euro adhoc: Telekom Austria AG / Earnings Forecast / Telekom Austria Group Takes Next Step in the Restructuring of its Fixed Net Operations, Planned DPS of EUR 0.75 for 2008 Reiterated, Preliminary 3Q

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Company Information

10.11.2008

Vienna, November 10, 2008: The Telekom Austria Group (VSE: TKA, OTC
US: TKAGY) today announced the next step of the current restructuring
program of its Fixed Net operations.

Under the plan announced today, about 1,250 employees, who cannot be
laid off mainly due to their civil servant status, will be made
redundant from the Fixed Net operations in the course of 2009. IFRS
accounting rules require a non-cash provision for the net present
value of the estimated future personnel expenses of the redundant
employees up to their retirement for the total amount of
approximately EUR 630 million, which will impact reported results in
4Q 2008. However, this provision will not have any effects on the
operating performance and the cash flow of the Telekom Austria Group
and it will improve future earnings. The planned provision will not
be included in the net debt calculation but it will be interest
bearing starting from 2009.

"Against the backdrop of a shrinking domestic fixed line market,
downsizing measures are imperative and consequently, we have
initiated a comprehensive cost cutting program in the fourth quarter
of 2007. While we have already achieved a number of milestones, a
decision on the creation of a personnel agency for the redundant
workforce has been postponed. Nevertheless, we will continue with our
restructuring program until a decision has been made," says Boris
Nemsic, CEO Telekom Austria Group.

The Telekom Austria Group will offer a social plan to eligible
employees, who can no longer be employed in the Fixed Net segment.
Under this social plan the Telekom Austria Group expects
approximately 400 employees to voluntary leave the company in the
next years, 250 of which already by the end of 2009. The total
estimated cost for this social plan of about EUR 60 million will be
provided for in the financial statements of 2008 as part of the
aforementioned non-cash provision for the redundant workforce in the
amount of EUR 630 million.

"With the social plan we have opted for a socially responsible
instrument to reduce current personnel expenses and provide affected
employees with the basis for a new start. The planned restructuring
measures will require a provision in the financial statements for the
year 2008 and impact reported results in 4Q 08. However, it will have
no effects on the operational performance and cash flow of the
Telekom Austria Group. Therefore, we reiterate our plan to distribute
a dividend of EUR 0.75 per eligible share for the 2008 financial
year," adds Hans Tschuden CFO Telekom Austria Group.

The measures announced today are expected to improve 2009 EBITDA by
approximately EUR 35 million, primarily as a result of lower
personnel expenses, with roughly EUR 10 million resulting from cash
savings due to the reduction of personnel expenses and
personnel-related operating costs such as extra allowance, overtime,
travel and trainings costs.

Planned DPS of EUR 0.75 for the 2008 financial year reiterated
despite impact of restructuring measures on reported earnings

The planned provision described above will impact reported earnings
in 2008, however, it will not have any effects on Telekom Austria
Group´s cash flow. Thus, the Management Board has reiterated its plan
to propose a dividend of at least EUR 0.75 per eligible share for the
2008 financial year to be paid following prior approval of the Annual
General Meeting in 2009.

Furthermore, the set of accounting measures described above will not
affect the net debt position of the company and therefore will not
influence the timing of Telekom Austria Group´s share buyback
program.

Full-year outlook 2008 for operating business reiterated, however,
lower reported results due to planned non-cash provision for
restructuring program

The Telekom Austria Group fully reiterates its full-year outlook 2008
for the operating business as announced with the 2008 half-year
results. The restructuring plan will have an impact on reported
results but not on the operating business. The Telekom Austria Group
continues to expect revenues to increase by approximately 5% in 2008
compared to the previous year. Excluding the planned non-cash
provision for the restructuring program, EBITDA is expected to grow
by about 3%, with growth from international operations
overcompensating for a lower contribution from the Fixed Net segment.
Operating income is expected to remain stable, excluding the impact
of the restructuring program.

Net debt increased in 2007 mainly due to the acquisition of Velcom in
Belarus. This will lead to higher interest expenses and a decline in
net income by approximately 12% in 2008, excluding the impact of the
planned provision for the restructuring program. Telekom Austria
Group´s operating free cash flow continues to be expected to rise by
about 10%.

Including the non-cash provision for the restructuring program and
its accounting treatment, the Telekom Austria Group expects reported
EBITDA to fall by about 30% and reported operating income to decrease
by about 85%. Furthermore, due to the above described restructuring
program, net result will turn slightly negative despite lower income
tax expenses.

Expected Operating
Performance as
Expected Reported Expected Operating Announced on
Results Including Performance Feb 27, 08
Restructuring reiterated and Reiterated
Program as of Nov 10, 08 on May 14, 08
Outlook 2008 and August 20, 08
Telekom Austria Group
Revenues 5% 5% 5%
EBITDA -30% 3% 3%
Operating income -85% Stable Stable
Net income Slightly negative
net result -12% -12%
Capital
Expenditures -5% -5% -5%
Fixed Net
Revenues -3% -3% -3%
EBITDA Slightly negative EBITDA -12% -12%
Mobile
Communications
Revenues 10% 10% 10%
EBITDA 10% 10% 10%

Selected preliminary 3Q 08 key figures

The Telekom Austria Group today disclosed selected preliminary key
figures for the third quarter and the first 9 months of 2008. Results
for the third quarter and the first 9 months of 2008 will be
announced on November 12, 2008.

Telekom Austria Group
Preliminary Results (in EUR m)
3Q 08 3Q 07 % change 1-9M 08 1-9M 07 % change
Revenues 1,328.0 1,277.1 4.0% 3,863.8 3,630.9 6.4%
EBITDA 539.9 521.2 3.6% 1,507.6 1,463.6 3.0%
CAPEX 184.0 158.1 16.4% 534.3 534.8 -0.1%

end of announcement euro adhoc
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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

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