COMPLIANCE

For the Telekom Austria Group, achieving the defined business goals is not the only thing that matters – how it goes about doing so is also essential. The overriding principle is acting with integrity and responsibility towards customers, shareholders, external creditors, the public, and employees.

PREVENTION AND REACTION

The Telekom Austria Group owes it to all of its stakeholders to ensure that its standards of integrity are realised as a key component of its corporate culture. Acting with honesty, fairness and trans- parency is the only way to secure the Group’s economic success and reputation in the long term.

To achieve this, the Telekom Austria Group has a sophisticated compliance management sys- tem based on the central elements of prevention and reaction. To prevent potential miscon- duct, the Group has established clear rules for acting ethically and with integrity in all business relationships, and integrated appropriate controls within its business processes.

To enable an appropriate response to potential misconduct, indications and evidence are col- lected via a dedicated portal and addressed in strict confidentiality as part of a structured process. This allows the remediation of any weaknesses and the permanent improvement of the compliance management system. A scoping process has identified the following areas as key compliance topics: corruption prevention and integrity, antitrust law, data protection and capital market compliance.

Group Compliance ensures the consistent implementation of the corresponding measures and instruments at all business units of the Telekom Austria Group with the support of the local compliance managers at the international subsidiaries. The Telekom Austria Group’s compli- ance management system is consistent with the internationally recognised standards issued by Transparency International and Institut Deutscher Wirtschaftsprüfer (Institute of Public Audi- tors in Germany). This was confirmed by an independent auditor in 2013. Furthermore, the es- sential elements of the compliance management system were successfully reviewed for effec- tiveness amongst the whole company through Group Internal Audit and Group Compliance.

ACTING WITH INTEGRITY AND RESPONSIBILITY

The Code of Conduct is a central instrument in the Telekom Austria Group’s compliance manage- ment system. It is aimed at all employees and the entire management team of the Group and is intended to help prevent misconduct in the various decisions that have to be taken every single day. It contains advice and regulations on fair conduct, gifts and personal benefits, confidentiali- ty, conflicts of interest, protecting company assets, indications of violations, communicating the content of the Code of Conduct, and the Group’s whistleblowing principles. Accordingly, the Code of Conduct provides the elementary guidelines for the day-to-day business practice.

This is supplemented by Group-wide guidelines providing detailed assistance on concrete top- ics, such as anti-corruption and conflicts of interest, gifts and invitations, management con- sulting and lobbying, sponsorship, donations and advertising, capital market compliance and antitrust law.

To ensure that the principle of integrity is sustainably embodied by all of the Group’s units in Austria and all of its subsidiaries in Central and Eastern Europe, target group-optimised train- ing on compliance topics takes place on a regular basis. In 2016, approximately 4,200 employ- ees and managers were trained in compliance classroom training sessions and approximately 2,600 employees and managers received the compliance training via eLearning. To clarify any questions they may have, Telekom Austria Group employees can also contact the ‘ask.me’ com- pliance helpdesk, which dealt with around 300 questions in 2016.

A MATTER OF CORPORATE CULTURE

Systematic adherence to all rules and regulations in the course of the company’s day-to-day work makes compliance a central element of the corporate culture. Key factors include, not least, the example set by senior management and the responsibility of all employees for their own actions. Employees and third parties can use the ‘tell.me’ whistleblower platform to anonymously report information on potential misconduct in order to sustainably prevent and identify potential risks within the Telekom Austria Group. In 2016, approximately 30 tips were submitted via this compliance instrument and carefully investigated by the Group.

The Telekom Austria Group responds to incidents with appropriate sanctions. If an actual case of misconduct is established, the potential consequences range from educational measures and process improvements via reprimands through to dismissals or the termination of business relationships.

More self-responsibility: Acting with honesty, fairness and transparency is securing economic success and reputation in the long term. The compliance management system gives a framework for self- reliable acting in key issues like data protection and corruption prevention. This goes beyond the simple execution of established rules and guidelines.