Telekom Austria AG · VIE:TKA

Telekom Austria — Shareholder Meeting (May 2009)

66 slides from Telekom Austria's shareholder meeting presentation, May 20, 2009

1. Slide 1: Annual General Meeting 2009

   Annual General Meeting 2009 1

2. Slide 2: Telekom Austria Group Annual General Meeting 2009

   Telekom Austria Group Annual General Meeting 2009 Vienna, May 20, 2009 Annual General Meeting 2009 2

3. Slide 3: Agenda

   Agenda ƒ Agenda Item 1: Report by the management board about the 2008 business year ƒ Agenda Item 2: Distribution of the net profit ƒ Agenda Item 3: Discharge of the members of the management board and of the supervisory board ƒ Agenda Item 4: Compensation for the members of the supervisory board An

4. Slide 4: Agenda

   Agenda ƒ Agenda Item 5: Election of the auditors for the fiscal year 2009 ƒ Agenda Item 6: Management report on share buy-back effected, number of treasury shares held and use of treasury shares ƒ Agenda Item 7: Authorization of the management board to acquire treasury Annual General Meeting 2009 4

5. Slide 5: Agenda Item 1: Report by the Management Board about the 2008 Business Year

   Agenda Item1: Report by the Management Board about the 2008 Business Year Annual General Annual General Meeting Meeting 2009 2009 5

6. Slide 6: In 2008 We Took the Bull by the Horns

   In 2008 We Took the Bull by the Horns… ƒ Growth trend continued ƒ Fixed Net attractiveness enhanced ƒ Core markets stabilised ƒ Restructuring of the Fixed Net segment underway ƒ Financial basis strengthened ƒ Commitment to balanced shareholders’ remuneration Annual General Annual General Meeting Mee

7. Slide 7: Strong Operating Performance Despite Challenging Framework Conditions

   Strong Operating Performance Despite Challenging Framework Conditions ƒ Fixed Net product bundles bear fruits ƒ Restructuring measures in Fixed Net segment impact results ƒ Economic downturn and financial crisis do not show any effects on 2008 business development ƒ Introduction of a minimum dividen

8. Slide 8: Solid Basis in Austria and Strong Position in Eastern and South-Eastern Europe

   Solid Basis in Austria and Strong Position in Eastern and South-Eastern Europe Belarus ƒ Operations in 8 countries Austria ƒ 17.8 million customers PL FL Slovenia in Mobile Communication Croatia Serbia Bulgaria Macedonia ƒ 2.3 million Fixed Net access lines Annual General Annual General Meeting Meet

9. Slide 9: 2/3 of EBITDA of the Telekom Austria Group Are in Euro

   2/3 of EBITDA of the Telekom Austria Group Are in Euro Revenues 2008 EBITDA 2008 71% in EURO 71% in EURO 70% in 66% in EURO EURO 78% in EURO Annual General Annual General Meeting Meeting 2009 2009 9

10. Slide 10: Telekom Austria Group's Strategy

    Telekom Austria Group‘s Strategy Annual General Annual General Meeting Meeting 2009 2009 10

11. Slide 11: Telekom Austria Group's Strategy Unchanged

    Telekom Austria Group‘s Strategy Unchanged ƒ Increase in corporate value ƒ Internationalisation provides sustainable growth potential ƒ Leveraging synergies in Austria through product bundles from both segments ƒ Know-how transfer and development of synergies through cross-segment and cross-border c

12. Slide 12: Fixed Net Strategy Focuses on Stabilisation of Cash Flow

    Fixed Net Strategy Focuses on Stabilisation of Cash Flow Telekom Austria Group Fixed Net Mobile Communication ƒ Market-oriented products and pricing enhance profitability ƒ Clear positioning versus alternative Increase in cash flow mobile providers ƒ Increase in efficiency Stabilisation of cash flow

13. Slide 13: Mobile Communication Strategy Focuses on Increase in Cash Flow

    Mobile Communication Strategy Focuses on Increase in Cash Flow Telekom Austria Group Fixed Net Mobile Communication ƒ Selective expansion in Eastern and Stabilisation of cash flow South-Eastern Europe ƒ Creation of growth potential through new products (mobile data services) ƒ Increase in efficiency

14. Slide 14: Fixed Net

    Fixed Net Annual General Annual General Meeting Meeting 2009 2009 14

15. Slide 15: International Trend of Shrinking Fixed Net Market Far Advanced in Austria

    International Trend of Shrinking Fixed Net Market Far Advanced in Austria 25% Fixed Net 77% 75% Mobile Communication 23% Austria Germany Annual General Annual General Meeting Meeting 2009 2009 15

16. Slide 16: Shrinking Fixed Net Market Requires Adoption of Counter-Measures

    Shrinking Fixed Net Market Requires Adoption of Counter-Measures ƒ Technological changes and success of mobile communication lead to a loss of 600,000 fixed net access lines over the past 5 years ƒ Cost cutting imperative to safeguard fixed net business over the long term ƒ Decline in earnings requi

17. Slide 17: In 2008 Important Steps Were Taken to Safeguard Fixed Net Business

    In 2008 Important Steps Were Taken to Safeguard Fixed Net Business ƒ Successful product bundles reduce fixed access line loss ƒ Increase in Fixed Net broadband lines of 18% to roughly 886,000 ƒ Successful broadband innovations: 75,000 aonTV customers as of May 2009 ƒ Cost reduction proves effective

18. Slide 18: Fixed Net Strategy Based on Three Pillars: Growth, Technology, Efficiency

    Fixed Net Strategy Based on Three Pillars: Growth, Technology, Efficiency ƒ Value-accretive subscriber growth via innovative The Future is Broadband! products and high-value Telekom Austria - present in each household, in each office services ƒ Future-proof technologies Growth Technology Efficiency

19. Slide 19: Restructuring Program According to Plan

    Restructuring Program According to Plan Announced as of Nov. 08 Status as of Target for March 31, 2009 Dec. 31, 2009 Social plan 400 FTE Social plan Total 334 FTE 1,250 1,250 Split FTE Staff FTE released from work Staff 850 FTE released from work 654 FTE Annual General Annual General Meeting Meeting

20. Slide 20: Socially Compatible Restructuring Measures

    Socially Compatible Restructuring Measures ƒ Targeted employees can accept a social plan or look for a new job within the internal job market ƒ Social plan accepted by roughly 400 employees; 334 employees left the company as of March 2009 ƒ Currently, there are 585 vacancies within Telekom Austria‘s

21. Slide 21: Fixed Net Development Reflects Challenges

    Fixed Net Development Reflects Challenges Revenues (in EUR million) -4% 2,133 ƒ Revenue decline of 4% 2,039 ƒ Restructuring program impacts results with FY 08 FY 07 expenses totaling EUR 632.1 million EBITDA EUR 632.1 million (in EUR million) of restructuring expenses ƒ Excl. restructuring 705 progr

22. Slide 22: Fixed Net Customer Growth in Nov. & Dec. Thanks to Product Bundles

    Fixed Net Customer Growth in Nov. & Dec. 08 Thanks to Product Bundles Fixed Net Access Line Loss (in 000) 2,500 Oct. 224.5 08 300 97.6 Nov . Dec. 08 08 -4,900 FY 08 FY 07 ƒ Product bundles sustainable slowdown fixed access line loss ƒ Fixed access line loss more than halved: from 224,500 in 2007 to

23. Slide 23: Broadband Penetration in Austria Exceeds European Average

    Broadband Penetration in Austria Exceeds European Average Broadband Penetration Broadband Market Share 21% Cable 26% 78% 63% 10% Unbundled lines 12% MBB* competitors 69% 22% 15% 58% 15% MBB*mobilkom austria 12% Europ. ø Europ. TA Fixed Net Wholesale ø 30% Telekom Austria 31% Fixed Net 2008 2007 2008

24. Slide 24: Cost-Saving Measures as Basic Pre-Requisite for Investment-Friendly Policy

    Cost-Saving Measures as Basic Pre- Requisite for Investment-Friendly Policy ƒ Cost-saving measures deemed necessary against the backdrop of a shrinking fixed net business ƒ Restructuring measures will be reflected in lower personnel expenses in 2009 ƒ Cost cutting in the area of marketing, sponsorin

25. Slide 25: Telekom Austria Invests in Fixed Net and Is One of the Largest Investors in Austria

    Telekom Austria Invests in Fixed Net and Is One of the Largest Investors in Austria Investments in 2008 (in EUR million) ƒ In 2008 over EUR 260 million 264 invested in Fixed Net ƒ In 2008 Telekom Austria invested 16 times more than its main competitor ƒ Focus on network expansion and innovation 17 ƒ

26. Slide 26: NGN is an Important Pillar of Corporate Strategy

    NGN* is an Important Pillar of Corporate Strategy ƒ New infrastructure enhances the company‘s competitiveness Growth ƒ New products and services address new growth business areas ƒ NGN simplify current architecture ƒ Network reaction speed further enhanced Technology ƒ Technology flexibility ƒ Syner

27. Slide 27: Glass Fiber Roll-Out

    Glass Fiber Roll-Out ƒ Glass fiber rollout expected for 2010–2012 dependent upon regulatory and legal framework conditions ƒ Greatest potential in urban areas with high market growth potential for Telekom Austria ƒ Pilot projects to gather experiences and assess planning measures ƒ Telekom Austria i

28. Slide 28: Product Bundles are Simple and Enhance Customer Satisfaction

    Product Bundles are Simple and Enhance Customer Satisfaction Fixed Net Internet TV A tariff for each communications need, one single bill, user-friendliness Annual General Annual General Meeting Meeting 2009 2009 28

29. Slide 29: aonBreitband-Duo Offers the Best of Both Worlds

    ‘aonBreitband-Duo’ Offers the Best of Both Worlds ƒ DSL high-speed Internet ƒ Mobile Internet with up to with up to 8 Mbps + 7.2 Mbps ƒ Unlimited ƒ No add. fixed costs per month ƒ Data volumes € 5.90/GB ƒ WLAN modem incl. 5 MB per month free-of charge ƒ HSDPA modem included Conditions of promotional

30. Slide 30: aonTV Won 75,000 Customers Already

    aonTV Won 75,000 Customers Already ƒ Start in March 2006 ƒ Currently more than 75,000 customers (May 2009) ƒ 63 channels ƒ 19 pay-TV channels, premium TV ƒ 1 HD channel ƒ 4 radio stations ƒ Video on demand Annual General Annual General Meeting Meeting 2009 2009 30

31. Slide 31: Mobile Communication

    Mobile Communication Annual General Annual General Meeting Meeting 2009 2009 31

32. Slide 32: Strong Subscriber Growth in All Markets

    Strong Subscriber Growth in All Markets ƒ Subscriber growth of roughly 15% to 17.8 million reflects successful growth strategy ƒ Organic growth increases revenue and earning power ƒ Increase in revenues of 12% to EUR 3.4 billion ƒ EBITDA growth of 14% to over EUR 1.3 billion Annual General Annual Ge

33. Slide 33: All Countries Contribute To Subscriber Growth of over 2.3 Million Customers

    All Countries Contribute To Subscriber Growth of over 2.3 Million Customers FY 08 FY 07 % Growth (in 000) GJ 08 GJ 07 % Wachstum 4,496 3,959 14% Austria Österreich 4.496 3.959 14% 5,396 5,099 6% Bulgaria Bulgarien 5.396 5.099 6% 3,698 3,059 21% Belarus Weißrussland 3.698 3.059 21% 2,487 2,180 14% Cr

34. Slide 34: Austria & Belarus As Main Growth Driver of Mobile Communication

    Austria & Belarus As Main Growth Driver of Mobile Communication Revenues EBITDA (in EUR million) (in EUR million) +12% 3,391 3,035 +14% 1,341 1,178 FY08 FY07 FY08 FY07 Annual General Annual General Meeting Meeting 2009 2009 34

35. Slide 35: In 2008 Largest Increase in Market Share Since Foundation of mobilkom austria

    In 2008 Largest Increase in Market Share Since Foundation of mobilkom austria Market Shares As of December 2008 42.5% mobilkom austria 32.0% T-Mobile incl. tele.ring Hutchison 18.8% Orange incl. YESSS! 5.8% 2004 2005 2006 2007 2008 ƒ Market leadership expanded to 42.5% ƒ Over 500,000 net additions i

36. Slide 36: Product Innovations Secure Market Position

    Product Innovations Secure Market Position A1 Breitband Unlimited ƒ Unlimited high-speed Internet at home ƒ Mobile broadband on the go A1 Netbook ƒ A1 launches Netbook onto the market in 2008 ƒ First ever combination of data tariffs and small notebook Annual General Annual General Meeting Meeting 20

37. Slide 37: Technical Expertise Demonstrated also in 2008

    Technical Expertise Demonstrated also in 2008 TV on the mobile phone ƒ DVB-h enables mobile TV ƒ Just in time for EURO 2008 Fem-to-Router ƒ First provider in Central Europe with a customer pilot project ƒ Fem-to-cell and DSL broadband access line create UMTS network for the home Annual General Annua

38. Slide 38: Exclusive Smart Phones and Additional Services Underpin Quality Leadership

    Exclusive Smart Phones and Additional Services Underpin Quality Leadership Blackberry Storm and G2 ƒ Blackberry „Storm“ sets new trends in 2009, G2 also launched ƒ Smart phones are more than just mobile phones m-commerce additional services ƒ Attractive additional services increase customer convenie

39. Slide 39: Key Financials

    Key Financials Annual General Annual General Meeting Meeting 2009 2009 39

40. Slide 40: Revenue Increase Through Growth From International Subsidiaries

    Revenue Increase Through Growth From International Subsidiaries 355 +5 % -17 5,170 4,919 -94 8 Revenues Change Change Change Other Revenues 2007 Fixed Net mobilkom international 2008 austria subsidiaries Annual General Annual General Meeting Meeting 2009 2009 40

41. Slide 41: Fixed Net Restructuring Program Impacts EBITDA

    Fixed Net Restructuring Program Impacts EBITDA 1,855 -726 Including restructuring expenses of EUR 632 million 141 -30 % 6 1,296 20 EBITDA Change Change Change Other EBITDA 2007 Fixed Net mobilkom intern. 2008 austria subsidiaries Annual General Annual General Meeting Meeting 2009 2009 41

42. Slide 42: Restructuring Program Also Impacts Net Profit

    Restructuring Program Also Impacts Net Profit 142,9 73 72,8 492 -632 492,5 -66,6 -58,3 -67 -58 143 -48,8 -49 Jahresüberschuss Abschreibungsanstieg Steuern vom 2007 Einkommen Net profit Increase in Restruct. Increase in Change Taxes Net loss 2007 operating program amortisation financial 2008 EBITDA &

43. Slide 43: Very Good Operating Performance, Results Impacted by Restructuring

    Very Good Operating Performance, Results Impacted by Restructuring (in EUR million.) FY 2008 FY 2007 % change Revenues 5,170 4,919 5% EBITDA 1,296 1,834 -30% Operating income /loss 135 761 -82% Financial result -212 -153 39% Income/ loss before income taxes -76 608 n.a. Income tax expense/ benefit 2

44. Slide 44: Net Debt Reduced by over EUR 400mn to Less Than EUR 4bn

    Net Debt Reduced by over EUR 400mn to Less Than EUR 4bn (in EUR million) Dec. 31 08 Dec. 31 07 % Change Long-term assets 7,452 7,678 -3% Current assets 1,545 1,326 17% Total assets 8,997 9,004 0% Current liabilities 2,220 2,557 -13% Long-term liabilities 4,621 3,881 19% Stockholders‘ equity 2,156 2,

45. Slide 45: Reduction in Liabilities through Strong Cash Flow

    Reduction in Liabilities through Strong Cash Flow 4,407 3,993 141 332 -1,694 808 Net debt 2007 Cash flow Investments Dividends Others Net debt 2008 from operations 2.4x Net debt/EBITDA* 2.1x *excl. restructuring expenses Annual General Annual General Meeting Meeting 2009 2009 45

46. Slide 46: Stable Cash Flow Allows For Investments, Reduction of Liabilities, Dividend Payments

    Stable Cash Flow Allows For Investments, Reduction of Liabilities, Dividend Payments (in EUR million) Cash Flow Deployment 808 Ordinary investments 1,682 1,694 414 Reduction of liabilities and others 140 Working capital 332 Dividends FY 07 FY 08 Annual General Annual General Meeting Meeting 2009 200

47. Slide 47: Strong Cash Flow Enables Stable Dividend Policy

    Strong Cash Flow Enables Stable Dividend Policy Dividende per Dividends je Aktie Share (EUR) 0.75 0,75 0.75 0,75 0.75 0,75 0.55 0,55 0.24 0,24 2004 2005 2006 2007 2008 Annual General Annual General Meeting Meeting 2009 2009 47

48. Slide 48: Telekom Austria Distributes a Part of its Cash Flow as Dividends

    Telekom Austria Distributes a Part of its Cash Flow as Dividends 97% 70% 42% 44% VOEST 0% Post OMV Verbund Wiener- Telekom berger Austria Source: Deutsche Bank -59% Dividend payment despite negative free cash flow Free cash flow: cash flow – investments – working capital financing Annual General Ann

49. Slide 49: Dividends Benchmarked Against Other Telcos as % of Free Cash Flow

    Dividends Benchmarked Against Other Telcos as % of Free Cash Flow 75% 71% 69% 59% 56% 51% 44% 40% 26% KPN Telia- Belga- Tele- Swiss Deutsche Telekom Telecom France Sonera com fonica com Telekom Austria Italia Telecom Source: UBS Annual General Annual General Meeting Meeting 2009 2009 49

50. Slide 50: Introduction of a Minimum Dividend Floor of 75 Cent

    Introduction of a Minimum Dividend Floor of 75 Cent Supported by Strong Cash Flow Dividend policy expanded to 2009 – 2012 - A stable dividend policy is a top priority - Allows for an adequate return on employed shareholders’ capital - Distribution of 65% of net profit, minimum dividend floor of 75 c

51. Slide 51: Dividend Provides Adequate Return on Employed Shareholders' Capital

    Dividends Provides Adequate Return on Employed Shareholders‘ Capital Proposed Dividend Dividend Return Price as of 31.12.2008 of EUR 10.30 0.75 EUR 7.3 % Annual General Annual General Meeting Meeting 2009 2009 51

52. Slide 52: Refinancing Policy and Telekom Austria Share

    Refinancing Policy and Telekom Austria Share Annual General Annual General Meeting Meeting 2009 2009 52

53. Slide 53: Successful Placement of a EUR 750 Million Bond in January 2009

    Successful Placement of a EUR 750 Million Bond in January 2009 Allocation ƒ EUR 750 million bond with a 7 year maturity and a coupon of Retail demand 6.375 % 10% ƒ Order book of EUR 3.3bn 25% ƒ Solid rating provides access to Banks 65% debt capital markets ƒ Refinancing for 2009 + 2010 guaranteed In

54. Slide 54: Cash Flow, Cash on Hand and Bond Cover Refinancing for 2009 & 2010

    Cash Flow, Cash on Hand and Bond Cover Refinancing for 2009 & 2010 Debt Maturing Sources of Cash (in EUR Mio.) As of 31.12.2008 incl. bond Cash on hand Debt maturing 961 2009 Bond placement in January 2009 Debt maturing Free cash flow 2009 1,232 2010 & 2010 after dividends ƒ Additional EUR 1.2 billi

55. Slide 55: Cross Border Lease Transactions Early Terminated

    10 Cross Border Lease Transactions Early Terminated ƒ Due to the financial crisis, US investors are willing to terminate cross border lease transactions early on ƒ 10 out of 11 Cross Border Lease Transactions of the Telekom Austria Group were early terminated ƒ These transactions have no impact on r

56. Slide 56: Telekom Austria Group Has a Broad Shareholder Structure

    Telekom Austria Group Has a Broad Shareholder Structure Shareholder Structure by Country (as of 31.12.2008) Rest of the world 16% Austria (incl. ÖIAG and Rest of treasury shares) Europe 37% 17% UK 15% USA 15% Annual General Annual General Meeting Meeting 2009 2009 56

57. Slide 57: In 2008 Reduction of Net Debt Took Priority Over Share Buyback

    In 2008 Reduction of Net Debt Took Priority Over Share Buyback Treasury Shares Share Buyback (in million) (in EUR million) 17.6 17.8 370 0 2008 2007 FY 08 FY 07 Annual General Annual General Meeting Meeting 2009 2009 57

58. Slide 58: Telekom Austria Share Price Dropped by 45%, But Performed Better than ATX

    Telekom Austria Share Price Dropped by 45%, But Performed Better than ATX Telekom Austria Sector ATX 120 110 Telekom Austria -45 % 21€ 100 Sector -41 % 19€ ATX -55 % 90 17€ 80 15€ 70 13€ 60 11€ 50 9€ 40 7€ 30 March 08 June 08 Sept. 08 Dec. 08 March 09 2009 Annual General Annual General Meeting Meeti

59. Slide 59: Corporate Governance & Investor Relations

    Corporate Governance & Investor Relations Annual General Annual General Meeting Meeting 2009 2009 59

60. Slide 60: Clear Commitment to the Principles of Corporate Governance

    Clear Commitment to the Principles of Corporate Governance ƒ Effective framework for sustainable and transparent company management ƒ “True and fair view” and non-discrimination of shareholders ƒ Compliance with Corporate Governance Code confirmed by KPMG as of 2008 Annual General Annual General Mee

61. Slide 61: Pro-Active Risk Management as Integral Part Of Good Corporate Governance

    Pro-Active Risk Management as Integral Part Of Good Corporate Governance ƒ Risks are regularly and systematically identified and assessed ƒ Risk Management becomes important against the backdrop of a challenging business landscape ƒ Counter-measures are conceived, implemented and reported on an ongo

62. Slide 62: Pro-Active Investor Relations at Top Level

    Pro-Active Investor Relations at Top Level ƒ Intensive dialogue with investors in 2008 - 17 road shows world-wide - 239 one-on-ones - 162 conference calls - 44 group presentations ƒ Award-winning IR work: - Best IR team in Austria - Third best IR team within the telco industry - Best IR website with

63. Slide 63: Outlook 2009

    Outlook 2009 Annual General Annual General Meeting Meeting 2009 2009 63

64. Slide 64: Telekom Austria Group 2009 Outlook

    Telekom Austria Group 2009 Outlook Telekom Austria Group 2009* Revenues slightly weaker than originally expected ~ EUR 5.1 bn EBITDA ~ EUR 1.9 bn CAPEX ~ EUR 0.8 bn Operating Free Cash Flow ~ EUR 1.1 bn Planned Dividend per Share of at least 75 Cent *on a constant currency basis Annual General Annua

65. Slide 65: Thanks for your attention!

    Thanks for your attention! Annual General Annual General Meeting Meeting 2009 2009 65

66. Slide 66: Annual General Meeting 2009

    Annual General Meeting 2009 66

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