Rome (OTS) - Telecom Italia has today signed the contracts for acquisition of a strategic stake of 25% plus one share of Austria's incumbent telephone company, Telekom Austria. Telecom Italia outbid the US company Ameritech with a bid of 27.226 billion Austrian shillings (approximately 3,800 billion Italian lire). The transaction, subject to EU approval, is expected to close by the end of the year. The Telecom Italia Group company acquiring the Telekom Austria stake will be Stet International Netherlands (SIN).

The Telecom Italia bid was successful principally because of its extensive plan for Telekom Austria's development, including better targetting of sales strategy, expansion of telecommunications services, together with company restructuring so as to achieve significant cost savings. Telecom Italia's plan was deemed to meet the need for creation of value In Telekom Austria as preparation for a public share placement.

This victory consolidates Telecom Italia's presence in Austria, where it already owns 25% of Mobilkom, the mobile telecommunications subsidiary of Telekom Austria. Purchase of the Telekom Austria stake provides Telecom Italia with an additional indirect 18.75% stake in Mobilkom. Operational synergies between Mobilkom and TIM -Europe's leading mobile operator and the world's third largest - have achieved excellent results: Mobilkom has asserted itself as market leader to achieve a market share of over 70% and more than 1.3 million customers.

In its role as strategic partner Telecom Italia has obtained substancial powers of management in Telekom Austria, filling key positions particularly in sales, finance and control. Telecom Italia can now fully exploit its position as a strategic partner and implement fixed-wire/mobile convergence to offer technologically and commercially integrated telecommunications solutions. A presence in both the fixed wire and mobile markets is a vital pre-requisite for competing in the global telecommunications market.

The Austrian acquisition is an important piece of Telecom Italia's European expansion plans and validates the Group's ability to pursue effectively its goal to be a European leader, as part of its international priorities, as outlined in its recently approved three-year business plan.

Austria is a strategic market because of its geographical contiguity with Italy. This will optimize co-ordination of telephone traffic between the two countries, which currently amounts to 7% of the international traffic handled by Telecom Italia. Austria is also a significant gateway for traffic to and from the German and Central/Eastern European markets. Together with the Austria market these are areas of major trade with Italy and are also experiencing a continued influx of Italian business investment.

For further information call: Mr. Karl Krammer

tel. (+43) 1 - 4021533