EANS-Adhoc: Telekom Austria AG / Telekom Austria Group announces capital increase of up to EUR 1 bn net proceeds (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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Capital measures/Stock Activity
07.11.2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN.

Vienna, 7 November 2014: Today, the management board of Telekom
Austria Aktiengesellschaft ("Telekom Austria" and, together with its
consolidated subsidiaries, "Telekom Austria Group"), with the
approval of Telekom Austria's supervisory board, has resolved on a
capital increase targeting net proceeds in the amount of up to EUR
1.0 bn by offering up to 221,500,000 newly issued no-par value
ordinary bearer shares (the "New Shares"). The New Shares will be
issued following a share capital increase from authorized capital and
will be carrying dividend rights as of 1 January 2014, including the
intended dividend of EUR 0.05 per share for the financial year 2014.
The capital increase will consist of an offering to existing
shareholders (the "Rights Offering"), and potentially followed by
private placements of New Shares to qualified investors in Austria
and other selected countries, including in the United States to
qualified institutional buyers (QIBs) as defined in Rule 144A under
the US Securities Act, and outside of the United States to certain
other eligible institutional investors in reliance on Regulation S
under the US Securities Act (the "Rump Placement" and, together with
the Rights Offering, the "Offering").

The Rights Offering will commence on 10 November 2014 and is expected
to end on 24 November 2014 (the "Subscription Period"). In the Rights
Offering, shareholders of Telekom Austria holding existing shares of
Telekom Austria as of 7 November 2014, 24:00 (midnight) Central
European Time, will be granted one subscription right for each
existing share and will be invited to exercise their subscription
rights at a price of EUR 4.57 per New Share (the "Rights Offering
Offer Price"). The subscription ratio is 2 to 1. As a result,
shareholders owning subscriptions rights (or holders of subscription
rights) are entitled to subscribe for 1 New Share for every 2
existing shares of Telekom Austria. Trading of the subscription
rights (ISIN AT0000A1AD41) on the Vienna Stock Exchange is expected
to commence on 12 November 2014 and to end on 19 November 2014.
Subscription rights not exercised by the end of the Subscription
Period will expire without the right to any compensation.

Each of América Móvil, S.A.B. de C.V. ("América Móvil"), Carso
Telecom B.V. ("Carso") and Österreichische Industrieholding
Aktiengesellschaft ("ÖIAG"), Telekom Austria's core shareholders, has
committed itself to participate in the capital increase as follows:
América Móvil has committed itself to acquire at the Rights Offering
Offer Price 3,967,850 New Shares according to its 7,935,700
subscription rights. Carso Telecom has committed itself to acquire at
the Rights Offering Offer Price 128,267,215 New Shares according to
its 256,534,431 subscription rights. ÖIAG has committed itself to
acquire at the Rights Offering Offer Price up to 62,958,867 New
Shares according to its 125,917,735 subscription rights such that its
participation in the share capital of Telekom Austria after
completion of the capital increase corresponds as closely as possible
to its current pro-rata participation in the Company (approximately
28.42%).

The Rump Placement is expected to commence on 24 November 2014, after
the close of trading on the Vienna Stock Exchange, and to end on 25
November 2014. The Rump Placement consists of those New Shares which
have not been subscribed for as part of the Rights Offering or
committed to by the core shareholders. The price for the New Shares
offered in the Rump Placement is equal to or above the Rights
Offering Offer Price and will be determined on the basis of the
outcome of a bookbuilding procedure.

Trading of the New Shares on the Vienna Stock Exchange is expected to
commence on 27 November 2014. Each of Telekom Austria, América Móvil,
Carso Telecom and ÖIAG has committed itself to a lock-up period
ending six months after the first day of trading of the New Shares on
the Vienna Stock Exchange.

Telekom Austria intends to use the net proceeds of the capital
increase to re-establish its target capital structure and maintain a
credit rating of at least BBB (stable) by Standard & Poor's. This
will allow Telekom Austria Group to pursue strategic investment
priorities with the aim to strengthen the Telekom Austria Group's
operational performance and to return to a sustainable growth profile
within the stated sound financial framework. In particular, the
capital increase will allow Telekom Austria Group to implement an
accelerated roll-out of its fibre infrastructure during the years
2015 - 2018 in combination with latest available technologies to
ensure CAPEX efficiency. Telekom Austria Group thus aims to meet
increasing demand for high bandwidth services and safeguard the
Group's network quality leadership in the Austria segment.
Furthermore, Telekom Austria Group will be able to finance
value-accretive M&A opportunities that strengthen its operational
strategy, thereby maintaining the following priorities: (i) in-market
consolidation to strengthen existing operations; (ii) the continued
pursuit of Telekom Austria Group's convergence strategy to diversify
in markets that are currently mobile-only and to enhance existing
convergent operations; and (iii) expansion via new operations.

The approval of the prospectus for the capital increase by the
Austrian Financial Market Authority is expected for today. Thereafter
the prospectus will be available, inter alia, for download on Telekom
Austria's website (http://www.telekomaustria.com/en/ir/14887).

Citigroup Global Markets Limited and Deutsche Bank AG are acting as
Joint Global Coordinators and Joint Bookrunners for the transaction.
Erste Group Bank AG, Raiffeisen Centrobank AG and UniCredit Bank
Austria AG are acting as Joint Bookrunners.

For further information please see the following link:
www.telekomaustria.com/en/ir/ir-news

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This document does not constitute an offer of securities, nor a
solicitation for an offer of securities nor marketing or sales
activity for such securities in countries where such an offer or
solicitation for an offer is subject to legal restrictions. This
document must not be used for such an offer or such marketing
activities. Under http://www.telekomaustria.com/en/ir/14887, a
prospectus will be published in accordance with the Austrian Capital
Market Act (Kapitalmarktgesetz). This document is not for
distribution, directly or indirectly, in or into the United States
(including its territories and possessions, any State of the United
States and the District of Columbia). This document does not
constitute or form a part of any offer or solicitation to purchase
securities in the United States. The securities mentioned herein have
not been, and will not be, registered under the United States
Securities Act of 1933, as amended, (the "Securities Act") and may
not be offered or sold in the United States, except pursuant to an
exemption from the registration requirements of the Securities Act.
There will be no public offer of securities in the United States.
This communication is directed only at (i) persons who are outside
the United Kingdom or (ii) persons who have professional experience
in matters relating to investments falling within Article 19(5) of
the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the "Order") and (iii) high net worth entities, and other
persons to whom it may lawfully be communicated, falling within
Article 49(2) of the Order (all such persons together being referred
to as "relevant persons"). Any investment activity to which this
communication relates will only be available to and will only be
engaged with, relevant persons. Any person who is not a relevant
person should not act or rely on this document or any of its
contents.

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.

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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