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)

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Company Information

03.10.2007

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
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ots Originaltext: Telekom Austria AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:
Peter E. Zydek
Head of Investor Relations
Tel.: +43 (0)59059 1 19001
mailto: peter.zydek@telekom.at

Elisabeth Mattes
Telekom Austria Group's Spokeswoman
Tel.: +43 (0)664 331 2730
mailto: elisabeth.mattes@telekom.at

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