Telekom Austria Group: 1st Quarter 2009 Results: Committed to Free Cash Flow Protection Despite Tough Market Environment

VIENNA, Austria - Significant Slowdown of Fixed Net Access Line Loss Continues With Just 8,000 Lines Lost in 1Q 09 - Mobile Communication Continues Growth Trend of its Subscriber Base With a 13.0% Increase to 17.9 Million Customers - Revenues Decline by 5.0% to EUR 1,197.1 Million Primarily Driven by Lower Fixed Net Revenues as Revenues in Mobile Communication Remain Flat - Fixed Net Revenues Impacted by Lower Wholesale Revenues, Declining Voice Volumes and the Disposal of Subsidiaries - EBITDA Decreases by 6.4% to EUR 454.8 Million due to Weaker Contribution From Mobile Communication While Fixed Net Grows Slightly - EBITDA, Capex and Operating Free Cash Flow Outlook 2009 Fully Reiterated, Revenues Slightly Weaker Than Originally Expected - Dividend per Share Floor of 75 Cent Reiterated for 2009-2012

in EUR million 1Q 09 1Q 08 % change Revenues 1,197.1 1,259.6 -5.0% EBITDA 454.8 485.7 -6.4% Operating income 180.1 202.3 -11.0% Net income 85.3 129.7 -34.2% Earnings per share (in EUR) 0.19 0.29 -34.2% Free cash flow per share (in EUR) 0.30 0.33 -9.5% Capital expenditures 116.0 159.6 -27.3% in EUR million March 31, 09 Dec. 31, 08 % change Net debt 3,877.8 3,993.3 -2.9% Net debt/EBITDA (12 months) excluding restructuring program 2.1x 2.1x

All financial figures are based on IFRS; if not stated otherwise, all comparisons are given year-on-year. EBITDA is defined as net income excluding interest, income tax expense, depreciation and amortization, impairment charges, equity in earnings of affiliates, income/loss from investments and foreign exchange differences. This equals operating income before depreciation, amortization and impairment charges.

Group Review

The Telekom Austria Group (VSE: TKA, OTC US: TKAGY) today announced its results for the first quarter ending March 31, 2009.

Hannes Ametsreiter, CEO Telekom Austria Group said: “The decline in revenues in the first quarter 2009 is mainly to be attributed to lower revenue generation in the Fixed Net segment which was due to lower wholesale revenues and the disposal of subsidiaries. EBITDA was impacted by a weaker Mobile Communication business, which was influenced by an economic slow down and one-off effects whereas the Fixed Net EBITDA increased slightly. The Mobile Communication segment showed favorable customer development with a 13% increase in subscriber numbers. Despite a tough market environment, we are committed to securing free cash flow. Our 2009 focus is further on operating excellence: group-wide we are directing our energy towards offering our customers product innovations, best service and technology quality with a view to guaranteeing a sustainable business performance. For the full year 2009 we anticipate slightly weaker revenues than originally expected, which will be accompanied by a proportionate reduction in costs. Therefore, guidance for EBITDA, capital expenditures and operating free cash flow remains unchanged and we reiterate a minimum dividend floor of 75 cent per share.”

Summary

In the first quarter of 2009 revenues decreased by 5.0% to EUR 1,197.1 million primarily due to lower revenues in the Fixed Net segment resulting from lower wholesale revenues and voice volume as well as the sale of the Fixed Net subsidiaries in the Czech Republic, in Slovakia and in Poland respectively. While EBITDA decreased by 6.4% to EUR 454.8 million at Group level, the Fixed Net segment showed a slight EBITDA growth. The EBITDA decline reflects primarily the impacts from assets sales in 1Q 08 in Bulgaria, the expiry of the national roaming agreement in Croatia and the negative effect of currency translation mainly due to a devaluation of the Belarusian Ruble. Operating income fell by 11.0% to EUR 180.1 million, with a higher contribution from the Fixed Net segment partly compensating for a lower operating income in the Mobile Communication segment. Net income was EUR 85.3 million in 1Q 09 compared to EUR 129.7 million in 1Q 08.

Total capital expenditures decreased from EUR 159.6 million to EUR 116.0 million driven by a reduction of capital expenditures in both segments. Net debt decreased by 2.9% to EUR 3,877.8 million at the end of March 2009 compared to year-end 2008 due to free cash flow generation. Net debt to EBITDA (last 12 months) excluding the impact of the provision in 4Q 2008 for the restructuring program was 2.1x.

Market Environment

While the sustained migration of Fixed Net customers to the Mobile Communication segment has been the main challenge for several years, mobile broadband continues to make steady inroads into the market for internet access. However, following the introduction of attractive product bundles, line loss decelerated significantly during recent quarters. Against this background the Fixed Net segment continues to focus on the stabilization of cash flows by means of a market-oriented product portfolio and attractive pricing schemes as well as a comprehensive cost-cutting program.

The Mobile Communication segment continued to show subscriber growth both in Austria and in its international markets. Austria is regarded as a highly developed mobile communications market characterized by fierce competition. Bulgaria, Croatia and Slovenia still offer untapped potential in terms of contract customers and innovative data products, however, fierce competition and the economic slowdown in these markets led to price cuts and declining ARPUs.

Velcom in Belarus was impacted by the devaluation of the Belarusian Ruble at the beginning of 2009. The counter-measures adopted to mitigate this negative impact include a tariff increase effective as of mid-February 2009 as well as a rebalancing of costs based on the local currency. A segment-wide risk monitoring system has been put in place to identify risk factors such as currency fluctuations or long-term macro-economic trends and therefore to react in due time. Regulation remains an important external disrupting factor in all markets primarily due to the impact on roaming tariffs and termination charges.

Outlook 2009

For the year 2009 the Telekom Austria Group anticipates slightly weaker revenues than originally expected due to lower Fixed Net wholesale revenues as well as lower Mobile Communication interconnection and equipment revenues, which will be accompanied by a proportionate reduction in costs. Therefore, EBITDA guidance remains unchanged at about EUR 1.9 billion in 2009. Capital expenditures for the year 2009 are expected to amount to approximately EUR 800 million, which translates into an operating Free Cash Flow (EBITDA less capital expenditures) of around EUR 1.1 billion. The Telekom Austria Group expects to distribute 65% of net income in form of dividends at a minimum floor of 75 cent per share.

Outlook 09 Outlook 09 Outlook 09 reiterated published as of May 13 Feb. 25 Jan. 29 Telekom Austria Group Slightly weaker Revenues than originally ~ EUR 5.1 bn ~ EUR 5.1 bn expected EBITDA ~ EUR 1.9 bn ~ EUR 1.9 bn ~ EUR 1.9 bn Capital expenditures ~ EUR 0.8 bn ~ EUR 0.8 bn ~ EUR 0.8 bn Operating Free Cash Flow ~ EUR 1.1 bn ~ EUR 1.1 bn ~ EUR 1.1 bn 65% of net 65% of net 65% of net Dividend income, DPS of income, DPS income, DPS 75 cent minimum of 75 cent of 75 cent minimum minimum Outlook based on constant currencies

Further Information

For more detailed information about the results for the first quarter 2009 please refer to the corresponding IR interim report on Telekom Austria Group’s website at www.telekomaustria.com/ir/interim-results.php

Contacts: Elisabeth Mattes Group Spokeswoman Tel.: +43-664-331-2730 E-Mail: elisabeth.mattes@telekom.at Peter Zydek Head of Investor Relations Tel.: +43(0)59059-1-19000 E-Mail: peter.zydek@telekom.at

Source: Telekom Austria Group

Contacts: Elisabeth Mattes, Group Spokeswoman, Tel.: +43-664-331-2730, E-Mail: elisabeth.mattes at telekom.at; Peter Zydek, Head of Investor Relations, Tel.: +43(0)59059-1-19000, E-Mail: peter.zydek at telekom.at