Regulatory News Announcement

RNS Number:1092Z
Cesky Telecom A.S.
01 March 2006


                  EUROTEL AND CESKY TELECOM ARE JOINING FORCES

             TO CREATE THE TELECOMMUNICATIONS COMPANY OF THE FUTURE


PRAGUE, Czech Republic - March 1, 2006


New integrated telecommunications operator Telefonica O2 Czech Republic, a.s. to
be formed. Today the Board of Directors and the Supervisory Board of CESKY
Telecom, a.s. have approved an intention to integrate Eurotel Praha, spol. s
r.o., and CESKY Telecom, a.s., into a new telecommunications player, Telefonica
O2 Czech Republic, a.s. designed to benefit from the know-how and expertise of
Eurotel, CESKY Telecom, Telefonica, and O2.  The integrated company will provide
both immediate and long-term benefits to its customers. The Board of Directors
of CESKY Telecom will ask the General Meeting, planned for April 2006, to
approve the integration* and to adopt the company's new name Telefonica O2 Czech
Republic, a.s. The integrated organization is expected to become effective in
mid-2006 after all required preparatory and legal steps have been completed.


'I am excited to be part of the process of Eurotel and CESKY Telecom joining
forces to create the telecommunications company of the future. Like its
predecessors, this company will remain committed to delivering distinctive,
innovative products and services by staying on the cutting edge of technology
and customer service. Together we will build the world's leading integrated
telecommunications company!'

- Jaime Smith, CEO of CESKY Telecom


Both individual customers and the Czech Information Society as a whole will
benefit from innovative, integrated telecommunications services. Telefonica O2
Czech

Republic, a.s. will develop a distinctive value proposition for the benefit of
all its customers. Converged mobile-fixed products and services and integrated
product packages will be among the first novelties available to individuals,
families and small businesses, while corporations will be provided with
integrated business solutions. Customers will also have the chance to purchase
all these products and content services at a single point of sale, to obtain
assistance from a single point of customer care, and to have the option of
receiving a single bill. We will accomplish this by building on the unique
strengths of each of the combined entities: namely, by leveraging Eurotel's
product innovation, flexibility, and customer focus; CESKY Telecom's long-term
customer relations and a high-quality fixed network; and Telefonica's and O2's
global expertise in fixed and mobile telecommunications. The new brand under
which the integrated company will operate, to be announced in the near future,
will build on the successes O2 has achieved in its markets and will benefit from
being part of the Telefonica Group. Telefonica O2 Czech Republic, a.s. will also
contribute to the advancement of the Information Society in the Czech Republic
by making broadband Internet access available to a wide range of customers,
including households, schools, libraries, government agencies, and more.


'By combining mobile and fixed services we will offer enormous opportunities and
benefits to our customers. This is especially important in the Czech market,
where consumers appreciate progressive technologies and innovations. It has
always been a matter of pride at Eurotel to bring the latest telecommunications
developments to market. This integration opens the door for new ideas that we,
together, can convert into new products and services.'

- Salvador Anglada, CEO of Eurotel


Czechs are at the forefront of fixed-mobile convergence.

The Czech telecommunications market is one of the most advanced in Europe,
characterized by a high level of fixed-mobile substitution and by consumers who
are quick to adopt new technologies. Recent technology developments will allow
us to combine mobile and fixed voice, Internet, and TV into innovative products.
Our own market research indicates significant demand for one-stop shopping,
single billing and customer service, and integrated voice and data services.
This fixed-mobile convergence trend is apparent in other European countries as
well, with several other operators already pursuing it, and it is the aspiration
of Telefonica O2 Czech Republic, a.s. to lead this new group of integrated
operators.


Telefonica O2 Czech Republic, a.s. will be led by a motivated, experienced
management team. The new integrated entity will be led by the current CEO of
CESKY Telecom, Mr. Jaime Smith, who will supervise an organization consisting of
integrated Business segment and Consumer segment, merged Operations division
including IT and networks, and consolidated general support functions:

  * The Consumer Division, led by Mr. Salvador Anglada, will be responsible
for serving our residential customers;
  * The Business Division, led by Mr. Fernando Astiaso, will be responsible
for serving our Corporate and SME customers;
  * Operations, led by Mr. Petr Slovacek, will be a single Division, including
integrated telecommunication networks and IT infrastructure and services;
  * The Finance Division will be led by Mr. Juraj Sedivy;
  * The HR and Support Services Unit led by Mr. Martin Bek;
  * The Wholesale Unit led by Mr. Pavel Jirousek

  * The Product Development Unit led by Mr. Stanislav Kura.
  * The Regulatory Unit led by Mr. David Sita;
  * The Business Development Unit led by Mr. Ramon Ros;
  * The Legal Unit led by Mr. Jakub Chytil;
  * The Transformation & Convergence Unit led by Mr. Antonio Botas;

*         The Public Affairs Unit led by Mr. Jaroslav Kubista.

Telefonica O2 Czech Republic, a.s.'s new leaders have the superior experience
and qualifications necessary to build the new integrated organization and to
lead it toward future growth. Indeed, not only they, but all of the new
company's current and future employees will discover many exciting opportunities
for personal and professional development under this new flagship.


After a short transition period customers will start benefiting from the change.

Following the announcement, management will initiate the legal procedures
necessary to create the newly integrated organization. After the General Meeting
of CESKY Telecom approves the integration*, the compnies will file a joint
application for the registration of the integration into the Commercial Registry
and wait for a court decision upon which the integration will become effective
effective. During this period customers of both Eurotel and CESKY Telecom will
not experience any interruptions in the products, services, and dedication they
have received so far. After the effective date of the integration, currently
expected in mid-2006, Telefonica O2 Czech Republic, a.s. will gradually
implement the new organizational structure, area by area, and begin delivering
all the new customer benefits made possible by its distinctive new product and
service offering.


Martin Zabka                         Pavel Kaidl

Spokesperson                         Spokesperson

CESKY Telecom, a.s.                  Eurotel Praha, spol. s r.o.


*The integration will have a legal form of transfer of Eurotel's assets and
liabilities to CESKY Telecom


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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