Investor Releases

Standard & Poor's rates Matáv

Budapest, December 8, 2000

MATÁV (NYSE: MTA.N and BSE: MTAV:BU) the leading Hungarian telecom service provider informs its investors of the following:

Standard & Poor's has assigned a single-'A'-minus local currency corporate credit rating to MATÁV. MATÁV is majority owned by Deutsche Telekom AG and its local currency rating is affected by the ratings of its parent. The local currency ratings outlook is negative. Matáv has also been assigned a triple-'B'-plus foreign currency corporate credit rating, which is affected by the Republic of Hungary's foreign currency rating (BBB+/Positive/A-2). The foreign currency rating outlook is positive.

Standard & Poor's provided - among others - the following rationale for the rating:

"The prime strength of MATÁV is its position as sole provider of fixed-line domestic long distance (DLD) and international public telephony services throughout Hungary and market-leading position in the rapidly growing Hungarian mobile-telephony market. MATÁV also has exclusive rights to provide local fixed line telephony service in areas covering about 70% percent of Hungary's geographic area, and nearly all of the major cities in Hungary, including the capital city Budapest. The key credit challenge faced by MATÁV is to continue to effect organizational change so that it is well positioned to compete when the telecommunications market is liberalized in 2002 MATÁV will need to compete on price, service quality, network quality and product range and to do this MATÁV must continue to adapt its culture, network quality, product range and cost base. This should allow MATÁV to minimize its market share loss and mitigate gross margin pressures (as heightened competition, and regulatory intervention, will result in tariff pressures). Standard & Poor's expects that MATÁV will achieve further operating efficiencies, as well as tariff rebalancing, prior to market deregulation and that, post liberalization, MATÁV will maintain its market dominance and will continue to generate strong cashflow from its domestic operations."

Dr. Klaus Hartmann, CFO of MATÁV commented the ratings announcement as follows: "MATÁV is content with the ratings awarded by Standard and Poor's. We believe that the local currency rating of A minus in specific, reflects the agency's positive view on the conduct of business, strategies and management of MATÁV. We feel confident that we will be able to deliver on the agency's expectations regarding the development of our business and organization both prior to and following liberalization and fully identify ourselves with the objectives laid out in S&P's report."