As the largest telecommunications company in Austria, Telekom Austria Group is successfully positioned on international markets with a focus on the CEE region. Besides Austria, the company has international operations in Belarus, Bulgaria, Croatia, Liechtenstein, the Republic of Macedonia, the Republic of Serbia and Slovenia. More than 2.3 million fixed line customers and approximately 19 million mobile customers put their trust in products and services provided by Telekom Austria Group. Telekom Austria Group has over 16,000 employees and achieved revenues of Ä4.8bn in 2009. Telekom Austria Group is an innovation leader when it comes to mobile communications with numerous “first-to-launch” – rollouts such as the world’s first rollout of an UMTS network.
Telekom Austria Group has a strong commitment to excellence in corporate governance. The positive effect of good corporate governance ultimately results in a strengthened economy. Hence, good corporate governance is an important tool for socio-economic development. It is of critical importance how directors and management develop a model of governance that aligns the values of all corporate stakeholders, which then is evaluated periodically for its effectiveness. In particular, senior executives should operate in an honest and ethically manner, especially with regards to actual or potential conflicts of interest and disclosure of financial reports.
To ensure sustainable and value-enhancing corporate development Telekom Austria Group adheres to strict principles and is committed to transparency and a willingness to engage in open dialogue. Areas of competency and responsibility are clearly regulated by law, the Articles of Association of Telekom Austria AG and the Rules of Internal Procedure for the Management Board and the Supervisory Board.
With regards to the structural setup at Telekom Austria Group the Management Board defines the strategic thrust of the group in consultation with the Supervisory Board and provides the latter with regular reports on the company’s current situation, including risks. Furthermore, the Supervisory Board is authorised to ask the Management Board at any time for reports on matters concerning Telekom Austria Group. The Rules of Internal Procedure for the Supervisory Board, the Audit Committee and the Management Board provide the legal framework for the duties and scope of action of both the Supervisory and Management Boards.
The group achieved compliance with the extended reporting obligations of the Austrian Corporate Governance Code at an early date. The Austrian Corporate Governance Code enjoys widespread acceptance. In January 2010, an amended and expanded version of the Code was published and shall apply to all financial years starting after December 31, 2009. The most important changes concern aspects of the variable and share-based remuneration of the Management Board and other executives. Several provisions of the Code were also adjusted to comply with amendments to the Austrian Stock Corporation Act 2009. The Telekom Austria Group fulfilled almost all of the extended reporting obligations at an early date and will continue to consistently work on further developing its corporate governance in future. The group committed itself to voluntary compliance with the Code as of 2003 and has also implemented further corporate governance instruments such as an effective risk management system or the Code of Conduct.
The group’s risk management system enables a Group-wide structured identification, evaluation and management of risks on the basis of a defined risk policy as well as strategic and operational objectives. Its effectiveness is subject to external evaluation by auditors pursuant to Rule 83 of the corporate governance Code and, along with the effectiveness of the internal control system, it is monitored by the Audit Committee.
The internal control system of Telekom Austria Group is aimed at safeguarding the effectiveness and profitability of business activities, the integrity and reliability of financial reporting as well as compliance with the relevant laws and regulations.
The Code of Conduct, which is binding throughout the Group, is designed to raise awareness among employees with regard to corruption prevention and lawful ethical conduct.
Commonly accepted principles of corporate governance include, among others: Rights and equitable treatment of shareholders, role and responsibilities of the board, integrity and ethical behaviour, disclosure and transparency. A reporting system has been put in place that enables employees to confidentially report legally dubious procedures or violations of this code. The Code of Conduct has been published at www.telekomaustria.com. To prevent the misuse or passing on of confidential information, Group-wide compliance guidelines have been implemented and classified units defined within the company.
We have all followed some of the very prominent cases of corporate corruption in the media. Such events cause significant damage and could seriously impact our reputation, but could also result in a significant financial impact.
Analysts and shareholders have zero tolerance for corruption and are very unforgiving if such cases surface. At Telekom Austria Group, we do not want to create a bureaucratic compliance environment as this would harm our unique culture of speed and innovation.
In addition, equal opportunity is considered as a central component of Telekom Austria Group’s Corporate Governance and corporate social responsibility understanding. Having a closer look at the promotion of female executives, the percentage of women on the Supervisory Board of Telekom Austria AG has risen steadily in recent years to a current quota of 25 percent, which is considerably higher than the average female quota of six percent within the ATX Prime Market. Since 2001 the important function of Vice Chair of the Supervisory Board of the Telekom Austria Group has been held by a woman, Edith Hlawati. Further seven Supervisory Board positions within the Telekom Austria Group were held by women in 2009 as were two Management Board and Managing Director positions. The proportion of women in management positions at the Telekom Austria Group in 2009 amounted to roughly 20 percent.
In this context, let us also take a look at our understanding of sustainable management at Telekom Austria Group: The prime strategic objective of Telekom Austria Group is the sustainable enhancement of shareholder value by ensuring the Group’s healthy development in the long term. The challenge of responsible company management is to combine economic success with environmental and social aspects.
To underline its commitment to this principle, the Telekom Austria Group endeavours to further develop its sustainability profile. The increased involvement of the international subsidiaries and their integration into the corporate strategy are central to these efforts.
Our excellence in Corporate Governance has been recognized on numerous Occasions. Most recently Telekom Austria Group has been awarded the World Finance Corporate Governance Awards as “Best Corporate Governance in Austria” and in 2009 Telekom Austria Group received the Vienna Stock Exchange Prize for “Best Corporate Governance”. Furthermore Telekom Austria Group has a proven track record of award-winning IR work: In 2009, we were recognised as the “Best IR team in Austria” and 2nd best Investor Relations Website in Austria. In addition, Telekom Austria achieved numerous awards for its annual reports (Arc Awards, Trend AAA).
Matthias Stieber is Division Manager of Investor Relations at Telekom Austria Group
