One-Off Special Effects Aimed at Saving Personnel Costs Over the Long Term Cause Reported Operating Loss (y 2)

In March 2011, A1 Telekom Austria was able to finalize fiber-optic network rollout in the 15th and 19th Vienna districts. For the first time an entire district could be connected to the company's GigaNet via fiber-optic technology. A total of 90,000 households and commercial businesses in the 15th and 19th Vienna districts have now access to the high-performance Internet and multimedia services of A1 Telekom Austria. Within the GigaNet coverage area customers are provided with bandwidths of up to 30 Mbit/s based on the company's Giga-speed products, which enable multimedia services such as high-resolution TV. By year-end 2011, the total number of households and commercial businesses covered by the company's GigaNet will reach roughly 2.1 million countrywide. This corresponds to a network coverage of roughly 50% of all domestic households and commercial businesses. In addition to other Vienna districts, further provincial Capitals and regional centers will benefit from this infrastructure initiative and will be connected to the company's GigaNet. Along with the 1,000 mobile base stations that are currently connected to the company's GigaNet, additional base stations will soon follow suit contributing to enlarging the company's "hybrid" GigaNet.

A1 Telekom Austria's mobile broadband network has recently received an important award. "Arcchart" - the International Association of Network Operators - carried out a network test among 94 European providers. The test report showed that A1 is by far the best mobile broadband network in Austria. With download speeds of roughly 2.5 Mbit/s on average, A1 customers can surf the net twice as fast as the customers of company's main domestic competitor, which won the second place. Furthermore, A1 was the only Austrian network operator to win the best mark "high". In a European benchmark, A1 Telekom Austria ranks second among 94 European network operators. The superiority of the network is mainly attributable to the network blanket coverage and the well-developed HSPA+ infrastructure, which A1 Telekom Austria started to rollout as early as 2009. In a country benchmark, Austria ranks fifth among 28 other European countries, which is mainly attributable to the excellent network quality of A1.

The number of Austrian mobile customers rose by 5.2% to roughly 5.1 million, with the number of mobile broadband contract subscribers increasing by even 23.8%. This favorable development also reflects the successful marketing of smartphones, which account for more than 13% of all mobile handsets. Since November 2010, A1 Telekom Austria has also included the Apple iPhone into its portfolio. By mid March 2011, a total of 100,000 iPhone users had joined the A1 Telekom Austria network.

The intensity of competition on the domestic market is also reflected by the company's declining average revenue per user. In the fixed net business ARPL declined by 2.4% and in mobile communication by 8% (ARPU). The regulation-induced reduction of roaming and interconnection tariffs had an additional negative impact on earnings. Revenues in the Austrian segment dropped by 3.3% to EUR 738.3 million and EBITDA comparable decreased by 11.3% to EUR 259.2 million.

Bulgaria

In Bulgaria, mobile customer base remained stable with 5.3 million subscribers. Due to focused marketing activities, contract customer share increased from 61% to roughly 66%. Mobile broadband subscriber base more than doubled to 141,000 customers compared to same period of the previous year. At the end of the first quarter of 2011 following the finalization of the acquisition of two fiber-optic operators Megalan AD and SpektrumNet AD in 2010, total fixed access lines amounted to 99,100 lines, with fixed net broadband lines accounting for more than 93,000 lines.

Revenues of the Telekom Austria Group's Bulgarian subsidiary Mobiltel amounted to EUR 133.4 million in the first quarter of 2011, a decline of 1.5% compared to the previous year's level mainly attributable to price pressure. EBITDA comparable declined by 10.7% due to higher personnel costs and increased material expenses as a result of the acquisitions.

Belarus

In Belarus, velcom showed a favorable development, with mobile customers rising by 7.3% to 4.4 million. Mobile broadband recorded a particularly strong growth of 463.9% to roughly 197,500 subscribers. ARPU increased by 11.0%.

As a result, revenues grew by 22.2% to EUR 89.9 million and EBITDA comparable by 20.8% to EUR 42.1 million. The negative effect of foreign exchange translations on revenues which amounted to EUR 1.0 million in the first quarter of 2011 has already been taken into account.

Croatia

Despite a persistently challenging macro-economic environment, Vipnet in Croatia was able to increase its mobile subscriber base by almost 2% to 2.7 million customers in the first quarter of 2011. Customer growth was primarily driven by the contract segment and the demand for mobile broadband, with the mobile broadband subscriber base growing by 22.9% to more than 179,000 customers. However, ARPU declined by 16.2% due to lower usage and regulatory measures.

Vipnet's revenues declined by 10% to EUR 90.3 million and EBITDA comparable by 13.6% to EUR 24.9 million.

Additional Markets

In Slovenia, mobile customer base was increased by 6.5% to 629,900 despite a highly competitive landscape, with mobile broadband showing a considerable growth of 21.8%. ARPU declined by 1.4%. Si.mobil's revenues rose by 8.0% to EUR 42.6 million, whereas EBITDA comparable dropped by 4.9% to EUR 10.9 million due to higher expenses.

In the Republic of Serbia, mobile subscribers increased by 22.7% to 1.4 million. Vip mobile's revenues rose by almost 30% to EUR 30.2 million. ARPU increased by 14.8% and EBITDA comparable amounted to EUR 4.3 million in the first quarter of 2011.

In the Republic of Macedonia, the mobile customer base grew by 47.2% to more than 490,000 subscribers. Vip operator was able to increase revenues by 60% to EUR 11.1 million and substantially improve EBITDA comparable to -0.4 million.

Details about the Annual General Meeting 2011

The Annual General Meeting of the Telekom Austria Group will take place on May 19, 2011 at 10 am in the Vienna Stadthalle, Halle F, A-1150 Vienna, Vogelweidplatz 14.

Please visit http://www.telekomaustria.com/ir/interim-results.php where you find the Financial Report on the First Quarter of 2011.

About Telekom Austria Group

The Telekom Austria Group, listed on the Vienna Stock Exchange since November 2000, is the leading telecommunications provider in Central and Eastern Europe with more than 22 million customers across its markets of operations. The Group is currently operating in eight countries: in Austria (A1TA), Slovenia (Si.mobil), Croatia (Vipnet), the Republics of Serbia (Vip mobile) and Macedonia (Vip operator), Bulgaria (Mobiltel), Belarus (Velcom) and Liechtenstein (mobilkom liechtenstein). The total market of the eight countries covers about 41 million inhabitants. The Group has more than 17,000 employees, revenues were EUR 4.7 billion as of year-end 2010. Telekom Austria Group's portfolio encompasses products and services of voice telephony, broadband Internet, multimedia services, data and IT solutions, wholesale as well as m-payment solutions. More detailed information is available at http://www.telekomaustria.com

Contact

Elisabeth Mattes, Director Corporate Communications and Spokeswoman, Telekom

Austria Group email: elisabeth.mattes@telekomaustria.com mobile: +43-664-6639187

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