Public announcement of the Summary of Annual report 2007 of Telekom Slovenia Group and Telekom Slovenije, d. d.

In February 2007, SiOL, d. o. o. introduced to the public new functions of digital IP television, the first in Slovenia, which will substantially influence the experience of watching TV content in the future: video on demand, a personal recorder and games on SiOL TV

The audited Annual Report 2007 of Telekom Slovenia Group and Telekom Slovenije, d.d. (Ljubljana: TLSG) was approved by the Supervisory Board at its regular session of 22 April 2008.

Sustained growth in IP television

The market for distribution of television signals over cable networks, largely in analogue form, was until recently dominated by cable TV operators. An alternative emerged in the form of IPTV, which Telekom Slovenije, d. d., offered to users as early as 2003 over xDSL. By the end of 2007, it had achieved a 15 percent market share.

The share of IP television has grown, as has the market share of Telekom Slovenije, d. d. in this area. The largest market share – 34 percent – was held by UPC Telemach, which together with the cable operators purchased, dominated the cable and IP television segment. At the end of September 2007, the share of IP television was 14.7 percent, an increase of 8.21 percent in share from the previous year. The largest market share – 61.4 percent – among IPTV service-providers was held by Telekom Slovenije, d. d.

Market shares of IPTV service-providers:

                       December        December
                           2006            2007
                       --------        --------
Telekom Slovenije         65.6%           61.4%
T2                        34.3%           35.8%
Amis                         -             1.9%
Tuš Telekom                0.1%            0.9%

Source: APEK, Report on development of electronic communications market for fourth quarter, 2007

Broadband services

xDSL subscriptions to end-users were 20 percent higher in Slovenia in 2007 – despite an exceptionally competitive broadband market – with the share of access without TDM telephone connections increasing. Likewise, the number of VoIP and IPTV connections more than doubled, particularly for the duo and trio service packages. Cable television connections also began to be marketed on FTTH access.

Sales of connections:

                         Index
          2006    2007   07/06
         -----  ------   -----
IPTV     5,895  14,839     252
CATV         0     450       -

Multimedia content, publishing and services

A large part of the area of multimedia content and services was until April 2007 covered by SiOL, d. o. o., including both television and web content. Reorganisation meant that these contents and services were transferred to the Multimedia Services and Content Division, which actively continued work in this segment.

In 2007, the Telekom Slovenia Group paid considerable attention to such increasingly important and attractive television services as:
“¢ video on demand,
“¢ a personal TV recorder, and
“¢ a redesigned electronic programme guide.

Throughout the year, we built up content in the areas of classic television (programme scheme) and video on demand. We enhanced the television programme scheme (as the only IPTV operator in Slovenia) with the internationally acclaimed HBO film channel and HBO Comedy.

Kosovo

Until the commercial launch of GSM telephony, the operation of Ipko, d. o. o. was based on broadband access services. Offered separately, or together with television, and using the well-prepared “duo” marketing strategy, the company achieved excellent sales results. However in the future, Ipko, d. o. o. intends to upgrade that offer with IP telephony, which will enable the “triple play” service.

With the launch of the GSM network, by the end of 2007, Ipko, d. o. o. was one of the very few operators in this part of Europe to offer a comprehensive service including fixed IP telephony, Internet, television and mobile telephony. With such a complete set of telecommunication services, the company will soon be able to form package offers with a combination of services, which will, to a large extent, distinguish the company from competitors.

Broadband Internet access and television users:

              31 December   31 December        Index
Service              2006          2007        07/06
              -----------   -----------        -----
Duo                 6,316        33,533          531
Only TV               441         4,738        1,074
              -----------   -----------        -----
  Total             6,757        38,271          566

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