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03.10.2007 – 07:03

Telekom Austria AG

euro adhoc: Telekom Austria AG
Mergers - Acquisitions - Takeovers
Telekom Austria Group Acquires 70% Stake in Belarusian Mobile Operator MDC for 5.9x08E EBITDA (Ad-hoc)

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.
Company Information
Vienna, October 3, 2007: The Telekom Austria Group (VSE: TKA, OTC US:
TKAGY) today announced that it has agreed to acquire a 70% stake in 
Cypriot SB Telecom Limited held by Mr. Ead Samawi and his partners 
for a corresponding enterprise value of approximately EUR 730* 
million, subject to approval by the relevant antitrust authorities. 
SB Telecom is the sole owner of the Belarusian mobile operator MDC. 
The transaction values MDC at approximately 5.9x08E EBITDA. 
Furthermore Telekom Austria Group has also entered into a call and 
put option agreement related to the remaining 30% stake exercisable 
in the fourth quarter 2010 for approximately EUR 320* million. Mr. 
Ead Samawi will remain chairman of SB Telecom Limited, all executive 
management positions in SB Telecom and MDC will be nominated by the 
Telekom Austria Group, which will have full operational control. 
Telekom Austria Group will acquire the stake in SB Telecom through a 
subsidiary of its mobile communication arm, mobilkom austria.
Telekom Austria Group has also agreed on a performance based deferred
consideration. The amount of the deferred consideration, which is 
payable in the fourth quarter 2010, will be directly linked to the 
future financial performance of MDC and may increase the enterprise 
value to 6.5x10E EBITDA. In return, the Telekom Austria Group has 
full access to the free cash flow and dividend distributed.
"The acquisition of MDC is the consistent execution of our strategy 
for profitable growth in Eastern- and South-Eastern Europe, it offers
us an entry to the attractive telecommunication market in Belarus 
while the terms of the transaction once again underline our 
disciplined approach to expansion. After the successful integration 
of the highly profitable Bulgarian market leader Mobiltel we once 
again engage in a similar transaction and increase our addressable 
market by approximately 30% to 44 million inhabitants in the 
countries Telekom Austria Group is present", says Boris Nemsic, CEO 
of Telekom Austria Group and CEO of mobilkom austria.
MDC, which markets its mobile communication services under the brand 
names "Velcom" for postpaid services and "Privet" for prepaid 
services, is the number 2 operator in Belarus with a market share of 
approximately 42% and more than 2.7 million customers in a market 
that reached a penetration of 66% as of June 30, 2007. For 2006, the 
company generated revenues of approximately EUR 263*** million and 
EBITDA of approximately EUR 159*** million. The net income for the 
period was approximately EUR 83*** million.
The acquisition of the 70% stake in SB Telecom Limited will be 
financed using existing credit facilities. "We have sufficient 
financial headroom to fund the transaction with existing credit lines
and expect no negative influence on our current rating. As the strong
free cash flow allows for rapid deleveraging we will resume our share
buy back program once we have reached the level of 2.0x net 
debt/EBITDA", states Hans Tschuden, CFO of Telekom Austria Group. The
acquisition is accretive on earnings per share from 2008 on and will 
have no impact on Telekom Austria Group´s stated dividend policy of 
distributing 65% of net income.
Operational information on MDC**    2006      2005       2004
Market share                       42.5%      46.0%      46.6%
Mobile Subscribers (in 000)
Postpaid                        2,361.9    1,882.1    1,135.0
Prepaid                           124.3        0.0        0.0
Total Subscribers               2,486.2    1,882.1    1,135.0
Financial information on MDC**     2006***    2005***    2004***
in EUR million
Revenues                          262.6      199.4      133.5
EBITDA                            158.8      117.2       76.4
EBITDA Margin                      60.5%      58.8%      57.2%
Depreciation & Amortization       -45.0      -42.3      -36.0
Operating income                  113.8       74.9       40.5
Net income                         82.8       56.7       30.9
Capex                              76.1       75.9       41.7
Capex/Sales                        29.0%      38.1%      31.2%
* The transaction is denominated in USD and MDC also reports in USD. 
USD have been converted into Euro using an exchange rate of 1:1.42, 
the prevalent exchange rate on October 1, 2007.
** Sources: Company data; financial figures according to IFRS 
provided by company
*** The transaction is denominated in USD and MDC also reports in 
USD. All historical USD amounts have been converted into Euro using 
the average exchange rates for 2004 of 1:1.25, for 2005 of 1:1.24 and
for 2006 of 1:1.27.
end of announcement                               euro adhoc 03.10.2007 06:28:00

Further inquiry note:

Peter E. Zydek
Head of Investor Relations
Tel.: +43 (0)59059 1 19001

Elisabeth Mattes
Telekom Austria Group's Spokeswoman
Tel.: +43 (0)664 331 2730

Branche: Telecommunications Equipment
ISIN: AT0000720008
WKN: 555750
Index: WBI, ATX Prime, ATX
Börsen: Wiener Börse AG / official dealing

Original content of: Telekom Austria AG, transmitted by news aktuell