Vision and Strategy

Digitalisation is opening up huge opportunities for economic growth, social and individual development and a more sustainable way of living in the interests of people and the environment. Within the scope of the vision and strategic orientation of the A1 Telekom Austria Group, digitalisation

is taking on a correspondingly important role.

Vision: Empowering digital life

The A1 Telekom Austria Group’s vision ‘Empowering digital life’ also expresses the fact that the Group has more to offer than just ‘traditional’ telecommunications services. Its self-conception goes far beyond the provision of infrastructure, con- nectivity and bandwidth. It sees itself as a pioneer and driver of digitalisation with the expertise to create and maintain digital business models and solutions from concept to operation.

In the context of its transformation into an ideal digitalisation partner, the A1 Telekom Austria Group has committed to increasing efficiency, flexibility, security and sustainability. In doing so, sustainability is understood as a long-term value driver that along with actively practised ecological and social responsibility (see ‘Social and Environmental Responsibility’) also has economic advantages — for ex- ample, increased energy efficiency reduces environmental effects as well as costs.

Corporate strategy

In pursuing its vision ‘Empowering digital life’, A1 Telekom Austria Group is drawing upon a corporate strategy based on the two pillars: revenue growth and excel- lence in execution.

Revenue growth

With a view to its growth strategy, the Group is not only building on its leading role in the CEE region. As part of América Móvil, it is also relying on the strength of one of the largest telecommunications providers in the world with approximately 280 million customers in the mobile communications sector alone (see ‘A1 Telekom Austria Group: Part of América Móvil’).

In its pursuit of revenue growth, the corporate strategy is focussed on three core elements: excel in the core, expand the portfolio and targeted M&A.

Excel in the core

The A1 Telekom Austria Group is focusing on intensifying sales and targeted cross- and upselling activities in order to optimise its core business. This involves the key objective of gaining households that are already covered technically as customers and thereby optimising the ratio of households covered to households connected. Convergence is another important starting point to ensure a first- class customer experience, with the Group already offering fixed-line and mobile services in six of its seven core markets. Infrastructure leadership remains a key differentiation factor against the competition.

A convincing example of how to excel in the core, but also of facilitating synergy effects and best possible group-wide leverage of existing assets and capabilities (‘One to all’) is the stepwise roll-out of the A1 brand across all of the Group’s operations depending on local circumstances. In the course of pursuing this one brand strategy consistently, the Group’s international corporate brand was rebranded to A1 Telekom Austria Group.

Expand the portfolio

Diversification and standing out from the competition are crucial. This requires the courage to be innovative and creative. In line with its ‘Empowering digital life’ vision, the A1 Telekom Austria Group’s objective is to become the first point of contact and key partner for the digital transformation of companies and to unlock new potential in digital services such as cloud and ICT solutions as well as in the area of the ‘Internet of Things’ (IoT).

For this purpose, the subsidiary A1 Digital was founded (see ‘Technology and Innovation’), which develops the associated potential for growth above and beyond the existing footprint.

In private customer business, the Group is increasingly focusing on innovations in all areas of its core business with solutions for entire households. Convergent product bundles that include, for instance, TV and music streaming services or cloud solutions are also counted here. What is more, the innovative solution A1 Smart Home was launched in 2017 and expands the utilisation potential of digitalisation in homes with a wealth of practical solutions.

Targeted M&A

In addition to measures for generating organic growth, the A1 Telekom Austria Group will also continue to grow in a sustainable manner by means of targeted and value-accretive mergers and acquisitions. A1 Digital is opening up new potential in the area of digital services, for example with the acquisition of Swiss company Exoscale (see ‘Technology and Innovation’), which offers infrastructure and services for cloud applications in Europe.

In its core business, the Group continues to focus on the consolidation of existing markets as well as the pursuit of its convergence strategy and subsequently on tapping into new markets.

Excellence in execution

In order to have financial flexibility for investments, operational excellence is crucial when implementing the Group strategy. The central objectives for this are: continuous improvements, transformation and ‘One to all’.

Continuous improvements

All structures, processes and investment decisions are reviewed and called into question on an ongoing basis. The A1 Telekom Austria Group has set itself the goal of becoming more efficient every single day.

All types of investment must either generate revenues or reduce costs. This is why investments are deliberately being made in technologies that allow an increase in efficiency and that protect resources.

Transformation

The A1 Telekom Austria Group is accounting for the dynamic change in its markets and its customers’ needs with an appropriate transformation of its oper- ational processes. In addition to a regional presence and call centres, services and advice are increasingly being provided on online platforms (multi-channel).

One to all

The A1 Telekom Austria Group’s goal is not to redevelop products and solutions multiple times across its markets, but rather to roll out established products in other markets rapidly. In addition to product development, this is also implement- ed in internal processes. A good example of ‘One to all’ is not least the group- wide roll-out of the A1 brand (see ‘Excel in the core’).

Finance strategy and cash use policy

The A1 Telekom Austria Group pursues a conservative finance strategy, with a solid investment grade rating of Baa2 by Moody’s and BBB by Standard & Poor’s at its core. This orientation ensures a solid balance sheet structure with moderate leverage (net debt to EBITDA) and financial flexibility for investments in order to make use of growth opportunities. The dividend policy aims for a sustainable divi- dend distribution with the potential to grow in line with the operational and finan- cial performance of the Group. For the financial year 2017, Management intends to propose a dividend of EUR 0.20 per share to the Annual General Meeting on 30 May 2018.

Sustainability strategy

The sustainability strategy of the A1 Telekom Austria Group is aimed at actively practised ecological and social responsibility that promotes a more efficient, resource-saving and therefore more sustainable way of working and living (see ‘Social and Environmental Responsibility’). In addition, sustainability is under- stood as a long-term value driver in the economic sense, since more efficiency and less use of resources also have positive effects on costs.

The A1 Telekom Austria Group’s understanding of its responsibility is based on the three-pillar model of sustainable development and the triple bottom line ‘People, Planet, Profit’ and thus integrates social, ecological and economic aspects. The Group also has targeted activities that support the United Nations’ Sustainable Development Goals (SDGs) (see ‘A1 Telekom Austria Group’s contribution to the Sustainable Development Goals’) that were issued in 2015. The Group’s sustain- ability strategy is focused on four action areas that were derived from a materiality analysis (see graphic ‘Materiality matrix’) last updated in early 2017. Each action area is associated with clear targets and specific performance indicators.

Stakeholder dialogue

The continuous dialogue of the A1 Telekom Austria Group with its stakeholders takes place on three levels: through systematic information via different informa- tion channels, through talks and surveys as well as through shaping memberships and cooperations. Depending on the topic and the stakeholder group, different formats are used such as information events, idea competitions, surveys of cus- tomers and employees or one-on-one meetings, conferences or roadshows. ▬

Initiatives A1 Telekom Austria Group (Extract)

▸Charta der Vielfalt (seit 2014)

▸Next Generation Mobile Networks Alliance

(since 2014)

▸UN Global Compact (since 2012)

▸ETNO (since 1996)

▸GSM Memorandum of Understanding

(since 1988)

Action areas in the field of sustainability

Technology and Innovation

In its role as a driver of digitali- sation and beyond the provision of connectivity and bandwidth,

A1 Telekom Austria Group pro- vides entire industries, business models and societal as well as personal areas of life with a wide range of positive develop- ment possibilities.

Environment

Information and communica- tions technologies can contribute to a more ecological and thus sustainable style of life. This is because it is impor- tant to find innovative solutions

to challenges such as climate change.

Employees

Digitalisation is accompanied by a profound change of the foun- dations and methods of work- ing. This includes the question of how employees interact with- in the company as well as with customers, suppliers and other stakeholders. A1 Telekom Austria Group actively promotes

the competences required.

Society

By providing the techno-

logical basis and educational offers for equal, digital access to information, education and knowledge, A1 Telekom Austria Group not only serves as a responsible member of our society, but also as an element briding gaps.

Materiality matrix

Bubble size represents business relevance for A1 Telekom Austria Group.

A topic’s importance is based on its impact on the environment, society and the economy as well as how relevant it is to A1 Telekom Austria Group’s stakeholders. Thus, the topics most important to A1 Telekom Austria Group are those that have the biggest impact and those that are most relevant to the stakeholders. As an additional dimension, the topics were assessed with regard to their business relevance for A1 Telekom Austria Group. This allows a perspective that takes into account the topics’ sustainability context and their economical significance for the company.