Telekom Austria unveils €400M broadband plan

Telekom Austria will invest up to an additional €400 million ($499 million) in its domestic broadband network if the government goes ahead with previously announced plans to allocate €1 billion in public spending to support broadband coverage.

The Austrian operator said is now in a position to invest new funds in its core markets following the conclusion of a capital increase this week, which raised €1 billion.

"Our next important item on the agenda with regard to the allocation of the new funds mainly concerns investments in our core markets. In our domestic market, Austria, given the right framework conditions, additional investments of up to €400 million will boost broadband rollout," said Hannes Ametsreiter, CEO of Telekom Austria Group and A1.

The "right framework" refers to the Austrian government's "broadband strategy 2020" plan to make €1 billion--half of the total amount raised--from the last frequency auction available for next-generation deployment in rural areas. The aim of the plan is to enable the country to comply with European Union targets to reach 100 per cent coverage with 30 Mbps broadband by 2020.

"As pointed out in the prospectus for the capital increase, the rapid implementation of Austria's €1 billion broadband infrastructure plan…is an important prerequisite for the planned surge in investments of up to €400 million over the next three years," Telekom Austria said.

The government has said its plan depends on a court ruling to decide whether the spectrum auction was valid, Reuters noted. The court's decision is expected in December.

Telekom Austria said it raised total net proceeds of about €1 billion from its capital increase after shares totalling 0.3 per cent that were not subscribed for during the first phase were acquired by Deutsche Bank at a price of €5.26 per share and subsequently resold on the market.

The Austrian operator has previously said it intends to use the net proceeds of the capital increase to "re-establish its target capital structure" and maintain a credit rating of at least BBB (stable) by Standard & Poor's.

"The proceeds of the capital increase…will be used to strengthen our balance sheet, boost infrastructure investments especially in Austria. Furthermore we will continue our expansion with focus on convergence as well as in-market consolidation and even consider expansion via new operations," Hannes Ametsreiter, the CEO of Telekom Austria Group, said when the capital increase was first announced on Nov. 7.

For more:
- see this Telekom Austria release
- see this Reuters article

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