The ratings on Telekom Austria AG reflect the group's leading position in all main segments of the Austrian telecommunications market. They also reflect its solid financial profile, supported by the cash-generative characteristics of its expanding international mobile operations, and its transparent and conservative financial policy. These positive factors are increasingly tempered by market saturation and fierce competition in Austria's fixed-line and mobile telecommunications services sector. As a result, domestic revenues are likely to decline slightly in 2008, while the group's flexibility to cut costs quickly remains limited because of the very high proportion of civil servants employed by its fixed-line operation. In addition, the group has a relatively high proportion of short-term debt. This is mainly due to the acquisition
