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Telekom Austria AG

EANS-Adhoc: Telekom Austria AG
Telekom Austria Group Updates its Cash Use Policy and Provides Financial Outlook at its Capital Market Day (Ad-hoc Release)

  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.
17.12.2010
Vienna, 17 December 2010: The Telekom Austria Group (VSE: TKA, OTC 
US: TKAGY) announced an update of its cash use policy and the Group´s
financial outlook for the period 2011 to 2013 at its Capital Market 
Day, which was held at the Group´s headquarter in Vienna today.
"Our vision is to become the most efficient and innovative operator 
in the CEE region. With returning to access line growth in our 
domestic market and initiating convergence in CEE we will lay the 
foundation to achieve this goal. Strict cost control will be critical
to mitigate external effects, such as roaming and interconnection 
regulation as well as a fierce competitive environment, which will 
continue to negatively impact both revenues and EBITDA in 2011. 
However, with a clear strategy to generate shareholder value via 
market consolidation, convergence and value enhancing growth projects
we are confident that we will achieve revenue growth and stabilise 
EBITDA comparable margin by 2013. The increase of the minimum 
dividend floor to EUR 0.76 per share reflects our strong confidence 
in our operations", says Hannes Ametsreiter, CEO Telekom Austria 
Group.
Update on Cash Use Policy 2011 - 2013 The company announced its 
intention to distribute 55% of free cash flow  or at least EUR 0.76 
per share as dividend for the years 2011 and 2012. Maintaining a 
stable investment grade rating of at least BBB (stable outlook) 
remains central to the Group´s financial profile. Nevertheless, a 
higher leverage corridor of 2.0x - 2.5x Net debt/EBITDA comparable  
provides increased flexibility to balance share buybacks with growth 
projects. The start of share buybacks depends on the volume of 
potential growth projects. However, cash will always be returned to 
shareholders via share buybacks if leverage falls below 2.0x Net 
debt/EBITDA comparable. A stable business and currency environment 
remains a general prerequisite for share buybacks.
"The increase of the dividend floor from EUR 0.75 to EUR 0.76 for the
years 2011 and 2012 reflects our confidence in the strong cash flow 
generation of Telekom Austria Group. As free cash flow generation 
better reflects the operational performance of the Group than net 
income, the dividend payout ratio will be 55% of free cash flow1 
going forward. In addition, the higher leverage corridor provides us 
with increased flexibility to balance share buybacks with value 
enhancing growth projects", says Hans Tschuden, CFO of Telekom 
Austria Group. ? Group Outlook 2011 For the full year 2011, Telekom 
Austria Group expects revenues of up to EUR 4.60 bn. EBITDA 
comparable is anticipated to amount to up to EUR 1.60 bn. CAPEX  are 
forecasted to reach up to EUR?800 mn and do not include investments 
for license or spectrum acquisitions. Operating free cash flow, 
defined as EBITDA comparable minus CAPEX, is expected to amount to 
approximately EUR 800 mn in 2011. Management intends to distribute 
55% of free cash flow or at least EUR 0.76 as dividend for 2011. The 
outlook is provided on a constant currency basis.
Group Midterm Expectations 2012 - 2013 The management expects 
revenues of approximately EUR 4.7 bn by 2013. EBITDA comparable 
margin is expected to remain stable at approximately 34%. CAPEX is 
forecasted to reach no more than 16% of revenues by 2013. Operating 
free cash flow, defined as EBITDA comparable minus CAPEX, is 
estimated to amount to approximately EUR 800 mm per year. Management 
reiterates the dividend policy of distributing 55% of Free cash flow.
The dividend floor of at least EUR 0.76 per share is confirmed until 
2012. The outlook is given on a constant currency basis.
Outlook 2011
Revenues: up to EUR 4.60 bn
EBITDA comparable: up to EUR 1.60 bn
CAPEX: up to EUR 0.80 bn
Operating free cash flow: approximately EUR 0.8 bn
Dividend: 55% of free cash flow, DPS of 76 Eurocents minimum
Outlook 2012 - 2013 Revenues: approximately EUR 4.7 bn by 2013 EBITDA
comparable margin: stable at approximately 34% CAPEX/Revenues: up to 
16% by 2013 Operating free cash flow: approximately EUR 0.8 bn per 
annum Dividend: 55% of free cash flow, DPS of 76 Eurocents minimum 
until 2012
The full presentations and further information is available on our 
website at http://www.telekomaustria.com/ir/capital-market-day-en.php
Definitions: Free Cash Flow: Cash flow from operating activities less
capital expenditures without investments for licence and spectrum 
acquisitions EBITDA comparable: EBITDA excluding impairment and 
restructuring charges CAPEX: Capital expenditures excluding 
investments for licence and spectrum acquisitions
Disclaimer: This document contains forward-looking statements that 
involve risks and uncertainties. These forward-looking statements are
usually accompanied by words such as "believe," "intend," 
"anticipate," "plan," "expect" and similar expressions. Actual 
results may differ materially from those anticipated in these 
forward-looking statements as a result of a number of factors. 
Forward-looking statements involve inherent risks and uncertainties. 
A number of important factors could cause actual results or outcomes 
to differ materially from those expressed in any forward-looking 
statement. These factors include, but are not limited to, the 
following:
1)      the level of demand for telecommunications services or equipment,
particularly with regard to access lines, traffic, bandwidth and new products;
2)      competitive forces in liberalized markets, including pricing pressures,
technological developments, alternative routing developments and new access
technologies, and our ability to retain market share in the face of competition
from existing and new market entrants;
3)      the effects of our tariff reduction or other marketing initiatives;
4)      the regulatory developments and changes, including the levels of
tariffs, the terms of interconnection, unbundling of access lines and
international settlement arrangements;
5)      our ability to achieve cost savings and realize productivity
improvements;
6)      the success of new business, operating and financial initiatives, many
of which involve start-up costs, and new systems and applications, particularly
with regard to the integration of service offerings;
7)      our ability to secure the licenses we need to offer new services and the
cost of these licenses and related network infrastructure build-outs;
8)      the progress of our domestic and international investments, joint
ventures and alliances
9)      the impact of our new business strategies and transformation program;
10)     the availability, terms and deployment of capital and the impact of
regulatory and competitive developments on capital expenditure;
11)     the outcome of litigation in which we are involved;
12)     the level of demand in the market for our shares which can affect our
business strategies;
13)     changes in the law including regulatory, civil servants and social
security law, including pensions and tax law; and general economic conditions,
government and regulatory policies, and business conditions in the markets we
serve.
Through its expansion into the Eastern and South-eastern European region, the
company operates in markets that have been experiencing political and economic
change. This circumstance has affected, and may continue to affect, the
activities of enterprises operating in this environment. Consequently,
operations in the Eastern and South-eastern European region involve
uncertainties, including tax uncertainties and risks related to foreign exchange
rates that typically do not exist in other markets.
Due to rounding differences deviations in subtotals and totals may occur.
end of announcement                               euro adhoc

Further inquiry note:

Matthias Stieber
Director Investor Relations
Tel.: +43 (0) 50 664 39126
mailto:matthias.stieber@telekomaustria.com

Elisabeth Mattes
Telekom Austria Group's Spokeswoman
Tel.: +43 (0) 664 66 39187
mailto:elisabeth.mattes@telekomaustria.com

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

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