UPDATE:Telekom Austria Sees a Larger Share for International Operations

LONDON -(Dow Jones)- Telekom Austria expects a growing proportion of its business to come from outside of Austria, the company's chief financial officer said in an interview.

"International business is growing, we expect the share (of international operations) to be bigger as we see a decline in fixed-line business activity," Hans Tschuden told Dow Jones Newswires.

He said that currently about 35% of the company's earnings before interest, tax, depreciation and amortization comes from operations outside of Austria and that he sees this potentially growing to 40% in five years time.

Meanwhile, he sees the company's fixed-line business shrinking.

"Our biggest challenges are in our fixed-line activities, we do see a downward trend," he said.

Currently about 35% of the company's Ebitda comes from fixed-line operations in Austria.

Tschuden added that the big take-up of mobile broadband in Austria was threatening the fixed-line market, as about 30% of the Austrian broadband market is now mobile- a higher proportion than elsewhere in Europe, where people typically rely on fixed-line connections for broadband.

"Fixed-line is no longer about making phone calls, its about offering additional value to customers," he said.

Adding that the company is now looking at offering products like burglar alarm systems through customers' existing fixed-lines.

For the moment the company's strategy is to grow in eastern and south-eastern Europe, Tschuden said, adding that the company remains interested in Bosnian BH Telekom, which is due to be privatized later this year.

The company reported its first-half results Wednesday where it reiterated its full-year guidance of 5% sales growth and 3% Ebitda growth.

Tschuden said that the company would meet its guidance, despite a slightly disappointing second quarter, as the second-half of the year would have lower advertising costs than the first-half, when the European soccer championships took place in Austria.

In addition he said that in the second-half of the year, the company will start to see the benefits of a cost savings program, which includes looking to dispose of non-core assets like real estate it doesn't need for its business activities.

Tschuden said that at the moment the company doesn't have plans to roll out a superfast fiber-based broadband network, like U.K. telecommunication company BT Group. But that he sees this as a trend in Europe and that Austria will eventually see a similar network also.

"There are still some major hurdles to be resolved. Before investing in a network like that we need to know what terms there'd be to opening up the network to competitors, we also have to know how we can realize cost savings out of these investments."

-By Erica Herrero-Martinez, Dow Jones Newswires; +44 (0)20 7842 9353; erica.herrero-martinez@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 21st August 2008