Telecommunications Markets in the 10 new EU Member States An overview of recent developments

Structure of the telecom market Total telecom service markets in the 10 new Member States: 20 billion EUR Poland, Hungary, the Czech Republic and Slovakia account for 90% of the market Mobile services : 48% of total value (38% in 2001) Growth (est.) : 9% increase in value at market prices in 2004 , against 4.1% in the EU-15 and 4.5% for the whole EU-25 24 November 2004

Fixed/mobile substitution Mobile expansion : 24% density at end-2000 ; 60% at end-2003 Stagnation of fixed network despite poor density level. 24 November 2004

Recent expansion of the Internet market 4.3 million Internet subscribers at year-end 2003, 80% of which through dial-up, up from 1.7 million at year-end 2000. Driving factors : Computer equipment rate Regulatory framework Development strategy of operators 24 November 2004

Bridging the gap with Western Europe Trends in diffusion of mobile, fixed telephony and Internet access 24 November 2004

Bridging the gap with Western Europe Disparities within the 10 new Member States 24 November 2004

Competition development Competition in the mobile market, acting as an indirect source of competition in the fixed market Full liberalization completed on 1 January 2003 Progress in implementing pro-competitive regulations (CPS, interconnection), resulting in increased competition mainly in the business segment and LD/international traffic Strong hold of incumbents on the local loop. 24 November 2004

FDI : positioning of Western European telcos Incumbent Mobile Others Deutsche Telekom Matav (HUN) Slovak Telecom (SLO) Westel (HUN) PTC (POL) Eurotel Bratislava (SLO) France Télécom TP Group (POL) Centertel (POL) Orange Slovensko (SLO) TeliaSonera Eesti Telekom (EST) Lattelekom (LAT) Lietuvos Telekomas (LIT) EMT (EST) LMT (LAT) UAB Omnitel (LIT) Telia Latvia (LAT) – 100% TDC Bite (LIT) Polkomtel (POL) Contactel (CZE) – 50% Telekom Austria Si.Mobil (SLI) Vodafone Vodafone Hungary (HUN) Vodafone Malta (MAL) Tele2 Tele2 Eesti (EST) SIA Tele2 (LAT) UAB Tele2 (LIT) SIA Tele 2 (LAT) 24 November 2004

Telecom operators Growth and restructuring challenges 24 November 2004

Outlook Significant opportunities for growth in the medium term: impact of general economic development, expansion of Internet & data market, rise in ARPU Stronger pressure on tariffs through increased competition VoIP accelerating the transformation of the industry? Regulatory challenges: adapting to the new EU framework 24 November 2004