EANS-Adhoc: Telekom Austria Group Submits a Revised Conditional Bid of up to EUR 1.1 billion for a 51% Stake in Telekom Srbija (Ad-hoc Release)

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04.05.2011

Vienna, May 4, 2011 - Today, the Telekom Austria Group (VSE: TKA, OTC
US: TKAGY) announced that it has submitted a revised conditional bid
in the tender process conducted by the Ministry of Finance of the
Republic of Serbia for the sale of a 51% stake in Telekom Srbija
a.d., the incumbent telecommunications operator of the Republic of
Serbia.

On 21 March 2011, an initial conditional offer was submitted for the
51% stake in Telekom Srbija, which included the payment of an equity
value of EUR 800 - 950 million plus a EUR 450 million CAPEX
commitment. Key conditions of this conditional bid were merger
control clearance in Serbia resulting in a market consolidation as
well as an agreement to address Telekom Srbija´s costs structure
within a pre-agreed time period. These conditions remain in place.

In the course of the ongoing negotiations with the Ministry of
Finance of the Republic of Serbia additional value-enhancing elements
were identified. The primary elements consist of spectrum agreements
and the prolongation of licences, which remain subject to agreement
with the relevant authorities.

On the basis of these conditions and waiving the initial CAPEX
commitment, a revised conditional offer for a 51% stake in Telekom
Srbija was submitted. This conditional offer consists of the
following parameters:

• EUR 800 million cash payment due at closing of the transaction
• Deferred annual cash payments over a period of nine years after closing

Subject to further negotiations on the submitted conditions, this bid is
expected to result in a maximum net present value of the equity value of up to
EUR 1.1 billion. The expected enterprise value/adjusted EBITDA 2012 multiple is
anticipated to remain in the range of approximately 4.8 - 5.3x.

The final terms of the transaction are subject to approval of the
Supervisory Board of Telekom Austria AG.

The revised conditional bid compares favourably to a share buyback
with respect to cash flow generation per share. The bid value will
allow the Telekom Austria Group to remain within the targeted
leverage range of Net Debt/EBITDA comparable of 2.0x to 2.5x. Thus,
the submitted conditional bid is in line with the Group´s existing
cash use policy.

Telekom Srbija is the incumbent telecommunication operator of the
Republic of Serbia with operations in Montenegro as well as Bosnia
Herzegovina, where Telekom Srbija owns a 65% stake in Telekom Srpske.
In the Republic of Serbia, the company offers both fixed and mobile
services with a 100% market share in the fixed line and 56% market
share in mobile communications. In Montenegro, the mobile market
shares of Telekom Srbija amounts to 23% while it has a 2% share of
the fixed line market. In Bosnia Herzegovina fixed line market share
amounts to 35% and mobile communication market share to 39.7%. In
2010, Telekom Srbija reported revenues of EUR 1,141 million and an
EBITDA of EUR 483 million.

Financial overview Telekom Srbija

2010 (reported)

Revenues (in EUR mn) 1,141
EBITDA (in EUR mn) 483
CAPEX (in EUR mn) 191
Operating Free Cash Flow (in EUR mn) 292
Net Debt (in EUR mn) 610
Mobile Subscribers (in mn) 7.3
Fixed Access Lines (in mn) 3.4

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

Further inquiry note:

Matthias Stieber
Director Investor Relations
Telekom Austria Group
Tel.: +43 (0)50 664 39126
Email: matthias.stieber@telekomaustria.com

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