(10) Related Party Transactions

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The significant shareholders América Móvil and ÖIAG are considered related parties due to their stake in Telekom Austria AG allowing them to control and to exercise significant influence, respectively. Through América Móvil, Telekom Austria Group is also related to its subsidiaries. Through ÖIAG, Telekom Austria Group is related to the Republic of Austria and its subsidiaries, which are mainly ÖBB Group, ASFINAG Group and Post Group as well as Rundfunk und Telekom Regulierungs-GmbH (“RTR”), all of which qualify as related parties. Telekom Austria Group has determined the kind and amount of the transactions concluded with these related parties. None of the individual transactions associated with government agencies or government-owned entities are considered significant to Telekom Austria Group except for the acquisition of licenses at the Austrian spectrum auction in 2013 (see Note (18)). In 2014 and 2013, services received from the related parties mentioned above mainly relate to postage fees, transportation, commissions, roaming and fees to RTR and amount to 4.7% and 3.8%, respectively, of the material expense and other operating expenses recognised in the segment Austria. In the years reported, revenues generated with these related parties were 3.2% of the total revenues in the segment Austria.

In the course of the capital increase in 2014, Amércia Móvil signed 132.2 million and ÖIAG 63.0 million new shares (see Note (29)).

Telekom Austria Group is obligated to provide voice telephone services for disadvantaged individuals at reduced tariffs for which it is entitled to appropriate compensation from the government on a contractual basis. The contract with the government concluded in July 2011 specifies the reimbursement for customers having a valid official notice issued before 1 July 2011 of Euro 13.81 per customer per month. The reimbursement for customers having a valid official notice issued after 1 July 2011 amounts to Euro 10.00 per month. The total reimbursement recorded as revenue in the service period was TEUR 16,402 and TEUR 20,382 in 2014 and 2013, respectively.

Regarding the transfer of civil servants to the government and the related expenses, provisions and liabilities, see Note (22).

The revenues from and expenses charged to related parties relate associated companies and are set forth in the following table:

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2014

2013

Revenues

244

60

Other operating income

505

13

Expenses

24,805

28,436

In 2014 and 2013, the expenses relate mainly to advertising and marketing services provided by media.at-Group. As of 31 December 2014 and 2013, accounts payable due to related parties relate primarily to media.at-Group. At 31 December 2014, accounts receivable from related parties relate to Telecom Liechtenstein and to subsidiaries of América Móvil (see Note (15)).

From 28 June 2001 to 29 May 2013, a partner in a law firm which provides legal services to Telekom Austria Group was a member of the Supervisory Board. Up to the resignation in 2013, Telekom Austria Group was charged TEUR 159 for legal services provided by this law firm.

All transactions with related parties are carried out at arm’s length.

The following table shows the compensation of key management personnel as well as the expenses for pensions and severance for other employees. Key management personnel is defined as the members of the management boards and the managing directors of all significant operating companies of Telekom Austria Group as well as the members of the Management Board of Telekom Austria AG.

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2014

2013

Short-term employee benefits

11,501

11,807

Pensions

871

561

Other long-term benefits

218

124

Termination benefits

2,245

579

Share-based payments

446

−75

Compensation of key management

15,280

12,997

 

 

 

Expenses for pensions and severance for other employees

22,038

25,053

Expenses for pensions and severance for other employees consist of voluntary and legal severance expenses, contributions to pension plans and other pension payments.

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