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07.11.2006 – 13:17

Telekom Austria AG

euro adhoc: Telekom Austria AG
Strategic management decisions
Telekom Austria Group is the Winning Bidder for the 3rd License in Serbia for EUR 320mn (Ad-hoc)

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.
Vienna,  November 7, 2006: Telekom Austria Group (VSE: TKA, NYSE:
TKA) today reported that the Serbian Regulatory Authority has
announced that mobilkom austria, the wireless subsidiary of the
Telekom Austria Group, is the winning bidder for the GSM 900/1800 and
UMTS license for the territory of the Republic of Serbia, offered in
a tender.
The license shall be granted for a period of ten years and shall be
automatically extended upon expiry for another ten years. mobilkom
austria submitted a bid for the license on November 3, 2006 in the
amount of EUR 320 million and 1 EURO.
"We are satisfied to have taken one more step towards entering the
telecommunications market in Serbia, which we believe offers an
attractive opportunity supported by a favorable macroeconomic
environment in Serbia," says Boris Nemsic, Chief Executive Officer of
the Telekom Austria Group.
The license conditions include a requirement to launch operations
within 6 months following the license grant date and to provide
coverage of 20% of the population as well as of the three major
highways within 12 months after the grant date. 50% of the population
and all highways have to be covered within 24 months and 80% of the
population and 90% of the territory of the Republic of Serbia have to
be covered within 48 months. Payment of the license fee is expected
in 2006.
"We aim to start developing the new mobile license in Serbia without
delay and with the utmost efficiency in order to take advantage of
the window of opportunity provided by ongoing market dynamics.
Furthermore, we intend to make use of all the prepatory work done
ealier this year when mobilkom austria planned to enter the Serbian
market via the acquistion of the second operator, and to fully
exploit synergies from our existing operations in Croatia and
Bulgaria," Boris Nemsic continues.
For the network rollout Telekom Austria expects capital expenditures
to amount to approximately EUR 250 million by 2009. The company
anticipates positive EBITDA and free cash flow from the new business
in 2009. Taxation exemptions granted for investments combined with
the possibility to carry forward initial losses are expected to
significantly reduce the tax burden and result in only minimal taxes
paid over the first ten years.
The acquisition of the license and the planned launch of operations
will not cause the Telekom Austria Group to exceed its self-imposed
threshold of net debt/EBITDA of 2.0x. Furthermore, market entry into
Serbia will not impact the planned share buyback program. Previously
announced dividend policy remains unchanged.
Further information on Serbia is available on our website under
end of announcement                               euro adhoc 07.11.2006 12:39:38

Further inquiry note:

Peter E. Zydek
Investor Relations Telekom Austria
Tel.: +43 (0) 59059 1-19001

Elisabeth Mattes
Telekom Austria Spokeswoman
Tel.: +43 (0)1 33161 2730

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

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

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