CT’s 1H20905 results released on Friday came below expectations. 2Q figures were negatively affected by a number of one-offs (severance payments, accelerated management bonuses, transformation plan costs and higher contingency reserves). As a result the EBITDA margin contracted to 45% from 49% in 1H2004. We estimate that excluding one-offs, the EBITDA margin would stand at 47.6%. The falling fixed line and stable mobile revenue trends remained. Voice revenues in both business segments declined, while data and internet revenues were up. Debt was reduced to CZK 16bn implying a D/E of 0.18. CT’s BoD will consider paying dividends after the minority buyout is completed. We expect dividends to reach CZK 20-25/share. We continue to see further upside in the stock and therefore maintain our Buy recommendation with a fair value of CZK 515. The approved buyout offer of CZK456 should form a short-term floor.