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Telekom Austria AG

EANS-Adhoc: Telekom Austria Group Creates New Structure for its Austrian Operations (Ad-hoc)

  ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
  distribution. The issuer is solely responsible for the content of this
  announcement.
Company Information
23.02.2010
Vienna, February 23, 2010: Telekom Austria Group (VSE: TKA, OTC US: 
TKAGY) today announced that it will restructure its Fixed Net and 
Mobile Communication operations in Austria. At today´s meeting, the 
Supervisory Board of Telekom Austria AG approved the Management 
Board´s proposals to merge the two domestic subsidiaries.
"With the merger of the Fixed Net and Mobile Communication segments 
we are creating considerable advantages for our customers, who in the
future will be able to receive all communications services from one 
trusted provider. This step also reflects the evolution of the 
Austrian market, where customers increasingly demand convergent 
products and, at the same time, it enables us to combine the 
innovative strengths of both business segments," said Hannes 
Ametsreiter, CEO of the Telekom Austria Group.
The merger of the Fixed Net and Mobile Communication business 
activities within one single operating company should first and 
foremost provide the basis to meet increasing customer demand for 
integrated telecommunications solutions and convergent products in 
Austria. Moreover, the joint steering of sales activities will 
generate additional revenue potential through cross-selling 
opportunities. This merger will also enhance the Group´s innovative 
strength, enabling the effective rollout of joint future-proof 
network infrastructure and the full leverage of synergies across all 
internal processes. The organizational merger will take place in 
2010. However, optimization of processes and the convergence of 
technological systems will require more time.
Against this backdrop of changed customer needs, a new industry 
rationale has already prompted almost all telecom peers in Europe to 
take this step.
Following this merger, the present finance holding will be changed 
into a management holding. For this reason, the Management Board of 
the Telekom Austria Group will be supported by four Group Officers 
for the areas HR, Technology, Marketing and Finance. Their main task 
will be to identify and leverage any group-wide synergies.
Based on preliminary forecasts, the Telekom Austria Group expects 
this merger to generate a positive contribution to earnings by 2012 
and subsequently an annual increase in cash flow of approximately EUR
100 million after further 2-3 years. This growth will result from 
additional revenues and lower expenses. In addition, cash flow will 
also benefit from lower capital expenditures. Initial costs will 
impact results over the next few years and a negative cash flow 
effect of approximately EUR 80 million is expected for the 2010 
financial year.
Apart from the above mentioned merger, the company´s expectations for
the operating business for the current financial year, as announced 
on December 9, 2009, remain unchanged.
"Market developments over the past few years have demonstrated that 
this step is imperative. We are convinced that through this merger 
the Telekom Austria Group will be best equipped to address future 
challenges, while at the same time it considerably strengthens the 
Group´s earning power. Thus, we once again reiterate our intention to
distribute a dividend of EUR 0.75 per share," added Hans Tschuden, 
CFO of the Telekom Austria Group.
end of announcement                               euro adhoc

Further inquiry note:

Barbara Plössnig
Investor Relations
Telekom Austria Group
Tel.: +43 (0) 590591-19003
E-Mail: barbara.ploessnig@telekom.at

Matthias Stieber
Investor Relations
Telekom Austria Group
Tel.: +43 (0) 590591-19007
E-Mail: matthias.stieber@telekom.at

Elisabeth Mattes
Telekom Austria Group's Spokeswoman
Tel.: +43 (0) 664 331 2730
E-Mail: elisabeth.mattes@telekom.at

Branche: Telecommunications
ISIN: AT0000720008
WKN: 555750
Index: WBI, ATX Prime, ATX
Börsen: Wien / official dealing

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