The ratings on Telekom Austria AG reflect the group's sustainable leading market position in all main segments of the Austrian telecommunications market, a solid financial profile supported by the cash-generative characteristics of its well established international mobile operations, solid discretionary cash flow generation, and a transparent and conservative financial policy. These factors are tempered by the saturation of, and fierce competition in Austria's declining fixed-line and mobile telecommunications services market. The group has a rigid cost structure due to the high portion of civil servants in Austria. Furthermore, we believe its material emerging markets exposure involves significant credit risks. As expected, Telekom Austria posted weak operating results in the first six months of 2009, with negative year-on-year revenue and EBITDA
