EANS-Adhoc: Telekom Austria Group Creates New Structure for its Austrian Operations (Ad-hoc)

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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.
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Company Information

23.02.2010

Vienna, February 23, 2010: Telekom Austria Group (VSE: TKA, OTC US:
TKAGY) today announced that it will restructure its Fixed Net and
Mobile Communication operations in Austria. At today´s meeting, the
Supervisory Board of Telekom Austria AG approved the Management
Board´s proposals to merge the two domestic subsidiaries.

"With the merger of the Fixed Net and Mobile Communication segments
we are creating considerable advantages for our customers, who in the
future will be able to receive all communications services from one
trusted provider. This step also reflects the evolution of the
Austrian market, where customers increasingly demand convergent
products and, at the same time, it enables us to combine the
innovative strengths of both business segments," said Hannes
Ametsreiter, CEO of the Telekom Austria Group.

The merger of the Fixed Net and Mobile Communication business
activities within one single operating company should first and
foremost provide the basis to meet increasing customer demand for
integrated telecommunications solutions and convergent products in
Austria. Moreover, the joint steering of sales activities will
generate additional revenue potential through cross-selling
opportunities. This merger will also enhance the Group´s innovative
strength, enabling the effective rollout of joint future-proof
network infrastructure and the full leverage of synergies across all
internal processes. The organizational merger will take place in
2010. However, optimization of processes and the convergence of
technological systems will require more time.

Against this backdrop of changed customer needs, a new industry
rationale has already prompted almost all telecom peers in Europe to
take this step.

Following this merger, the present finance holding will be changed
into a management holding. For this reason, the Management Board of
the Telekom Austria Group will be supported by four Group Officers
for the areas HR, Technology, Marketing and Finance. Their main task
will be to identify and leverage any group-wide synergies.

Based on preliminary forecasts, the Telekom Austria Group expects
this merger to generate a positive contribution to earnings by 2012
and subsequently an annual increase in cash flow of approximately EUR
100 million after further 2-3 years. This growth will result from
additional revenues and lower expenses. In addition, cash flow will
also benefit from lower capital expenditures. Initial costs will
impact results over the next few years and a negative cash flow
effect of approximately EUR 80 million is expected for the 2010
financial year.

Apart from the above mentioned merger, the company´s expectations for
the operating business for the current financial year, as announced
on December 9, 2009, remain unchanged.

"Market developments over the past few years have demonstrated that
this step is imperative. We are convinced that through this merger
the Telekom Austria Group will be best equipped to address future
challenges, while at the same time it considerably strengthens the
Group´s earning power. Thus, we once again reiterate our intention to
distribute a dividend of EUR 0.75 per share," added Hans Tschuden,
CFO of the Telekom Austria Group.

end of announcement euro adhoc
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ots Originaltext: Telekom Austria AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Barbara Plössnig

Investor Relations

Telekom Austria Group

Tel.: +43 (0) 590591-19003

E-Mail: barbara.ploessnig@telekom.at

Matthias Stieber

Investor Relations

Telekom Austria Group

Tel.: +43 (0) 590591-19007

E-Mail: matthias.stieber@telekom.at

Elisabeth Mattes

Telekom Austria Group's Spokeswoman

Tel.: +43 (0) 664 331 2730

E-Mail: elisabeth.mattes@telekom.at

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