The Telekom Austria Group Doubles Net Income and Continues Success Despite Intense Competition

Net Income More Than Doubled to EUR 195 Million

VIENNA, Austria, February 23, 2011 - Key Financial Figures*

    Telekom Austria Group                    2010      2009 Change +/-
    Fixed Access Lines                    2,315.0   2,313.5      +0.1%
    Mobile Subscribers                       19.9      18.9      +5.0%
    Group Revenues                        4,650.8   4,802.0      -3.1%
    EBIT                                    437.9     343.9     +27.3%
    Net Income                              195.2      94.9    +106.0%
    Capital Expenditures                    763.6     711.4      +7.0%
    Cash Flow from Operating Activities   1,397.5   1,385.4      +0.9%
    Net Debt                                3,305     3,615      -9.0%
    Employees                              16,501    16,573      -0.4%

*Key financials in EUR million

The Telekom Austria Group reported a slight decrease in revenues in the
year under review, however, has succeeded in doubling the Net Income. "For
the first time in 13 years we were able to return to fixed line customer
growth. This demonstrates the effectiveness of our convergence strategy,
which we are currently dedicated to implementing in our two largest markets
Austria and Bulgaria," pointed out Hannes Ametsreiter, CEO Telekom Austria
Group, commenting on this significant turnaround. "Against the backdrop of a
challenging market environment we have adopted the necessary measures - such
as the merger of our fixed line and mobile communication operations in
Austria - to realize selective growth opportunities going forward. In the
years to come, we will have to tackle a number of issues with regard to
regulation and competition. However, we are confident to achieve our targets
over the mid-term." The main goal is to secure the Group's market leadership
in Central and Southeastern Europe and to become the most efficient and
innovative telecom operator in this region. At year-end 2010, the Telekom
Austria Group had 22 million customers across its operations in 8 countries
of Central and Southeastern Europe, a market with 41 million inhabitants.

The Telekom Austria Group's Development in Figures

The Telekom Austria Group's total revenues dropped by 3.1% from EUR 4.802
billion in 2009 to EUR 4.651 billion in 2010 due to competition-driven price
reductions and the effects of regulation. Austria (-4%), Bulgaria (-8%) and
Croatia (-5%) showed a slight decline in revenues, whereas Belarus and the
Additional Markets segments (Slovenia, Republic of Serbia, Republic of
Macedonia and Liechtenstein) recorded a growth of 14% and 8% respectively.
"Revenues will continue to be impacted by pressure from competition in
future," said Hannes Ametsreiter. "Our strategy is to counteract this trend
with high-value services. Our main target is to stabilize revenues at EUR 4.7
billion over the mid-term."

The Group's EBITDA comparable, which does not include restructuring and
impairment charges, declined by 9% (= 165.7 million EUR) from EUR 1.811,6
billion in 2009 to EUR 1.645,9 billion in 2010. The impact from regulatory
measures alone (including the reduction of roaming tariffs and
interconnection fees, which are charges for both voice telephony and data
services among the different operators) led to a decrease in EBITDA
comparable of EUR 47 million. Excluding these exogenous effects, the drop in
earnings amounted to 6.6%, with operating expenses remaining stable at EUR
3.094 billion.

Regulatory measures also are expected to impact the Group's earnings
development in the years to come. For the period from 2011 to 2013 a negative
effect on EBITDA comparable of EUR 175 million is anticipated. "The
management intends to compensate for this regulation-induced drop in earnings
through strict cost management and high-value product offerings. Our target
is to keep EBITDA comparable margin stable at approximately 34% for the
period between 2011 and 2013," said Hans Tschuden, CFO and Deputy Chairman of
the Telekom Austria Group, stressing his confidence in the company's future
performance.

In the year under review, EBITDA - including restructuring and impairment
charges - increased by 4% to EUR 1.504 billion (as compared to EUR 1.442
billion in 2009). EBIT, which reflects the operating performance, rose by
27.3% from EUR 343.9 million in the previous year to EUR 437.9 million in the
reporting year, mainly due to impairment charges in Belarus and the Republic
of Serbia in 2009.

Net income was almost doubled year-on-year. In 2009, net income amounted
to EUR 94.9 million and in 2010 it increased by 106% to EUR 195.2 million.

In the year under review, Group's cash flow development showed a similar
trend as the earnings development. Cash flow from operating activities
recorded an increase of EUR 12.1 million to EUR 1.398 billion. Free Cash
Flow, a key figure for the equity financing of the Group, declined by 7% to
EUR 652 million due to higher investments particularly in the rollout of the
Giga-network in Austria.

The free cash flow per share amounts to EUR 1.47, of which EUR 0.75 will
be distributed as dividends as in the previous year. This corresponds to a
dividend yield of more than 7% based on the current share price.

Total capital expenditures tangible increased by 7% to EUR 763.6 million
in 2010. Thus, the degree of investment in 2010 amounted to 16.4% of
revenues, a peak level compared to the rest of Europe. The largest volume
totaling EUR 516 million was invested in the rollout of network
infrastructure in Austria. Domestic investments rose by 22% respectively EUR
91 million in the year under review, accounting for 67% of total Group
investments.

Despite an increase in capital expenditures, the Group's net debt was
reduced by EUR 310 million to EUR 3.3 billion. "With a leverage corridor of
2.0x net debt/EBITDA comparable, we are within the planned bandwidth. With
this reduction, we were able to strengthen our competitiveness, while
improving our financial flexibility," explained Hans Tschuden, stressing the
financial stability of the Group.

Outlook

For the 2011 financial year, the Telekom Austria Group's management board
expects revenues to amount to up to EUR 4.6 billion. Against the backdrop of
a persistently intense competitive landscape and of additional
regulatory-induced reductions of both roaming tariffs and interconnection
fees, strict cost control will contribute to mitigating the impact from lower
revenues. The management board intends to reach an EBITDA comparable of up to
EUR 1.6 billion. "We are confident we are well-equipped to face the
challenges ahead and to keep both revenues and earnings at a high level
despite adverse market conditions. Following our restructuring efforts in
2010, we will focus on the operating performance going forward, addressing
issues such as convergence, rollout of our Giga-network and smartphones. Our
confidence is demonstrated by our intention to increase our dividend floor
for the years 2011 and 2012 to EUR 0.76 per share respectively to distribute
55% of our free cash flow as dividends," added Hannes Ametsreiter and Hans
Tschuden.

Operational Highlights by Markets of Operation

Austria

The positive turnaround in the development of fixed access lines in
Austria, the further growth of the mobile subscriber base, the increase in
investing activities and the successful merger of Telekom Austria and
mobilkom austria shaped the 2010 business year in Austria.

For the first time in 13 years, the Telekom Austria Group was able to
stop fixed access line loss in Austria and bring about a sustainable
turnaround. Based on convergent offerings like aonTV, a dramatic surge in
data traffic, the accelerated rollout of the Giga-network and the rising
demand for higher bandwidths and higher transmission capacities, the fixed
line business is currently experiencing a renaissance. In 2010 a total of
1,400 fixed line net additions were recorded, with the total number of fixed
access lines rising to 2.315 million by year-end 2010. "We are currently
experiencing customer growth in the fixed line business without cannibalizing
our mobile customer base," said Hannes Ametsreiter about this extraordinary
success at the international level. In 2010, the Telekom Austria Group was
one of the only two telecommunications providers in Europe to record fixed
line customer growth.

The number of fixed broadband lines rose by 13.5% to 1.16 million in the
year under review and voice minutes showed a similar development as in the
previous year dropping by approximately 12%.

The Austrian mobile subscriber base saw a growth of 5.6% to 5.1 million
customers, which represents an outstanding performance considering the
challenging competitive landscape in Austria. Average revenues per user
(ARPU) were EUR 22/month at year-end 2010 in line with the European average.
However, the decrease in ARPU since 2004 amounts to 46% in Austria,
representing a peak level in a European comparison (European average: 20%
drop over the same period). This downward trend reflects the challenging
competitive landscape in Austria. The domestic mobile broadband subscriber
base rose by roughly 30% to 654,000 customers.

The main challenge for the Telekom Austria Group is to safeguard its
competitiveness and earnings power against the backdrop of intense
competition, rising production costs and declining prices: in Austria the
consumer price index (CPI) has registered an increase by +19 percentage
points since the year 2000 and the domestic telephone services cost index
(TS-CPI) has decreased by -21 percentage points over the same period (EU: CPI
+23 pp /TS-CPI -5 pp).

In 2010, a total of EUR 516 million were invested, which is an increase
of roughly EUR 90 million or 22% compared to the previous year. "With our
investments in the domestic broadband network, we are upgrading Austria's
business location infrastructure, safeguarding the competitiveness of the
country and the domestic economy for the years to come. A benefit to all
Austrians," stressed Hannes Ametsreiter, highlighting the investment program
of the Group in Austria.

At year end 2010, 1.7 million Austrian households were within the
coverage of the powerful Giga-network. At year end 2011 it will be more than
2.1 million households. The Telekom Austria Group's Giga-network is based on
a wide range of fiber-optic technologies and allows transmission speeds of up
to 100 Mbit/s. The company's mobile network A1 Net - which ranks first in
terms of network quality in the German-speaking area - will have its
transmission speeds and network performance upgraded through LTE technology
and through the connection of mobile base stations to the fiber-optic
network. At year-end 2010, more than 1,100 mobile base stations had been
connected to the "hybrid Giganet".

Data traffic in Austria is growing at a dramatic pace, as demonstrated by
the following figures: domestic fixed line data volumes have registered a
2.5-fold surge since 2008 from roughly 45 petabytes to over 110 petabytes (1
petabyte = 1 million gigabytes), the surge in mobile data traffic was
3.5-fold (from 2 petabytes to 5 petabytes) over the same period. Further
exponential growth rates are anticipated in future: currently the average
fixed line data volume per user amounts to 8 gigabytes per month with
transmission speeds of up to 8 Mbit/s. Over the mid-term demand is expected
to reach 100 gigabytes per month with transmission speeds of up to 20-100
Mbit/s. Mobile communication shows similar trend: mobile data volumes will
increase from the current 1.5 gigabytes/month to 10 gigabytes/month and
transmission speeds from 2.5 Mbit/s to 5 Mbit/s. The development mainly will
be driven by mobile broadband, smartphones, multimedia devices such as HDTV,
video streaming and gaming.

According to Hannes Ametsreiter and Hans Tschuden, one important
milestone for the company on its path towards the future is represented by
the successful merger of the Austrian fixed line and mobile communication
operations: "We have almost finalized the largest merger in Austrian economic
history without any major losses. We would like to thank all our employees
for their willingness to support this massive change, which has affected each
one of us with such a great commitment and dedication." Thanks to this
restructuring program, the Telekom Austria Group will now be in a better
position to manage both operating costs and overall investments in a more
efficient manner, considerably enhancing its effectiveness in the market.

In the Austrian segment, revenues decreased slightly by 4% to EUR 3.064
billion in 2010. EBITDA comparable declined by 12% to EUR 1.032 billion
mainly due to intensive competition and regulatory measures, as cost savings
could only party compensate for lower revenues.

Bulgaria

In Bulgaria, the Telekom Austria Group is represented by its local
subsidiary Mobiltel with a customer base of 5.3 million customers. Therefore,
in terms of subscriber numbers the Bulgarian market is as important as the
Austrian market. However, both revenues and earnings are considerably lower.
Bulgaria has the lowest broadband penetration rate in the EU, but, at the
same time, the highest data rate per user. As a result, the market offers
strong growth potential for convergent products. For this reason, Mobiltel
acquired two fiber-optic operators Megalan Network and Spectrum Net in 2010.
Under the M-Tel brand, the three operators jointly launched convergent
product bundles successfully in the year under review.

Mobiltel was able to increase the number of contract customers by 6.7% in
2010 compared to the previous year. Mobile broadband subscriber base was
almost doubled from roughly 60,000 to 126,000 customers. Due to the weak
local economy, both revenues and earnings registered a slight decline.

Belarus

The Telekom Austria Group is active in the Belarusian market through its
local subsidiary velcom, which accounts for 4.4 million customers and a
market share of 42%. In the year under review, velcom was able to increase
its subscriber base by 6%. Revenues (in EUR) rose by 14% to EUR 343.6 million
and EBITDA comparable by 4%. In 2010, the Group's stake in velcom was
expanded to 100%.

Croatia

In Croatia, Vipnet was able to increase customer numbers by 6% in 2010.
Against the backdrop of a challenging economic situation, both revenues and
earnings showed a slight decrease. The ARPU dropped by 8%. The number of
broadband customers grew by more than 30% to 178,958 subscribers.

Additional Markets

In the "Additional Markets segment" (Slovenia, Republic of Serbia,
Republic of Macedonia and Liechtenstein) customer numbers increased by 5% to
619,000 subscribers and revenues grew by 8% to EUR 321.1 million in 2010.
EBITDA comparable rose by 197% to EUR 41.1 million year-on-year.

The Telekom Austria Group's annual report will be published beginning of
April, 2011. The Annual General Meeting will take place on May 19, 2011 in
Wr. Stadthalle, Vienna.

Please visit www.telekomaustria.com/ir/publications-cc-en.phpto
where you find the Financial Report on the fourth quarter of 2010.

About Telekom Austria Group:

The Telekom Austria Group, listed on the Vienna Stock Exchange
since November 2000, is the leading telecommunications provider in Central
and Eastern Europe with more than 22 million customers across its markets of
operations. The Group is currently operating in eight countries: in Austria
(with the newly merged A1 Telekom Austria), Slovenia (Si.mobil), Croatia
(Vipnet), the Republics of Serbia (Vip mobile) and Macedonia (Vip operator),
Bulgaria (Mobiltel), Belarus (Velcom) and Liechtenstein (mobilkom
liechtenstein). The total market of the eight countries covers about 41
million inhabitants. The Group has more than 16,500 employees, revenues were
EUR 4.7 billion as of year-end 2010. Telekom Austria Group's portfolio
encompasses products and services of voice telephony, broadband Internet,
multimedia services, data and IT solutions, wholesale as well as m-payment
solutions. More detailed information is available at
www.telekomaustria.com

Contact:

Elisabeth Mattes, Director Corporate Communications and Spokeswoman,
Telekom Austria Group mobile: +43-664-6639187
email: elisabeth.mattes@telekomaustria.com

Contact: Elisabeth Mattes, Director Corporate Communications and Spokeswoman, Telekom Austria Group mobile: +43-664-6639187, email: elisabeth.mattes at telekomaustria.com