Contents: 2012 Annual... · Web viewFixed line operations KPIs ... as well as traffic performance through on-going campaigns focused on migrating ... RAN modernization project as

Crnogorski Telekom

2012 Annual Report

Crnogorski Telekom - 2012 Annual ReportContents:To Our ShareholdersAbout Crnogorski TelekomSelected Financial and Operational data of Crnogorski TelekomLetter to Our Shareholders

Management reportManagement Report for the Financial Year 2012Crnogorski Telekom’s Management

Board of Directors Executive Management Board

Mission, Vision, StrategyRegulatory EnvironmentPromotions and offerings

Human Resources

Corporate Responsibility

Financial StatementsIndependent Auditor’s ReportStatement of Financial PositionStatement of Comprehensive IncomeStatement of Cash FlowsStatements of Changes in EquityNotes to the Financial Statements

Further Information

2

Crnogorski Telekom - 2012 Annual Report

To Our ShareholdersAbout Crnogorski TelekomCrnogorski Telekom (CT) is the biggest telecommunications company in Montenegro. It provides a full range of fixed and mobile telecommunication services (voice, messaging, internet, TV, leased line circuits, data networks and ICT solutions).

Crnogorski Telekom fully digitalized fixed-line network in 2007 and brought ADSL coverage of the PSTN customers close to 100% base by the end of 2012. In December 2007, Crnogorski Telekom started with IPTV service. At the end of 2011 CT started offering ICT solutions, promoted as Integris.

CT was the second entrant into the mobile market in Montenegro. From its founding in 2000, it has always offered innovative and advanced services to the Montenegrin market and has been experiencing dynamic growth. Telekom uses mobile technologies such as UMTS, HSDPA, GPRS and EDGE. A 3G network was launched in the summer of 2007.

In 2006, T-Com and T-Mobile brands were launched.

On May 1, 2009 Crnogorski Telekom a.d., T-Mobile Crna Gora d.o.o and Internet Crna Gora d.o.o were merged into one legal entity, Crnogorski Telekom a.d.

In 2012, T-Com and T-Mobile brands were replaced by the Telekom brand, under which all products are now marketed.

On 1 April, 2005, Magyar Telekom obtained a 76.53% interest in Crnogorski Telekom. Deutsche Telekom AG holds 59.21% of the Magyar Telekom shares. Deutsche Telekom and Magyar Telekom have a number of subsidiaries worldwide, with which Crnogorski Telekom has regular

3

Crnogorski Telekom - 2012 Annual Reporttransactions. Details of related party transactions are given in the company’s Financial Statements, Note 28.

4


Selected Financial and Operational data of Crnogorski Telekom

Main financial KPIs (m€) 2011 2012 Δ Δ%Revenues 117,2 114,3 -2,8 -2,4Operating profit 16,1 21,1 5,0 30,8EBITDA 41,0 42,7 1,7 4,1EBITDA margin (%) 35,0 37,3 2,3EBITDA w/o SI 45,2 44,1 -1,1 -2,4EBITDA w/o SI margin (%) 38,6 38,6 0,0Net profit 16,5 19,9 3,4 20,9Total assets 197,5 200,7 3,2 1,6CAPEX 14,9 14,5 -0,3 -2,0Number of employees (closing FTE) 725 729 4 0,6

Fixed line operations KPIs* (in thousands)

Dec 31,

2011

Dec 31,

2012Δ Δ%

Fixed-voice customers, Total 167,5

167,8 0,4 0

Fixed voice Market share (%) 98,0 98,1 0,1

ADSL customers, Total 64,7 69,6 4,9 8BB Internet Market share (%) 84,8 82,6 -2,2

IPTV customers, Total 50,2 56,3 6,1 12Pay TV Market share (%) 41,0 42,0 1,0

Mobile line operations KPIs* (in thousands)

Dec 31,

2011

Dec 31,

2012Δ Δ%

Number of customers, Total 402,0

340,0 -61,9 -15

Prepaid 272,0 203,4 -68,7 -25Postpaid, Total 129,9 136,7 6,7 5Mobile customers market share (%) 34,7 34,3 -0,4

** Source: Agency for electronic communications of Montenegro

5

Crnogorski Telekom - 2012 Annual ReportMobile Internet customers market share (%) 30,8 39,6 8,8Mobile internet customer number 80,1 87,1 7,1 9Mobile penetration (%) 187 166 -21,4

Dear Shareholders,

After more than a year, full of various challenges, at the position of CEO of Crnogorski Telekom, I take this opportunity to inform you about the most significant business achievements in 2012. My overall impression is that, due to relatively negative macroeconomic developments, characterized by continuously increasing state budget deficits, deep industry crisis and FDI shortfalls, there are still significant risks causing further pressure on the economic stability in 2013. Nevertheless, I can proudly say that our company has averted these problems and not only achieved, but in some cases even overachieved, key operational and financial targets. Business year 2012 was fairly successful and very well in line with our expectations, which we perceive as the outcome of our strategy and full adherence to the Company’s BIG 6: 1. Strengthen Market Position, 2. Improve Efficiency, 3. Deliver Superior Service, 4. Shape an e-Society in Montenegro, 5. Increase Revenue from All Screens and 6. Lead in Business Solutions and 12 related priorities: 1. Customer First, 2. Energize One Culture, 3. Living the Brand, 4. Excel in Top Line Program TLP, 5. First million from ICT, 6. Keep momentum with Mobile Internet, 7. Proactive in wholesale, 8. Capture FMC potential, 9. Expand business through M&A, 10. Lead fibre revolution, 11. IT as a smart business enabler and 12. Manage Regulatory & Government driven pressure. It is already clear that the year 2013 will not be relaxing compared to the last year in any aspect, due to the demanding and challenging regulatory environment, new taxes and fees creating legal issues and financial burden, competitors in every market segment who, although non-comparable to us in terms of quality, are very

6

Crnogorski Telekom - 2012 Annual Reportdangerous in terms of the prices they offer to customers, etc. However, we are confident that with our customer focus, constant innovations, investments in both fixed-line and mobile networks and a constant increase in efficiency, which is the usual way of work and behaviour in our Company, and constant exploration of the new revenue streams, we are going to achieve operational excellence and maintain stable profitability in the long run, bringing even better results than those we had in 2012.

As in previous years, we continue to maintain a very substantial volume of investments of EUR 14.5 million. It mainly relates to: modernization of mobile network, fibre-optic network roll-out, IPTV, IMS, development of IP network, 4G spectrum license and IT systems. We achieved good business results and invested substantially in the most recent technology and a new modern infrastructure and we consolidated and strengthened our integrated customer-centric organization. Crnogorski Telekom further substantially improved the technological basis of the company and continued the modernization of the fixed-line and mobile network with state-of-the-art technology. I am proud that Crnogorski Telekom’s technology reflects in every regard the most up-to-date technological trends.

Despite the challenges we were facing in 2012, Crnogorski Telekom has managed to maintain a revenue level which declined only moderately compared to 2011 (-2.4%) and to keep its retail revenues at the same level as last year. The 2012 revenue amounted to EUR 114.3 million, which is EUR 7.5 million (7.0%) above plan and validates the company’s leading position in the market. This was mainly driven by higher Wholesale, ICT/Data, Prepaid revenues and Equipment (TV sets and laptops) sale.

Our constant focus on the expansion of ADSL services resulted in strong growth of our customer base by 4,900 (8%), while the related revenues increased by 4%, to EUR

7

Crnogorski Telekom - 2012 Annual Report11.6 million compared to the previous year, mainly based due to very favourable campaigns for our customers.

Speaking of the fixed BB developments, in order to ensure fixed BB customer base growth and stable leadership, significant Company’s efforts were dedicated to subscriber base push – we pursue speed-based differentiation strategy (FTTx) offering best speeds and quality on the market.

In the area of TV services, Crnogorski Telekom successfully maintained its market leadership, embodied in 42% market share in 2012, extending its customer base by 12% to 56.300 customers, despite the regional spread of local cable operators and strong competitor campaigns in Q4 2012. The related revenues increased by 14% to EUR 6.1 million. The success in our interactive TV offer was based on an excellent selection of channels, continuous service improvements and upgrades as well as attractive marketing offers. By offering attractive, high-quality TV sets in combination with high-quality channels and video on demand we offered our customers a unique experience in Montenegro.

The Company maintained its strong and stable market leadership in the fixed voice division and constant customer base, as well as traffic performance through on-going campaigns focused on migrating customers to higher packages with minutes included. The Company also continued with churn prevention/reduction initiatives like hardware financing offers (including laptops, TV sets and fixed phones), loyalty programs and further push to double and triple play offers. As far as the fixed-line voice revenues are concerned, 2012 was characterized by a moderate decline of 5.2%.

Looking at the mobile side of our business, in the mobile voice post-paid division, Telekom took over the leading position in the business segment in February 2011 and overall leadership in the post-paid segment in October 2011. In the meantime, our leadership has been improved to

8

Crnogorski Telekom - 2012 Annual Report43.6% through our attractive and unique offer: smartphones on instalments with unlimited data and exclusive and appealing iPhone5. We also overtook mobile data leadership with market share amounting to 40% in 2012, comparing to 31% in 2011.In the Mobile Internet division, T-Mobile is showing positive YoY development of 3% revenue growth, achieving market leadership in May 2012 and from then on improving up to 40% , further strengthening the leading position through dedicated acquisition campaigns (LTE soft launch, New Year campaigns: smartphone on instalments with included unlimited data and Nexus tablet promo). Mobile broadband services increased by 3% to EUR 3.9 million. This favourable development was supported by the very attractive offer of smartphones and related innovative data services. Finally, let me wrap up the story of our mobile line business development with the certified 2012 P3 research results, according to which CT’s mobile network is the best mobile and smartphone internet network in Montenegro.

Speaking of the business achievements of 2012, Crnogorski Telekom was primarily focused on intensive FTTH rollout, expanding ICT business, RAN modernization project as a prerequisite for LTE roll out plans, implementation of the Single T brand, diminishing/minimizing negative effects of the extensive regulatory changes and the introduction of new taxes, as well as launching the Delfin transformation program. In regards to the fibre story development, as you know, this product was defined as “future proven infrastructure” to serve our customers also in the next decades with new, interesting products needing higher and higher bandwidths. I point out that the YE targets were overachieved already in July 2012, that utilization rate was almost doubled comparing to 2011and that new services (new fibre packages offering significantly higher speed for the same price, HDTV as a new service and up to 5 STB available) were introduced, altogether increasing customer satisfaction.

9

Crnogorski Telekom - 2012 Annual ReportOn Crnogorski Telekom as an ICT company, I can report that this business is experiencing significant expansion from small pilot clients in 2010 to large companies, key banks, trade chains, hotels etc., resulting in the first million earned in August 2012. Having in mind that the 1 million was the YE stretched target, you can assume of how a remarkable overachievement this is.

As you all know, the RAN modernization project was very successfully completed in the first half of 2012, allowing better network performance and higher Internet speed, especially in mobile broadband services, better coverage and quality and improved customer satisfaction.

Speaking of further achievements, in October we introduced the Single T brand, thereby enabling improvement of the brand personality and increasing customer satisfaction and public awareness, coming one large step closer to becoming a synonym for connected life and work, based on fix and mobile networks.

We have been investing significant efforts in increasing employee satisfaction, seeing our employees as a key factor in our success. In that regard, I am happy to inform that the negotiation process with the Trade Union, which had been going on for four years, was successfully completed in Dec 2012. Program for housing loans started in Jan 2013. Our employees returned our efforts by participating in the first local research on the best employers and the best companies to work for in Montenegro, conducted by Blue Coach Agency. Overall 26 small, mid and large enterprises took part in the research, while only 8 large and reputable companies had enough courage to have its rating checked. It turned out that our Company found itself among the best three companies at that demanding ranking list. We achieved second place on the list of best companies to work for in the category of large enterprises and received a special award for best organized large company in Montenegro. These are the results we acquired through our

10

Crnogorski Telekom - 2012 Annual Reportfight for high quality in each and every segment of our business operations and through our winning spirit.

Let me now follow up on the story on internal developments and improvements in the company and inform you that in 2012 we launched the Delfin transformation program, with clear intentions to get prepared for the upcoming 2-3 year period in which we expect a more competitive environment and likely regulatory changes. Also, to achieve a more efficient and performing organization, as well as a sustainable business model. Redesigning CT’s operating model in terms of optimization of costs and structure will direct our business in a simple straightforward way.Within the Delfin project we have refreshed the corporate structure and the management team, so that we now have the right structure and the right people in place.

We have also been investing significant efforts in increasing customer satisfaction. Crnogorski Telekom’s strong commitment to continuously improve customer service is reflected in positive development of customer loyalty indices. However, I want to underline that in spite of the fact that most of our key achievements in 2012, as I already mentioned, resulted in an increase in customer satisfaction, special attention in 2013 will still have to be paid to TRI*M (customer satisfaction) results. CT ‘s aim is to each time deliver more sophisticated telecommunication services from the technological point of view, yet simpler and accessible to all the consumers. Equally important is providing high quality technical support and demonstrating maximum responsiveness to their needs.

Crnogorski Telekom experienced a minor decrease of Earnings before Interest, Tax and Depreciation (EBITDA) before special impacts YoY to EUR 1.1 million (-2.4%) to the level of EUR 44.1 million. The Net Profit achieved by Crnogorski Telekom in 2012 amounted to EUR 19.9 million, which represents a YoY increase of EUR 3.4 million or 21%.

11

Crnogorski Telekom - 2012 Annual ReportIn 2012, the company paid out dividends of EUR 16.5 million and the dividend yield amounted to 10.7%.

I would now like to express my recognition and gratefulness to our employees for their dedication to the building of CT’s sustainability, through their daily efforts, interventions and suggestions. Their diligent work, loyalty and commitment were essential in overcoming the challenges that the company had faced in the observed period.

Finally, dear shareholders, let me also thank you for your contribution to the success of the company. Your trust and confidence have always been a great support for us and we will feel free to continue counting on it.

Rüdiger J. SchulzChief Executive Director

12


Management reportManagement Report for the Financial Year 2012Highlights

Revenue decrease limited to 2.4%, with total revenue of EUR 114.3 million mainly driven by the development of voice revenues, and partly offset by the increase in Internet, TV and ICT revenues.

EBITDA excluding special influences decreased by 2.4%, to EUR 44.1 million, with an achieved margin of 38.6%.

Net profit in increased YoY, by EUR 3.4 million or 21%. Capital expenditure was EUR 14.5 million. It mainly

related to: modernization of mobile network, fibre-optic network roll-out, IPTV, IMS, development of IP network, 4G spectrum license and IT systems.

A dividend for 2011 in the amount of EUR 16.5 million was paid out in July

Revenues and profitability

Although the year of 2012 was operationally and financially very challenging, due to the economic downturn and the difficult market conditions, Crnogorski Telekom was focused on expanding its broadband services, on fibre-optic access roll-out, on expansion of the ICT service (Integris) and on the improvement of voice services. In the fixed-line voice segment, CT kept a stable customer base, while ADSL and Extra TV customer numbers increased. In the mobile segment CT retained both total post-paid and business segment post-paid leadership.

13

Crnogorski Telekom - 2012 Annual ReportEven though the increase in number of customers was mainly positive, CT experienced a moderate revenue decline. By limiting the YoY decrease to only 2.4%, CT performed better than most of its peers with revenues reaching EUR 114.3 million. Retail revenues were kept flat, while wholesale decreased. Major revenue downsides, compared to 2011, related to:

- interconnection revenues (-6.8%), which was a consequence of decreased mobile termination rates and lower incoming traffic,

- fixed-line voice retail revenues (-5.2%), which was influenced by decreasing usage, and

- mobile pre-paid revenues (-5.5%), influenced by 1EUR Tax, introduced in July, and weaker summer season.

Such development was partly compensated by higher:- ADSL revenues (+4%), driven by higher customer

numbers- IPTV revenues (+13.5%), driven by higher customer

numbers,- data services revenues (+6.8%), driven by CT’s

Integris service and- equipment sales revenues (+72%), boosted by

TVs/laptops sale on instalments.

As a result of continuous successful efforts to increase efficiency and improve the cost base, at the same time operating expenses excluding special effects decreased YoY by EUR 1.8 million (-2.4%), to the amount of EUR 70.2 million.

Limited YoY revenue decrease and cost efficiency resulted in a moderate YoY decrease of EBITDA excluding special influences of 2.4%, to an amount of EUR 44.1 million.

Respectively, Operating profit and Net profit increased YoY by EUR 5.0 million to EUR 21.1 million and by EUR 3.4 million to EUR 19.9 million. Such development was a

14

Crnogorski Telekom - 2012 Annual Reportconsequence of higher depreciation and amortization costs and higher severance costs in 2011.

Main Non-financial KPIs

In 2012, the fixed-line voice customer number was stable. The ADSL revenue increase was driven by a customer base increase of 4,900 or 8%. IPTV revenues also increased due to a customer number increase of 6,100 YoY or 12%.

Fixed line operations KPIs* (in thousands)

Dec 31,

2011

Dec 31,

2012Δ Δ%

Fixed-voice customers, Total

167,5

167,8 0,4 0

Residential 145,6 145,8 0,2 0Business 21,8 22,0 0,2 1

Fixed voice Market share (%) 98,0 98,1 0,1

ADSL customers, Total 64,7 69,6 4,9 8Residential 57,9 62,4 4,5 8Business 6,8 7,2 0,4 6

BB Internet Market share (%) 84,8 82,6 -2,2

IPTV customers, Total 50,2 56,3 6,1 12Residential 48,7 54,4 5,8 12Business 1,5 1,8 0,3 20

Pay TV Market share (%) 41,0 42,0 1,0

By the year end of 2012, 340,000 customers used T-Mobile services, 61,900 less than at the end of 2011, a decrease of 15%. The decrease in the pre-paid customer segment (-68,700; -25%) is mainly the effect of finished process of SIM registration. The number of mobile customers using the Internet at YE 2012 increased by 7,100 or 9% YoY.

Mobile line operations KPIs* (in thousands)

Dec 31,

Dec 31, Δ Δ%

** Source: Agency for electronic communications of Montenegro** Source: Agency for electronic communications of Montenegro

15


2011 2012Number of customers, Total 402,

0340,

0 -61,9 -15Prepaid 272,0 203,4 -68,7 -25Postpaid, Total 129,9 136,7 6,7 5

Postpaid Residential 32,1 34,1 2,0 6Postpaid Business 97,9 102,6 4,7 5

Mobile customers market share (%) 34,7 34,3 -0,4Mobile internet customer number 80,1 87,1 7,1 9Mobile Internet customers market share (%) 30,8 39,6 8,8Mobile penetration (%) 187 166 -21

Main investments

2012 was a year of significant investments in mobile network in order to enable it for future challenges:

Major project finished in 2012 was Mobile radio network (RAN) modernization, with 15% share in 2012 CAPEX. After successful Trial and Pilot cluster, all 2G &3G base stations were swapped/ modernized in first half of 2012. EDGE territory coverage improved for 24%, HSPA+ 21Mbps population coverage improved for 33%. Together with post swap optimization, all 2G KPIs were improved up to 20% and all 3G KPIs were improved up to 30%. Significant increase of transport capacities gives possibility to introduce HSPA+ 21Mbps on all of 3G base stations. By this, 3G network broadband capacity is increased for 28%. New 2G and 3G base stations were launched in order to expand 2G and 3G coverage and capacity. 2G territory and indoor population coverage improved for 5% and 3G population coverage improved for 6%.

In parallel to RAN modernisation, mobile backhaul modernization was successfully finished. Significant increase of link capacities, traffic redundancy and

16


reliability was achieved. All 3G base stations are now IP enabled.

In beginning of November 2012Telekom has softly launched LTE in two cities, Podgorica and Kotor.

All these achievements gave us advantage comparing to competition which was proved in October 2012 through the independent mobile networks benchmark, done by P3 Communication, where CT won official certificate for best mobile broadband and smartphone file transfer service among all GSM/UMTS mobile radio networks in Montenegro and for best mobile broadband services in Montenegro. Benchmark also confirmed CT as top in class for voice services.

Fibre-access network roll-out was continued in 2012 and it represented more than 14% CAPEX. Selection and realization of the new FTTx zones was done according to Access Strategy. The 2012 results are as follows: 19,500 households are under coverage of fibre network and 3,800 homes were actually connected to the network.

In 2012, major IPTV platform upgrade started and it is planned to be finished by June 2013. Beside the stability and performance improvement, this upgrade brings some new features which will enrich our offer portfolio and give us a competitive advantage in the TV area. In order to improve the overall TV offer, new service WebTV was launched as integrated functionality in CT corporate web site. It was followed by new iOS and Android applications that incorporate TV streams with some of the customer self-care features and full IPTV program schedule (EPG). New HBO-GO platform was launched at the beginning of the year, which enables the complete HBO offer to be available on PCs, phones and tablets. Including customer premises equipment, total investment in IPTV had a share of 14% of total CAPEX.

17

Crnogorski Telekom - 2012 Annual ReportIP/MPLS network is upgraded in order to achieve High Availability of Nodes and Network, Interconnection of IMS platform with IP/MPLS Transport Network and Support of synchronization for IP RAN aggregation. Critical services such as IPTV and Voice have additional redundancy in the network and the bandwidth on the critical places is increased. Also, the IP/MPLS network in the South Region and Podgorica can support synchronization for IP RAN aggregation, which was necessary for the preparation of the IP Network for LTE, next generation mobile network.

After the successful implementations of IMS platform in December 2011, the preparation for a massive customer migration was continued. The initial plan for the 2012 customer migration was increased from 5,000 to 15,000. After intensive migration activities, the year 2012 was finished with more than 17,500 PSTN customers migrating to IMS platform, which is more than 10% of the customer base.

18


19

Crnogorski Telekom - 2012 Annual ReportCrnogorski Telekom's Board of Directors

1. Róbert Pataki2. Susanne Krogmann3. Melinda Szabo4. TripkoKrgović5. PéterZsom6. János Szabo7. Gábor Pukler

Róbert Pataki

Róbert Pataki graduated as an economist from the University of Corvinus in Budapest, and then completed his studies in international finance and marketing management at the University of Erasmus in Rotterdam. He started his career as an investment analyst with Project Finance International Ltd., and then worked for Nutricia Netherlands BV. He joined Accenture (Andersen Consulting) working for Accenture’s Strategic Services in several managerial positions. He continued his professional career with A.T. Kearney and later he became a senior manager of A.T. Kearney’s European Telecommunications Team. He has been Chief Strategist at Magyar Telekom since September 2006. As of April 1, 2009, he was appointed Chief Operating Officer of Alternative Businesses and the Corporate Development Business Unit keeping his position as Chief Strategist of Magyar Telekom as well. With his nomination he has become a member of the Management Committee of Magyar Telekom. He has been working as Chief Strategist and Corporate Development Officer since September 2009.

Susanne Krogmann

Susanne Krogmann, born 1964, holds a diploma in Economics from Georg-August-University at Göttingen,

20

Crnogorski Telekom - 2012 Annual ReportGermany. After graduating, she went on to study European Integration at the College of Europe, Bruges, Belgium.She started her career at the Treuhandanstalt, the state-owned agency responsible for the privatization of the enterprises and assets of the former Democratic Republic of Germany. During her five years at the Treuhandanstalt, Susanne Krogmann worked in the controlling and in the contract management department. For the last 2 years there she held the position of Key Account Manager for several companies in the chemical industry.Susanne Krogmann joined Deutsche Telekom in 1999. For more than 8 years she worked in different positions in the Regulatory and Public Affairs division, especially in the field of regulatory economics and regulatory strategy. She then took over the position as head of the group “Corporate Responsibility Strategy and Controlling”, where she developed a new Corporate Responsibility strategy for the DT group. Following increasing awareness of data security and data protection at Deutsche Telekom, she then worked on a data security project with a personal focus on customer data security. Since the end of 2009 she holds the position as Vice President Corporate Governance Europe within Board Area Europe at Deutsche Telekom.

Melinda Szabo

Melinda Szabo was born in Budapest, 1971. She graduated at the College of Trade & Catering in 1994, followed by a second bachelor’s degree in marketing at the College of Foreign Trade in 1997. She graduated as a Master of Business Administration at WEBSTMBA in 2007.She started to work for Westel Mobile Co. Ltd. in 1999 as a marketing manager. During the past 10 years she managed different projects in the area of consumer marketing. After several carrier steps she was promoted to deputy marketing director in 2005. From January 2008, she was deputy marketing director of Consumer Segment marketing Unit Magyar Telekom, responsible for the T-Home and T-Mobile

21

Crnogorski Telekom - 2012 Annual Reportbrands. She was appointed as Director of Consumer Segment Marketing Directorate effective from 1 July, 2010.She has been a Member of the Supervisory Board of Origo Media and Communication Services Provider Co. Ltd. (member of the Telekom Group) since August 2010.

Tripko Krgović

Tripko Krgović was born in 1977 in Belgrade. He finished his undergraduate and master’s studies at the Faculty of Economics in Podgorica. His professional career began in 1996 in his family business. From 2004 he worked in the Securities Commission, in the Market Supervision Department. In 2005, he held the position of Investment Manager in Moneta Investment Fund. From 2006 to 2008, he was the Chief Executive Officer of Moneta Broker-Diler AD Podgorica. From 2008 to 2011, he was a member of the Board of Directors of Moneta privatisation fund and of Otrantkomerc AD Ulcinj. He is a representative of the minority shareholders in some of the Montenegrin biggest companies. He was elected a member of Crnogorski Telekom’s Board of Directors, Audit Committee and Compensation Committee in 2008.

Péter Zsom

Peter Zsom was born in Budapest, Hungary in 1973. He earned his first degree in Germanic Studies at ELTE University in 1999. Afterwards he received a second degree in Economics at the College of Foreign Trade in Budapest in 2003. He started his carrier working for the Hungarian Tax Authorities in the PR department. He joined Westel in 1999 and first worked in customer relations. From 2002, he led various sales and product development projects as Project Manager, participated in the T-Mobile re-branding project in 2005, was the head of the Integrated Sales Campaign Management Department in 2008. After that he worked for Deutsche Telekom in Germany as Senior Launch & Lifecycle Manager responsible for international product management

22

Crnogorski Telekom - 2012 Annual Reportwithin the DT Group. After returning to Magyar Telekom in 2010 Peter led various strategic projects. In April 2011 he joined Area Management MT at Deutsche Telekom and has been responsible for Magyar Telekom ever since.

János Szabó

János Szabó was born in Hódmezovásárhely (Hungary) in 1961. He graduated at the Budapest University of Economics in 1986, majoring in international relations.After working in Foreign affairs for three years, he continued in various finance and consultant positions in the private business sector. He became Director of Finance at Delco Remy Hungary (a subsidiary of a US-based automotive supplier) in 1995. Later he became Deputy General Manager of the operation, responsible for sales, purchasing and operations. In 1998 he moved to the position of Director of Finance for Europe, in charge of the finance activities and acquisitions of European operations. Later he became CFO and Managing Director of a joint venture between Delco Remy and Hitachi. From April 2003 he was the Finance Director of the Wireline Services LOB of Magyar Telekom (later T-Com). The role was extended to fixed-line network and IT operations in 2006. Since January 2008, he has been the Director of Group Planning & Control of Magyar Telekom Group. He is a member of the BoD of MakTel and TMMK companies.

Gábor Pukler

Gabor Pukler was born in 1974. He earned his degree at Budapest Technical College in 1997, majoring in IT Engineering – Technical Management, followed by a second bachelor degree in Agricultural Engineering at the University of Kaposvár in 2010. He started his working carreer in

23

Crnogorski Telekom - 2012 Annual Reporttelecommunications in 1997. He joined Axelero Internet Services Ltd. – Budapest in 2003, and worked as Deputy Director until 2005 when he became Chief Sales Officer. In May 2006, he was appointed to Chief Executive Officer in Albacomp Plc. – Székesfehérvár, Hungary’s largest Hungarian-owned IT company. Since April 2008 he holds the position as Innovation and Business Development Director in Magyar Telekom.The Executive Management Board of Crnogorski Telekom

24


- Rüdiger Schulz, Chief Executive Officer and Chairman of the Executive Management Board

- Slavoljub Popadić, Chief Customer Service Officer - Dr. Gabor Altmann, Chief Commercial Officer

Residential - Endre Horanyi, Chief Human Resources Officer - Eva Ulićević, Chief Technology Information Officer - Manfred Knapp, Chief Financial Officer - Vladimir Beratović, Chief Corporate Affairs Officer - Milija Zeković, Chief Commercial Officer Business

Rüdiger Schulz, Chief Executive Officer and Chairman of the Executive Management Board

Rüdiger Schulz, who is an internationally experienced business leader, completed his studies in electrical engineering at the University of Hamburg and business management studies at the University of Koblenz. His professional career began with service in the German Navy as Chief Engineer on Vessels, after which he joined Deutsche Telekom Group in 1991. To begin with, he was responsible for technology platforms, and later became responsible for marketing and sales in the residential and corporate segment.In 2005, he began working for T-Systems as Senior Executive Vice President of Business Customers and Large Enterprises in the north-east region of Germany, one of six in Germany and developed his experience in the area of IT. He joined Slovak Telekom in November 2006, taking over the position of Senior Executive Vice-President for Marketing, Sales and Technology/COO and was a member of the Executive Management Board being responsible for T-Com's product and service portfolio in the business, residential and wholesale segment. As of July 2010, with the merger of Slovak Telekom a.s. and T-Mobile a.s. into one joint company, Slovak Telekom a.s., he was appointed Chief Operating Officer Network and IT.

25


Slavoljub Popadić, Chief Customer Service Officer

Born in 1965, he holds a degree in electronics and telecommunication from the University of Montenegro. He started his career in 1991 at the Republic Secretariat for Development, Podgorica, first as a main network and systems engineer and then as leader of development of network and IT systems of governmental bodies in Montenegro. In 2001, he joined the Crnogorski Telekom group as CEO of Internet Crna Gora. In April 2005, after the acquisition of Crnogorski Telekom by Magyar Telekom, he became Group Network Development Director and Management Committee member of Crnogorski Telekom. In August 2006, he was appointed CEO of Crnogorski Telekom responsible for fixed-line business in the Company (T-Com). In 2008, he became a Member of the International Marketing Board of T-Com. As of December 2008, he has been Vice-Chairman of the Management Committee and in May 2009, after the legal merger into one company, he was appointed as CEO of the merged company. In 2011 Crnogorski Telekom further amended the corporate governance and Mr. Popadic became Chief Customer Care Officer. He currently holds the position of Chief Customer Service Officer.

Dr. Gabor Altmann, Chief Commercial Officer for Residential Area

Dr. Gabor Altman joined Crnogorski Telekom in January 2013, when he took over the position of Chief Commercial Officer for Residential Area. He came from Makedonski Telekom, from the position of Chief Sales Officer.In the last 10 years he covered different positions within Magyar Telekom Group including Makedonski Telekom, T –

26

Crnogorski Telekom - 2012 Annual ReportMobile Macedonia, T – Systems and T – Mobile Hungary. His professional experience at previous positions mainly relate to Sales and Customer service activities, Marketing, Portfolio management and Strategy.

Endre Horanyi, Chief Human Resources Officer

Endre Horanyi was previously an HR Partner of the Consumer Business Unit at Magyar Telekom. According to the MT organizational model, he was in charge of more than 4,000 people. From that position Mr. Horanyi joined Magyar Telekom in 2003. His professional development in the field of HR management mainly relates to his career path within MT. From 2003 until now, he has covered several positions related to HR functions such as: Senior HR Operational Development Manager, Head of HR Operational Development, HR Director of the Mobile Business Unit and most recently: HR Partner of the Customer Business Unit. Since June 2010, he has been working as Chief Human Resources Officer of Crnogorski Telekom.

Eva Ulićević, Chief Technology Information Officer

Born in 1970, she holds a degree in Mathematical Science and a Masters in Mathematical Science. She started her career in 1993 at the Faculty of Mathematics of the University of Montenegro in Podgorica, as assistant professor. From 1996 she worked in ProMonte GSM Podgorica as deputy CIO. In 2000, she was engaged as the Team Leader of the Oracle Academic Initiative Project, and in 2001 she worked in SEMA (LHS) Communications Systems Inc, Miami, Florida, USA as Senior Software Analyst Engineer for BSCS. Since 2002, she has been working for Crnogorski Telekom Group in several executive positions: CIO of T-Mobile, IT Director of Crnogorski Telekom Group (2005) and as CTO of Crnogorski Telekom Group (2006). She currently holds the position of Chief Technology Information Officer.

Manfred Knapp, Chief Financial Officer

27


Born in 1955 in Frankfurt/Main, Germany. He holds a degree in Business Administration and Management. Before joining Deutsche Telekom Group in 1997, Manfred Knapp covered several senior controlling and finance management positions in different industries where he gained a broad experience in all areas of finance management, mergers and acquisitions and turnaround management. In 1998, Manfred Knapp was assigned to the mobile operator Wind, in Italy, as Controlling Director. From 1999, he managed the controlling department of the Deutsche Telekom Carrier Services Business. In 2001, he joined Slovak Telekom as Controlling Director and Deputy CFO. Since May 2009, he has been responsible for the Finance Department of Crnogorski Telekom as CFO.

Vladimir Beratović, Chief Corporate Affairs Officer

Born in 1970 in Podgorica, he graduated in International Management, and is currently undertaking postgraduate studies. His 17 year long career in telecommunications started in the Montenegrin mobile operator Promonte (today’s Telenor). During his last 10 years at Telenor, he held various directorial positions and was a member of the top level management. He left Telenor as Chief Corporate Affairs Officer, in charge of government relations, legal, regulatory, interconnection and wholesale and corporate communication departments. His career in Crnogorski Telekom started in September 2010 as advisor to the Chairman of the Board. He was appointed Corporate Affairs Officer in November 2010. He currently holds the position of Chief Corporate Affairs Officer which in addition includes Wholesale area.

Milija Zeković, Chief Commercial Officer for Business Area

Born in 1971, he holds a degree in Economics from the University of Montenegro. After completing his studies in

28

Crnogorski Telekom - 2012 Annual Report1995, he started his career at “Kartonka”, Podgorica, as Production and Sales Manager. He started working as Sales Manager in T-Mobile (formerly Monet) in 2000. In 2006, he became the Director of Sales for residential customers and small and medium enterprises. In July 2008, he was appointed CSO of Crnogorski Telekom. He currently holds the position of Chief Commercial Officer for Business customers.

29


Our MissionWe deliver our customers a superior experience.We lead Montenegro towards an e-Society.We constantly innovate and explore new areas to enrich life of our customers.We remain the best place to perform and grow.We care about operational excellence in everything we do.

30


Our VisionWe make your life betterby connecting and entertaining youwherever you are, whatever you do.

Our Strategy

31


In 2012, CT continued to successfully execute its strategy based on its BIG 6 goals. Crnogorski Telekom’s main strategic goals in 2012 were:

1. Strengthening Market Position

CT has already regained post-paid leadership, became the No.1 choice of business customers, improved its mobile internet share by almost 10 percentage points and improved leadership in the TV market, capturing 41% of the market share in 2011. Stable voice and fixed-line broadband market leadership was mainly preserved by the successful adoption of Extra Trio, additionally supported with the first fibre-optic users. CT will keep and further improve this strong position by continuously creating attractive propositions for existing and new customers, maintaining high quality and providing consistent care to ensure the best T-brand experience.

2. Improving Efficiency

Successful implementation of the 3-year Save for Service (S4S) programme ensured sustainable savings, competitive cost structures, quality of service improvement and productivity increase. The S4S programme has become a synonym for operational excellence. Cost control and excellence have become and will remain an essential part of our work ethic and a basic principle of sustainable business performance.

3. Delivering a Superior Service

Over the past period we have managed to significantly improve our services to the level of being superior in the market in many aspects. However, we are committed to further promote superior service culture and providing a unique customer experience and high quality. We profoundly believe that developing and maintaining the company’s image as a customer-centric, socially responsible and

32

Crnogorski Telekom - 2012 Annual Reporttechnologically superior company is one of the key elements of our long term success.

4. Shaping e-Society in Montenegro

Crnogorski Telekom is committed to developing and shaping an e-Society in Montenegro which is one of the key contemporary prerequisites for prosperity. We have developed and launched FTTH access with its potential measured in hundreds of Mbps. We provide the fastest mobile broadband access of up to 42 Mbps with HSPA+. We are deploying a state-of-the-art all-IP infrastructure, the most advanced device and are providing complete solutions for companies, helping them to be competitive. In this way, we are helping to close the gap and keep pace with the most advanced countries in Europe. We will continue to develop faster and smarter networks in order to enable high-quality and super-fast Internet any place, any time and on any device to support modern lifestyles, evolving business needs and thus e-Society development.

5. Increasing Revenues from All Screens

In CT we believe that customers should not be limited or bound to any particular screen when they use the services they need. Therefore we are consistently working to provide them with an easy and comfortable experience on all screens, such as mobile phones, computers, tablets or TV screens. In the future, enriched applications and functionalities, tailor-made service bundles, an easy to use and high-quality service experience across all screens, which are all valued by our customers, will strengthen our competitive advantages and customer adoption at home, in the office and on the go.

6. Leading in Business Solutions

The success of Integris, which is the name of the IT solutions business provided by CT, has proved that we are an

33

Crnogorski Telekom - 2012 Annual Reportinnovative company and a reliable business partner with flexible IT solutions and verified expertise. With our network of partners we will continue with our expansion in the ICT market with ambitions to become the leader in areas of solutions and services by extending our Integris offers for SME’s and large enterprises, with advanced infrastructure, platforms, applications and cloud-based solutions.

34


Regulatory EnvironmentThe recent regulatory environment has been characterized by further implementation of the Law on Electronic Communications grounded on EU regulatory 2002 framework, which is dedicated to ensuring competitiveness in the market. In 2012, the new products placed on the market, based on the resolutions on SMP operators, had still not been put into operation due to a lack of interest from other parties. The only interest was shown for duct rental. The National Regulatory Agency (NRA) adopted the Rulebook on retail price regulation to be applied to all services. Cost Accounting and Accounting Separation Methodology for fixed network implemented in 2012 and the NRA approved the regulatory reports in November 2012. In September 2012, the NRA adopted the Cost Accounting Methodology for mobile networks, to be applied by all three operators. The First Regulatory revised reports need to be submitted by the end of June 2013.

In 2012, the NRA completed a market analysis of new five relevant markets. CT was identified as an SMP in four markets: two retail markets of calls, for business and residential, provided at a fixed location, wholesale market of trunk segments of leased lines and wholesale market of access and origination of mobile calls. Standard EU remedies were imposed on CT except in the mobile market where, besides MVO and national roaming, carrier selection was also imposed. There is still no interest for these new products launched on the market.

Universal service (US) was commercially launched in December 2011, but without significant interest from the customers’ side for the US service (especially for voice services and Internet access). Interest for US Inquiry and Directory Service is also not so remarkable; therefore Montenegrin operators compensated a rather significant net cost to USO.

35


The Number Portability service was commercially launched on December 1, 2011. The first year of implementation of the service showed that around 50% of numbers are ported in the CT network (while there was limited interest for porting of numbers in the fixed-line segment). At the end of 2012, the NRA started a procedure on amending the Rulebook on Number portability which implies fewer restrictions for porting of the numbers.

Regulatory fees

Under the currently effective regulations, Crnogorski Telekom pays fees for market supervision, numeration and the usage of radio frequencies, which are higher than the ones that used to be paid under the previous law when a flat fee of 1% of gross revenue was paid.

Carrier selection

Carrier Selection was already included in the 2008 version of the Reference Interconnection offer (RIO). In accordance with the Agency’s Resolution on designating CT as an SMP in the relevant market, the updated RIO also comprises Carrier Pre-selection. Only two operators have signed interconnection agreements with Crnogorski Telekom with Carrier Selection included.

Sharing of infrastructure

The RIO also defines the terms and conditions of collocation, for the purpose of interconnection realized at Crnogorski Telekom’s premises. This includes renting of space in buildings, masts and ducts. The RIO’s conditions are valid only for operators looking for interconnection/access, while usage of infrastructure by operators for other purposes is subject to commercial negotiations. Apart from the RIO, the

36

Crnogorski Telekom - 2012 Annual ReportReference Unbundling Offer defines the terms and conditions of collocation for the purpose of local loop unbundling, including also rental of collocation space in CT premises and ducts.

Termination of calls

The fixed termination fee (FTR) was changed in November 2010 by the NRA Resolution on designating CT as an SMP in the relevant market. The imposed price of 1.88 cents/min for single transit termination and 1.59 cents/min for local termination was applied in April 2011, while the new imposed prices of 1.07 cents/min for single transit termination and 0.93 cents/min for local termination were applied in November 2011.

The mobile termination fee (MTR) was changed in November 2010 by the NRA Resolution on designating CT as an SMP in the relevant market. The imposed price of 8.5 cents/min was applied in April 2011, while the new price 7.06 cents/min was applied in November 2011. In July 2012, the NRA imposed the new price of 4.00 cents/min which was implemented as of 31st December 2012.

Future regulatory developments

Public discussion on the Draft new Law, wherein the EU 2009 Framework will be implemented, started in September 2012 and as of the end of the year the Draft document is subject of harmonisation process with EU Commission. Two new retail markets (broadband and mobile service) will be subject of NRA’s market analysis in 2013.

Montenegro and the European Union

EU opened membership accession negotiations with Montenegro in June 2012.

37


Promotions and offerings

Residential customersPost-paid

In February 2012, CT offered all new lower rates for international calls to USA and Canada. With new rates, calls towards mobile and fixed numbers to USA and Canada were reduced to 10 cents per minute for post-paid. In April, mobile internet offers were further boosted by introducing innovative sharing models, in which a mobile post-paid number and a mobile data number share data from a single data bucket. In September, CT introduced innovative handset sales on instalments, widening the range of handsets available to residential post-paid customers.

Pre-paid

After a very favorable reception on the market, CT selected ‘Ajmo svi’ as its basic prepaid tariff and refreshed it with additional benefits including free calls and SMS towards a chosen Telekom mobile, along with free Facebook on mobile phones. A very favorable bundle Data/Voice prepaid offer was launched in September. For the 19EUR price of regular prepaid MI single-play offer, it offered 5 times more data with an extended validity period together with a prepaid voice package with a 5EUR account balance. In November, another favorable prepaid offer was launched: free handset with prepaid ‘Ajmo svi’ package with a 10EUR credit, for only 10EUR.

Fixed telephony

In February, CT offered 9 international options enabling cheaper calls to international destinations, including USA and

38

Crnogorski Telekom - 2012 Annual ReportCanada. Prices for calls for these destinations were reduced from 47 to 10 cents. CT initiated rollout, a key technical transformation project in 2012, IMS (IP Multimedia Subsystem). The new system is based on IP protocols and will set the stage for the new generation of fixed services, with new functionalities for customers. At the end of 2012, over 17 000 of customers had migrated to the new system.

Extra TV

Extra TV customers are able to enjoy numerous additions to the service. With Extra TV Mobile, the service is now available on phone, tablet and PC screens, enabling its customers to enjoy watching TV wherever they are. The launch of the Extra TV Mobile application was very successful. Movie fans welcomed the introduction of HBO GO, a class leading video on demand library and a first online repository of movies in the country. Customers of the CT’s state of the art fibre service are able to enjoy highest quality of sports entertainment with the introduction of the Arena HD channels.

At the end of 2012, there were 56,300 customers, which is an increase of 12% compared to the previous year active base. The company strengthened its leading position in the market with a market share of 42%.

ADSL

Strong marketing campaigns marked the summer and the end of the year, helping to increase the ADSL customer base to 69,600 customers, which is an increase of 8% compared to the previous year base. As a result of the various marketing and promotional activities, CT is holding a 82.6% of the market share in the broadband Internet market.

39


Fibre to the home (FTTH) project

Crnogorski Telekom continued its strong development of its fibre infrastructure resulting in the fibre coverage of 10% of total households, while the utilization reached 18%. Fibre services were also made available for the first time in the municipalities of Kotor, BijeloPolje, Budva and Niksic. In addition to existing benefits available to fibre customers, such as very high internet speeds, possibility to connect up to 5 TV sets on the IPTV service, free additional phone line, fibre customers can now also enjoy full HD channels.

Consumer financing

In 2012, Crnogorski Telekom launched an ambitious consumer financing project, which aims to offer an extended portfolio of consumer electronic product sales on instalments, as a model of customer financing through the partnerships with retailers. With this project, CT has offered its customers the possibility to purchase electronic equipment in the 3rd Party appliances stores (laptops, tablets, TVs, cameras...) on instalments and pay it via the monthly Telekom fixed bill.

The consumer financing project proved to be very successful and it represented a model for other hardware financing projects expanding to the most popular electronic retailers in Montenegro.

Loyalty programmes

Ritamklub continued with promotions, with a holiday campaign which involved free coins as a reward for prepaid top ups. Prepaid customers were also entered into a special draw, with prizes including consumer electronics, gift cards and additional Ritamklub coins.

After a successful launch of Premium cards, loyalty co-branded bank cards, activities in 2012 were focused on

40

Crnogorski Telekom - 2012 Annual Reportexpanding the number of partners and companies supporting the program. From initially35 companies that gave discounts to T-customers, 30 more partners were added to the list by December. The total number of T-Card holders at the end of 2012 was 9,000.

Business customersPost-paid

In February 2012, CT offered new lower rates for international calls to USA and Canada. With new rates, calls towards mobile and fixed numbers to USA and Canada were reduced to 10 cents per minute for post-paid. The promotional offer for SME was launched in February 2012, in order to improve CT’s position in this segment. The offer consisted of handsets in instalments with a discount on a monthly subscription and Internet options in order to push data usage. In April, mobile internet offers were further boosted by introducing innovative sharing models, in which mobile post-paid and mobile data numbers within the same company share allowances from a single data bucket. In September, CT introduced handset sales on instalments, widening the range of handsets available to post-paid customers.

Roaming

In March 2012, the internet roaming offer for post-paid customers was improved – two additional roaming partners were included, Telekom Croatia and T-Mobile Macedonia. A reshaped outbound roaming offer for post-paid and prepaid customers was launched in May - one price per zone, regardless of the roaming partner and call direction. The main objective was to make roaming tariffs more

41

Crnogorski Telekom - 2012 Annual Reporttransparent and simple for customers in order to push roaming usage.

Convergent offers

Business Calculator as a promotional offer was continued during the year 2012. It presented CT as a full telecommunication provider for business customers by integrating all services and equipment into one offer with a shorter sale cycle. The campaign is followed with a web calculator, a special web tool that enables customers to combine services and choose the best offer on their own.

Business Summer Offer was launched in May 2012 and is targeting SMEs that are oriented on summer season business and have no need for internet connections during the whole year. It consists of fixed/mobile data services with a minimal contract duration of 3 months.

Integris (ICT)

Integris continued its successful story during 2012. More than 200% additional companies (banks, retailers, enterprises and SME companies) compared to 2011, chose Crnogorski Telekom as their full ICT provider which led to YoY revenue growth of more than 120%.In October 2012, CT introduced Virtual desktop as one of the key cloud products for 2013 and further. It represents the basics for further deploying and implementing cloud based solutions.

42


Human ResourcesBetter utilization of existing resources

In order to proactively respond to numerous challenges on the telecommunications market, Crnogorski Telekom developed three years long extensive transformation program under the name Delfin. Aiming to increase the flexibility and adaptability to changing market conditions, positively changing the revenue curve, preserving profitability and keeping customer satisfaction, HR Area gave contributions to the Delfin project. It was done through numerous programs and initiatives; creating a stimulating work environment, simplification and automation of internal processes, mobilization and motivation of people for higher performance and willingness for change.

New Training and development offers

Apart from the Management Academy which continued to develop leadership capacity of CT management, HR extended its training and development offers with a so called Employee training Catalogue, mainly intended for soft skills development. The idea behind the Employee training catalogue has been to promote self-initiative and personal responsibility for professional growth. In two rounds, 116 employees from non- managerial positions participated in the offered programs, spending more than 1 800 training hours. Sales Academy has been launched for the first time in October 2012. The following figures say a lot - 200 trained people in 2012 and 3,200 training hours show how much this training initiative meets the needs of the Sales people in the Company. The outcome of a more flexible and better targeted training approach in 2012 is 15.5% more training hours compared to 2011.

43


e - Company

Traditional employee benefits related to company products and services will be implemented in a more efficient and less resources consuming way. By e-Phone ordering, HR contributed in automation of the process which has been seen as a typical HR service.

Beside recently introduced HR e-tools, such as e-Pay slip and e-Timesheet, HR continues to develop advanced e- tool for Performance management system. E-direction is strategic direction of HR Area.

Social dialogue

The negotiation process with the Trade Union has been successfully completed reaching the agreement about all subjects of negotiation, i.e. key points from CBA. The Agreement has been reached after several long years of negotiations and was officially signed on December 5th, 2012. Following the Agreement, HR started to implement programs for resolving housing needs of the employees and other CBA related employee benefits.

Positive trend in employee satisfaction

According to the Pulse check results in 2012, the company managed to keep positive trends in all aspects of crucial importance to an overall good shape of the company; satisfaction, employer attractiveness, motivation, strategy awareness, service orientation, etc. In spite of upcoming transformation and downsizing, a positive trend has been preserved even in the last round of Pulse check (November, 2012). Energizing Guiding principles Day 2012 and innovative campaign “’I love T’’ effected to high extent general employee satisfaction in the company.

Best Employers in MNE

44

Crnogorski Telekom - 2012 Annual ReportThe outcomes of the first local benchmark research about top employers in Montenegro met CT strategic aspirations. Crnogorski Telekom has been officially ranked among the three best employers in MNE and won two prizes: Best Company to work for (second place) and the Best organized large Company in Montenegro. Overall, 26 enterprises took part in the research while only 8 large and reputable companies had enough courage to check its rating. Additionally, Crnogorski Telekom gave crucial contribution by example, and for the introduction of regular employer benchmark research in the local business environment.

45


Corporate ResponsibilityAs one of the leading companies in the country, Crnogorski Telekom aims to be involved in all areas that are important for the Montenegrin society. Besides providing our customers with state-of-the-art telecommunications services, we see our role in the active and constant contribution to the development of the community in which we do business and we are part of.

The areas on which we focus are education (especially the development of information society), health and environment, culture and community support through disaster relief activities, corporate volunteering etc.

Development of information society in Montenegro

Being the leading broadband provider in the country, Crnogorski Telekom has the responsibility of being the country's first partner on its way to becoming an information society. In order to enable the internet to become a part of everyday life for the majority of Montenegrin citizens, the company initiated several projects, partnering with relevant bodies and organizations – the Montenegrin Government, educational institutions, NGOs, etc.

For the sixth year in a row, Crnogorski Telekom is enabling free internet access via ADSL to all elementary and high schools in the country. During 2012, around 150 Montenegrin schools benefitted from this. The project was implemented together with the Ministry of Education and Science.

Sports, music and culture move people

46

Crnogorski Telekom - 2012 Annual ReportWithin the company's sponsorship strategy, sports have a special place since this is an important area for developing a healthy, modern and advanced society.

The company is the golden sponsor of the Montenegrin national football team and general sponsor of the Telekom Montenegrin Football First League.

Crnogorski Telekom is for the tenth year in a row, the sponsor of the Budućnost Women's Handball Club, one of the most successful sports clubs in the country. With the support of the company, the club won the European Champions League title in 2012.

The company also sponsors music, since it is considered to be the universal language for all generations, it is perfect for underlining our brand promise “Life is for sharing” and give a wide range of memorable moments to share.

In the field of culture, Crnogorski Telekom partnered with several organizations in order to support different projects, with the focus being on youth and education.

In 2012, the company continued to support the City Theatre in Podgorica, thus helping this organization to offer new, exciting plays to young audiences.

The company was also the main sponsor of the Telekom Underhill Fest, an international documentary film festival which featured a series of concerts, film projects and lectures in Podgorica.

The company also supported the exhibition of Andy Warhol works, thus enabling the Montenegrin audience to witness the masterpieces of pop art for the first time.

CrnogorskiTelekom cooperates with numerous NGOs that protect the interests of people with disabilities.

Corporate Volunteering

47


The company supported the local community, and together with its employees showed solidarity by organizing the action of Voluntary blood donations, together with Red Cross Montenegro and Montenegrin Centre for blood transfusions.

50 employees, together with members of management gave blood and helped raise awareness to the fact that the number of blood donors in Montenegro should be doubled to reach WHO standards.

Disaster relief activities

After a severe snowstorm hit Montenegro in February 2012, Crnogorski Telekom responded by donating EUR 10,000 to the Montenegrin Red Cross and installed a donation line to enable its customers to donate by calling or sending SMS. In all, the sum of EUR 13,269 was collected in the month the donation line was in operation. Further, the company's employees helped to clear roads in front of the Institute for Public Health in Podgorica and the main hospital. With many people cut off by the snow, mobile phones were often the only means of communicating with the outside world. Here, the company's network maintenance teams worked round the clock to ensure services functioned properly or were restored. Their brave efforts were recognized by the Montenegrin public and the country's media.

After the building of Faculty of Fine Arts in Cetinje burned down in the summer of 2012, the students and their lecturers were invited to make temporary use of 3,200 m2 of office space in the Telekom premises until they can go back to their faculty building. Around 100 students are benefiting from this gesture.

Environment protection and energy efficiency

48

Crnogorski Telekom - 2012 Annual ReportIn 2012, Crnogorski Telekom continued implementing a range of measures to save energy and make their operations more energy-efficient.Energy consumption was reduced through a number of different measures in the reporting period. Rectifier plants with a low efficiency factor were replaced by ones with a high efficiency factor. Additional savings were achieved by replacing the central air-conditioning system and by introducing an automatically delayed start for backup diesel generators.

In March 2012, the company participated in the Earth Hour global campaign with the aim of raising awareness about climate change issues. The company is constantly promoting usage of sustainable solutions among its customers and employees, e.g. promoting e-mail bills, online registration, etc.

Crnogorski Telekom owns three base stations that use renewable energy sources. These are state-of-the art equipment that use the power of the sun and wind. The project is part of a broader company initiative to address global warming issues and protect the environment.

49


Further InformationContacts

Crnogorski TelekomMoskovska 2981000 PodgoricaMontenegroTel: + 382 20 433 433Fax: + 382 20 225 752e-mail: [email protected]

Crnogorski Telekom stock code:

Montenegroberza: TECG

Stock trading information:

Montenegroberza a.d.PodgoricaMoskovska 7781000 PodgoricaMontenegroTel/Fax: +382 20 228 502E-mail: [email protected]

Published by:Crnogorski Telekom © 2013

50

http://www.telekom.me/

Documents

Contents: 2012 Annual... · Web viewFixed line operations KPIs ... as well as traffic performance through on-going campaigns focused on migrating ... RAN modernization project as