Cash-use policy

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Disclosure in accordance with section 243a of the Austrian Business Enterprise Code (‘UGB’)

Maintaining its solid investment grade rating is the top priority of Telekom Austria Group’s cash-use policy. While the Moody’s rating of Baa2 (outlook stable) remained unchanged in 2014, Standard & Poor’s upgraded its rating from BBB- (outlook stable) to BBB (outlook stable) in August 2014 in view of the upcoming capital increase. These ratings by Moody’s and Standard & Poor’s ensure the required financial flexibility for strategic projects. Following the successful completion of the capital increase in November 2014, the Telekom Austria Group plans to invest approx. EUR 400 mn in addition to its regular CAPEX in an accelerated fibre rollout in Austria between 2015 and 2018. This plan is subject to the announced government subsidy programme as well as annual budget approvals by the Supervisory Board. In addition, the Group may capitalise on value accretive M&A opportunities with a primary focus on in-market consolidation as well as the implementation of its convergence strategy within the current footprint. Expansion into new markets is the third priority of the Group’s M&A strategy.

The Telekom Austria Group’s dividend policy is based on a minimum dividend of EUR 0.05 per share and is aimed at achieving a sustainable distribution level with upside potential. The planned dividend is announced at the start of each financial year. After the end of each financial year, additional payments to the shareholders may be defined depending on the Group’s actual results taking into account free cash flow and the Group’s planned capital structure and investment requirements in particular.

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