Telekom Austria Ag · VIE:TKA

Telekom Austria — Shareholder Meeting (May 2008)

50 slides from Telekom Austria's shareholder meeting presentation, May 20, 2008

1. Slide 1: Annual General Meeting 2008

   Annual General Meeting 2008 1

2. Slide 2: Telekom Austria Group Annual General Meeting 2008

   Telekom Austria Group Annual General Meeting 2008 Vienna, May 20 2008 Annual General Meeting 2008 2

3. Slide 3: Agenda

   Agenda ƒ Agenda Item 1: Report on the fiscal year 2007 ƒ Agenda Item 2: Distribution of the net profit ƒ Agenda Item 3: Discharge of the members of the management board and the supervisory board ƒ Agenda Item 4: Compensation for the members of the supervisory board Annual General Meeting 2008 3

4. Slide 4: Agenda

   Agenda ƒ Agenda Item 5: Election of the supervisory board ƒ Agenda Item 6: Election of the auditors for the financial year 2008 ƒ Agenda Item 7: Management report on treasury shares acquired, number of shares held and use of treasury shares ƒ Agenda Item 8: Authorization of the management board to a

5. Slide 5: Agenda Item 1: Report on the fiscal year 2007

   Agenda Item 1: Report on the fiscal year 2007 Annual General Meeting 2008 5

6. Slide 6: Business Year 2007 – Investment in the Future

   Business Year 2007 – Investment in the Future Only bad news… ƒ EBITDA declined by 3.0% to EUR 1,855 million ƒ Net profit declined by 12.3% to EUR 493 million ƒ Net debt increased by 39.1% … is good news ƒ 650,100 net adds in the Republic of Serbia and the Republic of Macedonia ƒ Shareholder remunera

7. Slide 7: Value-Enhancing Investments Strengthen Telekom Austria Group’s Profile

   Value-Enhancing Investments Strengthen Telekom Austria Group’s Profile Belarus 2007 Czech Republic 2007 Austria PL FL Slovenia Croatia Serbia Kosovo Bulgaria Macedonia 2007 Annual General Meeting 2008 7

8. Slide 8: International Growth Offsets Start-Up Costs in Serbia & Macedonia

   International Growth Offsets Start-Up Costs in the Republic of Serbia & Macedonia Revenues EBITDA* (in EUR million) (in EUR million) +3.3% -3.0% 4,919 1,912 4,760 1,855 FY07 FY06 FY07 FY06 Net Profit one-off Earnings per Share (in EUR million) effect (in EUR) -12.3% 562 493 -8.4% 44 1.09 1.19 FY 07

9. Slide 9: Competition Intensified in 2007

   Competition Intensified in 2007 ƒ Dynamic competitive environment for both segments ƒ International operations showed further growth ƒ Price war on the Austrian mobile communication market limits growth opportunities ƒ Fixed-to-Mobile migration trend persists ƒ Trend towards mobile broadband increas

10. Slide 10: Fixed Net

    Fixed Net Annual General Meeting 2008 10

11. Slide 11: Decisive Developments 2007

    Decisive Developments 2007 ƒ Further development of the existing Fixed Net infrastructure ƒ Market share in the Fixed Net voice telephony market expanded from 56.9% in the previous year to 59.9% ƒ More attractive product range through the introduction of innovative products and bundles ƒ Increase in

12. Slide 12: Voice Minutes Migrate to Mobile Telephony

    Voice Minutes Migrate to Mobile Telephony Development of Voice Telephony Volumes in million minutes per month 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 2001 2002 2003 2004 2005 2006 2007 Festnetze Fixed Net Mobile Network Mobilnetze Annual General Meeting 2008 12

13. Slide 13: Increase in Broadband Lines and Fixed Net Retail Market Share

    Increase in Broadband Lines and Fixed Net Retail Market Share Via Product Bundles Broadband Market Share ƒ Successful product bundles Year-End 2007 3.9% make fixed access lines more 12.3% attractive 30.6% ƒ 750,700 Fixed Net broadband 25.9% lines ƒ Retail market share increased 13.3% from 28.6% in 3

14. Slide 14: Product Bundle KombiPaket Slows Down Fixed Net Line Loss

    Product Bundle KombiPaket Slows Down Fixed Net Line Loss Fixed Net Line Loss (in 000s) ƒ Successful product bundle slowed down Fixed Net line 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 loss -36 ƒ Deceleration of line loss -48 -63 -54 -60 continued in 1Q 2008 ƒ Acquisition of new customers via KombiPaket Annual G

15. Slide 15: aonKombi, aonSuperKombi and aonFlex Expand Fixed Net Product Portfolio

    aonKombi, aonSuperKombi and aonFlex Expand Fixed Net Product Portfolio ƒ Product bundles aonKombi and aonSuperKombi continue the success of KombiPaket ƒ aonKombi encompasses fixed net, mobile telephony and broadband Internet ƒ aonSuperKombi offers in addition aonTV ƒ aonFlex offers mobile broadband

16. Slide 16: aonTV Strengthens Fixed Net Product Range

    aonTV Strengthens Fixed Net Product Range ƒ More than 82 channels, video on demand and personal program guide for EUR 4.90 per month ƒ Roughly 500 top movies in the video library ƒ Roughly 21,000 customers per end of 2007; approx. 38,600 per end of Q1 2008 ƒ About 25% of new customers did not have a

17. Slide 17: Growth Segment Business Solutions

    Growth Segment Business Solutions ƒ Increase in revenues from Data & IT solutions ƒ Reference projects: AUA: Voice-over-IP solution Kitzbühel: CRM solution Baxter: Video monitoring system UEFA EURO 2008: Connection and equipment of broadcasting venues Annual General Meeting 2008 17

18. Slide 18: Revenue Growth through Innovative Products and the Acquisition of eTel

    Revenue Growth through Innovative Products and the Acquisition of eTel Revenues (in EUR million) +0.6% ƒ Increase in revenues from Data & 2,133 2,120 IT solutions, Internet and Media, Wholesale voice and Internet ƒ EBITDA declined by 6.3% to EUR FY 07 FY 06 705 million due to higher costs Operating

19. Slide 19: Mobile Communication

    Mobile Communication Annual General Meeting 2008 19

20. Slide 20: Decisive Developments 2007

    Decisive Developments 2007 ƒ Expansion in Belarus, in the Republic of Serbia and the Republic of Macedonia strengthened the growth profile of the Mobile communication segment ƒ Customer growth by 50.9% to 15.4 million as a result of successful growth strategy ƒ Data products generated 23.2% of total

21. Slide 21: mobilkom austria with Excellent Market Share and Customer Growth

    mobilkom austria with Excellent Market Share and Customer Growth Market Share (in %) 20.8% ƒ 329,000 net adds expanded 40.3% subscriber basis to 4 million 5.2% customers 33.7% ƒ Increase in market share by 1.6 percentage points to Customers 40.3% (in 000s) +9.1% 3,959 3,630 ƒ Share of contract custo

22. Slide 22: Mobile Broadband Allows for Further Growth

    Mobile Broadband Allows for Further Growth Mobile Broadband ƒ Mobile broadband customers Customers more than doubled since (in 000) 2006 290 250 210 140 170 ƒ Higher usage compensated for decline in price 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 ƒ Data products generated 1/3 of revenues* ƒ Prices for data roam

23. Slide 23: Strong Customer Growth in all Operations

    Strong Customer Growth in all Operations (in 000s) FY 07 FY 06 Austria 3,959.3 3,630.5 Bulgaria 5,098.6 4,267.9 Belarus 3,058.7 - Croatia 2,179.6 1,912.3 Slovenia 497.3 420.9 Republic of Serbia 508.9 - Republic of Macedonia 141.2 - Liechtenstein 5.4 4.8 Mobile Commuication 15,449.0 10,236.4 Annual G

24. Slide 24: Expansion in Eastern and South-Eastern Europe Successfully Continued

    Expansion in Eastern and South-Eastern Europe Successfully Continued ƒ Pioneering role was demonstrated also in the business year 2007 ƒ Vip mobile in the Republic of Serbia and Vip operator in the Republic of Macedonia provides the basis for further growth ƒ The Belarusian MDC, acquired in 2007, ha

25. Slide 25: Customer Basis Increased by 50.9%; Strong International Performance

    Customer Basis Increased by 50.9%; Strong Performance of international Operations Revenues (in EUR million) +4.6% ƒ Customer basis increased by 3,035 2,903 50.9% to 15.4 million ƒ Revenues increased by 4.6% due to strong international FY 07 FY 06 performance and contribution EBITDA* 1.5 1 of MDC 0 (

26. Slide 26: Financial Overview

    Financial Overview Annual General Meeting 2008 26

27. Slide 27: Increase in Revenues through Growth from Fixed Net and International Subsidiaries

    Increase in Revenues through Growth from Fixed Net and International Subsidiaries +3.3% 80 1 4,919 131 13 4,760 -66 Revenues Change Change Change. Change MDC, Others Revenues 2006 Fixed Net mobilkom current Vip mobile, 2007 austria international Vip operator operations Annual General Meeting 2008 27

28. Slide 28: EBITDA Growth from International Operations Compensated for Start-Up Costs

    EBITDA Growth from International Operations Compensated for Start-Up Costs 1,912 -48 55 -36 -3.0% -29 1 1,855 EBITDA Change Change Change Change MDC, Others EBITDA 2006 Fixed Net mobilkom current Vip mobile, 2007 austria international Vip operator operations, Annual General Meeting 2008 28

29. Slide 29: Higher Net Interest Expenses Led to Lower Net Profit

    Higher Net Interest Expenses Led to Lower Net Profit 562 -57 41 -34 -12.3% -19 493 Net profit Decline in Decline in Financial Income tax Net profit 2006 EBITDA amortization result 2007 depreciation Annual General Meeting 2008 29

30. Slide 30: Asset Base Increases due to Consolidation of MDC

    Asset Base Increases due to Consolidation of MDC (in EUR million) 31. Dec. 07 31. Dec. 06 % Long-term assets 7,678 6,400 20% Current assets 1,326 1,160 14% Total Assets 9,004 7,560 19% Current liabilities 2,557 1,657 54% Long-term liabilities 3,881 3,079 26% Stockholder‘s equity 2,565 2,824 -9% Tota

31. Slide 31: Free Cash Flow Increases by Roughly 7%

    Free Cash Flow Increases by Roughly 7% Despite Stronger Investment Activities (in EUR million) FY 07 FY 06 % Cash flow from operations 1,682 1,768 -5% before working capital adjustments Change in Working Capital 60 -178 n.a. Ordinary capital expenditures -766 -677 13% Free cash flow 976 913 7% Annua

32. Slide 32: Investments in New Growth Markets more than Tripled

    Investments in New Growth Markets more than Tripled (in EUR million) FY 07 FY 06 % Ordinary capital expenditures 766 677 13% Growth projects and 1,545 320 383% acquisitions Total 2,311 997 132% Other investing activities -19 -25 -23% Purchase price of MDC not yet paid -606 - - Cash acquired -15 - -

33. Slide 33: Higher Net Debt due to Acquisition of MDC and Higher Shareholder Remuneration

    Higher Net Debt due to Acquisition of MDC and Higher Shareholder Remuneration 1,331 86 4,407 3,169 -1,742 713 851 Net debt Cash flow Capex Share Purchase Other Net debt from buy-backs price 2006 and 2007 operations MDC dividends 1.7x 2.4x Net Debt/EBITDA Annual General Meeting 2008 33

34. Slide 34: Profitability Impacted by Start-Up Costs and Increased Shareholder Remuneration

    Profitability Impacted by Start-Up Costs and Increased Shareholder Remuneration Return on Equity (ROE) ƒ ROIC and ROE are 19.6% indicators for value creation 18.3% ƒ Higher long-term assets due FY 07 FY 06 to acquisition of MDC but only in results for Q1 08 Return on Invested Capital (ROIC) 10.0% 8.

35. Slide 35: Dividends Maintained Despite Decline in Earnings

    Dividends Maintained Despite Decline in Earnings Earnings per Share Dividend per Eligible Share (EUR) (EUR) 1.19 1.09 0.75 0.75 0.84 0.55 0.44 0.24 2004 2005 2006 2007 2004 2005 2006 2007 Annual General Meeting 2008 35

36. Slide 36: Proposed Dividend of 75 Cents per Share

    Proposed Dividend of 75 Cents per Share Proposed Dividend Return on Dividend 0.75 EUR 3.9 % Annual General Meeting 2008 36

37. Slide 37: Telekom Austria Share

    Telekom Austria Share Annual General Meeting 2008 37

38. Slide 38: International Shareholder Basis

    International Shareholder Basis Shareholder Structure Shareholder Structure by Country By Investors (per 31.12.2007) (per 31.12.2007) Austia (incl. ÖIAG and treasury shares) Unidenified Shareholders Rest of World Value 16% 20% 36% Treasury 21% Shares 4% Rest of Others Europe 6% 12% Growth 14% ÖIAG G

39. Slide 39: Share Buy-Back Suspended Following Acquisition in Belarus

    Share Buy-Back Suspended Following Acquisition in Belarus Share Buy-Back Treasury Shares (in EUR million) (in million) 369 406 38.3 17.8 FY 07 FY 06 Dec. 31, Dec. 31, 2007 2006 Annual General Meeting 2008 39

40. Slide 40: 5-Year Performance of Telekom Austria Share

    5-Year Performance of Telekom Austria Share Announcement of MDC Acquisition 230 % Mobi 63 Bid 22 € 210 % Announcement of Mobiltel‘s 20 € Acquisition 190 % 18 € 170 % 16 € Telecom Italia Exit Acquisition Mobiltel 150 % 14 € 130 % 12 € 110 % 11 € 90 % 9€ 2003 2004 2005 2006 2007 Telekom Sector "DJ Sto

41. Slide 41: Stock Option Program Improves Corporate Governance and Aims at Value Creation

    Stock Option Program Improves Corporate Governance and Aims at Value Creation ƒ Integral part of best-practice corporate governance ƒ Stock options align the interests of the management with the enhancement of corporate value ƒ 4,047 million options granted to 300 managers, 240,000 of which to the b

42. Slide 42: Employee Participation Program Strengthens Corporate Identity

    Employee Participation Program Strengthens Corporate Identity ƒ Employees should participate in the success of the company ƒ One of the largest Employee Participation Programs in Austria ƒ 587,245 shares granted to roughly 11,100 employees so far ƒ In 2007, 150 EUR granted per employee, excluding pa

43. Slide 43: Delisting from the New York Stock Exchange

    Delisting from the New York Stock Exchange ƒ Low trading volume of Telekom Austria Shares in New York as decisive factor ƒ Last trading day on the New York Stock Exchange was May 16, 2007 ƒ Shares are currently traded over the counter in NY ƒ Reduction of administrative costs related to the listing

44. Slide 44: Corporate Governance & Investor Relations

    Corporate Governance & Investor Relations Annual General Meeting 2008 44

45. Slide 45: Clear Commitment to the Principles of Corporate Governance

    Clear Commitment to the Principles of Corporate Governance ƒ Effective framework for sustainable and transparent corporate management ƒ „True and fair view“ and non-discrimination of shareholders ƒ Intensive cooperation with Supervisory Board ƒ Compliance with Corporate Governance Code confirmed by

46. Slide 46: Risk Management Enables Optimal Management

    Risk Management Enables Optimal Management ƒ Risk management prevents “bad surprises” through preparation ƒ Risks are analyzed and evaluated regularly and systematically ƒ Monitoring of risks is the responsibility of the operating units ƒ Main risks: market and competitive risks, regulatory and lega

47. Slide 47: Top-Level Investor Relations

    Top-Level Investor Relations ƒ Intensive communication: 18 road shows worldwide, 233 one-on-one meetings, 146 conference calls and 57 group‘s presentations in 2007 ƒ Number 1 IR Officer within the telecommunications industry according to „Institutional Investor“ ƒ IR web site: Number 1 in Austria (W

48. Slide 48: Outlook

    Outlook Annual General Meeting 2008 48

49. Slide 49: Telekom Austria Group Expects Operating Growth for Full Year 2008

    Telekom Austria Group Expects Operating Growth for Full Year 2008 ƒ In 2008 the results of the Telekom Austria Group will be driven by international growth ƒ Revenue growth of approx. 5% and increase in EBITDA by roughly 3% ƒ Net profit will decline by 12% in 2008 due to higher interest expenses ƒ I

50. Slide 50: Thanks for your attention!

    Thanks for your attention! Annual General Meeting 2008 50

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