Telekom Austria Reports Q4

VIENNA -- Telekom Austria AG (VSE: TKA; NYSE: TKA) today announced its results for the Financial Year 2005 and the fourth quarter ending December 31, 2005.

The acquisition of Mobiltel in July 2005 contributed to the growth of major financial indicators. Consolidated financial statements of Telekom Austria for the year 2005 include results for Mobiltel for the period from July 12 through December 31, 2005. Mobiltel is not included in previous quarters.

Year-on-year comparison:

During 2005 consolidated group revenues increased by 7.9% to EUR 4,377.3 million.

Group operating income increased by 37.0% to EUR 620.0 million, benefiting from a substantial increase in the wireless segment following to the acquisition of Mobiltel and an increase in all other mobile companies.

Group operating income before depreciation, amortisation and impairment charges (adjusted EBITDA) rose by 12.0% to EUR 1,757.2 million during 2005.

Consolidated net income of Telekom Austria for 2005 rose by 83.5% to EUR 417.1 million, driven by higher operating income, lower net interest expense despite higher net debt and lower income tax expenses resulting mainly from a lower tax rate in Austria, positive one time effect of group taxation and a change of the law in Slovenia resulting in an increase of the expiration period of tax loss carry forwards.

Both segments contributed almost equally to the increase in group capital expenditures in 2005, which rose by 14.5% to EUR 627.6 million. Net debt increased by 56.1% to EUR 3,082.1 million primarily as a result of additional debt incurred for the acquisition of Mobiltel. The acceleration of the share buyback programme and higher capital expenditures also contributed to this increase. Consequently, net gearing increased to 107.4% at the end of December 2005.

Based on these results, the management board of Telekom Austria will recommend to the annual general meeting the payment of a dividend in the amount of EUR 0.55 per share, compared to EUR 0.24 last year, corresponding to an increase of 129.2%.

Quarterly comparison:

Group revenues increased by 14.3% to EUR 1,171.5 million during 4Q 05.

Wireline revenues decreased by 2.6% to EUR 535.2 million. Higher revenues from internet access & media partially offset the lower revenues from wholesale voice and internet and switched voice monthly rental & other.

Wireless revenues increased by 30.0% to EUR 704.9 million, which is primarily attributable to the consolidation of Mobiltel. On a comparable basis, excluding Mobiltel, wireless revenues increased by 5.0% to EUR 569.6 million in 4Q 05. This increase was primarily driven by higher monthly rental revenues as a result of a larger subscriber base, more data packages and higher equipment revenues.

Group operating income rose by 48.2% to EUR 60.6 million during 4Q 05, reflecting a significant rise of 70.7% in operating income of the wireless segment which more than offset the operating loss in the wireline segment.

Group operating income before depreciation, amortisation and impairment charges (adjusted EBITDA) rose by 20.2% to EUR 382.1 million. Wireless adjusted EBITDA increased by 50.1% to EUR 228.4 million in 4Q 05 which more than offset the 7.5% decline in Wireline adjusted EBITDA to EUR 153.3 million. On a comparable basis, excluding Mobiltel, wireless adjusted EBITDA increased by 1.2% to EUR 154.1 million.

Quarterly net income rose by 66.4% to EUR 41.6 million in 4Q 05 due to the higher operating income and to lower tax expenses. Earnings per share increased by 80.0% from EUR 0.05 to EUR 0.09.

Group capital expenditures increased by 3.3% to EUR 249.6 million during 4Q 05.

Telekom Austria AG (NYSE: TKA; Vienna: TKA)