VIENNA, Nov 20 (Reuters) - Telekom Austria may have to set aside up to 40 million euros ($50 million) this year to cover the costs of a European court ruling on the pay and pensions of thousands of its staff classed as civil servants.
About 5,000 of the former state-owned company’s 9,000 employees in Austria are on civil servant contracts and could be affected by the European Court of Justice (ECJ) decision this month over how their annual pay increases are calculated.
“Telekom Austria currently estimates that this may lead to additional provisions for the past in the financial year 2014 in the amount of approximately 30 to 40 million (euros),” the company said in a supplement to its prospectus for an ongoing capital increase advertised in newspaper Wiener Zeitung on Thursday.
It added that the ruling may lead to additional costs of about 10 to 15 million euros per year from 2015 onwards, “adversely affecting the group’s financial position and results of operation”.
The court decision may also force Telekom Austria - of which the state still owns about 28 percent - to increase its pensions contributions for civil servants that have worked or are working for the company, it said.
Telekom Austria announced its long-awaited 1 billion euro capital increase this month. Mexican tycoon Carlos Slim’s America Movil - which owns almost 60 percent of the company - and Austrian state holding company OIAG are together taking up 88.12 percent of the cash call.
1 US dollar = 0.7960 euro Reporting By Angelika Gruber; Writing by Shadia Nasralla; Editing by Pravin Char