Telekom Austria AG (TA1.F) Earnings Call Transcript & Summary

Ladies and gentlemen, summer is almost over. All of us have to get back to work, and that goes for us here at Telekom Austria. I would like to welcome you very warmly to today's Extraordinary Shareholders' Meeting, and I hereby call the meeting to order. In light of the renewed increase of the number of COVID infections, we have decided to hold a virtual general meeting in accordance with the COVID-19 Act in Austria, which we will broadcast in its entirety on the Internet. For that reason, I would like to welcome our shareholders and all interested parties who are following this extraordinary general meeting via the Internet. Here at corporate headquarters, I would like to welcome the proxies, Dr. Michael Knap from the IVA; Dr. Christoph Nauer, Attorney at Law; Mr. Thomas Niss, from Own Austria; and Dr. Sascha Schulz, Attorney at Law. Furthermore, I would like to welcome the gentlemen of the Management Board, [ Dr. Mayer ], the notary public, who will be monitoring the minutes and the adoption of resolutions and the technical staff. The members of the Supervisory Board following this shareholders' meeting via the live stream as well. Today's Extraordinary General Meeting is being held in response to a request by Österreichische Beteiligungs AG, Austria Holdings plc, or ÖBAG, to convene the meeting. Mr. Thomas Schmid resigned from the Telekom Austria Supervisory Board after the last Annual General Meeting in a letter dated 7th of June 2021. The purpose of today's shareholders' meeting is to fill this vacant seat on the Supervisory Board. Just a few words on the special features of today's meeting. The shareholders' meeting will be presented in an audiovisual format and broadcast in full in real-time on the Internet. The real-time broadcast will enable shareholders to follow the meeting as it progresses and -- as well as the answers to questions as if they were present in person. We do not anticipate any problems. However, if the broadcast completely breaks down, we will interrupt the meeting and only resume it once the live stream has been restored. The following applies to the right of information and the right to speak. Shareholders have been asked to send us the questions in advance of the meeting. In addition, you can still send your questions regarding the election of the new Supervisory Board member by e-mail to the e-mail address, [email protected], until the end of the question-and-answer segment. I will announce a specific time that you can still submit your questions by. Please use the published question form, if possible. If you are sending us a simple e-mail, we need the first and last name as well as the company name of the shareholder as well as their date of birth or the company registered number so that we can establish the identity of the person in question and match it to the deposit confirmation. Voting rights. The right to propose resolutions and the right to object can only be exercised through 1 of our 4 special proxies. In the run-up to this meeting, the shareholders were given the opportunity to authorize one of our special proxies and issue instructions to them. However, the shareholders may also issue new instructions or amend instructions already issued while the meeting is still in progress. To do so, please send a simple e-mail to the e-mail address of the proxy to whom you have also sent the power of attorney. Here, you can see the e-mail address is displayed on the screen. For more details, please see the information posted on the website of the company concerning participation in the meeting. Now before we move on to the agenda, allow me to state for the record that the invitation was published in the official Gazette in the Wiener Zeitung on July 31, 2021, and disseminated electronically via euro adhoc and IHS Markit, all required documentation has been posted on the website since July 30, 2021. And there are no proposals for additions or amendments to the agenda. Therefore, today, we can only discuss and adopt a resolution on the agenda item announced in the invitation. We now come to the sole item on the agenda, "Election to the Supervisory Board." According to Section 8 of the company's Articles of Association, the Supervisory Board shall consist of up to 10 members who are elected by the shareholders at the General Meeting. As already mentioned, Thomas Schmid resigned from the Supervisory Board in June. In order to ensure that the Supervisory Board once again has 10 members, ÖBAG has sent a request to Telekom Austria to convene this meeting and has submitted the following resolution proposal. ÖBAG moves to elect Dr. Christine Catasta to the Supervisory Board as of the end of this Extraordinary General Meeting until the end of the Annual General Meeting which resolves on the discharge of the Supervisory Board for the financial year 2021. The candidate has submitted a declaration pursuant to Section 87 Para 2 of the Austrian Stock Corporation Act, which has been published on the website together with her curriculum vitae. I would now like to ask Dr. Catasta to introduce herself very briefly.

Ladies and gentlemen, thank you very much for allowing me to introduce myself to you. So what drives me? Since June, I have -- I've been the only -- the first woman at the Head of ÖBAG as the CEO. I've been part of a very dedicated team. And I've been responsible for main companies here in Austria. And this, of course, in a very challenging environment, which has been overshadowed by economic and health crisis. I'm very motivated to help shape the current changing the times and to remain true to my job to build trust and build on this. And I would like to touch on my personal curriculum vitae. After studying economics and business, I joined what is now PricewaterhouseCoopers. After 10 years in auditing and in tax advising, in 1991, I was at a partner and I was one of the equity partners and part of the Austrian diversity leaders. And a milestone in my career was taking over as a CEO and senior partner by PwC Austria, this was in 2018. After 38 years in that company, I was responsible for over 1,200 employees at 5 locations throughout Austria. Prior to that, for years, I headed up consulting department, and over 25 years, I was the head of that department. My specialization concerns the auditing of international companies as well as consulting, including company due diligence, acquisitions and performance improvement, just to name a couple of examples. I was also a member of the Global Telecom team at PwC. And for several years, I was a member of a number of national and international bodies. For example, I was in the Management Board of various Boards as well as the chamber of the -- for Austrian trustees as well as accountants, Europe and Brussels, but also the International Federation of Accountants in New York. And in this role, together with international colleagues, I helped shape the code of ethics that globally covers the entire profession and has laid fundamental ethical standards. These standards include, in particular, integrity, objectivity, competence and due diligence and care in our work. These principles have been and are -- after my active -- my time as an active auditor, these form the foundation for my understanding of the profession. And I will continue in this vein as a member of the Supervisory Board of Telekom Austria. These will be, as I said, my guiding principles. For me, Telekom Austria is the central driver for digitalization in Austria. In the over 40 years of my career, I have been following the very impressive change in the Austrian economy from a very small economy on the edge of the Western economies and bordering on the [ curtain ], we have become internationally recognized and competitive business location that is fully integrated in the global economy. And we have many employees in a number of areas. And here, we have excellent employees who are at the top of their careers. So we need to continue in this vein. For several years now, we are faced with new opportunities that go hand-in-hand with this digital transition. We need to seize the future and these opportunities that present themselves. For that reason, Austria -- Telekom Austria in Austria as well as in Eastern Europe occupy a central role in doing this. Yes, this is the provider of the digital infrastructure and they provide the services of tomorrow. As a Supervisory Board member, I will support our Management Board to the best of my ability to realize their role as a provider of digital infrastructure and the services of tomorrow and to take Telekom Austria into the future. I will draw on my years of experience and expertise to help shape this profound change in the interest of all shareholders and, in particular, in the interest of our country. If I am to be elected, I would like to thank you in advance for the confidence you have placed in me, and I will gladly accept the mandate and I look forward to being a member of the Supervisory Board.

Thank you very much, Dr. Catasta, for introducing yourselves here. On behalf of the Supervisory Board, I would like to thank Thomas Schmid for his contribution to the Supervisory Board and for our cooperation with him. Mr. Schmid has been actively -- or has been actively involved in all issues of the Supervisory Board and the Audit Committee. I would like to particularly highlight his commitment to expanding infrastructure in Austria and to further developing and implementing the company's ESG strategy. On behalf of the Supervisory Board, I would like to wish Mr. Schmid all the best for the future. And now I would like to announce the current attendance into this meeting. According to the participants list, there are 469 shareholders represented by the 4 special proxies entitled to cast 563,313,324 votes. The General Meeting has the necessary quorum for all agenda items, namely the sole item on the agenda. I have already signed the participant list and the notary republic, [ Dr. Mayer ], has that with him. And now I would like to ask our special proxies whether or not there are any motions for resolutions from our shareholders. If yes, please read this out. If no, I would like to ask you to confirm that you have not received any motions for resolutions so far, Dr. Knap.

Madam Chairwoman, thank you very much for the floor. First of all, I would like to announce that I represent over 4,000 shareholders. This corresponds to 5.18% of the share capital. And I have no motions for additional resolutions that I have received. Dr. Nauer, please.

Madam Chairwoman, thank you very much for giving me the floor. I can confirm that the shareholders that I represent have not yet sent me any resolutions or motions. Dr. Niss -- Mr. Niss?

Thank you very much for the floor. I have not received any requests for further resolutions. Dr. Schulz, please.

Thank you very much. I have received no motions for resolutions.

Thank you very much for this confirmation, also for the minutes. Now let us come to the Q&A segment. We already have questions from [ Mr. Baumüller ], who has submitted these to us ahead of time. And these, of course, are in conjunction with the election of Dr. Catasta. We have summarized all of these, and we would like to deal with these in 3 main blocks. The first has to do with sustainability. The first is one of the central most important issues or challenges for all of us, for our society and for the companies. It is a central driver of sustainable change, and we toured the preservation of a world worth living in. [ Mr. Baumüller ] also quotes Dr. Catasta on ÖBAG's website as saying "Sustainability is one of ÖBAG's core value propositions. And I am deeply convinced that ÖBAG must live up to its responsibility for Austria as a business location by working with our companies to drive the transformation of the economy towards climate neutrality." So here is questions. What exactly does sustainability mean to you personally? Secondly, what role will you play on Telekom Austria's Supervisory Board with regard to the sustainability agenda? What will you advocate? What will you champion? Thirdly, what specific priorities or focal points will you be pursuing during your mandate? And finally, I would like to ask you to explain in specific terms, what this means for the further development of Telekom Austria? Please, Dr. Catasta.

Thank you very much. Sustainability in all ESG dimensions, not just the environment, of course, has been at the top of the agenda of many managers for several years now. This also applies to me as a member of the Management Board of ÖBAG. I've already been able to live this responsibility in my previous position as CEO in consulting, for example, by pushing diversity aspects, in particular, the advancement of women in management positions. As the PwC advisory leader, I also built up an area that advised on sustainability issues along the entire value chain. As a state holding company, it is our duty to act in the long-term interest and to safeguard the prosperity of future generations. Therefore, we wish to establish our companies as pioneers in their industries when it comes to climate neutrality and ESG best practices. Therefore, it is quite obvious that we are supporting our companies by sending them in the -- putting them on the right track by setting a strategic course and incentivizing management. ÖBAG, therefore, is supporting very strategic decisions and promoting these when it comes to sustainability in the Supervisory Board of its portfolio companies such as supporting ESG KPIs in the remuneration of the Management Board. In addition, the implementation of the EU taxonomy reregulation will also play a much greater role. From both an economic and an ecological perspective, I see the issue of energy efficiency and associated CO2 emissions as a particular priority for Telekom. In addition, the issue of circular economy and recycling of old devices is important to me when it comes to the sustainable use of resources. For the future, I personally foresee the implementation of the EU taxonomy regulation and further steps toward climate neutrality. And these, to me, are also very important.

Thank you very much. [ Mr. Baumüller ] has submitted further questions regarding Dr. Catasta's previous employment at PwC, which we are now summarizing. He would like to know in detail -- to a specific degree, are you still in contact with your former employer, have selected -- or selected key players of this company? In particular, how are you involved in networks as a so-called alumina? I would remind you that you worked for PwC in a senior position until 2020 last year. Furthermore, are there any specific agreements and plans on your part as far as engagements with PwC are concerned? Next question, is it conceivable for you to refrain from commissioning this law firm or with all of its more or less closely related companies for the duration of your mandate period for appearances sake in the sense of a cooling-off period? Please state to what extent you were involved in the [ Weingut ] projects or its predecessor projects. Furthermore, please state whether you're involved in the current or expected future court proceedings as a witness or possibly as a party of interest, et cetera. Dr. Catasta, please.

I am working full time for ÖBAG. And I have no performance-related claims vis-a-vis PwC. In addition, I am complying with all relevant cooling off obligations. I will be performing my Supervisory Board duties free from self-interest and the interest of PwC and would be doing this competently in compliance with our relevant legal provisions. Contact with PwC is limited to a generally customary scope. I personally am not a defendant or a witness in any proceedings pending before the court regarding [ Weingut AG ], and I do not expect to be involved in any such proceedings in the future.

Thank you very much. And now to the last block of questions from [ Mr. Baumüller ] on the subject of the Supervisory Board work itself. And he asks, I would like to ask you to outline your plans for your role on the Supervisory Board in the short, medium and long term. In particular, how would you like to structure your cooperation with Dr. Hlawati? Secondly, how will you ensure that you have sufficient time resources to participate in all committees with the required intensity or at the required degree? Thirdly, what is the objection to distributing the available mandates within ÖBAG even more broadly amongst the technically experienced staff in order to allow a more intensive contribution or in-depth contribution in each individual case? And fourthly, what necessary priorities of focal points do you see for the future development of Telekom Austria? And how do you specifically intend to contribute to implementing and realizing these in the course of your role as a member on the Supervisory Board? Dr. Catasta, please.

I will be taking over as an interim member of the Managing Board of ÖBAG. And here, I will be taking over a vacant Supervisory Board position. This was as a result of the departure of a previous member. By appointing me until the AGM in 2022, ÖBAG is ensuring the necessary flexibility to decide on how to fill this mandate. I am very much looking forward to continuing the excellent cooperation with Dr. Hlawati. Within the framework of ÖBAG's legal mandate, active investment management is what our purpose is, not least through our Supervisory Board activities in our investments. The necessary resources are available for this. In addition, there is also a legal framework regarding the number of permissible Supervisory Board positions that I adhere to. How the Supervisory Board mandates are distributed within ÖBAG is a matter for ÖBAG. My goal is to manage and control Telekom responsibly with a focus on sustainability and long-term value creation. In my role on the Supervisory Board, I will play my part accordingly and continue along the successful path I have already embarked on.

Thank you very much. So this takes us to the end of the Q&A segment. As far as I can tell, there are no further questions, but we are going to take a 5-minute break and we're going to set the timer so that you have the opportunity to send any further questions to us. You will see the timer displayed on screen. Actually, it's a 10-minute timer and we will be back with you in 10 minutes' time. [Break]

Welcome back from the break. I'm just being told that we are going to need more time in order to be able to answer the questions. So therefore, we're going to interrupt the meeting once again for 15 minutes. We're going to set our timer to 15 minutes. And at the same time, I would also like to ask you to submit any motions you may have. Questions or motions received after the deadline indicated can no longer be considered. Thank you very much. [Break]

Thank you very much for your patience. There have been a lot of questions coming in from Mr. [ Berthold Biaga ], voting card #28, which we have been attempting to reply to. First of all, I would like to ask Mr. Mayrhofer; next, Dr. Catasta, and the last block of questions will be answered by me.

Voting card #28, question #1. How much did the AGM 2021 cost? I would like to ask you to consider that today, we are only going to consider agenda Item 1, but still we're going to give you an indication. The 2021 cost roughly EUR 55,000. Next question. How many people were logged in, in Austria as well as abroad? All in all, 245 people were logged in. Of them, 45 from abroad. Next question. How many people are logged in today and listening to us in Austria as well as abroad? All in all, 97 people are listening to us today. For additional questions, I would like to give the floor to Dr. Catasta.

I'm going to reply 2 questions asked by voting card #28, Mr. [ Biaga ]. When did you go to Carlos Slim with Ms. Hlawati? ÖBAG holds regular discussions with its shareholder partners regarding significant investment topics. Such discussions took place in the first week of August 2021. But everything that was discussed is subject to secrecy and confidentiality. Next question also asked by Dr. [ Biaga ]. Does Dr. Catasta attempt to become Chairwoman of the Supervisory Board? Any plans? Dr. Hlawati has been appointed Chairwoman, and I do not have any plans to become Chair.

Thank you very much for answering those questions. Additional questions regarding the syndicate agreement. Question #1. Same question asked by Dr. [ Biaga ], voting card #21 (sic) [ voting card #28 ]. So the question reads, was it necessary to fill the vacancy so quickly? Second question. When does the syndicate agreement, the shareholder agreement expire? And is it possible to renew this for 5 years? I'm curious to know this because after all, the distribution of mandates is specified there. Related question is how many seats can América Móvil determine and how many seats can ÖBAG determine? I'm going to answer them en bloc. All the questions regarding the syndicate agreement, the shareholder agreement affect confidential bilateral agreements. Now the proposal within the scope of an extraordinary shareholder meeting 2021 is in accordance with the legal mandate of ÖBAG. And this states that any Supervisory Board members nominated by ÖBAG have to be present. And in particular, the CEO of ÖBAG is to fulfill this mandate. So briefly after the AGM 2021, there was a vacancy that -- due to the withdrawal of Mr. Schmid, and ÖBAG and the company have taken a team to fill the vacancy as quickly as possible. This brings us to the end of the questions asked by Mr. [ Biaga ]. Apart from that, no further questions have been asked. This means that I'm now going to close the Q&A segment. I would now like to ask our proxies to read out any further motions or to confirm that no motions have been received. Apologies. Apparently, there is one further question, namely question 11. The question regards denomination rights of América Móvil and ÖBAG. So as laid down in the shareholder agreement, and I do believe that an answer to this question has been given. The ratio is 8:2. Mr. Mayrhofer? Question 11, also asked by [ Mr. Biaga ]. The question is how many individuals, how many people are available today in the back office? It is 11 people, excuse me, working today in our back office. Specifically, I would like to ask our back-office staff, whether any further questions have come in. This is not the case. So therefore, I will now close the Q&A segment. And once again, I would like to ask our proxies to read out any other motions or to confirm to us that no motions have been received. Dr. Knap?

I have not received any motions.

Dr. Nauer?

I can also confirm that I have not received any motions.

Mr. Niss?

I would like to confirm as well that no motions have been received.

Dr. Schulz?

No motions have been received.

Thank you very much. Now this brings us to the vote, which will be conducted using the subtraction method. In this procedure, basically, the no votes and the abstentions are counted and subtracted from the total number of votes represented. This results in the correct number of yes votes. For voting purposes, the special proxies are to use the instruction cards or voting cards. The instruction cards and voting cards will be read out aloud for [ Dr. Mayer ], our notary public, to include this in the minutes. Agenda Item 1, "Election to the Supervisory Board." I put to the vote the motion to elect Dr. Christine Catasta to the Supervisory Board until the AGM that resolves on the formal approval of the actions of the Supervisory Board for the fiscal year 2021. Who is against this motion? Instruction card Knap; instruction card Niss. No further -- no votes. Any abstentions? Instruction card Knap, instruction card Niss, instruction card Nauer, instruction card Schulz. No further abstentions. The result of the vote regarding this agenda Item 1 is as follows. Yes votes, 538,006,985, corresponding to 95.91%. No votes, 22,993,795, corresponding to 4.08%. Now the number of shares for which valid votes were given is 561,000,780. So the percentage of the share capital represented is 84.42%. Now I would like to state that the motion has been adopted with the required majority and that Dr. Christine Catasta has been elected to the Supervisory Board. I warmly congratulate Dr. Catasta on her election and look forward to working together with her in our future meetings. Ladies and gentlemen, this concludes the agenda for today's Extraordinary General Meeting. The result of the vote will be published on the company's website. Thank you very much for following today's virtual shareholders meeting via the Internet. The meeting is now closed. I wish you all the best and, above all, good health. Stay healthy. Goodbye. See you at the next general meeting. [Statements in English on this transcript were spoken by an interpreter present on the live call.]