First Capital Increase in the Company’s History Boosts Investments and Secures Solid Financial Basis

Vienna, 27 November 2014
  • First trading day for the new shares on the Vienna Stock Exchange
  • Additional investments of up to EUR 400 million are planned for the broadband rollout in Austria
  • The capital increase will reinforce the company's capital structure and provide enhanced flexibility for M&A transactions
  • The weighting of the Telekom Austria share on the ATX has increased to 2.87%

"Following the successful conclusion of the capital increase of EUR 1 billion, trading of the new shares on the Vienna Stock Exchange commenced as of today. Our next important item on the agenda with regard to the allocation of the new funds mainly concerns investments in our core markets. In our domestic market, Austria, given the right framework conditions, additional investments of up to EUR 400 million will boost broadband rollout. In this way, we are equipping the country with the necessary infrastructure to meet the challenges lying ahead in the 21st century, while setting important impulses for economic growth and job creation," said Hannes Ametsreiter, CEO Telekom Austria Group and A1.

As pointed out in the prospectus for the capital increase, the rapid implementation of Austria's 1 billion euro broadband infrastructure plan following the example of tried and tested funding models such as, for instance, the ELER model, is an important prerequisite for the planned surge in investments of up to EUR 400 million over the next three years.

In the first phase already participation in the capital increase amounted to 99.7%. The remaining shares totaling 0.3% were acquired by the Deutsche Bank at a price of EUR 5.26 per share and subsequently resold on the market. The 15% premium over the issue price of EUR 4.57 demonstrates the high demand for the New Shares.

"The successful placement of the first capital increase in the company's history is a clear sign of confidence by the investor community. The fact that our shareholders exercised almost 100% of their subscription rights is a strong signal from the capital market, greatly encouraged by the participation through our free float shareholders. In addition to boosting investments and providing enhanced flexibility for M&A transactions, this fresh capital further secures our solid financial position. Our main target is to consolidate our BBB-rating with stable outlook moving forward," said Siegried Mayrhofer, CFO Telekom Austria Group.

Following the end of the subscription period and the conclusion of the capital increase, the number of shares of the Telekom Austria Group rose by 221.5 million, from 443.0 million to 664.5 million. The net proceeds of the transaction amounts to approximately EUR 1 billion. Roughly 25.5 million New Shares were subscribed by free-float investors at a price of EUR 4.57 per New Share. With an increase of the free-float proportion by EUR 120 million, the Telekom Austria Group share remains an exciting stock on the ATX. Following the capital increase, the weighting of the Telekom Austria share on the Vienna Stock Exchange will increase from 1.87% to 2.87%.

This fresh capital will enable the Telekom Austria Group to pursue strategic investment priorities with the aim to strengthen the Group's operational performance. In particular, this capital increase will allow the Telekom Austria Group to implement an accelerated rollout of its fiber-optic infrastructure in combination with the latest available technologies. Thus, the company will be able to secure its leading position in current markets and continue to meet increasing demand for high-bandwidth services moving forward, while safeguarding its quality leadership.

In addition, the Telekom Austria Group will be in a position to continue to pursue its growth course and finance potential value-accretive M&A opportunities, thereby maintaining the following priorities: (i) in-market consolidation to strengthen existing operations; (ii) the continued pursuit of Telekom Austria Group's convergence strategy to diversify in markets that are currently mobile-only as well as to enhance existing convergent operations; and (iii) expansion via new operations.

América Móvil acquired approximately 132.2 million New Shares according to its 264.5 subscription rights. Therefore, its shareholding in the company currently amounts to 59.7%. The ÖIAG acquired approximately 63.0 million New Shares. As a result, its participation in the share capital of Telekom Austria after completion of the capital increase corresponds as closely as possible to its current pro-rata participation in the company of approximately 28.42%. América Móvil and ÖIAG have committed themselves to a six-month lock-up period, which begins as of today with the first trading day of the New Shares on the Vienna Stock Exchange.

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