EANS-Adhoc: Telekom Austria AG / Telekom Austria Group acquires spectrum for a total of EUR 1,030 million in Austria (Ad-Hoc)

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21.10.2013

Vienna, 21 October 2013: The Telekom Austria Group (VSE: TKA, OTC US:
TKAGY) announces that the Austrian spectrum auction for the new 800
MHz band (6 blocks auctioned) as well as the existing 900 MHz (7
blocks auctioned) and 1800 MHz (15 blocks auctioned) bands has been
concluded today. No new operator entered the spectrum auctions. Thus
all spectrum (28 blocks of 2 x 5 MHz each) was available to the
existing operators. Telekom Austria Group's domestic subsidiary A1
Telekom Austria acquired 4 blocks of the 800 MHz spectrum, 3 blocks
of the 900 MHz spectrum and 7 blocks of the 1800 MHz spectrum for a
total consideration of EUR 1,030 million. Thus Telekom Austria Group
acquired 2 x 70 MHz of spectrum out of a total available spectrum of
2 x 140 MHz.

Bidding strategy

In light of Telekom Austria's existing spectrum as well as the
spectrum held by its competitors (significant positions in the 1800
MHz frequency band) prior to the auction, Telekom Austria Group's
bidding strategy was focused on the 800 MHz spectrum as well as
retaining its vital position in the 900 MHz band during the main
round (so called "clock round"). The comparatively high number in the
1800 MHz band (7 blocks in total) was a result of the "supplementary
round" where Telekom Austria Group acquired 2 x 20 MHz of additional
spectrum as 4 blocks of spectrum remained unsold in the "clock
round". This 40% increase in spectrum only lead to a 3% increase in
total costs.

Spectrum distribution

Subsequent to the auction the new spectrum distribution for the
auctioned frequency bands in Austria will be the following:

800 MHz 900 MHz 1800 MHz
A1 Telekom Austria before n.a. 2 x 20.2 MHz 2 x 15 MHz
(until 2015/17) (until 2015)
after 2 x 20 MHz 2 x 15 MHz 2 x 35 MHz
(until 2029) (until 2034) (until 2034)

Hutchison 3G Austria before n.a. 2 x 0.8 MHz 2 x 29 MHz
(until 2017) (until 2017)
after 0 MHz 2 x 5 MHz 2 x 20 MHz
(until 2029) (until 2034) (until 2034)

T-Mobile Austria before n.a. 2 x 12.8 MHz 2 x 25.4 MHz
(until 2015) (until 2015/19)
after 2 x 10 MHz 2 x 15 MHz 2 x 20 MHz
(until 2029) (until 2034) (until 2034)

The maturity date for the 800 MHz spectrum band, which is available
immediately, is 31 December 2029. The start of the licensing period
for all auctioned blocks in the 900 MHz and the 1800 MHz band depends
on the existing frequency licences, while the new licences will now
have a common maturity date of 31 December 2034 for all operators.

Strong strategic position

This new spectrum offers Telekom Austria unique strategic advantages.
Having acquired 67% of the immediately available low frequency 800
MHz spectrum, Telekom Austria Group is in an unparalleled position to
roll out a leading LTE network across Austria. This fully supports
Telekom Austria Group's high value strategy and network quality
leadership and allows Telekom Austria Group to protect its fixed-line
as well as its mobile customer base, in particular in rural areas.
Moreover, the spectrum distribution has significantly reduced the
viability of a potential new mass market mobile virtual network
operator (MVNO).

Financial implications and funding

The purchase price of the spectrum will be payable in full within
approximately 8 weeks. The Telekom Austria Group will finance the
spectrum acquisition via existing cash as well as additional debt. In
light of the resulting impact on its balance sheet the Telekom
Austria Group intends to achieve deleveraging via operational cash
flow generation to support the Group's BBB (stable) target rating.

Broadband investments

On 22 March 2013, the Federal Ministry for Transport, Innovation and
Technology announced that EUR 250 million of the proceeds from the
Austrian spectrum auctions will be dedicated to broadband investments
& research and development grants.

___

Disclaimer for forward-looking statements: This document contains
forward-looking statements. These forward-looking statements are
usually accompanied by words such as "believe", "intend",
"anticipate", "plan", "expect" and similar expressions. Actual events
may differ materially from those anticipated in these forward-looking
statements as a result of a number of factors. Forward-looking
statements involve inherent risks and uncertainties. A number of
important factors could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statement.
Neither Telekom Austria nor any other person accepts any liability
for any such forward-looking statements. Telekom Austria will not
update these forward-looking statements, whether due to changed
factual circumstances, changes in assumptions or expectations. This
report does not constitute a recommendation or invitation to purchase
or sell securities of Telekom Austria. ___

Further inquiry note:
Matthias Stieber
Director Investor Relations
Tel.: +43 (0) 50 664 39126
mailto: matthias.stieber@telekomaustria.com

end of announcement euro adhoc
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issuer: Telekom Austria AG
Lassallestrasse 9
A-1020 Wien
mail: investor.relations@telekomaustria.com
WWW: www.telekomaustria.com/ir
sector: Telecommunications
ISIN: AT0000720008
indexes: WBI, ATX Prime, ATX
stockmarkets: official market: Wien
language: English