VIENNA, August 24 /PRNewswire-FirstCall/ -- Telekom Austria AG (VSE: TKA; NYSE: TKA) today announced its results for the first half 2005 and the second quarter ending June 30, 2005. Year-to-date comparison: During the first half 2005 total group revenues increased by 1.5% to EUR 2,014.5 million. Wireline revenues decreased by 2.1% to EUR 1,065.6 million in the first half 2005. On a comparable basis excluding the one-time recognition of universal services in the amount of EUR 13.0 million in 2Q 04 the decline amounted to 0.9%. Wireless revenues increased by 4.2% to EUR 1,062.1 million driven mainly by the foreign operations, higher subscribers and strong data business resulting in higher monthly rental, traffic and roaming revenues. The 23.2% rise in group operating income to EUR 298.0 million was driven by higher group revenues and lower depreciation and amortization expenses in the wireline business segment. Group operating income before depreciation, amortization and impairment charges (adjusted EBITDA) rose by 3.2% to EUR 832.1 million during 1H 05. Consolidated net income of Telekom Austria for the first half 2005 rose by 81.8% to EUR 191.4 million, primarily due to a higher operating income, lower net interest payments and a decrease in the Austrian statutory tax rate from 34% to 25% as of January 1, 2005. Earnings per share increased from EUR 0.21 to EUR 0.39. As a consequence of higher wireline investments in broadband access and in the core network as well as additional wireless investments to upgrade the Austrian network with EDGE technology, capital expenditures for tangible and intangible assets increased by 30.4% to EUR 249.5 million during 1H 05. Net debt was reduced by 5.2% to EUR 1,872.0 million, despite higher capital expenditures, the distribution of divi­dends and an acceleration of the share buyback programme. Quarterly comparison: Quarterly figures show an increase in group revenues by 1.5% to EUR 1,011.0 million. The 3.8% decline in wireline revenues to EUR 532.5 million in 2Q 05 was caused primarily by the non-recurring revenue of EUR 13.0 million for services rendered to alternative service providers under the universal service obligation in 2Q 04. Adjusted by this one-time effect the decline amounted to 1.5%. Higher revenues from "switched voice traffic" and "internet access & media" could not fully compensate for the decline in "switched voice monthly rental & other" and "data & IT-solutions including wholesale" revenues. All operations of the wireless business segment contributed to an increase in revenues by 6.0% to EUR 535.3 million during 2Q 05, driven by higher monthly rentals as a result of a higher share of contract customers, higher traffic revenues due to higher average monthly charged minutes per customer and strong data business as well as higher equipment revenues. Group operating income rose by 17.4% to EUR 124.3 million during 2Q 05. The 21.6% decrease of EUR 4.2 million in the wireline operating income, which was primarily due to the non-recurring income of EUR 13.0 million related to the universal service obligation in 2Q 04, was more than offset by the 18.6% increase of EUR 17.0 million in the operating income of the wireless segment. Operating income before depreciation, amortization and impairment charges (adjusted EBITDA) rose by 1.6% to EUR 395.8 million. Declining wireline operating expenses due to lower material and maintenance expenses only partly offset the impact of declining revenues, resulting in a decline in wireline adjusted EBITDA by 8.1% to EUR 197.4 million. Excluding the impact of the universal service obligation wireline adjusted EBITDA declined by 2.2%. Despite higher operating expenses due to higher employee costs for stock options and higher interconnection costs, adjusted EBITDA in the wireless segment rose by 10.0% to EUR 198.1 million. Quarterly net income more than doubled to EUR 75.7 million in 2Q 05 compared to EUR 34.6 million in 2Q 04. Capital expenditures increased by 8.2% to EUR 130.3 million during 2Q 05. This is a consequence of higher wireline investments to support a growing broadband customer base and due to investments of EUR 16.6 million in 1H 05 required under the Austrian Telecommunications Interception Ordinance to allow Austrian law enforcement agencies to standardize the data exchange. Wireless capital expenditures for tangible assets increased by 15.0% in 2Q 05 mainly due to higher investments for network upgrades in EDGE and UMTS technology. For more detailed information about the financial results for the first half year 2005 please refer to the corresponding interim report on Telekom Austria's website at http://www.telekom.at/results-hy-2005 Contacts Martin Bredl Head of Public Relations Phone: +43-(0)59059-1-11001 E-Mail: Peter Zydek Head of Investor Relations Phone: +43-(0)59059-1-19000 E-Mail: DATASOURCE: Telekom Austria AG CONTACT: Contacts: Martin Bredl, Head of Public Relations, Phone: +43-(0)59059-1-11001, E-Mail: ; Peter Zydek, Head of Investor Relations, Phone: +43-(0)59059-1-19000, E-Mail:

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