The ratings on Telekom Austria AG reflect our view of the group's sustainable leading market positions in Austria. Furthermore, despite the current economic challenges, we believe Telekom Austria's profitable international mobile operations help diversify its revenue base and mitigate domestic pressure. We expect the mobile operations to keep generating meaningful, albeit somewhat declining, profit margins, which we consider likely to support the group's so far solid consolidated free cash flow (FOCF) generation. In addition, we consider that the group follows 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, in our opinion. The group has a rigid cost structure because of the high
