Telefónica O2 UK

Why? Why Not? What Next?

Location and date

Bernie McPhillips

Head of Wholesale Partners

Telefónica O2 UK

Contents

About Telefónica

About Telefónica O2 UK

O2 Highlights and Awards

An Incredible Brand

01

The O2 Network

Tariffcom

The Opportunity

Opportunity for Questions

02

03

04

05

06

07

08

1

�Why?

• True wholesale offering

• Access to complete O2 Business portfolio

• Complete customer ownership

• Range of up front bonuses

• Profitable recurring revenue streams

• Healthy margin

• In partnership with Nimans, the UK’s number 1 distributor

• Greater share of customer’s wallet

• Aids retention and future proofs your business

• Locks out the competition

• Customers want “one throat to choke”

The Opportunity

About Telefónica

• 105 million in Europe

• 190 million in Latin America

More than 300 million customers**

* December 2010

** December 2011

• 21 full network operations

• 18 commercial & operational offices

• 5 remote operations

• 129 countries extended MPLS

Operations in 44 countries*

• 31% in Europe

• 68% in Latin America

• 1% in other countries

285,000 employees**

Strong financials**

• Revenues: €62.8 billion

• OIBDA: €20.2 billion

• Net Income: €5.4 billion

A leading company in the global Telco sector

The Telefónica brand has an established role for speaking with institutions, shareholders and investors, multinationals and large

accounts, the community and employees in every country where we

operate.

The Movistar commercial brand is used for mobile, landline and broadband services to consumer and business customers in

Spain and Latin America.

The O2 commercial brand is used for mobile, landline and broadband services to consumer and business customers in the United

Kingdom, Ireland, Germany, Czech Republic and Slovakia.

The VIVO commercial brand is used for mobile, landline and

broadband services to consumer and business customers in Brazil.

About Telefónica Our brands

Terra is the trademark provided for services and internet content in Spain and Latin America.

About O2

• 23m customers

• More than 25m self-service contacts per month

• 12,000 employees

• 450 retail stores

• 3.2m service calls per month

Award-winning network

� Our coverage is very important to us

• We’re spending over £500 million in network

investment this year

• Ofcom puts us at number one for mobile broadband

speed and performance

•Metrico independent testing shows we have the best

overall UK data experience, including web-page

download speed and success

•SIRODA specialise in radio testing and they say we’ve

got the fastest web-page download speed in 12 out of 13

key UK cities.

� And we’re building for the future

• Fast 3G, 4G/LTE trials and O2 Wifi - free wireless

hotspots all over the UK for anyone to use.

We’re proud of our awards

Phone Network of the Year 2011

JD Power - Best Mobile Broadband Provider for the third year in a row 2009, 2010, 2011

Best Network at What Mobile 2011 and Mobile News Awards 2011 & 2012

What makes an award-winning mobile network? One that gives our customers the services they want. Lets everyone do what they need to do. Quickly and easily.

Networks:

Building for now. Planning for the future.

2011 2012 2013

Cornerstone

6 Sector Cells

U900

Boostbox (Femto) Cells

4G

Wifi

LTE – 4G

Our lead is increasing

Customer satisfaction index - how we’re doing

We finished 2011 with a CSI of 77, a drop of 1 point from Q3. However our lead has increased two points over Vodafone and we’ve maintained our 20 point lead over

Orange.

Enterprise CSI – Snapshot of the year

O2 – An Incredible Brand

0% 5% 10% 15% 20% 25% 30% 35% 40%

Is a brand you can trust

Easy to do business with

Best choice for business' of my/our

size

Has excellent UK coverage

Brand you want to be associated with

A brand that understands me & the

way I do business

Is a credible player in the business

market

Offers very good value for money

A brand that looks after its customers

better

Best choice for mobile office solutions

Brand that is a leader in the industry

Shows you how to use your mobile to

stay ahead

Has a fresh approach to business

O2

Vodafone

T-Mobile

Orange

Virgin

3

The world is changing fast

Teens pack nearly 11 hours of entertainment media into 7.5

hours Kaiser Family Foundation 2010

Almost a quarter (22%) of mobile users regularly use multiple screens, including mobiles, TVs and

computers, to access different content at the same timeFuture:Poll 2010

There are now 1.75bn internet users, and they send 247bn emails

each day Internet 2010 in Numbers — Pingdom 2010

By 2020, 450 billion internet transactions will be generated every

dayIDC 2010

Online retail spend continues to grow, with 42.6% of UK consumers now buying online at least once a

week. Average online spend is £71 per monthMarketing with a Digital Heartbeat, Paul Kennedy 2010

Apps market set to be worth over £23 billion in 2015 according to Forrester

ResearchTechRadar March 2011

Every day, 300,000 new users join Twitter TechRadar 2011

Impacting on businesses in four ways

More informed

and higher expectations

Consumer behaviour

Mobile business

Mobile is now a

computing asset

Employee behaviour

Better devices,

more flexibility

IT goes mobile

IT must embrace mobility

Signs of the times...

80% of businesseswill support a workforce using tablets*

2012by 2013by 2014by 2015by

90% of organisationswill support corporate applications on personal devices*

20% of businesseswill not own IT assets**

Mobile phones will overtake PCsas the most common web access device worldwide**

Most IT business caseswill include carbon remediation costs**

Context will be as influential to mobile consumer servicesand relationships as search engines are to the web**

*Gartner’s Top Predictions for IT Organisations and Users, 2011 and Beyond: IT’s Growing Transparency

** Gartner Top End-user Predictions for 2010: Coping with the New Balance of Power

+ tablets, e-readers and

others

A growing trend — with mobile at the centre

Smart devices will continue to be the main driver because they enable anytime, anywhere working

It started with the iPhone

Then android hit the scene

Smart device growth is likely to be the main driver

% of UK

mobile users with a

smartphone**

15%17%

24%

38%

55%

65%

71%

75%

2008 2009 2010 20112012 2013 2014 2015

Consumerisation is forecast to grow

% of UK

businesses FTE using consumer

technology

at work*

2010 2011 2012 2013

30%

25%

20%

15%

10%

5%

*Source : Gartner Group forecast, 2009. **Source : Enders Analysis estimate 4 January 2011. “Smartphone” is defined as a mobile device running an advanced operating system – like

Android.

Who are these flexible workers?

Any employee who works away from a

specific desk or place for a big part of their

working day or week, but still needs to be

connected

At homeHome workers, employees who

work flexible hours, senior

management, long commuters, people

‘on call’

Office roamersHot deskers, people travelling between offices or dipping in and out of the

office

On the roadField force, sales

teams, senior management, long

commuters

In the fieldOperational teams, public sector, front

line, retail managers

The benefits of flexible working

... for your business

The average cost of running a

desk in a UK office today is

£7,000 a year (Work Wise UK).

Flexible working patterns

drive savings on office space

and overheads.

Flexible working is being used

by one fifth of employers to

avoid job cuts*.

Reduce costs

£7000

* Source: Personnel Today, March 2010

The benefits of flexible working

... for your business

94% of flexible workers

report increased productivity

and 65% of managers agree.

The average reported

increase in productivity is

15–20%*.

Increased productivity

15 -20%

* Source: Nortel Networks

The benefits of flexible working

... for your business

Reductions in commuting

mean lower carbon emissions.

Sustainability

Reduced

The benefits of flexible working

... for your business

The average cost of recruiting

a new staff member is around

£6,000. Two thirds of

fathers consider flexible

working important when

looking for a new job (The

Equalities and Human Rights

Commission).

Talent acquisition and retention

2/3

The benefits of flexible working...

... for your businessLegislation

Since April 2009, parents

of children aged up to 16

have

had the legal right to

request flexible working

potentially 4.5

million parents.

The benefits of flexible working

... for your employees

Improve work/life balance

The freedom to manage other commitments and activities

Better health and reduced stress

�Why Not?

• True wholesale offering

• Access to complete O2 Business portfolio

• Complete customer ownership

• Range of up front bonuses

• Profitable recurring revenue streams

• Healthy margin

• In partnership with Nimans, the UK’s number 1 distributor

• Greater share of customer’s wallet

• Aids retention and future proofs your business

• Locks out the competition

• Customers want “one throat to choke”

The Opportunity