Telekom Austria Group: 2000 Results

- Revenues increased by 3.4%, growth in mobile, data and Internet offset

competition-related decline in voice telephony



- Rise in customers by almost 40% in mobile communications, positive

contribution to profits by VIPNet



- 38,500 ADSL customers resulting from a successful marketing campaign of

broadband communications



- 293,000 Internet customers in Austria; market share grows from 22% to

28%



- Transformation and restructuring initiated. Level of personnel within

target at year-end



- Restructuring expenses and competitive pressure put a strain on EBITDA



Summary Financial Figures of Telekom Austria Group According to US-GAAP



(in mn EUR) 2000 1999 Change in %

Revenues 3,905.3 3,775.9 3.4

EBITDA 1,016.5 1,477.9 -31.2

EBITDA, excl. Restructuring

Expenses 1,274.9 1,563.4 -18.5

Operating Results -31.5 493.7 n.m.

Operating Results, excl.

Restructuring Expenses 226.9 579.2 -60.8





Net Income for the Year/ Net Loss

for the Year of Telekom Austria AG

with Mobilkom Austria

at-equity -285.6 200.2 n.m.



* According to US-GAAP, Mobilkom Austria, in which Telekom Austria holds

75%+ 1 share, is reflected in the consolidated accounts of Telekom

Austria AG by means of equity consolidation. The summarized figures also

take those of Mobilkom Austria into account.





Apr 11, 2001, 01:00 ET from Telekom Austria Group

VIENNA, Austria, April 11 /PRNewswire/ -- Telekom Austria Group AG
 (NYSE:   TKA; VSE: TKA) announced its operating results for business year 2000
 today.  The summarized revenues of the Telekom Austria Group (including
 Mobilkom Austria) grew by 3.4% to 3.9 bn EUR.  The growth divisions of mobile
 communications, data communications and Internet more than offset the
 competition-related decline in fixed-line.  To adapt the company to the
 changed conditions, a comprehensive transformation programme was initiated,
 which will lead to a reduction in the number of employees in fixed line
 business by 5,000 by the year 2005.  The restructuring measures and the
 decline in revenues in traditional voice telephony led to a decline in EBITDA
 of 1,478 million EUR to 1,016.5 mn EUR.  Excluding restructuring expenses
 EBITDA fell by 18.5% to 1,274.9 mn EUR.  The consolidated net loss for the
 year of Telekom Austria AG fell 200 mn EUR to minus 285.6 mn EUR, and
 comprises concentrated efforts to optimize the tax expenses within the Group.
     "As mentioned repeatedly within the framework of the IPO, the
 transformation of Telekom Austria Group, which has been radically embarked
 upon since the change in the management board, is reflected in the financial
 statements of 2000," said Heinz Sundt, CEO of Telekom Austria.  "We are
 holding firm to our long-term strategy of transformation from a traditional
 fixed-line operator to a full-service provider on an All-IP basis.  The
 increased costs of this are necessary to overcome the future decline in the
 fixed line sector as well as to implement our strategy."
 
     The Results in Detail:
 
     Highlights of Business Divisions:
 
     -- Fixed-line: competitive-related decline in revenues, 258.4 mn EUR
        restructuring expenses
     -- Mobile communications: EBITDA grows by 23.3%, market leadership in
        Austria and Croatia
     -- Data communications: EBITDA grows 36.5%.  New formation as a solution
        provider for key customers of the Telekom Austria Group
     -- Other segments: In Austria Internet customer figures almost tripled,
        doubled in the Czech Republic
 
     The fixed-line business division comprises approximately 59% of sales
 revenues of Telekom Austria Group, mobile communications 33%, data
 communications 7%.  The rest falls on other business segments, which primarily
 produce sales revenues from Internet business.  Mobile and data communications
 and other segments show revenue growth by 20.7%, 10.5% and 124.8%
 respectively.  Due to competitive pressure on traditional voice telephony,
 there was a 5.8% decline in fixed-line business.
     This development is also reflected in EBITDA, reinforced due to
 restructuring expenses.  While a decline of 51.8% to 519.5 mn EUR was shown in
 fixed line business, in mobile communications it rose by 23.2% to 437.9 mn EUR
 due to continuing customer growth, and in data communications by 36.5% to
 59.5 mn EUR.  The other business segments showed a decline of 2.1 mn EUR to
 minus 0.6 mn EUR.
     The operating results of Telekom Austria Group fell from 493.7 mn EUR
 to - 31.5 mn EUR, excluding restructuring expenses of 579.2 mn EUR to
 225.1 mn EUR.
 
     Decline of Asset Investments Within Target
 
     (in mn EUR)                        2000            1999   Change in %
     Additions to property, plant
      and equipment                    917.4           983.2          -6.7
 
     The development of the property, plant and equipment took place according
 to Group strategy, which foresees a reduction and focus of investments on
 additions to property, plant and equipment.  While a reduction in fixed line
 business succeeded -- including data communications and Internet -- by 14% to
 594.3 mn EUR, there was an increase in mobile communications due to capacity
 by 12.4% to 323.1 mn EUR.
 
     Employee Numbers on Target
 
     The measures to lower costs that have already been initiated comprise
 personnel reduction, consolidation of logistic centers, renegotiating supplier
 contracts, selling real estate, and improving the procurement system.
 Personnel reduction went according to plan in the year 2000.  The targeted
 number of personnel at year-end was in fact less by 150 employees.  The final
 reduction of approximately 5,000 employees in fixed line business should be
 completed in 2005.
 
     Employees*                         2000            1999   Change in %
     Fixed line                       14,982          15,722          -4.7
     Mobile communications             2,520           2,054          22.7
     Data communications                 956             847          12.9
     Other segments                      102              27         277.8
     Telekom Austria Group            18,560          18,650         -0,48
     * Annual average of
      full time equivalents
 
     Operational Highlights and Customer Development
 
     The ADSL Network covers Seventy-five per cent of Austria's households and
 the focus on broadband continues.  The first step was successfully completed
 in October 2000: a powerful backbone with a transmission capacity of 320
 Gigabit/s.  In addition, the tariff reductions initiated in the year 2000 will
 be continued this year.
     In the year 2000 Mobilkom Austria proved its innovative leadership, among
 other things with the first start worldwide of GPRS, the start of Mobilkom
 Liechtenstein, development of the Austrian network to 98% coverage, and the
 start with VIPonline in Croatia.  Furthermore, due to the relatively low-price
 of the UMTS license there are economic advantages and excellent starting
 chances.
     The concentrated Internet activities led to the establishment of Jet2Web
 Internet and the acquisition of Czech On Line, the largest provider in the
 Czech Republic.  The Internet fixed-line activities of the Group are bundled
 in this company.  The ORF holds a 2.5% participating interest in Jet2Web
 Internet as a strategic partner.
     Datakom Austria was newly positioned as a solution provider and has a
 stable number of customers.
     Through the foundation of Jet2Web Network Services GmbH in November 2000,
 Telekom Austria will actively market the infrastructure of the Telekom Austria
 Group to alternative telephone and Internet providers.
     In the fixed-line area, there was a rise in traffic minutes to
 15.2 bn minutes due to increased online traffic, voice traffic showed a
 decreasing tendency.  The development of the access channels shows a decline
 in the ordinary telephone access lines, these were compensated for by the
 rapid rise in ISDN offers.  The absolute number of transmission channels
 remained almost the same at 3,833,000 in the year 2000.  In 1999, this figure
 was 3,862,000.  The ISDN channels increased by 37% from 660,000 to 904,000.
     Mobilkom Austria showed an overall increase in customers of almost 40%.
 In addition, in a European comparison the relationship between contract
 customers (=47%) and prepaid customers is particularly positive.  With a
 penetration of 22% in Croatia, VIP-Net has a great potential for growth.  In
 Austria, Mobilkom Austria will find potential for growth primarily in the area
 of mobile data and mobile Internet.
     Jet2Web Internet was able to make better use of the market growth in the
 Internet segment than all other competitors in Austria.  The customer figure
 rose by 177% to 293,000.  The market share increased in the same time from
 22% to 28%.  Czech On Line almost doubled its customer base from 95,000 to
 188,000 in the past year.
 
     Transformation to a Full Service Provider with Broadband Technology
 
     The Telekom Austria Group currently provides mobile, Internet and
 fixed-line networks.  In the middle of the year 2000, the new management team
 set the course technologically and organizationally for new broadband
 technologies on an IP basis to be used by the customers of the entire Group.
 The backbone with 320 Gbit/s of transmission capacity for the new broadband
 technologies xDSL, GPRS and UMTS was put into operation. With wide coverage of
 broadband the Telekom Austria Group is transforming into a full-service
 provider for voice, data, image and multimedia communications.  To be able to
 communicate and market the cross-network products and services of the Group
 efficiently, Jet2Web, the new umbrella brand of the Group, was launched in
 July 2000.
 
     Involvement in Central Europe
 
     "The focal point of our strategy is to tighten up our organization and
 thus to strengthen our market leadership and competitiveness in Austria, while
 abroad we are focusing on selective expansion in the growth regions of
 southern and eastern Europe in the areas of mobile communications and
 Internet," explains Mr. Sundt with regard to the goals of foreign involvement
 of the Telekom Austria Group.  "Parallel to this Telekom Austria is utilizing
 every opportunity offered by the strategic partnership with Telecom Italia, as
 well as the resulting synergy effects and advantages."
 
     Future Developments - Overview
 
     The Austrian telecommunications market is considered to be one of the most
 liberalized within the EU, with the most competitive market environment.  In
 view of the relatively high number of fixed line and mobile operators, losses
 in market share are a logical development of liberalization.  The goal at
 Telekom Austria is to slow down losses in market shares in the traditional
 areas and to stabilize them on a strategic level. Additionally we aim to win
 market shares in new fields of business, such as Internet.
     This year will be decisively marked by the successful implementation of
 restructuring, which will lead to a clear improvement in results. The focus of
 this transformation is fixed-line business, where a substantial reduction in
 the employment figure will take place, and relative to this, to an improvement
 in the cost structure. These measures should more then balance out the
 continuing pressure from the competitors.
     In mobile business the potential for growth in Croatia and -- in view of
 the latest acquisition -- Slovenia will be brought into play. In Austria,
 mobile penetration will reach its climax, whereby there will be a reduction in
 the growth in earnings in this business segment.
     In data business we are assuming a further growth in revenues. The margins
 will be reduced due to the new positioning of Datakom Austria and the related
 higher inter-Group transfer prices.
     In 2001 for the first time Internet will be shown as an individual
 business segment. Parallel to being the first full business year of Jet2Web
 Internet's operative activity as a full Internet service provider, it will
 also have a substantial growth in revenues.
 
     Business Divisions
 
     -- Fixed Line Network: Transformation and Focus on Broadband Technology.
        Decline in Competition Through Competition and Restructuring
 
     (in mn EURO)                       2000            1999   Change in %
     Sales Revenues                  2,676.9         2,842.2          -5.8
     EBITDA                            519.5         1,077.1         -51.8
     Operating Results                -295.4           250.3          n.m.
     Additions to property, plant
      and equipment                    558.5           646.5         -13.6
     Employees*                       14,982          15,722          -4.7
     * Annual Average of Full-Time Equivalents
 
     Operative revenues in fixed-line business declined in the year 2000,
 compared with the previous year by 5.8% to 2.7 bn EUR. Contributing to the
 decline were primarily lower traffic tariffs by approximately one third
 (809 mn EUR). The reasons for this are in the growing competitive environment
 as well as in tariff cuts, above all those from 1999. Earnings from monthly
 rentals could be increased by 10% to 655 mn EUR. The unfavorable market
 development could partly be compensated for by higher interconnection
 earnings, which rose by 51.3% to 618.8 mn EUR. The greater increase by far
 resulted from the increase in the volume of transit traffic via the fixed line
 network of Telekom Austria in mobile and international networks.
     Excluding restructuring expenses in the amount of 254 mn EUR
 (1999: 85.5 mn EUR) the EBITDA of fixed line business was reduced by 33.5% to
 773.1 mn EUR. Decisive factors for this were mainly competitive-related lower
 earnings.  After consideration of depreciation EBIT was reduced to minus
 295 mn EUR. Restructuring expenses contain primarily provisions for the early
 retirement program. Since 1997, 2,976 employees have accepted Telekom
 Austria's offer for early retirement.  Regulatory measures such as carrier
 preselection, also locally, assured a rapid increase in competitive pressure.
 The market share was thus reduced by approximately 85% on the average in 1999
 to 63% at year-end 2000.
     Overall, at year-end Telekom Austria was responsible for 3.3 million
 lines. While the traditional PSTN lines continued to decline, the number of
 ISDN channels increased by one third due to new lines or changed
 registrations. Access lines were reduced by 0.8% to 3.8 million.
 
     (in thousands)                                      2000           1999
     PSTN access line                                 2,929.1        3,201.6
     ISDN basic access line                             331.9          247.0
     ISDN multi access line                               8.0            5.6
     Total access lines                               3,269.0        3,454.2
     ADSL access lines                                   38.5            0.9
     Total access channels                            3,832.9        3,862.4
 
     Telekom Austria's impressive pioneer role in broadband communications can
 be seen in the development of the ADSL lines. At the end of the business year
 2000, just about 14 months after Telekom Austria offered ADSL services as one
 of the first operators in Europe, approximately 38,500 ADSL lines were
 installed, with a transmission rate of 512/64 kibt/s (downstream/upstream).
 This figure also comprises ADSL customers of other Internet service providers.
     In the past business year, for the first time Telekom Austria exceeded the
 15 billion minute mark in national fixed-line traffic, and reached
 15.2 billion minutes, after 14 billion minutes in the year 1999. This rise can
 be attributed exclusively to the increase in Internet traffic. Traffic in
 traditional voice telephony continues to decline.
     The reorganization of Marketing and Sales strengthened the orientation of
 product development relative to the specific segments and the focus on IP
 based services and applications. Numerous tariff measures were initiated in
 the business year. Among others, the tariffs in national voice traffic were
 reduced by more than 50% and by up to 60% in some international zones. The
 prices for national leased lines were reduced by up to 54%. On November 15,
 Telekom Austria submitted an application to the Telekom Control Commission to
 introduce tariffs with seconds-based accounting from the 30th second, coupled
 with another considerable price reduction. Approval was granted at the end of
 January 2001, implementation took place on March 1, 2001.
     In October, Telekom Austria established a subsidiary, Jet2Web Network
 Services, which will make network services available to other operators in the
 future -- including fixed and mobile operators and Internet service providers.
     The reduction of the additions to property, plant and equipment in fixed
 line business is a central part of Telekom Austria's transformation program.
 This goal could clearly be achieved with a 13.6% decline to 558.8 mn EUR in
 the year 2000. The simultaneous focus on broadband technologies is reflected
 impressively in its share of the investments, which rose by 18% to 42%. The
 well-timed investment in broadband communications will provide Telekom Austria
 with a quality of uniqueness on the European telecom market and ensure new
 proceeds for the coming years.
 
     -- Mobile Communications: Sales Increase 21%, EBITDA +23% and
        Customers 38% - VIPNet with Positive Operating Results in the First
        Full Business Year
 
     (in mn EURO)                       2000            1999   Change in %
     Sales Revenues                  1,500.1         1,242.4          20.7
     EBITDA                            437.9           355.3          23.2
     Operating Results                 261.1           225.8          15.6
     Additions to property,
      plant and equipment              323.1           287.4          12.4
     Employees*                        2,520           2,054          22.7
     * Annual Average of Full-Time Equivalents
 
     The business area of mobile communications comprises the activities of
 Mobilkom Austria in Austria, Croatia, Liechtenstein and -- since February 2001
 -- Slovenia. Telekom Austria AG holds 75% - 1 share of Mobilkom Austria, 25%
 +1 share is held by Telecom Italia Mobile.
     This business area successfully raised its sales revenues by 20.7% to
 1.5 bn EUR. The successful activities of VIP-Net in Croatia played a major
 role in this with revenues of 148,9 mn EUR (1999: 31.7 mn EUR).
     Above all, continuing customer growth contributed to this positive
 development. Traffic revenues grew by more than one third to 721 mn EUR, those
 from monthly rentals by 15% to 246 mn EUR. The activities of international
 calls in the Telekom Austria networks in Austria and Croatia led to an
 increase of roaming revenues by 57% to over 113,7 mn EUR. Sales of equipment
 at 187.5 mn EUR remained almost at the level of the previous year.
     The comparatively low rise in expenses of the business segment led to an
 increase of EBITDA by 23.3% to 438 mn EUR. The rapid customer growth of the
 last few years led to a rise in depreciation by 44%, operating results
 increased by 15.6% to 261 mn EUR.
 
     Customer Development in mn     31.12.00        31.12.99   Change in %
     Contract Customers              1,336.6         1,218.4         +9.7%
     Prepaid Customers               1,468.7         1,041.4        +58.3%
     Total Customers
      Mobilkom Austria               2,804.3         2,259.8        +24.1%
     VIP-Net (Croatia)                 531.4           155.1       +342.6%
     Total Customers Mobile
      Communications                 3,336.7         2,414.9        +38.2%
 
     There was also successful customer growth in the business area of almost
 40% to a total of over 3.3 million in Austria and Croatia over the past year.
 In both countries Telekom Austria is the market leader.
     Following the entry of a fourth network operator in the past year,
 Mobilkom Austria's market share in Austria at year-end was 44.8%. The share of
 contract customers at 47% is still at a positive level in an international
 comparison.  In the second half of the year, even 50% more contract customers
 could be won than in the first half of the year.
     A major part of the successful development in Austria  can be attributed
 to Mobilkom Austria's leadership in new products and services. Some examples
 are location-related services (MobilGuide), the development of information
 services via SMS and WAP, telematic solutions (i.e. remote activation of car
 heater) and m-commerce solutions such as Cin-e-Ticket and FlowerLine.
     With the world's first commercial GPRS network, Mobilkom Austria took an
 important step in successfully opening up the mobile data service market. The
 number of SMS messages rose in December 2000 to 36.6 million, as opposed to 21
 million the previous year. At year-end, Mobilkom Austria listed approximately
 140,000 active WAP users.
     The Croatian mobile subsidiary VIPNet (61% share held by Mobilkom Austria)
 achieved great success: In its first full year of operative business activity,
 VIPNet achieved positive operating results. Attractive prepaid products
 attuned to differing customers needs and low-priced "Friends" tariffs could
 satisfy the now 530,000 VIP-Net customers. Like Mobkilkom Austria, VIP-Net is
 also reckoning with the boom on data services: Since November, VIP-Net has
 offered fixed-line Internet access, which customers can combine with mobile
 access services.
     The increase in additions to property, plant and equipment by 12.4% to
 323.1 mn EUR should be seen against the background of capacity-oriented
 network expansion. The number of base stations in Austria increased by 24% to
 4,120 stations.
     On November 3, 2000, Mobilkom Austria successfully bid for two UMTS
 frequency packages in the paired and two in the unpaired area for
 171.5 mn EUR. Thus, in relation to the customers in Austria, the license fee
 was far below the European average.
     In the first quarter 2001 Mobilkom AG was transformed into "Mobilkom AG
 und Co. KG."  Therefore, taxation of the results of Mobilkom Austria will be
 effected with its partners as from June 30, 2000. End of February 2001,
 Mobilkom Austria acquired a participation in si.mobil in Slovenia.
 
     -- Data Communications: EBITDA Grows by 36.5%, New Positioning as a
        Solution Provider
 
     (in mn EUR)                        2000            1999   Change in %
     Sales Revenues                    309.0           279.6          10.5
     EBITDA                             59.5            43.6          36.5
     Operating Results                  22.8            16.0          42.5
     Additions to property,
      plant and equipment               34.2            48.3         -29.2
     Employees*                          956             847          12.9
     * Annual Average of Full-Time Equivalents
 
     The business area data communications, which comprises the activities of
 the wholly-owned subsidiary Datakom Austria, achieved revenues of 309 million
 EUR with a plus of over 10%.  This growth can almost exclusively be attributed
 to higher earnings from company networks and to a lesser part to an increase
 in value-added data services. The price decline in leased lines by 20%
 contributed considerably to the rise in EBITDA of 36.5% to 59.5 mn EUR.
     At year-end 2000, Datakom Austria serviced approximately 90% of the
 Austrian top 100 companies. With the development of branch-oriented network,
 ASP enabling, e-commerce and security solutions Datakom continued to expand
 its product offer in the business year. Besides the development and
 installation of network infrastructure, active network management and security
 services, Datakom Austria continued to deepen its specialization last year in
 certain market segments such as in the health and legal areas.
     Datakom Austria's competency as a provider of corporate networks forms the
 basis for its new positioning as a solution provider and system integrator of
 Telekom Austria.  In this role Datakom Austria offers individual solutions for
 key customers, which cover its entire palette of services.
     The additions to property, plant and equipment were reduced in the
 business year by 29.2% to 34.2 mn EUR. The investment emphasis was on the
 expansion of the Datastream network, technical equipment in the area of
 company networks as well as upgrading the Dataswitch service.
 
     -- Other Segments: Plus 177% Internet Customers in Austria, Restructuring
        of Internet Business Started
 
     (in mn EUR)                        2000            1999   Change in %
     Sales Revenues                     51.9            23.1         124.7
     EBITDA                             -0.6             2.1          n.m.
     Operating Results                  -2.5            -2.8          10,7
     Additions to property,
      plant and equipment                1.9             0.9         111.1
     Employees*                          102              27         277.8
     * Annual Average of Full-Time Equivalents
 
     The area other business segments comprises -- besides international data
 services and other services -- earnings from Internet business, in as far as
 these are not contained in another business segment.
     On June 30, 2000, Telekom Austria AG transferred the entire Internet
 private customer business to Jet2Web Internet Services GmbH. Due to reasons of
 comparability, effects that result from this transfer were left unconsidered
 in the annual accounts of 2000. The business area also contains the activities
 of Czech On Line a.s., of which 100% was acquired by Telekom Austria in the
 business year 2000.
     The sales revenues of other business segments rose in the business year
 2000 by 125% to 52 mn EUR. This rise is mainly due to the dynamic development
 of Internet business, which was also reflected in high personnel and marketing
 costs. In consequence EBITDA was reduced to minus 0.6 mn EUR following
 2.1 mn EUR in 1999. The operative results amounted to minus 2.5 mn EUR (1999:
 minus 2.8 mn EUR).
     Telekom Austria is Austria's leading Internet service provider, with
 293,400 private and business customers. Compared to the previous year this
 implies a rise of 177%. This also includes the ADSL customers of Jet2Web
 Internet, a figure which has risen by 900 to 34,600 compared to the previous
 year. In November 1999 Telekom Austria was one of Europe's first operators to
 offer this high speed Internet access. With 18.5 million page impressions
 (following 7.9 million at the end of 1999) http://www.aon.at is one of the
 leading Internet portals in Austria.
 
     Internet Customers of Jet2Web Internet              2000           1999
     Customers via Dial-Up Access                     258,800        105,200
     ADSL customers                                    34,600            900
     Total                                            293,400        106,100
 
     Telekom Austria succeeded in implementing ideally the rise of Internet
 penetration in Austria from 34% at the end of 1999 to 44% at the end of 2000.
 The market share of Jet2Web Internet in Internet private customer business
 rose in the same time period from 22% to 28%.
     Following the successful products A-Online Speed Alpha via PSTN and
 A-Online Plus via ISDN, Jet2Web Internet brought Austria's first ADSL
 self-installation product, A-Online Speed SI, to the market before Christmas.
 For the business customer segment, individual complete Internet solutions were
 developed and work was started in revising the B2B portal, which is being
 implemented with SAP and HP.
     Telekom Austria and the Austrian Broadcasting Company, ORF, have concluded
 a cooperation contract to jointly open up the potential of broadband
 technology in Austria. This cooperation contract has a minimum term of four
 years. The focal point is the development and proliferation of ORF TV and
 radio programs via Jet2Web Internet.
     In the business year 2000 Telekom Austria acquired 100% of the leading
 Internet service provider in the Czech Republic, Czech On Line a.s. The
 company was founded in 1995 and operates its services under the brand name
 Video On Line. The number of Czech On Line's active users almost doubled by
 the end of the business year 2000 with 188,000 as opposed to 95,000 at the end
 of 1999. Czech On Line additionally offers free email services and as of
 December 31, 2000 has over 696,000 registered users. With the start of
 liberalization of voice telephony on the Czech market, Czech On Line applied
 for a fixed line license and received it in December 2000. The necessary
 preparations for offering voice telephony began immediately.
     The additions to property, plant and equipment of the other business
 segments -- mainly for switching facilities - doubled in the business year
 2000 to 1.9 mn EUR.
     During the first quarter 2001 Jet2Web Internet increased its market share
 to 32% through the acquisition of 70,000 lion.cc customers. The ORF enlarged
 its cooperation through a 2.5% participation in Jet2Web Internet.
 
 

SOURCE Telekom Austria Group
VIENNA, Austria, April 11 /PRNewswire/ -- Telekom Austria Group AG
 (NYSE:   TKA; VSE: TKA) announced its operating results for business year 2000
 today.  The summarized revenues of the Telekom Austria Group (including
 Mobilkom Austria) grew by 3.4% to 3.9 bn EUR.  The growth divisions of mobile
 communications, data communications and Internet more than offset the
 competition-related decline in fixed-line.  To adapt the company to the
 changed conditions, a comprehensive transformation programme was initiated,
 which will lead to a reduction in the number of employees in fixed line
 business by 5,000 by the year 2005.  The restructuring measures and the
 decline in revenues in traditional voice telephony led to a decline in EBITDA
 of 1,478 million EUR to 1,016.5 mn EUR.  Excluding restructuring expenses
 EBITDA fell by 18.5% to 1,274.9 mn EUR.  The consolidated net loss for the
 year of Telekom Austria AG fell 200 mn EUR to minus 285.6 mn EUR, and
 comprises concentrated efforts to optimize the tax expenses within the Group.
     "As mentioned repeatedly within the framework of the IPO, the
 transformation of Telekom Austria Group, which has been radically embarked
 upon since the change in the management board, is reflected in the financial
 statements of 2000," said Heinz Sundt, CEO of Telekom Austria.  "We are
 holding firm to our long-term strategy of transformation from a traditional
 fixed-line operator to a full-service provider on an All-IP basis.  The
 increased costs of this are necessary to overcome the future decline in the
 fixed line sector as well as to implement our strategy."
 
     The Results in Detail:
 
     Highlights of Business Divisions:
 
     -- Fixed-line: competitive-related decline in revenues, 258.4 mn EUR
        restructuring expenses
     -- Mobile communications: EBITDA grows by 23.3%, market leadership in
        Austria and Croatia
     -- Data communications: EBITDA grows 36.5%.  New formation as a solution
        provider for key customers of the Telekom Austria Group
     -- Other segments: In Austria Internet customer figures almost tripled,
        doubled in the Czech Republic
 
     The fixed-line business division comprises approximately 59% of sales
 revenues of Telekom Austria Group, mobile communications 33%, data
 communications 7%.  The rest falls on other business segments, which primarily
 produce sales revenues from Internet business.  Mobile and data communications
 and other segments show revenue growth by 20.7%, 10.5% and 124.8%
 respectively.  Due to competitive pressure on traditional voice telephony,
 there was a 5.8% decline in fixed-line business.
     This development is also reflected in EBITDA, reinforced due to
 restructuring expenses.  While a decline of 51.8% to 519.5 mn EUR was shown in
 fixed line business, in mobile communications it rose by 23.2% to 437.9 mn EUR
 due to continuing customer growth, and in data communications by 36.5% to
 59.5 mn EUR.  The other business segments showed a decline of 2.1 mn EUR to
 minus 0.6 mn EUR.
     The operating results of Telekom Austria Group fell from 493.7 mn EUR
 to - 31.5 mn EUR, excluding restructuring expenses of 579.2 mn EUR to
 225.1 mn EUR.
 
     Decline of Asset Investments Within Target
 
     (in mn EUR)                        2000            1999   Change in %
     Additions to property, plant
      and equipment                    917.4           983.2          -6.7
 
     The development of the property, plant and equipment took place according
 to Group strategy, which foresees a reduction and focus of investments on
 additions to property, plant and equipment.  While a reduction in fixed line
 business succeeded -- including data communications and Internet -- by 14% to
 594.3 mn EUR, there was an increase in mobile communications due to capacity
 by 12.4% to 323.1 mn EUR.
 
     Employee Numbers on Target
 
     The measures to lower costs that have already been initiated comprise
 personnel reduction, consolidation of logistic centers, renegotiating supplier
 contracts, selling real estate, and improving the procurement system.
 Personnel reduction went according to plan in the year 2000.  The targeted
 number of personnel at year-end was in fact less by 150 employees.  The final
 reduction of approximately 5,000 employees in fixed line business should be
 completed in 2005.
 
     Employees*                         2000            1999   Change in %
     Fixed line                       14,982          15,722          -4.7
     Mobile communications             2,520           2,054          22.7
     Data communications                 956             847          12.9
     Other segments                      102              27         277.8
     Telekom Austria Group            18,560          18,650         -0,48
     * Annual average of
      full time equivalents
 
     Operational Highlights and Customer Development
 
     The ADSL Network covers Seventy-five per cent of Austria's households and
 the focus on broadband continues.  The first step was successfully completed
 in October 2000: a powerful backbone with a transmission capacity of 320
 Gigabit/s.  In addition, the tariff reductions initiated in the year 2000 will
 be continued this year.
     In the year 2000 Mobilkom Austria proved its innovative leadership, among
 other things with the first start worldwide of GPRS, the start of Mobilkom
 Liechtenstein, development of the Austrian network to 98% coverage, and the
 start with VIPonline in Croatia.  Furthermore, due to the relatively low-price
 of the UMTS license there are economic advantages and excellent starting
 chances.
     The concentrated Internet activities led to the establishment of Jet2Web
 Internet and the acquisition of Czech On Line, the largest provider in the
 Czech Republic.  The Internet fixed-line activities of the Group are bundled
 in this company.  The ORF holds a 2.5% participating interest in Jet2Web
 Internet as a strategic partner.
     Datakom Austria was newly positioned as a solution provider and has a
 stable number of customers.
     Through the foundation of Jet2Web Network Services GmbH in November 2000,
 Telekom Austria will actively market the infrastructure of the Telekom Austria
 Group to alternative telephone and Internet providers.
     In the fixed-line area, there was a rise in traffic minutes to
 15.2 bn minutes due to increased online traffic, voice traffic showed a
 decreasing tendency.  The development of the access channels shows a decline
 in the ordinary telephone access lines, these were compensated for by the
 rapid rise in ISDN offers.  The absolute number of transmission channels
 remained almost the same at 3,833,000 in the year 2000.  In 1999, this figure
 was 3,862,000.  The ISDN channels increased by 37% from 660,000 to 904,000.
     Mobilkom Austria showed an overall increase in customers of almost 40%.
 In addition, in a European comparison the relationship between contract
 customers (=47%) and prepaid customers is particularly positive.  With a
 penetration of 22% in Croatia, VIP-Net has a great potential for growth.  In
 Austria, Mobilkom Austria will find potential for growth primarily in the area
 of mobile data and mobile Internet.
     Jet2Web Internet was able to make better use of the market growth in the
 Internet segment than all other competitors in Austria.  The customer figure
 rose by 177% to 293,000.  The market share increased in the same time from
 22% to 28%.  Czech On Line almost doubled its customer base from 95,000 to
 188,000 in the past year.
 
     Transformation to a Full Service Provider with Broadband Technology
 
     The Telekom Austria Group currently provides mobile, Internet and
 fixed-line networks.  In the middle of the year 2000, the new management team
 set the course technologically and organizationally for new broadband
 technologies on an IP basis to be used by the customers of the entire Group.
 The backbone with 320 Gbit/s of transmission capacity for the new broadband
 technologies xDSL, GPRS and UMTS was put into operation. With wide coverage of
 broadband the Telekom Austria Group is transforming into a full-service
 provider for voice, data, image and multimedia communications.  To be able to
 communicate and market the cross-network products and services of the Group
 efficiently, Jet2Web, the new umbrella brand of the Group, was launched in
 July 2000.
 
     Involvement in Central Europe
 
     "The focal point of our strategy is to tighten up our organization and
 thus to strengthen our market leadership and competitiveness in Austria, while
 abroad we are focusing on selective expansion in the growth regions of
 southern and eastern Europe in the areas of mobile communications and
 Internet," explains Mr. Sundt with regard to the goals of foreign involvement
 of the Telekom Austria Group.  "Parallel to this Telekom Austria is utilizing
 every opportunity offered by the strategic partnership with Telecom Italia, as
 well as the resulting synergy effects and advantages."
 
     Future Developments - Overview
 
     The Austrian telecommunications market is considered to be one of the most
 liberalized within the EU, with the most competitive market environment.  In
 view of the relatively high number of fixed line and mobile operators, losses
 in market share are a logical development of liberalization.  The goal at
 Telekom Austria is to slow down losses in market shares in the traditional
 areas and to stabilize them on a strategic level. Additionally we aim to win
 market shares in new fields of business, such as Internet.
     This year will be decisively marked by the successful implementation of
 restructuring, which will lead to a clear improvement in results. The focus of
 this transformation is fixed-line business, where a substantial reduction in
 the employment figure will take place, and relative to this, to an improvement
 in the cost structure. These measures should more then balance out the
 continuing pressure from the competitors.
     In mobile business the potential for growth in Croatia and -- in view of
 the latest acquisition -- Slovenia will be brought into play. In Austria,
 mobile penetration will reach its climax, whereby there will be a reduction in
 the growth in earnings in this business segment.
     In data business we are assuming a further growth in revenues. The margins
 will be reduced due to the new positioning of Datakom Austria and the related
 higher inter-Group transfer prices.
     In 2001 for the first time Internet will be shown as an individual
 business segment. Parallel to being the first full business year of Jet2Web
 Internet's operative activity as a full Internet service provider, it will
 also have a substantial growth in revenues.
 
     Business Divisions
 
     -- Fixed Line Network: Transformation and Focus on Broadband Technology.
        Decline in Competition Through Competition and Restructuring
 
     (in mn EURO)                       2000            1999   Change in %
     Sales Revenues                  2,676.9         2,842.2          -5.8
     EBITDA                            519.5         1,077.1         -51.8
     Operating Results                -295.4           250.3          n.m.
     Additions to property, plant
      and equipment                    558.5           646.5         -13.6
     Employees*                       14,982          15,722          -4.7
     * Annual Average of Full-Time Equivalents
 
     Operative revenues in fixed-line business declined in the year 2000,
 compared with the previous year by 5.8% to 2.7 bn EUR. Contributing to the
 decline were primarily lower traffic tariffs by approximately one third
 (809 mn EUR). The reasons for this are in the growing competitive environment
 as well as in tariff cuts, above all those from 1999. Earnings from monthly
 rentals could be increased by 10% to 655 mn EUR. The unfavorable market
 development could partly be compensated for by higher interconnection
 earnings, which rose by 51.3% to 618.8 mn EUR. The greater increase by far
 resulted from the increase in the volume of transit traffic via the fixed line
 network of Telekom Austria in mobile and international networks.
     Excluding restructuring expenses in the amount of 254 mn EUR
 (1999: 85.5 mn EUR) the EBITDA of fixed line business was reduced by 33.5% to
 773.1 mn EUR. Decisive factors for this were mainly competitive-related lower
 earnings.  After consideration of depreciation EBIT was reduced to minus
 295 mn EUR. Restructuring expenses contain primarily provisions for the early
 retirement program. Since 1997, 2,976 employees have accepted Telekom
 Austria's offer for early retirement.  Regulatory measures such as carrier
 preselection, also locally, assured a rapid increase in competitive pressure.
 The market share was thus reduced by approximately 85% on the average in 1999
 to 63% at year-end 2000.
     Overall, at year-end Telekom Austria was responsible for 3.3 million
 lines. While the traditional PSTN lines continued to decline, the number of
 ISDN channels increased by one third due to new lines or changed
 registrations. Access lines were reduced by 0.8% to 3.8 million.
 
     (in thousands)                                      2000           1999
     PSTN access line                                 2,929.1        3,201.6
     ISDN basic access line                             331.9          247.0
     ISDN multi access line                               8.0            5.6
     Total access lines                               3,269.0        3,454.2
     ADSL access lines                                   38.5            0.9
     Total access channels                            3,832.9        3,862.4
 
     Telekom Austria's impressive pioneer role in broadband communications can
 be seen in the development of the ADSL lines. At the end of the business year
 2000, just about 14 months after Telekom Austria offered ADSL services as one
 of the first operators in Europe, approximately 38,500 ADSL lines were
 installed, with a transmission rate of 512/64 kibt/s (downstream/upstream).
 This figure also comprises ADSL customers of other Internet service providers.
     In the past business year, for the first time Telekom Austria exceeded the
 15 billion minute mark in national fixed-line traffic, and reached
 15.2 billion minutes, after 14 billion minutes in the year 1999. This rise can
 be attributed exclusively to the increase in Internet traffic. Traffic in
 traditional voice telephony continues to decline.
     The reorganization of Marketing and Sales strengthened the orientation of
 product development relative to the specific segments and the focus on IP
 based services and applications. Numerous tariff measures were initiated in
 the business year. Among others, the tariffs in national voice traffic were
 reduced by more than 50% and by up to 60% in some international zones. The
 prices for national leased lines were reduced by up to 54%. On November 15,
 Telekom Austria submitted an application to the Telekom Control Commission to
 introduce tariffs with seconds-based accounting from the 30th second, coupled
 with another considerable price reduction. Approval was granted at the end of
 January 2001, implementation took place on March 1, 2001.
     In October, Telekom Austria established a subsidiary, Jet2Web Network
 Services, which will make network services available to other operators in the
 future -- including fixed and mobile operators and Internet service providers.
     The reduction of the additions to property, plant and equipment in fixed
 line business is a central part of Telekom Austria's transformation program.
 This goal could clearly be achieved with a 13.6% decline to 558.8 mn EUR in
 the year 2000. The simultaneous focus on broadband technologies is reflected
 impressively in its share of the investments, which rose by 18% to 42%. The
 well-timed investment in broadband communications will provide Telekom Austria
 with a quality of uniqueness on the European telecom market and ensure new
 proceeds for the coming years.
 
     -- Mobile Communications: Sales Increase 21%, EBITDA +23% and
        Customers 38% - VIPNet with Positive Operating Results in the First
        Full Business Year
 
     (in mn EURO)                       2000            1999   Change in %
     Sales Revenues                  1,500.1         1,242.4          20.7
     EBITDA                            437.9           355.3          23.2
     Operating Results                 261.1           225.8          15.6
     Additions to property,
      plant and equipment              323.1           287.4          12.4
     Employees*                        2,520           2,054          22.7
     * Annual Average of Full-Time Equivalents
 
     The business area of mobile communications comprises the activities of
 Mobilkom Austria in Austria, Croatia, Liechtenstein and -- since February 2001
 -- Slovenia. Telekom Austria AG holds 75% - 1 share of Mobilkom Austria, 25%
 +1 share is held by Telecom Italia Mobile.
     This business area successfully raised its sales revenues by 20.7% to
 1.5 bn EUR. The successful activities of VIP-Net in Croatia played a major
 role in this with revenues of 148,9 mn EUR (1999: 31.7 mn EUR).
     Above all, continuing customer growth contributed to this positive
 development. Traffic revenues grew by more than one third to 721 mn EUR, those
 from monthly rentals by 15% to 246 mn EUR. The activities of international
 calls in the Telekom Austria networks in Austria and Croatia led to an
 increase of roaming revenues by 57% to over 113,7 mn EUR. Sales of equipment
 at 187.5 mn EUR remained almost at the level of the previous year.
     The comparatively low rise in expenses of the business segment led to an
 increase of EBITDA by 23.3% to 438 mn EUR. The rapid customer growth of the
 last few years led to a rise in depreciation by 44%, operating results
 increased by 15.6% to 261 mn EUR.
 
     Customer Development in mn     31.12.00        31.12.99   Change in %
     Contract Customers              1,336.6         1,218.4         +9.7%
     Prepaid Customers               1,468.7         1,041.4        +58.3%
     Total Customers
      Mobilkom Austria               2,804.3         2,259.8        +24.1%
     VIP-Net (Croatia)                 531.4           155.1       +342.6%
     Total Customers Mobile
      Communications                 3,336.7         2,414.9        +38.2%
 
     There was also successful customer growth in the business area of almost
 40% to a total of over 3.3 million in Austria and Croatia over the past year.
 In both countries Telekom Austria is the market leader.
     Following the entry of a fourth network operator in the past year,
 Mobilkom Austria's market share in Austria at year-end was 44.8%. The share of
 contract customers at 47% is still at a positive level in an international
 comparison.  In the second half of the year, even 50% more contract customers
 could be won than in the first half of the year.
     A major part of the successful development in Austria  can be attributed
 to Mobilkom Austria's leadership in new products and services. Some examples
 are location-related services (MobilGuide), the development of information
 services via SMS and WAP, telematic solutions (i.e. remote activation of car
 heater) and m-commerce solutions such as Cin-e-Ticket and FlowerLine.
     With the world's first commercial GPRS network, Mobilkom Austria took an
 important step in successfully opening up the mobile data service market. The
 number of SMS messages rose in December 2000 to 36.6 million, as opposed to 21
 million the previous year. At year-end, Mobilkom Austria listed approximately
 140,000 active WAP users.
     The Croatian mobile subsidiary VIPNet (61% share held by Mobilkom Austria)
 achieved great success: In its first full year of operative business activity,
 VIPNet achieved positive operating results. Attractive prepaid products
 attuned to differing customers needs and low-priced "Friends" tariffs could
 satisfy the now 530,000 VIP-Net customers. Like Mobkilkom Austria, VIP-Net is
 also reckoning with the boom on data services: Since November, VIP-Net has
 offered fixed-line Internet access, which customers can combine with mobile
 access services.
     The increase in additions to property, plant and equipment by 12.4% to
 323.1 mn EUR should be seen against the background of capacity-oriented
 network expansion. The number of base stations in Austria increased by 24% to
 4,120 stations.
     On November 3, 2000, Mobilkom Austria successfully bid for two UMTS
 frequency packages in the paired and two in the unpaired area for
 171.5 mn EUR. Thus, in relation to the customers in Austria, the license fee
 was far below the European average.
     In the first quarter 2001 Mobilkom AG was transformed into "Mobilkom AG
 und Co. KG."  Therefore, taxation of the results of Mobilkom Austria will be
 effected with its partners as from June 30, 2000. End of February 2001,
 Mobilkom Austria acquired a participation in si.mobil in Slovenia.
 
     -- Data Communications: EBITDA Grows by 36.5%, New Positioning as a
        Solution Provider
 
     (in mn EUR)                        2000            1999   Change in %
     Sales Revenues                    309.0           279.6          10.5
     EBITDA                             59.5            43.6          36.5
     Operating Results                  22.8            16.0          42.5
     Additions to property,
      plant and equipment               34.2            48.3         -29.2
     Employees*                          956             847          12.9
     * Annual Average of Full-Time Equivalents
 
     The business area data communications, which comprises the activities of
 the wholly-owned subsidiary Datakom Austria, achieved revenues of 309 million
 EUR with a plus of over 10%.  This growth can almost exclusively be attributed
 to higher earnings from company networks and to a lesser part to an increase
 in value-added data services. The price decline in leased lines by 20%
 contributed considerably to the rise in EBITDA of 36.5% to 59.5 mn EUR.
     At year-end 2000, Datakom Austria serviced approximately 90% of the
 Austrian top 100 companies. With the development of branch-oriented network,
 ASP enabling, e-commerce and security solutions Datakom continued to expand
 its product offer in the business year. Besides the development and
 installation of network infrastructure, active network management and security
 services, Datakom Austria continued to deepen its specialization last year in
 certain market segments such as in the health and legal areas.
     Datakom Austria's competency as a provider of corporate networks forms the
 basis for its new positioning as a solution provider and system integrator of
 Telekom Austria.  In this role Datakom Austria offers individual solutions for
 key customers, which cover its entire palette of services.
     The additions to property, plant and equipment were reduced in the
 business year by 29.2% to 34.2 mn EUR. The investment emphasis was on the
 expansion of the Datastream network, technical equipment in the area of
 company networks as well as upgrading the Dataswitch service.
 
     -- Other Segments: Plus 177% Internet Customers in Austria, Restructuring
        of Internet Business Started
 
     (in mn EUR)                        2000            1999   Change in %
     Sales Revenues                     51.9            23.1         124.7
     EBITDA                             -0.6             2.1          n.m.
     Operating Results                  -2.5            -2.8          10,7
     Additions to property,
      plant and equipment                1.9             0.9         111.1
     Employees*                          102              27         277.8
     * Annual Average of Full-Time Equivalents
 
     The area other business segments comprises -- besides international data
 services and other services -- earnings from Internet business, in as far as
 these are not contained in another business segment.
     On June 30, 2000, Telekom Austria AG transferred the entire Internet
 private customer business to Jet2Web Internet Services GmbH. Due to reasons of
 comparability, effects that result from this transfer were left unconsidered
 in the annual accounts of 2000. The business area also contains the activities
 of Czech On Line a.s., of which 100% was acquired by Telekom Austria in the
 business year 2000.
     The sales revenues of other business segments rose in the business year
 2000 by 125% to 52 mn EUR. This rise is mainly due to the dynamic development
 of Internet business, which was also reflected in high personnel and marketing
 costs. In consequence EBITDA was reduced to minus 0.6 mn EUR following
 2.1 mn EUR in 1999. The operative results amounted to minus 2.5 mn EUR (1999:
 minus 2.8 mn EUR).
     Telekom Austria is Austria's leading Internet service provider, with
 293,400 private and business customers. Compared to the previous year this
 implies a rise of 177%. This also includes the ADSL customers of Jet2Web
 Internet, a figure which has risen by 900 to 34,600 compared to the previous
 year. In November 1999 Telekom Austria was one of Europe's first operators to
 offer this high speed Internet access. With 18.5 million page impressions
 (following 7.9 million at the end of 1999) http://www.aon.at is one of the
 leading Internet portals in Austria.
 
     Internet Customers of Jet2Web Internet              2000           1999
     Customers via Dial-Up Access                     258,800        105,200
     ADSL customers                                    34,600            900
     Total                                            293,400        106,100
 
     Telekom Austria succeeded in implementing ideally the rise of Internet
 penetration in Austria from 34% at the end of 1999 to 44% at the end of 2000.
 The market share of Jet2Web Internet in Internet private customer business
 rose in the same time period from 22% to 28%.
     Following the successful products A-Online Speed Alpha via PSTN and
 A-Online Plus via ISDN, Jet2Web Internet brought Austria's first ADSL
 self-installation product, A-Online Speed SI, to the market before Christmas.
 For the business customer segment, individual complete Internet solutions were
 developed and work was started in revising the B2B portal, which is being
 implemented with SAP and HP.
     Telekom Austria and the Austrian Broadcasting Company, ORF, have concluded
 a cooperation contract to jointly open up the potential of broadband
 technology in Austria. This cooperation contract has a minimum term of four
 years. The focal point is the development and proliferation of ORF TV and
 radio programs via Jet2Web Internet.
     In the business year 2000 Telekom Austria acquired 100% of the leading
 Internet service provider in the Czech Republic, Czech On Line a.s. The
 company was founded in 1995 and operates its services under the brand name
 Video On Line. The number of Czech On Line's active users almost doubled by
 the end of the business year 2000 with 188,000 as opposed to 95,000 at the end
 of 1999. Czech On Line additionally offers free email services and as of
 December 31, 2000 has over 696,000 registered users. With the start of
 liberalization of voice telephony on the Czech market, Czech On Line applied
 for a fixed line license and received it in December 2000. The necessary
 preparations for offering voice telephony began immediately.
     The additions to property, plant and equipment of the other business
 segments -- mainly for switching facilities - doubled in the business year
 2000 to 1.9 mn EUR.
     During the first quarter 2001 Jet2Web Internet increased its market share
 to 32% through the acquisition of 70,000 lion.cc customers. The ORF enlarged
 its cooperation through a 2.5% participation in Jet2Web Internet.
 
 SOURCE  Telekom Austria Group