Macquarie Funds Agree to Acquire Airwave 02 Limited

20 April 2007

LONDON, 18 APRIL 2007 – Two Macquarie-managed infrastructure funds today announced an agreement to acquire Airwave O2 Limited (Airwave), the UK’s public safety communications network, from Telefonica S.A. for £1.9 billion*. Macquarie European Infrastructure Fund II (MEIF II) and Macquarie Communications Infrastructure Group (MCG) will each own 50 per cent of Airwave, which is currently a subsidiary of Telefonica’s UK business Telefonica Europe O2 Limited plc.

Airwave is the UK’s largest provider of public safety communication services and is a world-leading, built-for-purpose communications network. Since its establishment in early 2000 the Airwave network, which covers 99% of Great Britain’s land area, has become the primary means of secure and reliable communications for police and emergency services and a number of other key bodies involved in public safety in the UK, currently contracted to over 220,000 users.

Airwave operates the world’s largest TETRA network which will soon be a global pioneer in aggregating all key national and regional public safety agencies onto one unified, seamless network.

“Macquarie is investing in Airwave for the long-term – our funds have formally committed to this investment for a minimum of 10 years and intend to remain for the longer term. The Macquarie Bank Group is one of the world’s leading owners and managers of strategic infrastructure and essential community services, and has a strong track record of managing communications services and other important infrastructure assets across Europe”, said Mr Jim Craig, Head of the Macquarie Bank Group in Europe.

“Airwave is a critical part of the UK’s essential national public safety infrastructure and we are committed to ensuring users continue to receive the highest level of service and reliability. We take a responsible, long-term approach to owning and managing infrastructure businesses, working collaboratively with all stakeholders, including employees, customers, Government and the wider community, to ensure sustainable growth,” he said.

“For Airwave it will be business as usual. We look forward to working with Executive Chairman Peter Richardson and the rest of the Airwave team, to continue to provide high quality, critical services to network users and to invest further in the business in accordance with the established business plan.

“Airwave is the largest built-for-purpose public safety communications network globally with unique capabilities. There is potential to leverage the company’s skills and unique know-how in the international field as overseas governments modernise their emergency communications,” Mr Craig said.

“It’s been great to be part of the O2 success story and to have grown Airwave into such a significant business, delivering real value to our customers. I am delighted that we now have the support of Macquarie and their long term commitment to our business will allow us to go from strength to strength, delivering even more capability to our customers in the emergency services,” said Mr Peter Richardson, Executive Chairman of Airwave.

MEIF II is a wholesale investment fund that makes long-term investments in infrastructure businesses across Europe. MEIF II aims to raise approximately €4bn and has to date secured commitments from major pension funds including a significant number of UK pension funds. MEIF II is a cornerstone investor in Thames Water and owns NCP, the UK’s leading off-street car parking provider.

MCG is listed on the Australian Stock Exchange and is a substantial international owner and operator of communications infrastructure. MCG owns interests in Arqiva (44%) in the UK, and Broadcast Australia (100%).

Both MEIF II and MCG are managed by the Macquarie Bank Group, a global leader in investment and management of infrastructure and essential-service businesses with a portfolio of over 100 assets. MEIF II and MCG benefit from Macquarie’s substantial expertise and strong track record of responsible management.

EDITORS NOTES

Macquarie European Infrastructure Fund II
Macquarie European Infrastructure Fund II (MEIF II) is Macquarie’s second diversified pan-European infrastructure fund. Its mandate is to invest in a portfolio of infrastructure assets located across the expanding European Union. It aims to raise commitments of approximately €4bn and to assemble a diversified portfolio of eight to 15 assets. MEIF II follows the success of the €1.5bn Macquarie European Infrastructure Fund (MEIF), established in April 2004. MEIF has investments in a variety of infrastructure sectors including transport, ports, ferries and utilities.

Macquarie Communications Infrastructure Group
MCG is a substantial international owner and operator of broadcast transmission and related communications infrastructure in Australia and Europe. The portfolio currently consists of two assets; Broadcast Australia, the only national transmission services provider which reaches 99% of the Australian population. It also has a 44% interest in Arqiva, which provides broadcast transmission services to television and radio broadcasters in the UK and radio communications maintenance and managed services to public safety organisations (police, fire and ambulance) across the UK and Republic of Ireland. Arqiva recently announced the acquisition of National Grid Wireless, the UK communications infrastructure network that provides broadcast transmission services for BBC television and radio, hosts wireless sites for major mobile network operators, and owns and operates two Freeview digital TV multiplexes.

The Macquarie Bank Group
The Macquarie Bank Group (Macquarie) comprises Macquarie Bank Limited and its worldwide affiliated entities including funds under management. MEIF II and MCG are managed by members of the Macquarie Bank Group, a leading global investor and manager of infrastructure businesses. Members of the Macquarie Bank Group manage more than €28 billion in equity invested in infrastructure and essential service assets around the world through a range of listed and unlisted vehicles. Infrastructure investments managed by Macquarie include assets in the energy, water, telecommunications and transportation sectors in the UK, Germany, Portugal, Italy, France, Sweden, Denmark, the Netherlands, Belgium, Canada, US, Australia, Korea, Japan and South Africa. Macquarie aims to manage investments in infrastructure assets profitably and responsibly.

* after agreed purchase price adjustments
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FOR FURTHER INFORMATION

Alison Jefferis
Corporate Communications
Macquarie Group (London)
Tel: (44) (0)20 7065 2335
Mobile: (44) (0)79 1938 2958