09.12.2009 – 15:46

Telekom Austria AG

EANS-Adhoc: Telekom Austria Group Announces Expectations for 2010 and Reiterates 75 Cents DPS Floor for 2009-2012 (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.

09.12.2009

Vienna, December 9, 2009: Following today´s approval of the budget by
the Supervisory Board, the Telekom Austria Group (VSE: TKA, OTC US: 
TKAGY) announced its expectations for the financial year 2010. The 
forecast is based on the assumption of constant currencies.

As published earlier on, the Telekom Austria Group expects the 
difficult environment which has dominated the current financial year 
to prevail also in 2010. This environment is characterized by the 
coincidence of several negative external effects with the impact of 
weak economies. The negative external effects mainly encompass 
ongoing fixed-to-mobile substitution in Austria, continued price 
pressure in Telekom Austria´s major markets and the effect from 
regulatory-induced lower roaming prices as well as mobile termination
rates in Austria, Bulgaria, Croatia and Slovenia. Furthermore, the 
introduction of taxes levied on selected mobile communication 
services in Croatia and the Republic of Serbia poses an additional 
burden.

Revenues for the financial year 2010 are expected to amount to 
roughly EUR 4.7bn. The company has already initiated significant cost
reduction programs in both segments addressing both staff and 
non-staff related expenses to mitigate the impact from lower 
revenues. Including the expected cost savings, EBITDA should reach 
about EUR 1.6bn. Depending on the extent of investments for the 
migration to an All-IP based voice network in the Fixed Net segment, 
capital expenditures of the Telekom Austria Group are forecasted to 
reach up to EUR 800mn. This amount does not reflect a material roll 
out of glass fiber, which is not expected to start in 2010.

Operating Free Cash Flow remains the primary focus of the management 
and is expected to come out at about EUR 800mn. The Telekom Austria 
Group reiterates its intention to distribute until 2012 the higher of
65% of the annual net income or at least 75 cents per share as 
dividend. The management board remains committed to its capital 
allocation policy including returning excess cash to shareholders via
share buy-backs within the 1.8x-2.0x net debt/EBITDA target balance 
sheet structure and provided stability in its main foreign currencies
and operations. Nevertheless, in light of the ongoing challenging 
operating environment the share buyback is not expected to start in 
2010.

Telekom Austria Group on constant currency basis          2010
Revenues                                             ~ EUR 4.7bn
EBITDA                                               ~ EUR 1.6bn
Capex                                            up to EUR 800mn
Operating Free Cash Flow (EBITDA less Capex)         ~ EUR 800mn
Dividend 2009-2012                          65% of net income or
                                     at least 75 cents per share

end of announcement                               euro adhoc

Further inquiry note:

Peter E. Zydek
Head of Investor Relations
Tel.: +43 (0) 59059 1-19000
mailto:peter.zydek@telekom.at

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

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