T-Mobile Slovensko, a.s. - Telekom...a commencement date on or after January 1, 2009. However, during the 12 months to December 31, 2009 no borrowing costs were incurred on qualifying

T-Mobile Slovensko, a.s.

Financial Statements for the year ended

December 31, 2009

Prepared in Accordance with International Financial

Reporting Standards

Index to the Financial Statements

Page

Report of independent auditors ......................................................................................................... 1

Statement of financial position ......................................................................................................... 2

Statement of comprehensive income ................................................................................................ 3

Statement of cash flows ................................................................................................................... 4

Statement of changes in equity ......................................................................................................... 5

Notes to the financial statements ..................................................................................................... 6


Statement of comprehensive income

(in thousands of Euro)

3

Year ended December 31,

Notes 2009 2008

Revenue .............................................................................................. 20 555,771 591,443

Cost of goods sold and services used .................................................. 21 (182,364 ) (225,887 )

Gross profit ........................................................................................ 373,407 365,556

Operating expenses ............................................................................. 22 (232,852 ) (236,178 )

Operating profit ................................................................................ 140,555 129,378

Finance income ................................................................................... 23 3,236 12,560

Finance costs ....................................................................................... 24 (1,274 ) (16,503 )

Profit before tax ................................................................................ 142,517 125,435

Income tax .......................................................................................... 25 (29,476 ) (24,731 )

Profit for the year.............................................................................. 113,041 100,704

Other comprehensive income .............................................................. - -

Total comprehensive income for the year, net of tax ..................... 113,041 100,704

The accompanying notes form an integral part of these financial statements.


Statement of cash flows


4

Year ended December 31,

Notes 2009 2008

Profit for the year ........................................................................................................................... / 113,041 100,704

Adjustments for:

Income tax ............................................................................................................................... 25 29,476 24,731

Depreciation and amortization .............................................................................................. 22 103,007 106,185

Impairment on property and equipment ............................................................................... 22 288 (1,062 )

Provision for the universal service costs ........................................................................ 22 13,100 -

Loss from disposal of property and equipment ................................................................... 22 257 1,115

Interest expense ....................................................................................................................... 23 535 -

Interest income ........................................................................................................................ 23 (416 ) (5,738 )

Gain on held-to-maturity investments ................................................................................. 23 (704 ) (2,201 )

Impairment loss on held-to-maturity investments .............................................................. 23, 24 (1,328 ) 6,717

Fair value (gains) / losses on financial instruments ............................................................. 17 (145 ) 224

Changes in working capital

Decrease in inventories .................................................................................................................. 14,407 1,587

Increase in receivables, prepayments and deferred expenses ................................................... (4,804 ) (3,377 )

Decrease in trade, other payables and deferred revenue ............................................................ (7,971 ) (1,411 )

Cash flows from operations ....................................................................................................... 258,743 227,474

Interest paid ..................................................................................................................................... (100 ) -

Interest received .............................................................................................................................. 2,013 7,537

Income tax paid .............................................................................................................................. (34,830 ) (30,792 )

Net cash flows from operating activities ................................................................................. 225,826 204,219

Cash flows from investing activities

Purchase of property and equipment ............................................................................................ (75,486 ) (66,731 )

Cash payments to acquire held-to-maturity investments - (56,063 )

Cash receipts from repayment of held-to-maturity investments .............................................. 42,318 37,804

Proceeds from disposal of property and equipment ................................................................... 138 101

Net cash used in investing activities.......................................................................................... (33,030 ) (84,889 )

Cash flows from financing activities

Proceeds from shareholder loan ................................................................................................... 35,000 -

Repayment of shareholder loan .................................................................................................... (35,000 ) -

Payment of dividends to equity shareholders ............................................................................. (121,018 ) (149,373 )

Net cash used in financing activities ......................................................................................... (121,018 ) (149,373 )

Net increase / (decrease) in cash and cash equivalents ........................................................

71,778 (30,043 )

Cash and cash equivalents at beginning of period ................................................................

11 68,300 98,343

Cash and cash equivalents at end of period ........................................................................... 11 140,078 68,300



Statement of changes in equity


5

Ordinary

shares

Share

premium

Preferred

shares

Total

share capital

Legal

reserves Retained

earnings

Total

Balance as of December 31, 2007 ........................................................... 118,219 34 5,717 123,970 24,787 305,238 453,995

Dividends to shareholders ........................................................................ - - - - - (270,390 ) (270,390 ) Total comprehensive income for the year 2008 ........................................ - - - - - 100,704 100,704


Share capital adjustment (Note 14) ........................................................... 22 - 1 23 - (23 ) - Dividends to shareholders ........................................................................ - - - - - (100,704 ) (100,704 ) Total comprehensive income for the year 2009 ........................................ - - - - - 113,041 113,041



T-Mobile Slovensko, a.s. Notes to the financial statements


6

1. General information

Corporate information

T-Mobile Slovensko, a.s. („T-Mobile‟ or „the Company‟), a Slovak joint stock company, was established under

the name EuroTel Bratislava, a.s. („EuroTel‟) on December 16, 1996 as a joint venture of Slovak Telekom, a.s.

(„ST‟), a subsidiary of Deutsche Telekom AG („DT‟), and Atlantic West B.V. („AWBV‟). On September 26,

2004, ST entered into an agreement for the purchase of all EuroTel shares held by AWBV. The purchase

transaction was authorized by the Slovak Anti-Monopoly Office and by anti-monopoly authorities subordinated

to the European Commission in December 2004, and ST then became the sole shareholder of EuroTel Bratislava,

a.s.

On March 24, 2005 the Shareholders‟ General Meeting passed a resolution to change the Company‟s name to

T-Mobile Slovensko, a.s. The change was registered in the commercial register on May 2, 2005.

Principal activities

T-Mobile provides mobile telephony services in the 900 MHz and 1800 MHz frequency bands under the Global

System for Mobile Communications („GSM‟) standard and in the 2100 MHz frequency band under the Universal

Mobile Telecommunications System standard („UMTS‟), hereinafter referred to as „mobile services‟. T-Mobile

commercially launched the GSM 900 service in February 1997, the GSM 1800 service in November 1999 and

the UMTS service in January 2006. Provisioning of mobile telephony service in the 450 MHz frequency band

under the Nordic Mobile Telephone („NMT‟) standard, which T-Mobile commercially launched in September

1991, has been discontinued since September 2008. The 450 MHz frequency band is utilized by T-Mobile for

providing wireless broadband internet access under the Flash-OFDM standard, which has been commercially

offered since November 2005. T-Mobile has also provided Managed Data Network Services („MDNS‟) in the

Slovak Republic since November 1991. T-Mobile‟s business activities and customers are concentrated in the

Slovak Republic.

The general license granted by the Telecommunications Office of the Slovak Republic for provision of mobile

services under the GSM 900, GSM 1800 and NMT 450 MHz standards is valid until August 30, 2011 at which

point T-Mobile has the right to request renewal of the license for an additional period of up to ten years. The

UMTS license is valid to July 16, 2022 when T-Mobile will be entitled to request its prolongation.

Registered office of the Company

Vajnorská 100/A

831 03 Bratislava

Slovak Republic

Information about controlling parties

Slovak Telekom, a.s. with its registered office on Karadžičova 10, Bratislava, Slovak Republic, is the parent of

the smallest group of which the Company is a member and for which group financial statements are drawn up.

Deutsche Telekom AG, Friedrich Ebert Allee 140, Bonn, Germany, is the parent of the largest group of which

the Company is a member and for which group financial statements are drawn up. These consolidated financial

statements are available at the registered offices of the listed companies or at the register courts administering the

commercial registers, i.e. the District Court Bratislava I in Bratislava, Slovak Republic and the District Court of

Bonn HRB 6794, Germany, respectively.



7

2. Basis of preparation

The financial statements of T-Mobile for the year ended December 31, 2009 were authorized for issue in

accordance with a resolution of the Board of Directors on February 11, 2010.

These financial statements have been prepared on a historical cost basis, except for derivative financial

instruments that have been measured at fair value through profit and loss, and non-current assets held for sale

that have been measured at their fair value less costs to sell. These financial statements constitute the statutory

accounts of T-Mobile prepared in accordance with Article 17 (6) of Slovak Act No. 431/2002 Coll. on

Accounting for the accounting period from January 1, 2009 to December 31, 2009.

The financial statements were prepared using the going concern assumption that the Company will continue in

operation for the foreseeable future.

The financial statements and accompanying notes are presented in thousands of Euro, which is the Company‟s

functional and presentation currency. Euro became the official currency of the Slovak Republic on January 1,

2009. As a result of Slovakia‟s adoption of the Euro, the functional currency of the Company changed from the

Slovak Crown to Euro. The change in functional currency was implemented prospectively as of January 1, 2009

and all assets, liabilities and equity of the Company were converted into Euro based on the official conversion

rate EUR1 = SKK30.1260. Comparative financial statements for the previous year were also converted to Euro

based on the official conversion rate. The average exchange rate of Euro during 2008 was SKK31.291/EUR1.

Statement of compliance

The Financial Statements of the Company have been prepared in accordance with International Financial

Reporting Standards as adopted by the EU („IFRS‟).

Changes in accounting policies and disclosures

The accounting policies adopted have been consistently applied to all the years presented, except where

disclosed otherwise in the Notes to the financial statements.

The Company has adopted the following new and amended IFRS and IFRIC interpretations as of January 1,

2009.

IAS 1 Presentation of Financial Statements (Revised)

The revised standard separates owner and non-owner changes in equity. The statement of changes in equity

includes only details of transactions with owners, with non-owner changes in equity presented in a reconciliation

of each component of equity. In addition, the standard introduces the statement of comprehensive income: it

presents all items of recognised income and expense, either in one single statement, or in two linked statements.

The Company has elected to present one statement.

IAS 23 Borrowing Costs (Revised)

The revised standard requires capitalization of borrowing costs that are directly attributable to the acquisition,

construction or production of a qualifying asset. The Company‟s previous policy was to expense borrowing costs

as they were incurred. In accordance with the transitional provisions of the amended IAS 23, the Company has

adopted the standard on a prospective basis. Therefore, borrowing costs are capitalised on qualifying assets with

a commencement date on or after January 1, 2009. However, during the 12 months to December 31, 2009 no

borrowing costs were incurred on qualifying assets.

IFRIC 13 Customer Loyalty Programmes

This interpretation requires customer loyalty credits to be accounted for as a separate component of the sales

transaction in which they are granted. A portion of the fair value of the consideration received is allocated to the

award credits and deferred. This is then recognized as revenue over the period that the award credits are

redeemed (Note 4.20). The Company maintains a loyalty programme, T-Mobile Club, and has historically

recognised a provision at the time of the sale based on the costs expected to be incurred to supply

products/services in the future. IFRIC 13 has no specific provisions on transition. Therefore, the Company has

followed IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, applying the changes

retrospectively (also see Note 4.1).



8

2. Basis of preparation (continued)

Adoption of IFRS during the year

Standards, interpretations and amendments to published standards effective in 2009 but not relevant to

the Company’s operations

The following standards, amendments and interpretations are mandatory for accounting periods beginning on or

after January 1, 2009 but are not relevant to the Company‟s operations:

IFRS 2 Share-based Payment: Vesting Conditions and Cancellations

IFRS 3 Business Combinations

IFRS 7 Financial Instruments: Disclosures

IFRS 8 Operating Segments

IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations

Arising on Liquidation

IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items

IFRIC 9 Remeasurement of Embedded Derivatives

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

IFRIC 18 Transfers of Assets from Customers

Improvements to IFRSs

In May 2008 and April 2009 the IASB issued an omnibus of amendments to its standards, primarily with a view

to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard.

The adoption of the following amendments resulted in changes to accounting policies but did not have any

impact on the financial position or performance of the Company:

IAS 16 Property, Plant and Equipment (effective for annual periods beginning on or after January 1,

2009)

Replaces the term “net selling price” with “fair value less costs to sell”. The Company amended its

accounting policy accordingly which did not result in any change in financial position.

IAS 23 Borrowing Costs (effective for annual periods beginning on or after January 1, 2009)

The definition of borrowing costs is revised to consolidate the two types of items that are considered

components of “borrowing costs” into one – the interest expense calculated using the effective interest

rate method calculated in accordance with IAS 39. The Company has amended its accounting policy

accordingly which did not result in any change in financial position.

Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact on

the accounting policies, financial position or performance of the Company:

IFRS 2 Share-based Payment

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

IFRS 7 Financial Instruments: Disclosure

IFRS 8 Operating Segment Information

IAS 1 Presentation of Financial Statements (Assets and liabilities classified as held for trading in

accordance with IAS 39 Financial Instruments: Recognition and Measurement)

IAS 7 Statement of Cash Flows

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10 Events after the Reporting Period

IAS 18 Revenue

IAS 19 Employee Benefits

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

IAS 27 Consolidated and Separate Financial Statements

IAS 28 Investments in Associates

IAS 31 Interests in Joint Ventures

IAS 34 Interim Financial Reporting

IAS 36 Impairment of Assets

IAS 38 Intangible Assets

IAS 39 Financial Instruments: Recognition and Measurement

IAS 40 Investment Properties

IFRIC 9 Reassessment of Embedded Derivatives

IFRIC 16 Hedge of a Net Investment in a Foreign Operation



9

3. Significant accounting judgments, estimates and assumptions

3.1 Use of judgments, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires management to make judgments,

estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of

contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and

expenses during the reporting period. Actual results could differ from those estimates. Estimates and judgments

are continually evaluated and are based on historical experience and other factors, including expectations of

future events that are believed to be reasonable under the circumstances.

3.2 Critical accounting estimates and assumptions

The Company makes estimates and assumptions concerning the future, but the resulting accounting estimates

will, by definition, seldom equal the related actual results. Estimates that might have a significant risk of causing

material adjustments to the carrying amounts of assets and liabilities comprise the following:

a) Fair value of financial instruments

The fair value of financial instruments which are not traded in an active market (e.g. over-the-counter

derivatives) is determined by using quoted forward exchange rates for similar instruments, bank quotes available

at the end of the reporting period and valuation techniques.

It is assumed that carrying amounts of cash and short-term deposits, trade and other receivables and prepayments

and trade and other payables with maturities of less than one year substantially approximate their fair values due

to their short-term nature.

b) Provision for dismantlement and removal of assets

The Company entered into lease contracts for land and premises on which the Company‟s communication

network equipment is placed. T-Mobile is committed by these contracts to dismantle the equipment and restore

the land and premises to their original condition. Therefore, in accordance with IAS 16 and IAS 37, the

Company has recognized provisions for dismantlement, removal and restoration obligations (see Note 4.13).

Management‟s judgments and estimates in arriving at these provisions are as follows:

a) Estimation of appropriate pre-tax credit adjusted interest rates commensurate with the Company‟s credit

standing;

b) Estimates of amounts which will be necessary to discharge future obligations;

c) Such leases of land and property to the Company often represent best economic use of the property and the

owners may decide upon expiration of contracts to renew the leases or when leases are terminated, not to

enforce Company‟s restoration obligations as the modifications of land and premises are often deemed

useful improvements.

c) Provisions for impairment of receivables

The Company provides services and sells merchandise to a large number of customers, including individuals and

businesses, mainly on credit terms. Management is aware that certain debts due to the Company will not be paid

through the default of a small number of our customers. Estimates are used in determining the level of

receivables that management believes will not be collected. These estimates are based on past experience of

payment history and their validity is subject to annual reviews (Notes 4.7 and 4.8).

d) Useful lives of non-current assets

The estimation of the useful lives of non-current assets is a matter of judgment based on the experience of the

Company with similar assets. As described in Note 4.2, the Company reviews the estimated useful lives of non-

current assets at the end of each annual reporting period. Management‟s estimates and judgments are inherently

prone to inaccuracy for those assets for which no previous experience exists. During the financial year ended

December 31, 2009, management identified items of network software which remained in use beyond their

initially estimated useful life of 2 years. The actual useful life of these assets varies between 3 to 8 years. The

modification of their estimated useful lives will be implemented prospectively from January 1, 2010 and will be

accounted for as a change in an accounting estimate in accordance with IAS 8. It is estimated that the change

will result in a reduction of the amortisation charge in amount of approximately EUR7,000 on an annual basis.



10

3. Significant accounting judgments, estimates and assumptions (continued)

e) Fair value of loyalty programme points

The Company estimates the fair value of points awarded under the T-Mobile Club loyalty programme by

applying statistical techniques. Inputs to the model include making assumptions about expected redemption

rates, the mix of products/services that will be available for redemption in the future and customers‟ preferences.

All of the key assumptions in the model are subject to ongoing review. Accumulated fair value of loyalty

programme points awarded in sales transactions are disclosed in Note 16. Provisions for loyalty points which are

outside the scope of IFRIC 13 are detailed in Note 19.



11

4. Summary of significant accounting policies

4.1 Reclassifications

The Company adopted IFRIC 13 effective January 1, 2009 (Note 2), retrospective adoption of which did not

result any reclassifications to the comparative figures in the statement of comprehensive income. However, the

accumulated fair value of loyalty programme points are disclosed within deferred revenue with a value of

EUR3,032 in the 2008 comparatives, whereas as at December 31, 2008 they were disclosed within „Provisions.‟

4.2 Property and equipment

Property and equipment primarily represents costs incurred to construct the mobile and MDNS networks. This

includes switches, base stations, MDNS nodes and MDNS modems. Property and equipment also includes

operating support systems and other support assets. Items of property and equipment are measured at historical

cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly

attributable to bringing the asset to working condition for its intended use (excluding the costs of day-to-day

servicing), and the cost of dismantling and removing the items and restoring the site on which they are located.

The cost of property and equipment also includes the cost of direct labour and certain engineering overhead costs

incurred during the construction period.

Subsequent costs are included in the asset‟s carrying amount or recognized as a separate asset, as appropriate,

only when it is probable that future economic benefits associated with the item will flow to the Company and the

cost of the item can be measured reliably. All other repair and maintenance costs are charged to the statement of

comprehensive income during the financial period in which they are incurred.

Land is not depreciated. The cost of other property and equipment is depreciated on a straight-line basis to write

off the cost of each asset to its residual value over its estimated useful life as follows:

Switching equipment ................................................................................................................................... 5 to 10 years

Auxiliary switching equipment (WAP gateways, SMS centres) .......................................................... 5 years

Radio equipment ........................................................................................................................................... 8 years

UMTS equipment ......................................................................................................................................... 4 to 8 years

Wireless broadband equipment .................................................................................................................. 5 years

MDNS equipment ......................................................................................................................................... 7 to 10 years

MDNS modems ............................................................................................................................................ 3 years

Furniture and fixtures ................................................................................................................................... 5 to 13 years

Computer equipment and peripherals ........................................................................................................ 3 years

Motor vehicles .............................................................................................................................................. 6 to 9 years

Network software (integral part of the network technology) ................................................................. 2 years

Other software .............................................................................................................................................. 3 years

The assets‟ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting

period.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the

difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of

comprehensive income in the year the asset is derecognized.

4.3 Licenses

Licenses comprise the „general license‟ covering the provision of public mobile telephony and the use of

900 MHz, 1800 MHz and 450 MHz radio frequencies, the UMTS license covering the operation of a public

mobile telecommunication network based on the Universal Mobile Telecommunications System standard and

the use of 2100 MHz radio frequency and the license for public data network services in Slovakia.



12

4. Summary of significant accounting policies (continued)

4.3 Licenses (continued)

The general license is valid until August 30, 2011, at which point T-Mobile has the right to request the renewal

of the license for up to an additional ten years. The renewal of the license may be granted by the Telecom Office,

at its sole discretion and T-Mobile may be required to pay certain fees for the renewal of the license. T-Mobile

commenced commercial UMTS services in January 2006. The license is valid through to July 16, 2022 when T-

Mobile will be entitled to request its prolongation.

Licenses are initially measured at cost and are deemed to have finite useful lives and are, therefore, carried at

cost less accumulated amortization and accumulated impairment losses. Licenses are amortized on a straight-line

basis over their remaining useful lives exclusive of the renewal options.

It is T-Mobile‟s policy to recognize licenses as intangible assets when T-Mobile assumes control of the related

frequencies; any payments made prior to obtaining control of frequencies are recorded as prepayments.

Amortization of the licenses commences on the date of the commercial launch of the network which utilizes the

awarded frequencies.

4.4 Impairment of non-financial assets

Property, equipment and licenses are reviewed for impairment losses whenever events or changes in

circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized for

the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an

asset‟s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped

at the lowest levels for which there are separately identifiable cash flows (cash-generating unit).

At each reporting date an assessment is made as to whether there is any indication that previously recognized

impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an

estimate of recoverable amount. A previously recognized impairment loss is reversed only if there has been a

change in the estimates used to determine the asset‟s recoverable amount since the last impairment loss was

recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That

increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had

no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of

comprehensive income unless the asset is carried at revalued amount, in which case the reversal is treated as a

revaluation increase.

4.5 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a

sale transaction rather than through continuing use. This condition is regarded as met only when the sale is

highly probable and the asset is available for immediate sale in its present condition. Management must be

committed to the sale, which should be expected to qualify for recognition as a completed sale within one year

from the date of classification.

Non-current assets classified as held for sale are measured at the lower of their previous carrying amount and fair

value less costs to sell, and no depreciation is charged on such assets.

4.6 Leases

Leases of assets under which the lessor effectively retains all the risks and rewards of ownership are classified as

operating leases. Payments made under operating leases are charged to the statement of comprehensive income

on a straight-line basis over the period of the lease.



13


4.7 Financial assets

Financial assets within the scope of IAS 39 are classified as loans and receivables, held-to-maturity investments and

financial assets at fair value through profit or loss, as appropriate. When financial assets are recognized initially,

they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly

attributable transaction costs.

Management determines the classification of its financial assets on initial recognition and re-evaluates this

designation at every reporting date.

a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market. They are included in current assets, except for maturities greater than 12 months after

the end of the reporting period in which case they are classified as non-current assets. Loans and receivables are

classified as trade and other receivables in the statement of financial position.

After initial measurement at their fair value, including transaction costs that are directly attributable to their

acquisition, loans and receivables are carried at amortized cost using the effective interest method less any

allowances for impairment. Gains and losses are recognized in profit or loss when the loans and receivables are

derecognized or impaired, as well as through the amortization process.

b) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets

designated upon initial recognition at fair value through profit or loss.

Financial assets are classified as held for trading if they are acquired for purposes of selling in the near future.

Derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

During the financial year ended December 31, 2009 the Company did not hold any derivative instruments

designated as hedges in accordance with IAS 39.

Financial assets carried at fair value through profit or loss are initially recognized at their fair value; transaction

costs are expensed as incurred. Gains or losses arising from changes in fair value are recognized in profit and

loss.

c) Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-

to-maturity when the Company has the positive intention and ability to hold them to maturity. After initial

measurement held-to-maturity investments are measured at amortized cost using the effective interest method.

Gains and losses are recognized in profit or loss when the investments are derecognized or impaired, as well as

through the amortization process.

d) Derecognition of financial assets

A financial asset is normally derecognized when the rights to receive cash flows from the asset have expired or

when the Company has transferred its rights to receive cash flows from the asset and has transferred substantially

all the risks and rewards or the control of the asset.

e) Impairment of financial assets

The Company assesses at the end of each reporting period whether there is objective evidence that a financial

asset or a group of financial assets is impaired. The amount of the provision for assets carried at amortized cost is

the difference between the carrying amount of the financial asset and the recoverable amount, being the present

value of expected cash flows, discounted at the original effective interest rate.



14


4.8 Trade receivables

Trade receivables are recognized initially at fair value (original invoice amount) and subsequently measured at

amortized cost using the effective interest method, less provision for impairment. A provision for impairment of

trade receivables is established when there is objective evidence that T-Mobile will not be able to collect all

amounts due according to the original invoice terms. Indicators that a trade receivable is impaired include the

financial difficulties of the debtor, the probability that a debtor will enter bankruptcy or significant delays in

payment.

The carrying amount of the asset is reduced through the use of a provision account, and the amount of the loss is

recognized in the statement of comprehensive income. Subsequent recoveries of amounts previously written off

are credited against costs in the statement of comprehensive income.

When the trade receivable becomes uncollectible, it is written off against the allowance account for trade

receivables.

4.9 Inventories

Inventories consist of mobile phones, wireless broadband modems, SIM cards, spare parts and accessories.

Inventory is valued at the lower of cost and net realizable value (being the estimated selling price in the ordinary

course of business less applicable selling expenses) using the weighted average valuation method.

4.10 Cash and cash equivalents

Cash includes cash on hand and current accounts with banks net of bank overdrafts, which are shown within

borrowings in current liabilities on the statement of financial position. Short-term deposits having an original

maturity date of three months or less are considered cash equivalents.

4.11 Share capital

Ordinary shares and irredeemable preference shares are classified as equity.

4.12 Provisions

Provisions are recognized when T-Mobile has a present legal or constructive obligation as a result of past events,

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,

and a reliable estimate of the amount of the obligation can be made. Provisions are not recognized for future

operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of

an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation

using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to

the obligation. The increase in the provision due to passage of time is recognized as interest expense.

4.13 Asset dismantlement, removal and restoration obligations

Obligations for dismantlement, removal and restoration of assets relate to future costs associated with the

dismantling and removal from use of property and equipment. The amount of initially recognized liability for

dismantlement, removal and restoration of assets is considered an element of cost of property and equipment in

accordance with IAS 16 in the period in which the liability is recognized. The liability is accreted to its present

value each period, and the capitalized cost is depreciated over the estimated useful life of the related property

and equipment. The increase in the provision due to passage of time is recognized as interest expense. Upon

settlement of the liability, T-Mobile either settles the obligation for its recorded amount or incurs a gain or loss

upon settlement.



15


4.14 Income Tax

a) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to

be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are

those that are enacted or substantively enacted by the end of the reporting period.

b) Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred

income tax is not accounted for if it arises from the initial recognition of an asset or liability (in transactions

other than business combinations) that at the time of the transaction affects neither accounting nor taxable profit

or loss.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be

available against which the temporary differences can be utilized. Deferred income tax liabilities are recognized

for all taxable temporary differences.

Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the end of

the reporting period and are expected to apply when the related deferred income tax asset is realized or the

deferred income tax liability is settled.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to

set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same

taxable entity and the same taxation authority.

4.15 Employee benefits

a) Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related

service is provided by employees. Accruals are recognized for short-term employee benefits for which the

Company has a legal or constructive obligation as a result of past service provided by employees, for which the

obligation can be estimated reliably and which is due after the end of the reporting period (e.g. bonuses, unused

vacation entitlements).

b) Termination benefits

Termination benefits are recognized as an expense when the Company is demonstrably committed, without

realistic possibility of withdrawal, to a formal detailed plan to terminate employment before normal retirement

date. Termination benefits for voluntary redundancies are recognized once the Company has made an offer

encouraging redundancy, it is probable that the offer will be accepted and the number of acceptances can be

estimated reliably.

The Company is not involved in any long-term defined contribution plans or defined benefit plans for its

employees.

c) Social security and retirement benefits

Contributions are made to statutory health, retirement benefit and unemployment schemes at the statutory rates

in force during the year, based on gross salary payments. The cost of social security payments is expensed in the

same period as the related salary cost.



16


4.16 Financial liabilities

T-Mobile classifies its financial liabilities as either loans or borrowings or financial liabilities at fair value

through profit or loss.

a) Loans and borrowings

All loans and borrowings are initially recognized at their fair value less directly attributable transaction costs,

and have not been designated „as at fair value through profit or loss‟. After initial recognition, interest bearing

loans and borrowings are subsequently measured at amortized cost using the effective interest method. Loans

and borrowings are classified as trade and other payables in the statement of financial position.

Gains and losses are recognized in profit or loss when the liabilities are derecognized, as well as through the

amortization process.

b) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial

liabilities designated upon initial recognition as at fair value through profit or loss. Derivatives are also classified

as held for trading unless they are designated as effective hedging instruments. During the financial year ended

December 31, 2009 the Company did not hold any derivative instruments designated as hedges in accordance

with IAS 39. Gains or losses on liabilities held for trading are recognized in profit or loss.

c) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

4.17 Borrowing costs

Borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying

asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense when

incurred.

4.18 Accounting for derivative financial instruments and hedging activities

T-Mobile is authorized to undertake certain hedging activities, including the use of derivatives, within the limits

and overall framework set by the Board of Directors.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly

effective are recognized in equity. Amounts deferred in equity are transferred to the statement of comprehensive

income and classified as revenue or expense in the same periods during which the hedged item affects the

statement of comprehensive income. At the date a hedging instrument expires or is sold, or once a hedge no

longer meets the criteria for hedge accounting under IAS 39, any cumulative gain or loss existing in equity at

that time remains in equity and is recycled to the statement of comprehensive income when the committed or

forecasted transaction is ultimately recognized in the statement of comprehensive income. If the committed or

forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is

immediately transferred to the statement of comprehensive income.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the

statement of comprehensive income, together with any changes in the fair value of the hedged asset or liability

that are attributable to the hedged risk.

As of December 31, 2009 and December 31, 2008 the Company did not hold any derivatives designated as cash-

flow hedges or fair value hedges. The Company did, however, enter certain derivative transactions that, while

providing effective economic hedges under T-Mobile‟s risk management policies, do not qualify for hedge

accounting under the specific rules of IAS 39. Changes in the fair value of derivative instruments that do not

qualify for hedge accounting under IAS 39 are recognized immediately in the statement of comprehensive

income.



17


4.19 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and

the revenue can be reliably measured. Revenue comprises the fair value of the consideration received or

receivable for the sale of goods and services in the ordinary course of the Company‟s activities. Revenue is

shown, net of value-added tax, estimated returns, rebates and discounts. Specific recognition criteria are

described below.

a) Mobile telephony services

Mobile telephony services include service revenue (including roaming and interconnection revenue), activation

revenue and revenue from the sale of goods.

Service revenue (including roaming and interconnection revenue)

Mobile service revenue is earned by providing access to the network (access revenue) and for the actual use of

the network (airtime and roaming revenue). Access revenue for postpaid customers is billed once a month in

arrears. Value of bundled minutes of voice telephony that customers may transfer and utilize beyond the end of

the financial year is deferred in the statement of financial position until the service is rendered. Airtime and

roaming revenue for postpaid customers is billed one month in arrears and is recognized in the period the airtime

is used. Airtime and roaming revenue for prepaid customers is recognized in the period the airtime is used.

Interconnection revenue is recognized in the period the incoming phone call or incoming SMS terminates in the

Company‟s network.

Activation Revenue and Activation Costs

Non-refundable activation fees are recognized as income to the extent that they are immediately offset by a

product delivered or service rendered. Otherwise, non-refundable activation fees are deferred in the statement of

financial position and recognized over the expected period of the customer relationship. Activation costs are

deferred to the extent of activation revenue and amortized over the average expected period of the customer

relationship in the same allocation manner as the activation fees. Any excess of activation costs over income

earned from activation fees is expensed as incurred.

Sale of goods (mobile handsets and other equipment)

Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods

have passed to the buyer, usually on dispatch of the goods.

Multiple-element arrangements

A Multiple-Element Arrangement („MEA‟) is a contract (or a series of contracts) which are economically linked

and under which T-Mobile has to deliver several products or services (e.g. a contract for mobile services bundled

with a handset) whereas normally these products or services are provided at different points in time.

If a MEA is identified, the following process is applied:

Arrangements with multiple deliverables are divided into separate units of accounting (if certain criteria

are met);

Arrangement consideration is allocated among the separate units of accounting based on their relative

fair values. The amount allocated to the delivered item(s) is limited to the non-contingent amount (cash

received). The amount received that is contingent upon undelivered elements of the arrangement is

deferred over the expected period of the customer relationship until the service is rendered.

Revenue recognition criteria are considered and must be met for each separate unit of accounting.

b) Managed Data Network Services

T-Mobile earns MDNS revenue primarily by providing access to the MDNS network and for usage of the

network. Access revenue is billed once a month in advance and is recognized when the service is rendered.

Usage revenue is billed one month in arrears and is recognized in the period the network is used. T-Mobile also

earns revenue from selling and installing equipment and rental of modems. These revenues are recognized when

the equipment, systems and services are delivered and installed.



18


4.20 Customer loyalty programme

For customer loyalty programme (“T-Mobile Club”), the fair value of the consideration received or receivable in

respect of the initial sale is allocated between the award credits (“T-points”) and the other components of the

sale. The amount allocated to T-points is estimated by reference to the fair value of the discounted

products/services for which they could be redeemed, taking into account the expected redemption rate and the

timing of expected redemptions. Such amount is deferred and revenue is recognised only when the T-points are

redeemed and the Company has fulfilled its obligations to supply the discounted products/services. The amount

of revenue recognised in those circumstances is based on the number of T-points that have been redeemed in

exchange for discounted products/services relative to the total number of T-points expected to be redeemed. The

fair value of the T-points is considered separate unit of accounting and the rules for accounting for Multiple-

Element Arrangement as described in Note 4.19 apply.

Members of the T-Mobile Club can also collect loyalty points (“T-bonuses”) for certain behaviour (e.g. for

arranging a direct debit facility, activation of electronic bill, etc.) that is in no way related to a sales transaction.

Such loyalty points are outside the scope of IFRIC 13 and the Company recognises a provision in accordance

with IAS 37 at the time when T-bonuses are awarded, which is measured at the amount necessary to settle its

liability to participants of the T-Mobile Club.

4.21 Finance income and expenses

Finance income comprises interest income on funds invested, changes in the fair value of financial assets and

financial liabilities at fair value through profit or loss and foreign currency gains. Interest income on held-to-

maturity investments carried at amortized cost is recognized as it accrues using the effective interest method and

is disclosed under the heading of „net gains from held-to-maturity investments‟.

Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, changes in

the fair value of financial assets and financial liabilities at fair value through profit or loss and foreign currency

losses. Borrowing costs are recognized in profit or loss using the effective interest method. Net losses on

financial instruments held for trading comprise changes in fair value of derivative financial instruments and any

income realized or expenses incurred upon settlement of currency forward contracts.

4.22 Foreign currencies

Transactions denominated in foreign currencies are translated into Euro using the exchange rate prevailing at the

date of the transaction. Outstanding monetary assets and liabilities denominated in foreign currencies are

retranslated at the exchange rate ruling at financial year-end. Non-monetary items are reported using the

exchange rate at the date of the transaction.

Realized and unrealized exchange differences are recognized as income or expense in the accounting period in

which they arise.

4.23 Dividend distribution

Dividend distributions to the Company‟s shareholder are recognized as liabilities in the Company‟s financial

statements in the period in which the dividends are approved by the Company‟s shareholder.



19

5. Financial risk management

5.1 Financial risk factors

T-Mobile‟s activities expose it to a variety of financial risks: market risk (foreign exchange risk, in particular),

credit risk and liquidity risk. The Board of Directors has overall responsibility for the establishment and

oversight of the Company‟s risk management framework. The Treasury Department („Treasury‟) carries out risk

management functions approved by the Board of Directors in accordance with the internal treasury policies of

the ST Group and in line with DT Group principles.

These policies cover specific areas, such as foreign exchange risk, credit risk, liquidity risk, investment of excess

funds, use of derivative financial instruments, authorization rules, as well as monitoring and reporting. Financial

instruments (such as foreign exchange contracts) may be used to mitigate the adverse impact of risks identified,

but speculative trading is not undertaken. Treasury identifies and evaluates financial risks in close co-operation

with the Company‟s operating units.

a) Market risk

Foreign exchange (currency) risk

T-Mobile faces transactional currency risk in respect of capital expenditures (including payments for GSM and

UMTS network equipment), purchases of mobile phone handsets and terminals, and certain services (e.g.

roaming), which are denominated in currencies other than Euro (the Company‟s functional currency). The

Company‟s exposure to foreign exchange risk was significantly reduced from January 1, 2009 when the Euro

became the official currency in Slovakia and the Company‟s functional currency. As at December 31, 2009 the

Company‟s exposure was to changes in USD and SDR foreign exchange rates, with immaterial risk related to

financial assets and financial liabilities denominated in other foreign currencies (e.g. GBP and CZK).

In order to manage the risk, T-Mobile uses forward contracts transacted with ST Group Treasury, which are

expected to mature on the date of the anticipated foreign currency cash outlays. Short-term cash forecasts are

prepared on a rolling basis to quantify the Company‟s expected exposure. The Company‟s risk management

policy requires hedging every cash flow denominated in foreign currency exceeding the equivalent of EUR50

thousand.

During 2009 and 2008 T-Mobile entered into currency forward contracts to hedge its foreign exchange exposure

arising from its firm commitments for future capital expenditures. A further description of instruments used and

their fair values as of December 31, 2009 is provided in Notes 4.18 and 17.

The following table details the sensitivity of the Company‟s profit before tax and equity to a 5%

increase/decrease in the EUR against USD, with all other variables held constant. The 5% change represents

management‟s assessment of the reasonably possible change in foreign exchange rates and is used when

reporting foreign currency risk internally in line with treasury policies.

Impact of USD

2009 2008

Profit before tax Depreciation of EUR by 5% 29 131

Appreciation of EUR by 5% (26 ) (127 )

Equity Depreciation of EUR by 5% 29 131

Appreciation of EUR by 5% (26 ) (127 )



20

5. Financial risk management (continued)

5.1 Financial risk factors (continued)

Interest rate risk

T-Mobile‟s exposure to interest rate risk is very limited as it does not hold any interest-bearing financial assets or

liabilities. As a result, the Company‟s income and operating cash flows are substantially independent of changes

in market interest rates. Treasury policy to address the risk would be to maintain a reasonable blend of floating

and fixed rate instruments for financial assets and liabilities. Additionally, ST Group Treasury may utilize

interest rate swaps where applicable.

In previous periods the Company‟s exposure to interest rate risk resulted from held-to-maturity investments. A

discussion on the sensitivity of these assets to changes in interest rates is provided in Note 12.

b) Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks, held-

to-maturity investments, as well as credit exposures to wholesale and retail customers, including outstanding

receivables and committed transactions.

T-Mobile transacts with banks, financial institutions and issuers of debt instruments only if they have a minimum

rating of „BBB+‟ according to Standard & Poor (or equivalent rating from Moody‟s and/or Fitch) in order to

mitigate the risk of default of the counterparty. Credit ratings of the Company‟s counterparties are continuously

monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit

exposure is controlled by counterparty limits in accordance with treasury policies and is reviewed annually.

T-Mobile has adopted a policy of only trading with creditworthy counterparties. As a result, all customers and

partners (dealers) who wish to trade on credit terms are subject to verification procedures. If business customers

are independently rated, these ratings are used. Otherwise, a combination of publicly available information on

the customers‟ financial position and purchased credit information, if available, are utilized. Credit risk for retail

customers for whom no credit information can be purchased is assessed taking into account the Company‟s past

experience with the customers, assessment of their financial position, and other factors. Usually, no collateral is

required but T-Mobile reserves the right to require a deposit, a guarantee letter from a third party or even a bank

guarantee in certain cases. A Fraud Detection System is in place, which helps identify unusual deviations in

customer behaviour, detect specific fraud indicators, and ensure that credit limits set for customers are not

exceeded. To mitigate the credit risk exposure attributable to trading with dealers, credit limits for each of the

dealers are subject to the approval of the Credit Limit Committee. Limits are regularly reviewed and aligned

with the expected volume of sales transactions with dealers, taking account of their payment history and external

credit information.

Trade receivables consist of a large number of customers, both business and retail. Approximately 20% of the

Company‟s revenue is generated from prepaid services, which also reduces the Company‟s exposure to credit

risk. The credit risk on liquid funds, derivative financial instruments and held-to-maturity investments is limited

because the counterparties are banks or corporations with high credit ratings assigned by international credit-

rating agencies. In this regard management concluded that a significant concentration of credit risk existed

neither as at December 31, 2009 nor for the preceding financial year.

T-Mobile establishes a provision for impairment that represents its estimate of losses incurred in respect of trade

and other receivables and, historically, actual losses have not exceeded management's expectations. Impairment

losses are recognized to cover both individually significant credit risk exposures, and a collective loss

component for assets that are assessed not to be impaired individually. Objective evidence of impairment for a

portfolio of receivables includes the Company‟s past experience of collecting payments, as well as changes in

the internal and external ratings of customers.



21

5. Financial risk management (continued)

5.1 Financial risk factors (continued)

The carrying amount of financial assets recorded in the financial statements, which is stated net of any

impairment losses, represents the Company‟s maximum exposure to credit risk. These amounts are detailed in

Note 11 for cash and cash equivalents, in Note 12 for held-to-maturity investments, in Note 17 for derivative

financial instruments and in Note 10 for trade and other receivables.

c) Liquidity risk

Prudent liquidity risk management in accordance with T-Mobile‟s policies implies monitoring forecast and

actual cash flows, matching the maturity profiles of financial assets and liabilities, maintaining sufficient cash

and cash equivalents and ensuring the availability of committed credit facilities.

Liquidity management involves monitoring cash flows on a daily, weekly and monthly basis and matching

planned cash outlays with anticipated cash inflows that are estimated based on past experience. Internal treasury

guidelines require that the average daily balance of cash and cash equivalent must not be lower than 2% of the

annual planned total of capital expenditure and operating expenses less non-cash items (e.g. depreciation and

amortization, provisions for impairment of receivables, etc.). The average monthly ratio must not be lower than

6%.

The following table details T-Mobile‟s liquidity analysis for its financial liabilities (comprising trade and other

payables and gross currency forward contracts) based on contractual undiscounted payments. However, amounts

relating to currency forward contracts will be settled net upon maturity.

As at December 31, 2009

On demand

3 months or

less

3 – 12 months

Over 1 year

Trade and other payables ................................................................................................ 6,254 67,310 - -

Dividends payable .......................................................................................................... - - 100,704 -

Income tax payable ......................................................................................................... - 5,915 - -

Currency forward contracts

Contractual amounts payable ....................................................................................... - 198 111 -

Contractual amounts receivable ................................................................................... - (205 ) (116 ) -

As at December 31, 2008

On demand

3 months or

less

3 – 12 months

Over 1 year

Trade and other payables ................................................................................................ 13,035 76,615 14 746

Dividends payable .......................................................................................................... - - 121,018 -

Income tax payable ......................................................................................................... - 4,503 - -

Currency forward contracts

Contractual amounts payable ....................................................................................... - 859 1,312 -

Contractual amounts receivable ................................................................................... - (843 ) (1,179 ) -

5.2 Capital management

The primary objective of the Company‟s capital management process is to ensure that it maintains a strong credit

rating and healthy capital ratios in order to support its business and maximize shareholder value.



22

6. Property and equipment

The composition of property and equipment and related accumulated depreciation as of December 31, 2009 is as

follows:

Mobile

equipment

MDNS

equipment

Computer

equipment

and software

Motor

vehicles

Furniture,

fixtures and

other

Construction

in progress

and advance

payments

Total

Cost

As of December 31, 2008 ...................................................................... 650,278 15,305 128,136 3,842 16,579 38,897 853,037

Additions ............................................................................................... 30,982 - 6,287 180 2,130 27,025 66,604

Disposals ............................................................................................... (99,101 ) (687 ) (7,762 ) (932 ) (2,098 ) (117 ) (110,697 )

Transfers ............................................................................................... 16,992 - 7,428 32 1,565 (26,017 ) -

As of December 31, 2009 ...................................................................... 599,151 14,618 134,089 3,122 18,176 39,788 808,944

Depreciation

As of December 31, 2008 ...................................................................... (430,098 ) (13,987 ) (102,100 ) (2,118 ) (9,419 ) - (557,722 )

Charge for the period............................................................................. (78,368 ) (578 ) (15,877 ) (473 ) (2,848 ) - (98,144 ) Impairment ............................................................................................ - - - - - (288 ) (288 )

Disposals ............................................................................................... 99,087 682 7,742 899 1,931 - 110,341

As of December 31, 2009 ...................................................................... (409,379 ) (13,883 ) (110,235 ) (1,692 ) (10,336 ) (288 ) (545,813 )

Net book amount as of December 31, 2009 ........................................... 189,772 735 23,854 1,430 7,840 39,500 263,131

The composition of property and equipment and related accumulated depreciation as of December 31, 2008 was as

follows:

Mobile

equipment

MDNS

equipment

Computer

equipment

and software

Motor

vehicles

Furniture,

fixtures and

other

Construction

in progress

and advance

payments

Total

Cost

As of December 31, 2007 ...................................................................... 668,119 17,371 126,212 3,570 15,802 48,576 879,650

Additions ............................................................................................... 46,077 - 10,952 391 2,373 18,221 78,014 Disposals ............................................................................................... (84,919 ) (2,104 ) (14,418 ) (186 ) (2,990 ) (10 ) (104,627 )

Transfers ............................................................................................... 21,001 38 5,390 67 1,394 (27,890 ) -

As of December 31, 2008 ...................................................................... 650,278 15,305 128,136 3,842 16,579 38,897 853,037

Depreciation

As of December 31, 2007 ...................................................................... (433,712 ) (14,926 ) (100,287 ) (1,771 ) (9,331 ) (864 ) (560,891 )

Charge for the period............................................................................. (81,509 ) (1,165 ) (15,236 ) (485 ) (2,944 ) - (101,339 )

Impairment ............................................................................................ 1,062 - - - - - 1,062

Disposals ............................................................................................... 84,925 2,104 13,423 138 2,856 - 103,446

Transfers ............................................................................................... (864 ) - - - - 864 -

As of December 31, 2008 ...................................................................... (430,098 ) (13,987 ) (102,100 ) (2,118 ) (9,419 ) - (557,722 )

Net book amount as of December 31, 2008 ........................................... 220,180 1,318 26,036 1,724 7,160 38,897 295,315



23

7. Licenses

The composition of licenses and related accumulated amortization was as follows:

As of December 31,

2009

As of December

31, 2008

General license................................................................................................................ 34,958 34,958

FWA license ................................................................................................................... 514 -

UMTS license ................................................................................................................. 50,140 50,140

Less: accumulated amortization ..................................................................................... (44,118 ) (39,255 )

41,494 45,843

Included in the UMTS license is a capitalized consultancy fee of EUR382 in addition to the license fee paid to

the Telecommunication Office of the Slovak Republic.

T-Mobile launched the Fixed Wireless Access (FWA) services to its business customers during 2009. The FWA

service utilises the 26 GHz/28 GHz frequency bands for which 2 licenses were granted by the

Telecommunications Office of the Slovak Republic at the cost of EUR514. Both licenses are valid until

December 2017.

There were no additions or disposals of licenses during 2008.

8. Deferred expenses As of December 31,

2009

As of December 31,

2008 Non-current deferred expenses

Deferred activation costs (a) ....................................................................................... 642 796

Deferred expenses relating to operating leases (b) ....................................................... 986 1,179

1,628 1,975

As of December 31,

2009

As of December 31,

2008 Current deferred expenses

Deferred activation costs (a) ....................................................................................... 932 1,180

Deferred expenses relating to operating leases (b) ....................................................... 141 141

Other deferred expenses (c) ........................................................................................ 1,721 1,648

2,794 2,969

(a) Direct costs incurred in connection with the activation of customers, to the extent of deferred revenue from

non-refundable upfront activation fees, are deferred and amortized over the average expected period of the

customer relationship (see Note 4.19).

(b) Initial direct costs incurred in negotiating and securing T-Mobile‟s operating lease of its primary office

space are charged to income on a straight-line basis over the lease term.

(c) Other deferred expenses primarily relate to prepaid costs of servicing (e.g. IT services) which are expensed

in the period when the service provider renders the service.



24

9. Inventories As of December 31,

2009

As of December 31,

2008

Mobile

Mobile phones and accessories .................................................................................... 4,045 17,547

Data devices ................................................................................................................ 2,201 2,991

SIM cards, spare parts and other inventory ................................................................. 159 274

6,405 20,812

The cost of inventories expensed and included in cost of sales and services amounted to EUR61,647 (2008:

EUR87,552).

Inventories with a carrying value of EUR2,626 are carried at net realizable value (EUR5,195 as of December 31,

2008).

T-Mobile uses an aging analysis to determine slow-moving and obsolete inventory to approximate the amounts

that would have been provided for under specific physical identification. Inventories are shown net of

allowances of EUR2,514 (December 31, 2008: EUR1,594).

10. Trade and other receivables and prepayments

As of December 31,

2009

As of December 31,

2008

Domestic trade receivables (net of provision for impairment) .................................. 61,564 53,417

Foreign trade receivables .......................................................................................... 1,440 1,652

Amounts due from related parties

- ST ....................................................................................................................... 1,299 1,204

- Deutsche Telekom AG ....................................................................................... 22 11

- Other related parties ........................................................................................... 3,139 3,200

Other receivables ...................................................................................................... 1,414 3,545

Prepayments ............................................................................................................. 431 954

69,309 63,983

Trade receivables are non-interest bearing and are generally due within 14 days for business and residential

customers, and within 30 days for other telecommunication operators.

An analysis of the age of trade and other receivables that are past due but not impaired as at December 31, 2009

and December 31, 2008, respectively, is provided in the table below:

As of December 31,

2009

As of December 31,

2008

Neither past due nor impaired ................................................................................... 55,864 56,778

Overdue up to 30 days .............................................................................................. 3,417 3,972

Overdue 30–90 days ................................................................................................. 1,783 1,626

Overdue 91–180 days ............................................................................................... 2,624 724

Overdue 181–365 days ............................................................................................. 4,717 590

Overdue more than 365 days .................................................................................... 904 293

69,309 63,983

Receivables that are past due as at the end of the reporting period but not impaired are from creditworthy

customers who have a good track record with T-Mobile, mostly roaming partners and other major

telecommunication operators. Based on historical default rates, management believes that no additional

impairment allowance is necessary in this regard.



25

In order to preserve their tax-deductible status, T-Mobile‟s trade receivables may not be written out of

T-Mobile‟s primary books and records until certain statutory collection requirements are complied with. As

such, T-Mobile keeps certain receivables in its statement of financial position even if fully provided for until

such requirements are met.

The carrying amount of trade and other receivables is shown net of a provision for impairment losses of

EUR18,572 (December 31, 2008: EUR16,658). No significant individually impaired trade receivables were

included in the provision for impairment losses.

Movements in the provision for impairment losses were as follows:

As of December 31,

2009 As of December 31,

2008

Balance at beginning of the year ............................................................................... 16,658 15,816

Impairment losses recognized .................................................................................. 4,414 5,536

Impairment losses reversed ....................................................................................... (707 ) (3,744 )

Amounts written-off as uncollectible ........................................................................ (1,793 ) (950 )

Balance at end of the year ......................................................................................... 18,572 16,658

During the year ended December 31, 2009 T-Mobile wrote off uncollectible receivables amounting to EUR1,793

(2008: EUR950), which had previously been fully provided for.

As of December 31, 2009 no receivables were pledged as security for the Company‟s liabilities.

11. Cash and cash equivalents

As of December 31,

2009

As of December 31,

2008

Interest bearing deposits on terms of less than three months ............................................ 138,784 67,241

Cash on hand and on current accounts with banks ............................................................ 1,294 1,059

140,078 68,300

T-Mobile‟s cash balance includes deposits held in interest bearing accounts, current accounts and cash on hand.

The interest rate bearing deposits earned 0.321% (year ended December 31, 2008: 1.58%) effective interest on a

weighted average basis. Short-term deposits as at December 31, 2009 represented overnight deposits with banks.

The Company and its parent, ST, concluded a contract on notional cash-pooling account with one of the banks.

The cash-pooling account has a credit facility limit of EUR2,000, which can be utilized by either company. The

credit facility can be used in the form of bank guarantees provided by the bank. However, the aggregate amount

of bank guarantees utilized by the Company and ST must not exceed the credit facility limit of EUR2,000.

12. Held-to-maturity investments

Held-to-maturity investments in the amount of EUR1,328 as at December 31, 2009 consisted of corporate bonds

issued by an international bank domiciled in Iceland. The bonds were measured at amortised cost, which

approximates their fair value. The fair value of bonds was established with reference to fact that similar bonds

were traded at approx. 20% of their principal at public markets in December 2009.

The bank was facing severe financial difficulties as a result of the global crisis and defaulted on coupon and

principal payments prior to year-end 2008. The principal of EUR6,639 and accrued interest income of EUR78

were fully provided for as at December 31, 2008. An impairment loss in amount of EUR6,717 was recognized in

2008 and was disclosed within finance costs (Note 24).



26

12. Held-to-maturity investments (continued)

During 2009 the government of Iceland adopted measures to preserve the bank from wind-up. Local authorities

established a moratorium (valid until August 13, 2010), thus providing the bank with protection from legal

actions such as freezing of assets and ensuring that it maintains its banking license. As a result, 20% of the

previously recognised impairment loss was released and reported within finance income in the amount of

EUR1,328 (Note 23).

As at December 31, 2008, held-to-maturity investments consisted of corporate bonds and treasury bills issued by

banks and creditworthy financial institutions, which were acquired in line with internal risk management policies

detailed in Note 5. Held-to-maturity investments were carried at amortized cost in the statement of financial

position in the amount of EUR43,211 as at December 31, 2008, comprising acquisition cost of EUR42,318 and

accrued interest income of EUR893. The carrying value of held-to-maturity investments was disclosed net of

impairment losses of EUR6,717. The weighted average effective interest rate on held-to-maturity investments in

2008 was 4.33% p.a. If the interest rate had been 15 basis points higher / 20 basis points lower and all other

variables were held constant, the Company‟s profit for the year ended December 31, 2008 and equity as at

December 31, 2008 would increase / decrease by EUR14 / EUR19.

All corporate bonds reported as held-to-maturity investments in the statement of financial position as at

December 31, 2008 in amount of EUR43,211 were repaid during 2009, thus completely eliminating the

Company‟s exposure to interest rate risk.

13. Non-current assets held for sale

Certain switching equipment was presented within non-current assets held for sale as at December 31, 2008 and

the sales transaction was completed during 2009. As at December 31, 2008 the assets were carried at their fair

value less costs to sell.

14. Equity attributable to equity holders of the Company

The total number of ordinary shares authorized, issued and outstanding as of December 31, 2009 was 3,561,470,

all of which are held by ST. The total number of authorized, issued and outstanding preferred shares is 172,230,

all of which are held by ST.

The nominal value of shares in each class was changed from SKK1 thousand (EUR33.194) to EUR33.20

following Slovakia‟s introduction of the Euro. The increase of the Company‟s registered capital, which resulted

from rounding, was accounted for as transfer from retained earnings. The carrying value of ordinary shares was

increased by EUR22 and the carrying value of preferred shares by EUR1. The change in the nominal value of

shares was approved by the Board of Directors on February 13, 2009. Each share carries one vote per share. The

preferred shares give the right to share in the profits of T-Mobile solely through the payment of a preferred

dividend of three Euro cents per share prior to the payment of each annual dividend to the holders of ordinary

shares. Ordinary shares carry the right to share equally in the profits of T-Mobile through the payment of a

dividend as and when declared. Share premium represents the excess of each shareholder‟s total initial capital

contribution over their proportionate contribution to T-Mobile‟s registered capital prior to the transformation of

the Company‟s legal predecessor EuroTel to a joint stock company.

As stipulated by Article 217 of the Slovak Act No. 513/1991 Coll. (the Commercial Code) a joint stock company

shall annually transfer no less than 10% of its net profit to legal reserves until they have reached 20% of the

Company‟s registered share capital. Unless the statutes of the Company or the Commercial Code provide

otherwise, the Board of Directors shall decide on the use of the legal reserves. Legal reserves are set up to cover

future losses and are not distributable.

The General Meeting approved the financial statements of the Company for the year ended December 31, 2008

(the preceding accounting period) on February 13, 2009. Based on the resolutions of the General Meeting, the

entire 2008 profit was approved for distribution as dividends. The payment of dividends of EUR100,704 is due

on April 30, 2010 and was included in current liabilities as at December 31, 2009.



27

14. Equity attributable to equity holders of the Company (continued)

The 2010 General Meeting will decide on the distribution of the 2009 profit of EUR113,041. The proposal

presented by the Company‟s Board of Directors is that the profit should be retained.

15. Deferred income tax

Deferred income tax is provided in full on temporary differences under the liability method using the statutory

tax rate of 19%.

The movement on the deferred tax account is as follows:

As of December 31,

2009

As of December 31,

2008

At beginning of period – net deferred tax liability (13,671 ) (18,859 )

Charge in the statement of comprehensive income (Note 25) 6,770 5,188

At end of period – net deferred tax liability (6,901 ) (13,671 )

The movement in deferred tax assets and liabilities during the period is as follows:

Deferred tax liability As of

December 31, (Charged)/

credited to Income As of

December 31,

2009 Statement 2008

Accelerated tax depreciation ........................................................................................... (16,802 ) 2,076 (18,878 )

Contractual penalties taxed on cash basis ....................................................................... (169 ) (169 ) -

Fair value of derivatives ................................................................................................. (2 ) (2 ) -

Deferred activation expenses .......................................................................................... (299 ) 76 (375 )

Deferred tax liability ....................................................................................................... (17,272 ) 1,981 (19,253 )

Deferred tax assets As of

December 31,

(Charged)/

credited to Income

As of

December 31,

2009 Statement 2008

Deferred activation revenue ............................................................................................ 377 (93 ) 470

Other accruals ................................................................................................................. 4,088 1,147 2,941

Provision for impairment of receivables ......................................................................... 2,337 1,541 796

Provision for universal service costs ............................................................................... 2,489 2,489 -

Rent and exit costs .......................................................................................................... 56 (18 ) 74

Impairment of bonds ....................................................................................................... 1,024 (252 ) 1,276

Fair value of derivatives ................................................................................................. - (25 ) 25

Deferred tax assets .......................................................................................................... 10,371 4,789 5,582

16. Deferred revenue and other liabilities As of December 31,

2009

As of December 31,

2008 Non-current deferred revenue and other non-current liabilities

Deferred activation revenue (a) .................................................................................. 711 878

Accrued rent of office space (b) ................................................................................ 511 713

Other non-current liabilities (c) .................................................................................. - 746

1,222 2,337



28

16. Deferred revenue and other liabilities (continued) As of December 31,

2009

As of December 31,

2008, restated Current deferred revenue

Deferred activation revenue (a) .................................................................................. 1,274 1,597

Deferred access revenue (d) ....................................................................................... 1,204 1,391

Unused prepaid credits (e) .......................................................................................... 11,769 10,662

Accumulated fair value of loyalty programme points (f) ........................................... 2,909 3,032

17,156 16,682

(a) Revenue from non-refundable upfront activation fees that are not offset by a product delivered or a service

rendered are deferred over the average expected period of the customer relationship.

(b) Under the terms of T-Mobile‟s primary office space operating lease (see Note 27), T-Mobile paid a reduced

rent in the first year of the lease as an incentive to enter into the lease. The aggregate amount of the benefit

of incentives is recognized on a straight-line basis over the lease term.

(c) Other non-current liabilities disclosed in 2008 comprised long-term payables for UMTS technology falling

due in 2010.

(d) „Deferred access revenue‟ consists of the value of bundled minutes of voice telephony that postpaid

customers may transfer beyond the year-end and MDNS access fees billed in advance.

(e) Cash obtained from customers for prepaid services is deferred in the statement of financial position until the

service is rendered in line with revenue recognition policies described in Note 4.19a.

(f) The amount of revenue allocated to loyalty programme points („T-points‟) in a sales transaction is deferred

and revenue is recognised only when the T-points are redeemed and the Company has fulfilled its

obligations to supply the discounted products/services (Note 4.20).

17. Derivative financial instruments held for trading As of December 31,

2009

As of December 31,

2008

Derivative financial instruments held for trading ....................................................... 11 (134)

11 (134)

As of December 31, 2009 T-Mobile was a party to three foreign exchange forward contracts with maturity of one

to five months to hedge anticipated future foreign currency expenditure in the total amount of USD462 thousand.

While these contracts may provide effective economic hedges under T-Mobile‟s risk management policies, they

do not qualify for hedge accounting under the specific rules of IAS 39 „Financial Instruments: Recognition and

Measurement‟. Therefore, they were classified as held for trading upon initial recognition.

The net gain from the change in the fair value of derivative instruments was recognised in the statement of

comprehensive income in the amount of EUR117, net of tax of EUR28 for the year ended December 31, 2009

(year ended December 31, 2008: net loss of EUR181, net of tax of EUR43).



29

18. Trade and other payables As of December 31,

2009

As of December 31,

2008

Domestic trade payables ............................................................................................. 29,821 32,026

Foreign trade payables ................................................................................................ 623 12,646

Amounts due to related parties

ST ............................................................................................................................ 1,201 2,680

Other related parties ................................................................................................ 2,159 3,126

Amounts due to employees ......................................................................................... 8,318 8,936

VAT payables ......................................................................................................... 3,307 1,737

Payroll taxes and social security costs ........................................................................ 1,170 1,442

Fixed asset accruals ..................................................................................................... 11,171 8,200

Roaming and interconnect accruals ............................................................................. 6,125 8,009

Rent accrual ................................................................................................................ 2,387 1,526

Marketing expense accrual .......................................................................................... 822 1,834

Other accruals ............................................................................................................. 6,460 7,502

73,564 89,664

Trade payables are non-interest bearing and are normally settled within 30 days. VAT payables are due no later

than 25 calendar days following month end. Employee related payables and social security liabilities are settled

12 days following the date on which employees‟ salaries are due.

19. Provisions Balance as of

December 31,

2008,

restated

Provisions

created in

the period

Accretion

(discount

unwinding)

Provisions

released in

the period

Provisions

reversed in

the period

Balance as

of December

31, 2009

Dealers commissions (a) ................................................................. Closing balance 915 1,132 - (1,509 ) - 538

Loyalty program (b) .................................................................................................... 1,498 2,827 - (2,178 ) (129 ) 2,018

Obligation for

dismantlement and removal

of assets (c) .................................................................................................................

7,190 225 435 - -

7,850

Universal service (d) ................................................................................................... - 13,100 - - - 13,100

Other ........................................................................................................................... 526 330 - (224 ) (68 ) 564

Total ............................................................................................... Closing balance 10,129 17,614 435 (3,911 ) (197 ) 24,070

Analysis of total provisions: As of December 31,

2009

As of December 31,

2008

Non-current provisions ............................................................................................... 8,330 7,652

Current provisions ....................................................................................................... 15,740 2,477

24,070 10,129

(a) T-Mobile grants additional dealer commissions when signed up customers remain active after a certain

period of time from the date of their activation. The provision has been established as a best estimate based

on current customer loyalty patterns and past experience of customer retention.

(b) The provision for the Company‟s loyalty program (“T-Mobile Club”) was established at the amount

necessary to settle T-Mobile‟s liability to participants in the T-Mobile Club when award loyalty points

granted outside sales transactions (“T-bonuses”) are exchanged by customers for discounted products and/or

services (Note 4.20). The provision has been recognized based on past experience of the usage of these

credits by loyalty program participants.



30

19. Provisions (continued)

(c) T-Mobile is subject to obligations for dismantlement, removal and restoration of assets associated with its

cell site operating leases. Cell site lease agreements may contain clauses requiring restoration of the leased

site at the end of the lease term, creating an asset retirement obligation.

(d) The Act on Telecommunications (“the Act”) requires that T-Mobile and other operators contribute towards

the net costs associated with the provision of so-called “universal service” mandated by the Act and

currently provided by another Slovak telecommunication operator. Until November 2009, when the

Telecommunications Office of the Slovak Republic issued their statement of position regarding the extent of

net costs of universal service from 2005 and 2006 eligible for reimbursement by other operators in

accordance with the law, T-Mobile was not able to reliably estimate its obligation resulting from the

universal service. No provision for the costs of the universal service was recognised in previous accounting

periods.

The provider of the universal service appealed against the Telecommunications Office‟s resolution, posing

some level of uncertainty when it comes to the best estimate of T-Mobile‟s obligation. However, a

provisions of EUR13,100 was booked in 2009 as a change in accounting estimate, considering various

possible outcomes of the Telecommunications Office‟s second-degree verdict. The amount recognised is the

best estimate of the expenditure that the Telecommunications Office might impose on T-Mobile for the

period 2005 to 2009.

20. Revenue Year ended December 31,

2009 2008

Mobile service revenue .............................................................................................. 523,970 563,112

Mobile equipment and other sales

Mobile equipment and accessories sales .................................................................. 10,819 9,189

Other revenue .......................................................................................................... 17,839 15,465

28,658 24,654

Managed data network services revenue ................................................................. 3,143 3,677

555,771 591,443

21. Cost of goods sold and services used Year ended December 31,

2009 2008

Mobile service cost of sales

Interconnect .................................................................................................................................... 71,404 80,532

Roaming .......................................................................................................................................... 9,317 11,797

Leased circuits ................................................................................................................................ 10,919 14,181

License and other costs .................................................................................................................. 10,907 12,717

102,547 119,227

Cost of mobile equipment and other services consumed

Equipment, SIM cards, accessories and spare parts .................................................................. 61,647 87,552

Other services consumed ............................................................................................................. 17,237 17,711

78,884 105,263

Managed data network services cost of sales ..................................................... 933 1,397

182,364 225,887



31

22. Operating expenses Year ended December 31,

2009 2008

Advertising and marketing .......................................................................................... 17,980 22,621

Wages, employee benefits and other employee related expenses (a) .......................... 47,220 48,620

Repairs, maintenance and support expenses ................................................................ 25,117 25,656

Rent and operating leases (Note 27) ............................................................................ 11,795 11,958

Professional fees, administrative and other expenses (b) ............................................ 13,594 19,726

Cost of the universal service (Note 19) ....................................................................... 13,100 -

Impairment losses for trade and other receivables ...................................................... 3,707 1,792

Depreciation ................................................................................................................ 98,144 101,339

Amortisation ............................................................................................................... 4,863 4,846

Impairment on property and equipment ..................................................................... 288 (1,062 )

Loss on disposal of property and equipment ............................................................... 257 1,115

Capitalized expenses (c) .............................................................................................. (3,213 ) (433 )

232,852 236,178

(a) Wages and employee benefits include EUR8,024 of contributions accrued to the statutory health, retirement

benefit and unemployment schemes (during the year ended December 31, 2008: EUR7,287).

Throughout the period reported in these financial statements, T-Mobile was required to make contributions

amounting to 35.2% of gross salaries to statutory health, retirement benefit and unemployment schemes,

while the employees contributed an additional 13.4%. The bases from which both employer and employee

contributions were determined were capped against maximum monthly salaries and range from EUR1 to

EUR2.9.

(b) „Professional fees, administrative and other expenses‟ also contain auditor‟s fees for assurance services of

EUR221 (2008: EUR260). Other services from auditor were not commissioned (2008: EUR22).

(c) Capitalized expenses include labour and overhead expenses associated with the construction of non-current

assets.

23. Finance income

Year ended December 31, 2009 2008 Interest income ......................................................................................................... 416 5,738

Foreign exchange gains on receivables and payables ............................................... 663 4,621

Release of impairment losses on held-to-maturity investments ................................ 1,328 -

Gains on held-to-maturity investments .................................................................... 704 2,201

Net gains on financial instruments held for trading ................................................. 125 -

3,236 12,560



32

24. Finance costs

Year ended December 31, 2009 2008 Interest expenses on borrowings ............................................................................... 100 -

Foreign exchange losses on receivables and payables .............................................. 654 7,839

Net losses on financial instruments held for trading ................................................ - 1,400

Impairment loss on held-to-maturity investments ..................................................... - 6,717

Arrangement fees and other finance expenses, net ................................................... 520 547 1,274 16,503

Foreign exchange losses on receivables and payables also comprise foreign exchange losses in amount of

EUR75, which arose from translation of opening balances of assets and liabilities from Slovak Crowns to Euro

in relation to the adoption of the Euro as the official currency in Slovakia and the functional currency of the

Company as of January 1, 2009.

25. Income tax

Taxation expense includes both current and deferred taxation. Income taxes were calculated using the tax rate

of 19% valid in 2009 (in 2008: 19%).

A reconciliation between the reported income tax charge and the theoretical amount that would arise using the

statutory tax rate is as follows: Year ended December 31, 2009 2008

Profit before tax .................................................................................................................... 142,517 125,435

Income tax at 19% ................................................................................................................... 27,078 23,833

Provision for impairment of receivables ................................................................................. 526 22

Provision for inventory ........................................................................................................... 175 52

Representation expenses ......................................................................................................... 191 351

Tax charge in respect of prior periods .................................................................................... 769 264

Other, net................................................................................................................................. 737 209

Tax charge

Income tax expense for the period

29,476 24,731

The tax charge for the period comprises:

Deferred tax credit (Note 15) ............................................................................................ (6,770 ) (5,188 )

Tax charge in respect of current and prior periods ............................................................. 36,246 29,919

29,476 24,731

26. Capital commitments

T-Mobile had the following contractual capital commitments:

As of December 31,

2009

As of December 31,

2008

Capital expenditures that have been contracted for but have not been

provided for in the financial statements ................................................................................. 16,450 9,425

These commitments principally relate to network equipment, with the majority of payments expected to occur

within one year.



33

27. Operating leases

T-Mobile has operating lease commitments with terms ranging from one to ten years relating primarily to

office and retail space and motor vehicles. The future aggregate minimum lease payments under non-

cancellable operating leases are as follows:

As of December 31,

2009

As of December 31,

2008

2009 .............................................................................................................................................. - 11,437

2010 ............................................................................................................................................. 10,766 5,129

2011 .............................................................................................................................................. 4,521 4,272

2012 .............................................................................................................................................. 3,444 3,234

2013 .............................................................................................................................................. 1,515 1,289

2014 .............................................................................................................................................. 154 -

2015 .............................................................................................................................................. 3 -

20,403 25,361

The following amounts relating to operating leases were charged to income:

As of December 31,

2009

As of December 31,

2008

Amounts relating to operating leases charged to income

statement (Note 22) ................................................................................................................ 11,795 11,958

28. Transactions with related parties

T-Mobile purchases telecommunications services from, and sells certain services to its parent company, ST,

and to/from subsidiaries of ST. T-Mobile also entered into several operating lease agreements with ST.

T-Mobile receives consulting services and seconds employees from Deutsche Telekom AG.

T-Mobile also purchases and sells, in the normal course of business, telecommunication services from and to

the following fellow subsidiaries, associated undertakings and joint ventures of the Deutsche Telekom AG

Group: T-Mobile Czech Republic, T-Mobile Austria, T-Mobile Germany, T-Mobile USA, T-Mobile UK, T-

Mobile Netherlands, T-Mobile Croatia, T-Mobile Hungary, T-Mobile Macedonia, T-Mobile Montenegro, PTC

Poland, T-Mobile International UK, companies within the OTE Group, Greece and companies of the T-

Systems Group.

Outstanding receivables and payables with related parties are disclosed in Notes 10 and 18. Transactions with

related parties were as follows: Year ended December 31,

2009 2008

Sales to ST ..................................................................................................................... 9,645 12,929

Income from operating lease of billing platforms to ST ................................................. 126 -

Purchases from ST ......................................................................................................... 18,146 22,149

Interest expense from shareholders loan from ST .......................................................... 100 -

Payment of dividends to ST ........................................................................................... 121,018 149,373

Lease expense to ST ....................................................................................................... 374 434

Sales to other related parties .......................................................................................... 8,443 8,460

Purchases from other related parties .............................................................................. 9,423 11,509

Management and brand fees to Deutsche Telekom AG ................................................. 950 436

Sales to state controlled entities ..................................................................................... 36 37

Purchases from state controlled entities ......................................................................... 12 28

Key management remuneration ..................................................................................... 2,781 2,581

Key management personnel comprise executive directors, members of the Board of Directors and members of

the Supervisory Board.



34

29. Employees As of

December 31,

As of

December 31,

2009 2008

Number of employees – directly employed........................................................... 1,491 1,499

Number of temporary employees .......................................................................... 26 32

Number of employees at period end ..................................................................... 1,517 1,531

The headcount detailed above includes 9 directors (as at December 31, 2008: 9 directors).

30. Contingencies

Litigation

T-Mobile is not involved in any material legal proceedings outside of the normal course of business.

Management does not believe the resolution of any current legal proceedings will have a material adverse effect

on T-Mobile‟s financial condition, results of operations or cash flows.

Taxation

Due to the fact that Slovak tax law contains certain provisions allowing for more than one interpretation,

management‟s interpretation of the Company‟s business activities may not coincide with the interpretation of

these activities by the tax authorities.

31. Events after the reporting period

No information was received after December 31, 2009 about conditions that existed at the end of the reporting

period, which would have to be reported in or which would result in an update of the disclosures in the financial

statements of the Company for the year ended December 31, 2009.

In line with recent structural and organizational changes within the Deutsche Telekom Group, it is expected that

the Company will merge with Slovak Telekom in 2010. In December 2009, the Board of Directors of Slovak

Telekom approved the concept of the integration and set up a Steering Committee responsible for the integration

process.

Documents

T-Mobile Slovensko, a.s. - Telekom...a commencement date on or after January 1, 2009. However, during the 12 months to December 31, 2009 no borrowing costs were incurred on qualifying