Press Release

CONNECT AUSTRIA PRESENTS TOP RESULTS IN THE FIRST HALF OF 2002

• Cash flow positive for the first time, EBIT will turn positive before the end of 2002
• Connect Austria now completely cash-flow financed

The financial results of the first half of 2002 confirm the success of the third largest Austrian mobile telephony provider: Connect Austria (ONE) presented a positive cash flow for the first time and is one of the leading European telecom companies with regard to its EBITDA growth. A positive EBIT is envisaged for 2002.

For Connect Austria’s CFO Christian Schrötter these results clearly confirm the company policy, “We achieved excellent results in the first half of 2002. Our performance clearly puts all alarmists in their place. One is now completely cash-flow financed and in a better position than ever before.” Connect Austria will continue the trend of the first six months also in the second half of 2002 and focus on the policy that has hitherto proved successful: On the one hand, to offer simple products and service that make people’s lives easier and, on the other, to economise on expenses.

Excellent financial results in the first half of 2002

Rounded to € million

1st half of 2002
Total revenues, rounded 292
EBITDA 70
EBIT - 5
Cash flow 75
EBITDA margin 24 %

1st half of 2001
Total revenues, rounded 269
EBITDA 21
EBIT - 37
Cash flow - 111
EBITDA margin 8 %

1st half of 2002 versus 1st half of 2001
Total revenues, rounded + 9 %
EBITDA + 237 %
EBIT + 88 %
Cash flow + 167 %
EBITDA margin + 211 %

Change, in absolute terms
Total revenues, rounded 23
EBITDA 49
EBIT 32
Cash flow 186
EBITDA margin -

In the first half of 2002, the total revenues of Connect Austria rose by 9% to € 292 million, against € 269 million in the first half of 2001.

For the first time, Connect Austria presented a positive cash flow of € 75 million in the first half of 2002, compared to € -111 million in the first half of 2001. This means that the operating cash flow – generated by ordinary business activities – was even positive after investments.

The EBITDA (earnings before interest, taxes, depreciation and amortisation) climbed by € 49 million or 237% to € 70 million, as compared to € 21 million in the first half of 2001. Connect Austria’s profitability has picked up significantly. While the EBITDA margin had still come to 8% in the first half of 2001, it soared to 24% in the first half of 2002. Thus, Connect Austria is one of the leading European telecom businesses, which have so far only been able to reach such an EBITDA margin within the same time as of market launch if they had entered the market as first or second provider.

The EBITDA has been positive since December 2001. A slightly positive EBIT is envisaged for this year. At present, it already exceeds the budget at € -5 million.

Connect Austria is now completely cash-flow financed. This means that all planned investments can be financed from the operating cash flow, and that even for the expansion of the UMTS network no further inflow of capital will be required. The largest project financing since the beginning of the Second Republic was concluded as recently as in the autumn of 2001. It involved 13 banks and an investment volume of € 690 million with a loan duration of nine years. Given its good financial results, Connect Austria could lower the interest and risk margins of these banks by 41% and thus reduce the interest rate burden.

Number of customers, market share and ARPU picked up

The positive results of the first half of 2002 are largely attributable to a rise in sales together with a reduction of costs. Customer growth, the new euro tariff schedules and a wider range of services contributed to the sales increase in the first half of 2002. Expenses could be reduced by close expenditure evaluation and by cost-cutting programmes in all areas.

ONE managed to increase the number of its customers from over 1.5 million in the first half of 2001 to about 1.6 million in the first half of 2002 (1.3 million mobile, 140,000 fixed line and 140,000 Internet customers). With an increase of its market share from 19% in the first half of 2001 to about 21% in the first half of 2002, ONE is the fastest growing Austrian mobile telephony provider (RTR, source: Mobile Communications). In addition, ONE can be proud of an excellent ARPU (average revenue per user) of average € 35 per month, although the company has only begun to place a stronger focus on business customers in 2002. It has also become evident that ONE customers use the products and services offered ever more often and extensively.