The ratings on Telekom Austria AG reflect Standard&Poor's Ratings Services' view of the group's sustainable, leading market positions in Austria. Telekom Austria's international mobile operations help diversify its revenue base and generate meaningful profit margins, which we consider likely to support the group's so far solid consolidated free operating cash flow (FOCF) generation. In addition, in our opinion, the group follows a transparent and moderately 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 number of civil servants working at its domestic fixed-line business. Furthermore, we consider that its international
