Telefónica O2 UK Company Profile

Telefónica O2 UK Company Profile

Telefónica O2 UK, We re better, connected Our approach to corporate responsibility is simple. It s characterized by our focus on getting things done. As a business, we know we can do more but we can also inspire and enable our customers to act on the things they care about. Companies get the reputation they deserve. And, during our sixyear history, we have applied our values and ethics, stakeholder dialogue and customer focus to create a successful and sustainable business. We also work hard to do the right things for our customers, our people, and the communities we operate in. The results can be seen in O2 customer satisfaction scores: 1st in 2007, and in our employee feedback; 87 per cent are proud to work here. Our industry must be accountable for its actions every day. At O2 we will put our customers first, canvass stakeholder opinion, and take a leading role. It s time for us all to take greater pride in our industry s reputation and build long-term confidence. While corporate responsibility issues do exist in the mobile and broadband industries, we think they also offer solutions - in the environment, the community and for our growing number of. As we move from being a mobile phone company to a total communications and entertainments business, we will focus on: Seizing the opportunities that faster data services bring to our customers, especially where our products can support UK households. For example, we are seeing great strides in the development of machine-to-machine applications that can enable customers to control their household appliances remotely to better manage their bills. Harnessing the scale and financial clout of our parent company Telefónica to invest in better networks, new products our customers want, and simple, value-for-money services for all. Enabling our people to put their energy into supporting the areas where they live and work, via our flagship partnership It s Your Community and other projects, such as crime prevention. I believe our future lies in giving our customers the best products and services on the market and building trust with everyone we touch. Ronan Dunne Chief Executive Officer Telefónica O2 UK

More than 18 million mobile subscribers 394 owned retail stores More than 13,000 in 2007 Our Body Customers We had more than 18 million mobile subscribers. We had more than 130,000 broadband subscribers within six months of launch and our research says that nine out of ten customers would recommend the product to friends and family. In 2007 over 3.5 million O2 customers were using more powerful 3G services. In 2007 we operated 4 customer service centres, 394 owned retail stores and a further 72 franchised outlets. In 2007 we had a milestone year. We launched: Fixed-line broadband services, following the acquisition of Be - offering a super-fast residential broadband service with speeds of up to 20Mb. The Apple iphone, the first single device on the UK market to offer a mobile phone, a wide screen ipod, and a mobile internet device. Our sponsorship of The O 2, operated by AEG Europe, which has hosted concerts by artists such as Prince, the Rolling Stones, Justin Timberlake and Led Zeppelin. Our Soul Inclusive Services We took part in the UK Government s Digital Inclusive Panel which contributed to the UK s Digital Strategy. We comply with the General Code 15 and the Code of Practice for Service Delivery for disabled and elderly people. We belong to the Employers Forum for the Disabled and the Two Ticks scheme, which raises disability awareness among employers. In 2007, total charitable cash donations were 1,031,494 During the year a total of 547 volunteered their time to social causes In 2007, we bought 18 per cent of our electricity from renewable sources Child Protection In 2006 we began to work closely with Childnet International, the charity for child internet safety, by launching a programme of education for parents on avoiding risks to children from mobile phones. Our Child Protection Champions, all volunteers, spread the child safety message to our customers during the year. We ran Protect our Children sessions to give them the skills needed to be able to offer good advice to our customers. In December 2006, Telefónica O2 UK launched an external Protect Our Children website in partnership with Childnet.

CUSTOMER ACCESSES (thousands) GENDER BREAKDOWN 2007 Dec 2006 Dec 2007 +4.5% 17,650 18,453 55% 45% Men Women Network We track and record customer satisfaction with our products and services as well as the quality of our network. During the year our GSM network was measured as 98.8 per cent effective, based on Telefónica O2 UK's customer experience testing. At launch our broadband network covered 50 per cent of the UK population, focusing on major urban areas. During 2008 it is rolling out to meet demand. We continue to add capacity to our 3G network and to establish the High-Speed Downlink Packet Access (HSDPA) protocol, which enables higher data transfer speeds and capacity. Employees Telefónica O2 UK had a skilled workforce of 13,011 in 2007 (12,126 in 2006). Our business is relatively well balanced in terms of gender: around more than 45 per cent of our are women. 87 per cent of our people said they were proud to work for the company (Reflect O2 2007 score, based on a 76 per cent response rate). In 2007 we gained 1 st place in the Best for Well Being category of the Sunday Times Best Companies awards. We also provided handy cards in stores, which offer advice to parents about our child protection services. We continue to support Teach UR Mum to TXT, a national campaign to help parents keep in touch with their children using text messages, managed by the Suzy Lamplugh Trust. http://protectourchildren.o2.co.uk/ Environment During the year we put our signature, one of 150, to the Bali Communiqué, drawn up under the auspices of The Prince of Wales s Corporate Leaders Group on Climate Change. This was ahead of the United Nations Climate Change Conference 2007 and called for world leaders to agree a legally-binding UN agreement to tackle the issues, arguing that not to do so would seriously undermine future economic growth. We have developed policies in line with our environmental management system externally verified to the international standard IS0 14001:2004. In 2007, we bought 18 per cent of our electricity from renewable sources and we are focused on increasing this proportion. Community In 2007, Telefónica O2 UK was short-listed in the Best for Giving Something Back category in the Sunday Times Best Companies awards. In 2007, total cash donations for Telefónica O2 UK were 1,031,494. The total value of our in-kind donations was 4,100, and the total time in paid hours was 1,466 (based on 20 per employee, per hour). Our It s Your Community programme encourages local initiatives with the tag line If you could change one thing about where you live, what would it be?. During 2007 the scheme supported over 500 local initiatives with awards between 100 and 1,000. During the year a total of 547 volunteered their time to social causes, equating to 1,466 in paid hours at a rate of 20 an hour. Payroll Giving is an easy way for to support their favourite charities by donating regularly through the payroll. In December 2007 around 3 per cent of all subscribed to this scheme.

Nearly 600 people at Telefónica O2 UK have home working contracts, enabling them to telework from home at least 40 per cent of the time. We comply with the key elements of the ILO Safety and Health Management System 2001 and the BS OHSAS18001: 2007 Standard, to which we are certified. Economics Our revenues contribute to 0.4 per cent of the GDP in UK. In 2007, we had more than 7,000 suppliers in the UK. We spent nearly 3.8 billion buying the products and services we needed in 2007. iphone - a first In a bid to offer better experiences to customers, we entered into an exclusive agreement to market Apple s iphone. It s the first convergence product on the UK market combining phone, camera/video and music player with mobile web browsing, one-click access to the internet, flat rate tariffs, and Wi-Fi access at over 7,500 public hotspots. The launch comes at a tipping point for mobile internet we are seeing a change in the industry with mobile internet services starting to take off. We expect the iphone to become an important part of our portfolio but only one of a wide range of handsets to meet our customers needs. During the year we were held to account by some stakeholders for the cost of the iphone, priced at 269 plus an 18-month contract starting at 35 per month. We refreshed our tariff structure in February 2008 adding more minutes and texts to the iphone tariffs. With its unique multi-task features from a single product, we feel the iphone is good value. The iphone, amongst other new services, helped us connect nearly 500,000 additional customers in the fourth quarter of 2007 (276,000 of them on contracts). To ensure high levels of service, we boosted employee numbers by 1,427 to support the its launch. O2 and Carphone Warehouse stores offer live demonstrations and a dedicated specialist to help customers. Employees are trained to advise on setting up personal email and downloading songs via itunes Wi-Fi, for example. We help youth at risk by supporting the HM Prison Services campaign Prison, Me No Way! (www.pmnw.co.uk). A dedicated iphone customer services unit was created in our Glasgow call centre. New jobs were created in Glasgow as well as our other contact centres in Leeds, Cardiff and Dearne Valley. In total, we have created 700 new jobs in customer services with the rest of the roles going to existing. O2 launched the Community Awards in 2004 to recognise who work tirelessly for charity or their communities and held the fourth event, at The O 2, in October 2007.

Telefónica O2 UK 2007 Over 18 million customers GSM network, 98.8 per cent effective In 2007, total charitable cash donations were 1,031,494 During the year a total of 547 volunteered their time to social causes Over 13,000 Over 7,000 suppliers In 2007, we bought 18 per cent of our electricity from renewable sources During 2007, the It s Your Community programme supported over 500 local initiatives Telefónica in Europe 2007 92 million customers Over 35.7 billion in revenues In 2007, total community investment donations by Telefónica in Europe were 33.3 million During the year over 6,000 volunteered their time to social causes in Europe Over 82,000 Over 14,000 suppliers in Europe ATAM* has over 60,000 members and has received over 13.9 million in contributions to date 2.5 billion spent in 2007 on technological innovation in Europe Telefónica in the World 2007 260 million customers Over 56.4 billion in revenues Nearly 90 million on social and cultural projects worldwide Some 19,000 are Telefónica Volunteers Over 250,000 Over 4.35 billion invested in Research and Development 36,000 trained on our Business Principles More than 93,000 children saved from child labour and put in school in Latin America thanks to the Proniño programme * ATAM stands for Telefónica s association to help support people with disabilities. We want to enhance people's lives and the performance of businesses as well as the progress of the communities where we operate, by delivering innovative services based on information and communications technologies. www.o2.com