#1O2 Czech Republic, a. s. November 2017 (updated with 3Q 2017 results) General Presentation O₂ 2#22 Cautionary statement Any forward-looking statements concerning future economic and financial performance of O2 Czech Republic a.s. contained in this Presentation are based on assumptions and expectations of the future development of factors having material influence on the future economic and financial performance of O2 Czech Republic a.s. These factors include, but are not limited to, public regulation in the telecommunications sector, future macroeconomic situation, development of market competition and related demand for telecommunications and other services. The actual development of these factors, however, may be different. Consequently, the actual future results of economic and financial performance of O2 Czech Republic a.s. could. materially differ from those expressed in the forward-looking statements contained in this Presentation. Although O2 Czech Republic a.s. makes every effort to provide accurate information, we cannot accept liability for any misprints or other errors. O₂ 2#3140 160 E 180 200 220/240/460 S SW Introduction & Strategic highligts O₂ 2#4Leading retail digital economy enabler in Czech Republic... ...fastest growing mobile player & entering fixed in Slovakia Leading fixed/mobile operator 4,917k Mobile 635k fixed voice lines Leading fixed BB provider 771k xDSL (ADSL, VDSL) & LTE Fastest growing Pay TV provider 265k Pay TV (IPTV, OTT, Multi) No. 3 mobile fastest growing 1,916k Mobile O2 Czech, O2 Slovakia, O2 TV, O2 Family, O2 IT Services, others* *Tesco Mobile CR, ICA, Bolt Start Up Development, eKasa, 02 Financial Services, O2 Business Services Slovakia Figures as of 30th September 2017#55 ся Streamlining the business... ...resulted in turn around of our financial trends More focus on what we do ■ Mobile revolution (2013) ■ Fixed revolution (2016) volání Accelerated what we do 4G (LTE) 99% coverage[1]... ...and monetized trend 4G 3G 2G 26 3G ■ New proposition ■ New features We do things differentially 02 Spolu convergent bundle.. - ■ ...mobile voice, data & Pay TV 02 TV for all Sport bars & pubs O₂TV MOB We entered new businesses Hardware insurance Travel insurance More content... ...More channels O, TV SPORT HET O, TV FOTBAL LIGA CS Start-up accelerator O, TV TENIS WTA ATP O, TV HOKEJ BOLT End to end startups Electronic sales reporting solution [1] based on CTU methodology, within Top 5 in Europe O, 2#6We are starting up new business activities... ...to compensate pressures in traditional business eKasa O₂ O₂ Insurance BOLT End to end startups taxify ☑Tapito mluvii CROSS - Electronic sales reporting new legislation market leader after first two waves... ...one-off hardware revenue, recurring service fee O eKasa smart travel: the only postpay travel insurance on the market ■ handsets & tablets: for newly sold hardware 200k insurance policies milestone in only 18 months Minor cash investments into advanced start-ups Typically own O2 experience before investment Not only financial contribution, but also 02 ecosystem 6 O, 2#77 02 with unique pay TV proposition... ... bringing multidimensional customer experience Anytime Anywhere For all 50 h REC Timeshift Recording O, TV Multidevice 2 MD) MULTIDIMENZE O2 TV SPORT O₂TV MO 1000+ Video on demand Any connectivity Retail distribution O₂TV FREE Free-to-air distribution Full paid content provided via HbbTV Unique content O2 TV FOTBAL HET LIGA OTV TENIS WTA O2 TV HOKEJ UEFA CHAMPIONS LEAGUE 4x ATP WORLD TOUR Any camera Any match LIBEREC S 2#8Strategic commercial initiatives & CDUCTION Performance Highlights in 9M 2017 SHO DIRECTON DATE GAERANAN 2#99 We confirmed WTTx/5G spectrum leadership... ...and secured O2 brand minimum until 2022 ■ 40 MHz block in 3.7 GHz spectrum acquired for CZK 203m ... ** suitable for WTTx in areas with insufficient xDSL coverage... ...leveraging on experience in Slovakia (3.5 & 3.7 GHz) Current spectrum allocation [1] O, 40 13.7 GHz TDD [1] 25 25 40 12.6 GHz TDD Current[2] O₂ T.. 2 vodafone 2 02 brand license agreement extended by 3 years (Jan 2022)... ...another 5-years extension (till Jan 2027) available... ... partnership with Telefonica till at least Jan 2022 ...CZK 800m prepayment in 4Q 2017, capex in 3Q O₂ 2 [1] following recent 3.7 GHz spectrum auction (new spectrum likely to be paid for and assigned in 4Q 2017); [2] 450 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,600 MHz FDD#1010 2 New O₂ branded device for smart household & fixed BB ... ...convergent product helping mobile & Pay TV sales 22 3x 9GB O, TV 99% O2 Smart Box...fast and powerful Wi-Fi across whole house ... online video in HD quality ...heart of a smart home (home security, lights & sockets remote control, fire alarm)... ■...intuitive control via mobile application 02 Spolu - flexible family convergent bundle...well accepted ...driving mobile postpay & Pay TV sales uptake... ...and mobile traffic growth ■ Unlimited technology agnostic (DSL & LTE) home BB ... ■ ...with guaranteed 20Mbps speed.. ...leading to sales turnaround Gross Adds 1Q16 2016 3Q16 4Q16 1Q17 2017 3017 O₂#1111 [1] Roaming traffic substantially grew as expected ... ...data monetization works on the back of valuable offer Roaming abroad ש per total number of handsets EU data traffic EU voice (in+out) traffic EU SMS traffic 7x 2x 1.1x Jul+Aug 16 Jul+Aug 17 Jul+Aug 16 Jul+Aug 17 Jul+Aug 16 Jul+Aug 17 Data traffic 6x Roaming visitors Voice traffic 2x ■ Paid data packages upgraded in major tariffs... ...mobile data traffic up by 94% y-o-y... ...data monetization accelerates... mobile ARPU keeps growing despite roaming 61% smartphone penetration [1] 42% LTE HW penetration [1] 34% LTE HW & SIM penetration [1] 2#1212 02 Slovakia already with 90% 4G LTE and 99.8% 2G [1] coverage... 3% mobile ARPU growth by 31% data revenue uptake ■No. 1 mobile network coverage in Slovakia... ...4G LTE +65 p.p. in 2 years, 2G - own NW & national roaming... ...national fibre backbone & transmission NW expansion WTTx network (3.5&3.7 GHz spectrum) for broadband & Pay TV LTE handset sales focus (in-house instalment model)... ...customers' demand in rich data proposition... ...improving customer mix: already 58% postpay share... ... data customer base +13% & traffic +64%... Successful monetization: total revenue +7.9% [3]….. ...data revenue +31% [3], hardware revenue +21% [3] 90% coverage 60% smartphone penetration [2] 43% LTE HW penetration [2] 36% LTE HW & SIM penetration [2] Revenue (CZKm [3]) +7.9% 4G LTE O₁ 99.8% coverage[1] Ö 2G Modre Strieborné FOLData O₂ Dáta Zlaté Data EBITDA (CZKm [3]) Mobile total & postpay ARPU +3% [3] +5.6% 5 230 ■Total EBITDA margin 33.6% [4] (9M 2017) 4 934 1 692 1 755 Positive contribution to Group financials 9M 16 9M 17 9M 16 9M 17 O₂ 2 [1] I own 2G network (97.9%) and national roaming (Slovak Telekom & Orange); [2] per total number of handsets, [3] year-on-year, growth rates in constant currency (EUR), [4] including O2 Business Services and national roaming costs#13Financial Performance January - September 2017 2#14Group Financials Growth of costs driven by EU roaming regulation ... .. partially compensated by new revenue streams CZK millions Operating Revenue CZ Fixed CZ Mobile Slovakia[1] EBITDA EBITDA margin Jan-Sep 2017 Change 9M17 /9M16 27,893 +0.6% 8,006 14,816 5,230 7,804 -0.6% 28.0% Net Income Free Cash Flow[2] Operating Revenue EBITDA -0,6% 0,6% 27 720 7 855 27 893 7 804 9M 16 9M 17 9M 16 4,114 +2.5% 3,618 9M 17 14 [1] including O2 Business Services; [2] FCF in 9M 17 including 450 MHz license renewal (CZK 210m); 4Q 17 will be impacted by 3.7 GHz spectrum payment (CZK 200m), brand prepayment (CZK ~900m) in the Czech republic, and intensified network capex (2G, 4G, backbone) and hardware installment sales funding in Slovakia O₂ 2#15Fixed Business Fixed voice declining due to fixed to mobile substitution... ...B2B segment still under pressure CZK millions (% change y-o-y) 8,600 -6.9% -224 (-10.7%) -28 (-0.7%) 8,006 -204 -27 -22 -89 (-14.6%) (-3.5%) (-12.2%) (-25.4%) Strong Q3 2016 base ■ Selective approach to ICT projects ICT profit margin flat y-o-y (both 9M and Q3) 9M 16 Voice BB & Pay TV ICT Data Hardware Other¹ 9M 17 15 [1] termination of O2 Germany network monitoring contract O, 2#16Mobile Business Double digit growth of data, financial services, and HW revenue... ...more than compensating roaming abroad & B2B pricing impact Slovakia Mobile Revenue[1] CZK millions (% change y-o-y) Czech Mobile Revenue +7.5% +3.5% +193 +45 14,319 496 (+13.6%) +118 +13 (+0.8%) (+18.4%) (+6.8%) 14,816 -266 -103 (-4.1%) (-14.7%) +127 [2] 9M 16 Voice Messaging Data Financial S. Interconnect Hardware Other 9M 17 16 [1] Key drivers: Data: +37%, Hardware: +33%; O2 Slovakia, growth rate in local currency (EUR); [2] incl. electronic sales reporting HW O₂ 2#17Group Costs Cost base under control; with Czech costs flat year-on-year... ...while Slovak up 7% due to higher HW costs & roaming CZK millions (% change y-o-y) 17 19,926 +0.1% +1.1% +7.1% +243 +158 (+5.8%) +3 (+8.4%) 20,141 (+0.6%) -47 -16 -125 (-1.1%) (-7.2%) (-0.9%) Insourcing saving Commissions -170 -300 IT -47 Call centers -84 [1] 9M 16 Costs of Service Commercial Costs Marketing Personnel Expenses NW & IT repairs Other 9M 17 and maintenance [1] Taxes other than income taxes, provisions and fees, Rentals, Buildings, Vehicles, Consumables, Consultancy, Billing, Collection, Call Centers, management fees and other; including Internal expenses capitalized in fixed assets O, 2#18Group Capex Underlying capex up by 25% y-o-y... ...driven by 2G/4G & capacity in SK & IT transformation CZK millions CAPEX/ Revenue 1.8 & 2.6 GHz spectrum 1 472 5.9% 435 1 191 7.3% 450 MHz 210 spectrum renewal 782 688 1 339 02 brand license extension 13.2% 5.9% Slovakia: 4G NW rollout (already 90% coverage) Mobile NW capacity to capture growing data traffic 2G NW expansion to reduce national roaming (also in 2018) 3.5 & 3.7 GHz - LTE TDD (BB + Pay TV) Czech Republic: IT transformation (also in Q4 2017/1H 2018) Mobile core NW upgrade Est. in Q7 2017: 3.7 GHz spectrum (CZK 203m) 9M 16 9M 17 18 O₂ 2#1919 Group Balance Sheet CZK 6.4bn of 2016 shareholder remuneration paid... ...new CZK 3.5bn debt withdrawn in 2Q 2017 CZK millions 31 Dec 2016 30 Sep 2017 30 Sep 17 /31 Dec 16 Non-current assets 22,071 22,751 +3.1% - of which intangible assets 16,515 16,816 +1.8% - of which property, plant & equipment 5,075 5,194 +2.3% Current assets 11,235 11,329 +0.8% - of which cash & cash equivalents 4,137 4,069 -1.6% Total assets 33,306 34,079 +2.3% Equity 17,505 14,319 -18.2% Non-current liabilities 7,382 10,814 +46.5% - of which financial debt 6,976 10,455 +49.9% Current liabilities 8,419 8,947 +6.3% O, 2#20CZK 10.5bn debt utilized out of CZK 15.5bn capacity... ...Net Debt/EBITDA at low level, well below "up to 1.5x" target CZK millions 12 000 Debt 15 500 3 500 10 487 4 069 Cash, Net Debt 0.62x 6 418 10 400 Term + revolving Schuldschein Utilised Cash Net Debt 30-Sep 2017 (CZK, 2020) (CZK/EUR[1], 2022/2024) 20 [1] CZK 3,000m, EUR 20m EBITDA O2#21MA 2016 Shareholder remuneration O₂ 2 21#22Share premium distribution on top of 2016 regular dividend... ...complemented by share buy back DPS: CZK 17... 98% of net profit Total shareholder remuneration 2015 2016 Regular Dividend In line with dividend policy... ...distribution of 90% to 110% standalone net profit 4 On top of regular dividend 21 Share Premium distribution 16 17 77 Not one-off, but mid-term intention ■CZK 4 per share Share Buy Back 22 [1] as of 3rd November 2017 Divi Divi Share pr. Up to CZK 6,515m Total up to 10% in 5 years.. 7.8m, i.e. 2.5% shares... already (1) repurchased... ...for total acquisition cost of CZK 1,968m O2#23Back up O#24EURM O2 is market leader in Czech Republic (CZ)... and fastest growing player in Slovakia (SK) Strong position in both CZ and SK market Market leader in CZ ■Fastest growing player in SK Solid GDP growth and retail purchasing power ■Strong link to German economy GDP growth above EU level Unemployment in CZ at the lowest levels in past 20 years Market leader in the Czech Republic Mobile Service Revenue Fastest growing player in Slovakia Fixed Service Revenue (1) Mobile customers Mobile revenue CAGR 2013-2015(2) 800 600 400 400 300 T EURM 200 2 200 100 0 0 02 T-Mobile 02 T-Mobile 3 000 3% 2 500 1% 1.7x 2 000 <10% -1% 1 500 -3% T 1 000 O T -5% orange T 500 -7% 0 -9% 02 T-Mobile Orange T-Mobile 02 24 Note: (1) O2 also has 1.7x higher broadband subscriber base than UPC, the largest broadband competitor; (2) Data for Orange are best estimate O, 2#25From Telefónica to PPF... PPF acquires majority stake from Telefónica ... Separation created value Separation by spin-off June 2015 02 Fixed & mobile transport/access network and infrastructure 25 Jan 2014 ►CETIN ČESKÁ TELEKOMUNIKAČNÍ INFRASTRUKTURA Focus & Flexibility Less regulation Light financial profile (assets, capex) 02#2626 Separation created retail player 02... O₂ ...and national telco infrastructure player CETIN Customer relationship 2 Mobile subscribers Infrastructure owner ►CETIN Access Network Transport Spectrum and brand Marketing, sales channels. ■Service provisioning ■Customer care, billing & collection Fix voice Fix data IPTV subscribers subscribers subscribers 6,000 sites for mobile services Network Country wide aggregation and backbone transport fibre network DOK vydivane pro 1.90 wwwwwys 1.80 110021 Access nodes for fixed services 20 million km- pairs of metallic cables 38,000 km of fibre optic cables, thousands of network elements O, 2#2727 Fundamental rationale for separation followed 3 simple goals.. Streamlining the business Focus Acceleration Approach New 2#2828 Fundamental rationale for separation followed 3 simple goals.. Streamlining the business Easing of regulation པ་ 2 O2 10% Spin-off (1st June 2015) ►CETIN ČESKÁ TELEKOMUNIKAČNÍ INFRASTRUKTURA 60% CANCELLED 30% O₂ 2#2929 Fundamental rationale for separation followed 3 simple goals.. total assets decreased...and completely changed its structure Streamlining the business Easing of regulation "Heavy" asset "Light" asset Non-current assets Current assets Financial Old O₂ New O₂ consequences O₂ 2#3002 share price responded... 30 30 ...by recognizing CZK 63bn extra value [1] Old O₂ 2 172 49 ►CETIN ČESKÁ TELEKOMUNIKAČNÍ INFRASTRUKTURA 430 179 134 New O₂ 251' 5x XII-14 II-15 IV-15 VI-15 VIII-15 X-15 XII-15 Source: Prague Stock Exchange; [1] including CETIN (infrastructure company)#31Post separation setup... 02 CR X CETIN relationship ... Two strong independent companies. O₂ PPF stake: 81.06% ►CETIN ČESKÁ TELEKOMUNIKAČNÍ INFRASTRUKTURA PPF stake: 100.00% Independent conduct solely on commercial basis ■ Independent IT, corporate bodies, business plan and goals CETIN key vendor of O2 Commercial relationship established & working... 12 main business contracts on commercial as well as regulated basis Fixed - based on reference/regulated price Mobile - open book principle @ CZK 4.4 bn. for 7 years Data centers, Roaming, Collocation, etc. 31 02 CR X PPF relationship PPF considers O2 as financial investment, i.e. not as part of PPF Group PPF does not interfere with daily management, O2 does not pay any management fee to PPF PPF not seeking to squeeze out minorities, supports increase in O2 liquidity and free-float O2#3232 Reasonable commitment for pro-growth areas... Fixed charge & commitment (illustrative) with further potential CETIN's wholesale FBB offer (illustrative) TIME commitment other tv voice 20% fbb 80% (650k) uncommitted 7 years commitment Mobile charge & commitment (illustrative) 7 years 2G & CZK 4.4bn 3G annually & LTE VOLUME commitment 650k/ 7 years • . Open book principle 7 years commitment Additional savings shared 2#3333 33 Improving coverage & capacity of mobile data network... ...to monetize future increasing demand for mobile data Pioneers in active network sharing • ⚫ Joint rollout (3G: 2011, 4G/LTE: 2014) • 2G/3G consolidation since 2013 (40% target) ...execution to be continued by CETIN 5% LTE outdoor coverage 99% 80% 32% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 LTE densification & capacity improvement 4GLTE+ • ~2.5 thousand new LTE sites in 2016/17 • 2CC (4GLTE+) already available in 99% of Prague (Brno to be covered during 2017) • 3CC available in selected parts of two major cities First 4.5G commercial launch (up to 1.2Gbs) O, 2#3434 Superior fixed broadband coverage [1] ... ... with further increase in speeds Fixed broadband infrastructure [1] [2] Household coverage [1] 0," 2 90% 33% upc 02 current proposition 1/3 of customers with >80Mbps (PREMIUM) 2/3 with 6 to 20Mbps Speed upgrade through: Remote DSLAMS Vectoring Bonding 5/2017 - SUPERFAST (100 to 250 Mbps) [1] through CETIN [2] 20 million kmp of cables 2H/2017 - upgrade of PREMIUM from 80Mbps to 100 Mbps O, 2#35Investor Relations contact O₁₂ ၁ 2#3636 Investor Relations contacts Jakub Hampl Head of Investor Relations T: +420 271 463 935 E: [email protected] [email protected] www.02.cz/spolecnost/en/investor-relations/ O₂ 2