26.44 26.44 26.44 26.44 Cash and cash equivalents 5,108.71 6,334.45 7,038.45 7,038.45 5,478.40 5,866.59 Total current assets 6,864.91 8,437.58 9,801.59 10,026.78 8,638.14 9,207.68 TOTAL ASSETS 15,096.02 17,147.03 18,653.04 19,588.49 18,447.77 19,291.96 Shareholders'equity 9,635.79 10,907.84 12,875.26 15,034.20 13,767.51 15,056.97 Minorities -37.13-114.34-140.32-161.70-177.91-187.69 Hybrid capital and other reserves 0.00 0.00 0.00 0.00 0.00 0.00 Pension and other LT personnel accruals 134.19 163.35 339.31 367.02 388.42 410.97 LT provisions 0.00 0.00 0.00 0.00 0.00 0.00 Interest-bearing LT debts 2,212.44 2,031.22 1,161.04 1,161.04 1,161.04 1,161.04 Other LT liabilities 347.98 261.61 225.99 231.96 236.57 241.43 Total long-term liabilities 2,560.41 2,292.83 1,387.03 1,393.00 1,397.61 1,402.46 Interest-bearing ST debts 690.85 1,563.29 2,037.62 598.04 598.04 0.00 Other ST liabilities 2,111.92 2,334.07 2,154.15 2,357.93 2,474.10 2,609.25 Total short-term liabilities 2,802.77 3,897.36 4,191.77 2,955.97 3,072.15 2,609.25 TOTAL LIAB., EQUITY 15,096.02 17,147.03 18,653.04 19,588.49 18,447.77 19,291.96 Cash Flow Statement 2010 2011 2012 2013e 2014e 2015e (IAS,TRY mn, 31/12) Cash flow from operating activities 1,920.33 1,995.96 2,123.25 2,666.54 3,267.10 3,455.11 Cash flow from investing activities -1,100.67-2,716.01 543.42-1,700.00-1,700.00-1,750.00 Cash flow from financing activities -525.55 1,631.46-1,868.98-966.54-3,127.16-1,316.92 CHANGE IN CASH, CASH EQU. 361.78 1,225.74 704.01 0.00-1,560.05 388.19 Margins & Ratios 2010 2011 2012 2013e 2014e 2015e Sales growth 0.8% 4.1% 12.1% 8.2% 5.8% 5.8% EBITDA margin 32.5% 30.1% 30.2% 29.9% 30.3% 30.4% EBIT margin 19.4% 11.8% 16.5% 16.5% 17.5% 18.1% Net profit margin 19.0% 12.2% 19.6% 18.8% 19.3% 19.2% ROE 19.2% 11.5% 17.5% 15.5% 16.2% 17.0% ROCE 20.2% 10.5% 18.8% 16.7% 17.7% 18.7% Equity ratio 63.6% 62.9% 68.3% 75.9% 73.7% 77.1% Net debt -2,071.2-2,576.6-3,500.5-4,912.4-3,330.9-4,294.6 Working capital 4,057.7 4,534.0 5,583.4 7,044.4 5,539.6 6,572.0 Capital employed 7,875.4 8,478.5 9,460.4 10,192.1 10,495.3 10,816.1 Inventory turnover 125.5 136.8 95.0 77.9 76.0 76.3 Source: Company data, Erste Group estimates Erste Group Research Sector Report Page 67

Contacts Group Research Head of Group Research Friedrich Mostböck, CEFA +43 (0)5 0100 11902 Major Markets & Credit Research Head: Gudrun Egger, CEFA +43 (0)5 0100 11909 Adrian Beck (Fixed income AT, CH) +43 (0)5 0100 11957 Hans Engel (Senior Analyst International Equities) +43 (0)5 0100 19835 Christian Enger, CFA (Covered Bonds) +43 (0)5 0100 84052 Mildred Hager-Germain (Senior Economist, Euro, US) +43 (0)5 0100 17331 Alihan Karadagoglu (Senior Analyst Corporate Bonds) +43 (0)5 0100 19633 Peter Kaufmann (Corporate Bonds) +43 (0)5 0100 11183 Stephan Lingnau (International Equities) +43 (0)5 0100 16574 Elena Statelov, CIIA (Corporate Bonds) +43 (0)5 0100 19641 Gerald Walek, CFA (Economist Euro) +43 (0)5 0100 16360 Katharina Böhm-Klamt (Student Analyst Euro) +43 (0)5 0100 19632 Lisa-Maria Sommer (Student Analyst Euro) +43 (0)5 0100 19632 Macro/Fixed Income Research CEE Head CEE: Juraj Kotian (Macro/FI) +43 (0)5 0100 17357 CEE Equity Research Head: Henning Eßkuchen +43 (0)5 0100 19634 Chief Analyst: Günther Artner, CFA (CEE Equities) +43 (0)5 0100 11523 Günter Hohberger (Banks) +43 (0)5 0100 17354 Franz Hörl, CFA (Basic Resources) +43 (0)5 0100 18506 Daniel Lion, CIIA (Technology, Ind. Goods&Services) +43 (0)5 0100 17420 Thomas Unger; CFA (Insurance, Miscellaneous) +43 (0)5 0100 17344 Vera Sutedja, CFA (Telecom) +43 (0)5 0100 11905 Vladimira Urbankova, MBA (Pharma) +43 (0)5 0100 17343 Martina Valenta, MBA (Real Estate) +43 (0)5 0100 11913 Editor Research CEE Brett Aarons +420 956 711 014 Deniz Gurgen +90 212 371 2538 Research Croatia/Serbia Head: Mladen Dodig (Equity) +381 11 22 09 178 Head: Alen Kovac (Fixed income) +385 62 37 1383 Anto Augustinovic (Equity) +385 62 37 2833 Ivana Rogic (Fixed income) +385 62 37 2419 Davor Spoljar; CFA (Equity) +385 62 37 2825 Research Czech Republic Head: David Navratil (Fixed income) +420 224 995 439 Petr Bittner (Fixed income) +420 224 995 172 Head: Petr Bartek (Equity) +420 224 995 227 Vaclav Kminek (Media) +420 224 995 289 Katarzyna Rzentarzewska (Fixed income) +420 224 995 232 Martin Krajhanzl (Equity) +420 224 995 434 Martin Lobotka (Fixed income) +420 224 995 192 Lubos Mokras (Fixed income) +420 224 995 456 Josef Novotný (Equity) +420 224 995 213 Research Hungary Head: József Miró (Equity) +361 235-5131 András Nagy (Equity) +361 235-5132 Orsolya Nyeste (Fixed income) +361 373-2026 Tamás Pletser, CFA (Oil&Gas) +361 235-5135 Zoltan Arokszallasi (Fixed income) +361 373-2830 Research Poland Head: Magdalena Komaracka, CFA (Equity) +48 22 330 6256 Marek Czachor (Equity) +48 22 330 6254 Tomasz Duda (Equity) +48 22 330 6253 Adam Rzepecki (Equity) +48 22 330 6252 Michal Zasadzki (Equity) +48 22 330 6251 Research Romania Head: Mihai Caruntu (Equity) +40 3735 10427 Head: Dumitru Dulgheru (Fixed income) +40 3735 10433 Chief Analyst: Eugen Sinca (Fixed income) +40 3735 10435 Dorina Cobiscan (Fixed Income) +40 3735 10436 Raluca Ungureanu (Equity) +40 3735 10428 Marina Alexandra Spataru (Equity) +40 3735 10429 Research Slovakia Head: Maria Valachyova (Fixed income) +421 2 4862 4185 Martin Balaz (Fixed income) +421 2 4862 4762 Research Turkey Head: Can Yurtcan +90 212 371 2540 Evrim Dairecioglu (Equity) +90 212 371 2535 M. Görkem Göker (Equity) +90 212 371 2534 Sezai Saklaroglu (Equity) +90 212 371 2533 Nilufer Sezgin (Fixed income) +90 212 371 2536 Ilknur Unsal (Equity) +90 212 371 2531 Group Institutional & Retail Sales Institutional Equity Sales Core Markets Head: Brigitte Zeitlberger-Schmid +43 (0)5 0100 83123 Cash Equity Sales Hind Al Jassani +43 (0)5 0100 83111 Werner Fuerst +43 (0)5 0100 83121 Josef Kerekes +43 (0)5 0100 83125 Cormac Lyden, CFA +43 (0)5 0100 83127 Stefan Raidl +43 (0)5 0100 83113 Simone Rentschler +43 (0)5 0100 83124 Derivative Sales Christian Luig +43 (0)5 0100 83181 Sabine Kircher +43 (0)5 0100 83161 Christian Klikovich +43 (0)5 0100 83162 Armin Pfingstl +43 (0)5 0100 83171 Roman Rafeiner +43 (0)5 0100 83172 Institutional Equity Sales London Declan Wooloughan +44 20 7623 4154 Institutional Equity Sales Croatia Damir Eror (Equity) + 385 62 37 2836 Zeljka Kajkut (Equity) +38 562 37 28 11 Institutional Sales Czech Republic Head: Michal Rizek +420 224 995 537 Pavel Krabicka (Equity) +420 224 995 411 Radim Kramule (Equity) +420 224 995 537 Jiri Smehlik (Equity) +420 224 995 510 Tomas Vender (Equity) +420 224 995 593 Institutional Sales Hungary Gregor Glatzer (Equity) +361 235 5144 Attila Preisz (Equity) +361 235 5140 Norbert Siklosi (Fixed income) +361 235 5842 Institutional Equity Sales Poland Pawel Czuprynski (Equity) +4822 330 6212 Jacek Krysinski (Equity) +4822 330 6218 Emil Onyszczuk (Equity) +48 22 330 62 14 Grzegorz Stepien (Equity) +48 22 330 6211 Institutional Equity Sales Turkey Simin Öz Gerards (Head) +9 0212 371 2525 Murat Guneren (Equity) +9 0212 371 2521 Varol Guzel (Equity) +9 0212 371 2523 Mine Yoruk (Equity) +9 0212 371 2526 Ebru Doganay Percin (Equity) +9 0212 371 2522 Institutional Equity Sales Slovakia Head: Dusan Svitek +48 62 56 20 Andrea Slesarova (Client sales) +48 62 56 27 Saving Banks & Sales Retail Head: Thomas Schaufler +43 (0)5 0100 84225 Equity Retail Sales Head: Kurt Gerhold +43 (0)5 0100 84232 Fixed Income & Certificate Sales Head: Uwe Kolar +43 (0)5 0100 83214 Treasury Domestic Sales Head: Markus Kaller +43 (0)5 0100 84239 Corporate Sales AT Mag. Martina Kranzl +43 (0)5 0100 84147 Karin Rattay +43 (0)5 0100 84112 Mag. Markus Pistracher +43 (0)5 0100 84152 Günther Gneiss +43 (0)5 0100 84145 Jürgen Flassak, MA +43 (0)5 0100 84141 Antonius Burger-Scheidlin, MBA +43 (0)5 0100 84624 Fixed Income Institutional Desk Head G7: Thomas Almen +43 (0)5 0100 84323 Head Germany: Ingo Lusch +43 (0)5 0100 84111 Fixed Income International & High End Sales Vienna Jaromir Malak/ Zach Carvell +43 (0)5 100 84254 U. Inhofner/ P. Zagan/ C. Mitu +43 (0)5 100 84254 Fixed Income International Sales London Antony Brown +44 20 7623 4159 Erste Group Research Sector Report Page 68

Magyar Telekom 600 550 500 450 400 350 300 23.03 23.04 19.06 H R H 18.06 R 250 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history 18. Jun 13 Reduce 337.00 330.00 19. Jun 12 Hold 454.00 470.00 23. Apr 12 Reduce 524.00 500.00 08. Sep 11 Hold 505.00 550.00 06. May 11 Accumulate 559.00 640.00 09. Sep 10 Hold 697.00 720.00 14. May 10 Accumulate 665.00 770.00 23. Apr 10 Hold 800.00 800.00 12. Feb 10 Accumulate 699.00 800.00 17. Jun 09 Hold 604.00 625.00 29. Mar 07 Accumulate 940.00 1100.00 25. Sep 06 Hold 876.00 970.00 24. May 06 Accumulate 841.00 1040.00 05. Oct 05 Hold 1060.00 1100.00 02. Jan 04 Buy 790.00 Company description 1120.00 Magyar Telekom offers voice, mobile, data transmission, IT services, as well as TV and internet access in Hungary. It owns 100% of its mobile subsidiary T-Mobile Hungary. The company is the market leader in both fixed and mobile services in Hungary. International activities include Maktel, the incumbent and leading mobile service provider in Macedonia and Telekom Montenegro, the incumbent and leading mobile service provider in Montenegro. The stock is listed in Budapest since 14 Nov 1997 and was listed New York Stock Exchange until 12 November 2010. Netia 6.5 Rating history Date Rating Price Target Price 06. Dec 12 Reduce 4.84 4.30 6.0 5.5 5.0 4.5 4.0 3.5 06.12 R Company description Netia is the largest alternative telecom operator in Poland, with a 20% share in fixed line voice and a 14.3% share in fixed broadband in 2Q12. After acquiring Telefonia Dialog and Crowley Data Poland in 4Q11, Netia gained a considerable size. The shares are traded at Warsaw Stock Exchange since June 2000. 3.0 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Erste Group Research Sector Report Page 69

T-Hrvatski Telekom 260 250 240 230 220 210 200 190 180 170 160 23.03 H 26.09 A 17.05 H 150 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history Date Rating Price Target Price 17. May 13 Hold 211.80 220.00 26. Sep 12 Accumulate 198.02 234.00 12. Feb 10 Hold 301.99 310.00 03. Aug 09 Accumulate 227.80 260.00 07. May 09 Buy 220.10 300.00 13. Oct 07 Accumulate 400.00 Company description T-HT is the market leader in telecom services in Croatia with a 79% share in fixed telephony access, a 45% share in mobile users a 79% share in fixed broadband access and a 59% share in pay TV users in 1H12. T-HT boasts the largest distribution network in Croatia and a superior nationwide network infrastructure. T-HT is listed in Zagreb and London (GDR) since October 5, 2007. In Bosnia-Herzegovina T-HT owns a 39.1% stake in HT Mostar and a 30.2% stake in HP Mostar. T-HT bought IT company Combis in May 2010, whose market share reached 11% in 2011. Telefónica CR 420 400 380 360 340 320 300 280 260 240 23.03 H 08.11 R 220 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history 08. Nov 12 Reduce 380.00 360.00 05. May 11 Hold 414.00 450.00 11. Nov 10 Accumulate 391.00 450.00 23. Mar 10 Hold 445.00 480.00 13. Oct 09 Accumulate 437.50 500.00 12. Aug 09 Hold 477.20 500.00 11. Mar 08 Buy 520.30 700.00 02. Nov 07 Accumulate 588.50 650.00 08. Mar 07 Hold 546.70 600.00 04. May 06 Buy 498.80 608.00 16. Sep 05 Accumulate 461.30 496.00 17. Jun 04 Restricted 320.80 05. Dec 03 Buy 272.00 320.00 22. Sep 03 Hold 274.80 31. Jul 03 Buy 291.30 Company description Telefónica Czech Republic is an integrated operator formed on July 1, 2006 via the merger of the leading fixed line operator, Cesky Telecom, and the mobile operator, Eurotel Praha, into a single organization. The company was privatized in April 2005, when Telefónica bought 51% of the shares for CZK 82.2bn (CZK 502/share). Telefónica later increased its stake through a buyout tender to 69.4% (at CZK 456), the rest remains free float. The company bought the third wireless license in Slovakia for EUR 4.1mn in August 2006, offering services since February 2, 2007. Erste Group Research Sector Report Page 70

Telekom Austria 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 23.03 R 20.06 A 17.0826.09 H S 4.0 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history 26. Sep 12 Sell 5.71 5.00 17. Aug 12 Hold 6.91 7.00 20. Jun 12 Accumulate 8.05 9.00 02. Feb 12 Reduce 8.96 8.20 23. Aug 11 Sell 7.49 5.50 04. Feb 11 Hold 10.31 11.00 29. Nov 10 Reduce 10.91 11.00 30. Apr 09 Hold 10.01 11.00 28. Aug 08 Accumulate 14.58 16.60 02. Sep 05 Hold 17.14 17.50 03. Aug 04 Accumulate 12.46 14.00 25. Aug 03 Buy 9.67 Company description Telekom Austria (TA) is the largest telecommunications company in Austria and has been listed on the Vienna Stock Exchange since November 2000. The fixed net segment comprises fixedline, data, wholesale and internet activities. The wireless segment encompasses mobilkom austria, the Austrian market leader, as well as Velcom in Belarus, Vipnet in Croatia, Si.mobil in Slovenia and MobilTel in Bulgaria. TA started greenfield wireless operations in Macedonia and Serbia (2H 2007). TA intends to expand (acquisitions) in SEE. Telekom Slovenije 120 110 100 90 80 70 60 50 23.03 A 26.09 H 40 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history Date Rating Price Target Price 26. Sep 12 Hold 76.00 74.00 16. Mar 12 Accumulate 67.25 85.00 01. Mar 12 Under review 66.10 85.00 27. May 11 Accumulate 73.00 85.00 09. Sep 10 Hold 88.42 94.00 17. Jun 09 Reduce 169.31 160.00 27. May 08 Hold 246.89 270.00 04. Dec 07 Not rated 404.42 Company description Telekom Slovenije is the market leader in fixed line, internet and mobile segments in Slovenia. It also owns leading ISPs in Albania, Kosovo, Macedonia and Srpska, incumbent Gibtelecom in Gibraltar, Cosmofon (the second mobile operator in Macedonia) and the second GSM licence in Kosovo. The company aims to reach 50% mobile market share in Kosovo by 2012. Erste Group Research Sector Report Page 71

TPSA 20 18 16 14 12 10 8 6 23.03 A 18.10 R 22.03 H 4 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history Date Rating Price Target Price 22. Mar 13 Hold 6.75 7.00 18. Oct 12 Reduce 13.63 12.50 02. Feb 12 Accumulate 17.19 19.50 08. Sep 11 Reduce 17.70 16.00 29. Oct 10 Sell 18.15 16.00 06. Sep 10 Reduce 16.60 16.00 30. Jul 10 Hold 15.91 16.50 15. Mar 10 Sell 16.07 14.00 02. Nov 09 Reduce 17.01 15.50 17. Jun 09 Accumulate 16.00 20.50 12. Feb 08 Hold 23.28 23.00 21. Feb 07 Reduce 25.10 24.00 25. Sep 06 Hold 20.19 21.50 18. Mar 04 Buy 16.10 20.20 28. Nov 03 Hold 14.00 14.60 14. Aug 03 Buy 14.95 Company description Telekomunikacja Polska is the dominant player in the Polish telecommunications market with a 63.7% share in fixed lines, a 35.2% share in fixed broadband and a 30.8% share in mobile users in 4Q10. Orange Polska (formerly PTK Centertel), a 100% owned subsidiary of TP SA, had 14.3mn mobile customers in 4Q10 and is the biggest mobile operator in Poland. France Telecom is the strategic investor in the company, controlling 49.79% of TPSA. Turkcell Iletisim Hizmetleri AS 15 14 13 12 11 10 9 8 23.03 A 09.08 H 25.01 A 7 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Rating history Date Rating Price Target Price 25. Jan 13 Accumulate 12.00 14.50 09. Aug 12 Hold 9.70 10.50 02. Feb 12 Accumulate 9.34 10.50 08. Sep 11 Hold 8.02 8.30 29. Apr 11 Reduce 8.98 8.50 10. May 10 Hold 8.90 9.40 Company description The largest mobile operator in Turkey with 35.1mn clients or 52.0% market share (4Q12). Through its 41.45% stake in Fintur, Turkcell had 21.3mn mobile users in Azerbaijan, Kazakhstan, Georgia and Moldova (4Q12). Turkcell owns indirectly 55% of Astelit, the 3rd mobile operator in Ukraine with 8mn active users or 14% market share (4Q12). In 2008 Turkcell bought 80% of BeST, the 3rd mobile operator in Belarus with 1.1mn users or 10% market share (4Q12). Turkcell owns 100% mobile operator Kibris Telekom in Northern Cyprus. The shares are traded on Istanbul and NYSE. Erste Group Research Sector Report Page 72

Turk Telekomunikasyon AS 9.0 8.5 Rating history Date Rating Price Target Price 21. Jun 12 Accumulate 6.76 8.00 02. Feb 12 Hold 8.08 8.70 10. May 10 Buy 5.60 7.00 8.0 7.5 7.0 6.5 6.0 23.03 H 21.06 A 5.5 Dez 11 Mär 12 Jun 12 Sep 12 Dez 12 Mär 13 Jun 13 Sep 13 Target price 12 m fwd Company description Türk Telekom is the incumbent in Turkey, operating 14.3mn fixed lines and 7mn broadband lines in 4Q12. It owns 81.4% stakes in Avea, the third largest mobile operator in Turkey, with 13.5mn subscribers and 20% market share in 4Q12. It also owns 15.2% stake in incumbent Albtelecom. Türk Telekom shares are listed in Istanbul since May 2008. Erste Group Research Sector Report Page 73

Important Disclosures THIS DOCUMENT MAY NOT BE TAKEN, TRANSMITTED OR DISTRIBUTED INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR TO ANY U.S. PERSON OR TO ANY INDIVIDUAL OUTSIDE CANADA, AUSTRALIA OR JAPAN WHO IS A RESIDENT OF THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR TO THE PRESS IN THESE COUNTRIES General disclosures All recommendations given by Erste Group Research are independent and based on the latest company, industry and general information publicly available. The best possible care and integrity is used to avoid errors and/or misstatements. No influence on the rating and/or target price is being exerted by either the covered company or other internal Erste Group departments. Each research piece is reviewed by a senior research executive or agreed with a senior analyst/deputy (4-eyed principle). Erste Group Compliance Rules state that no analyst is allowed to hold a direct ownership position in securities issued by the covered company or derivatives thereof. Analysts are not allowed to involve themselves in any paid activities with the covered companies except as disclosed otherwise. No part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or views expressed by them contained in this document. Erste Group may engage in transactions with financial instruments, on a proprietary basis or otherwise, in a manner inconsistent with the view taken in this research report. In addition, others within Erste Group, including strategists and sales staff, may take a view that is inconsistent with that taken in this research report. Disclosure Checklist Company ISIN Disclosure Magyar Telekom HU0000073507 Netia PLNETIA00014 T-Hrvatski Telekom HRHT00RA0005 Telefónica CR CZ0009093209 2, 3 Telekom Austria AT0000720008 2, 5 Telekom Slovenije SI0031104290 TPSA PLTLKPL00017 Turk Telekomunikasyon AS TRETTLK00013 Turkcell Iletisim Hizmetleri AS TRATCELL91M1 Disclosures of potential conflicts of interest relating to Erste Group AG, its affiliates, subsidiaries (together Erste Group AG ) and its relevant employees with respect to the issuers, financial instruments and/or securities forming the subject of this document are valid as of the end of the month prior to publication of this document. Updating this information may take up to ten days after month end. Erste Group Research Sector Report Page 74

Description of specific disclosures (2) Erste Group AG and/or its affiliates act(s) as market maker or liquidity provider for securities issued by the covered company. (3) Erste Group AG and/or its affiliates have an agreement with the covered company relating to the provision of investment banking services or have received compensation during the past 12 months. (5) Erste Group AG and/or its affiliates managed or co-managed an issue of financial instruments/ securities for the company during the last 12 months. Erste Group rating definitions Buy Accumulate Hold Reduce Sell > +20% to target price +10% < target price < +20% 0% < target price < +10% -10% < target price < 0% < -10% to target price Our target prices are established by determining the fair value of stocks, taking into account additional fundamental factors and news of relevance for the stock price (such as M&A activities, major forthcoming share deals, positive/negative share/sector sentiment, news) and refer to 12 months from now. All recommendations are to be understood relative to our current fundamental valuation of the stock. The recommendation does not indicate any relative performance of the stock vs. a regional or sector benchmark. Distribution of ratings Coverage universe Inv. banking-relationship Recommendation No. in % No. in % Buy 47 25.3 6 30.0 Accumulate 60 32.3 4 20.0 Hold 44 23.7 6 30.0 Reduce 11 5.9 3 15.0 Sell 9 4.8 1 5.0 N.R./UND.REV./RESTR. 15 8.1 0 0.0 Total 186 100.0 20 100.0 Explanation of valuation parameters and risk assessment Unless otherwise stated in the text of the financial analysis/investment research, target prices in the publication are based on either a discounted cash flow valuation and/or comparison of valuation ratios with companies seen by the analyst as comparable or a combination of the two methods. The result of this fundamental valuation is adjusted to reflect the analyst's views on the likely course of investor sentiment. Whichever valuation method is used there is a significant risk that the target price will not be achieved within the expected timeframe. Risk factors include unforeseen changes in competitive pressures or in the level of demand for the company s products. Such demand variations may result from changes in technology, in the overall level of economic activity or, in some cases, from changes in social values. Valuations may also be affected by changes in taxation, in exchange rates and, in certain industries, in regulations. Investment in overseas markets and instruments such as ADRs can result in increased risk from factors such as exchange rates, exchange controls, taxation, political and social conditions. Erste Group Research Sector Report Page 75

Disclaimer This research report was prepared by Erste Group Bank AG ( Erste Group ) or its affiliate named herein. The individual(s) involved in the preparation of the report were at the relevant time employed in Erste Group or any of its affiliates. The report was prepared for Erste Group clients. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All opinions, forecasts and estimates herein reflect our judgment on the date of this report and are subject to change without notice. The report is not intended to be an offer, or the solicitation of any offer, to buy or sell the securities referred to herein. From time to time, Erste Group or its affiliates or the principals or employees of Erste Group or its affiliates may have a position in the securities referred to herein or hold options, warrants or rights with respect thereto or other securities of such issuers and may make a market or otherwise act as principal in transactions in any of these securities. Erste Group or its affiliates or the principals or employees of Erste Group or its affiliates may from time to time provide investment banking or consulting services to or serve as a director of a company being reported on herein. Further information on the securities referred to herein may be obtained from Erste Group upon request. Past performance is not necessarily indicative for future results and transactions in securities, options or futures can be considered risky. Any forecasts or price targets shown for companies and/or securities discussed in this document may not be achieved due to multiple risk factors including without limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information and/or the subsequent transpiration that underlying assumptions made by Erste Group AG or by other sources relied upon in the document were inapposite. Not all transactions are suitable for every investor. Investors should consult their advisor, to make sure that the planned investment fits into their needs and preferences and that the involved risks are fully understood. Neither Erste Group AG nor any of its respective directors, officers or employees accepts any responsibility or liability whatsoever for any expense, loss or damages arising out of or in any way connected with the use of all or any part of this document. Erste Group AG may provide hyperlinks to websites of entities mentioned in this document, however the inclusion of a link does not imply that Erste Group AG endorses, recommends or approves any material on the linked page or accessible from it. Erste Group AG does not accept responsibility whatsoever for any such material, nor for any consequences of its use. This document is for the use of the addressees only and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior, written consent of Erste Group AG. The manner of distributing this document may be restricted by law or regulation in certain countries, including the United States. Persons into whose possession this document may come are required to inform themselves about and to observe such restrictions. By accepting this document, a recipient hereof agrees to be bound by the foregoing limitations. Additional notes to readers in the following countries: Austria: Erste Group Bank AG is registered in the Commercial Register at Commercial Court Vienna under the number 33209m. Erste Group AG is authorized and regulated by the Austrian Financial Market Authority (FMA) (Otto-Wagner Platz 5, 1090, Vienna, Austria) Germany: Erste Group Bank AG is authorised for the conduct of investment business in Germany by the Austrian Financial Market Authority (FMA) and subject to limited regulation by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). United Kingdom: Erste Group Bank AG is regulated for the conduct of investment business in the UK by the Financial Conduct Authority and the Prudential Regulation Authority. This document is directed exclusively to eligible counterparties and professional clients. It is not directed to retail clients. No persons other than an eligible counterparty or a professional client should read or rely on any information in this document. Erste Group AG does not deal for or advise or otherwise offer any investment services to retail clients. Czech Republic: Česká spořitelna, a.s. is regulated for the conduct of investment activities in Czech Republic by the Czech National Bank (CNB) Croatia: Erste Bank Croatia is regulated for the conduct of investment activities in Croatia by the Croatian Financial Services Supervisory Agency (CFSSA) Hungary: Erste Bank Hungary ZRT. and Erste Investment Hungary Ltd. are regulated for the conduct of investment activities in Hungary by the Hungarian Financial Supervisory Authority (PSZAF). Serbia: Erste Group Bank AG is regulated for the conduct of investment activities in Serbia by the Securities Commission of the Republic of Serbia (SCRS). Romania: Banka Comerciala Romana is regulated for the conduct of investment activities in Romania by the Romanian National Securities Commission (CNVM). Poland: Erste Securities Polska S.A. is regulated for the conduct of investment activities in Poland by the Polish Financial Supervision Authority (PFSA). Slovakia: Slovenská sporiteľňa, a.s. is regulated for the conduct of investment activities in Slovakia by the National Bank of Slovakia (NBS). Turkey: Erste Securities İstanbul Menkul Değerler A.Ş. is regulated for the conduct of investment activities in Turkey by the Capital Markets Board of Turkey. As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses, portfolio management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations. Switzerland: This research report does not constitute a prospectus or similar communication in connection with an offering or listing of securities as defined in Articles 652a, 752 and 1156 of the Swiss Code of Obligation and the listing rules of the SWX Swiss Exchange. Hong Kong: This document may only be received in Hong Kong by professional investors within the meaning of Schedule 1 of the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made there under. Erste Group AG 2013. All rights reserved. Published by Erste Group Bank AG, Börsegasse 14, 1010 Vienna, Austria Head Office: Vienna Commercial Register No.: 33209m Commercial Court of Vienna Phone +43 (0)5 0100 - ext.11902 Erste Group Homepage: www.erstegroup.com On Bloomberg please type: EBS AV and then F8 GO Erste Group Research Sector Report Page 76