Investor Releases

May 17, 2002

Matáv (NYSE: MTA.N and BSE: MTAV.BU), the leading Hungarian telecommunications service provider, today announced that it has taken steps to modify the capital structure at certain subsidiaries and repay a portion of its debt.

Matáv has completed a review to ensure a more efficient intra-Group capital structure. As a result, Matáv has initiated the following steps:

In the case of two subsidiaries, Westel and Emitel, which currently have minimal debt, a significant increase in leverage is justified. In order to effect this, Westel?s Extraordinary General Meeting decided that the company shall pay an interim dividend of HUF 61.5 bn from retained earnings to Matáv in respect of 2002 The transaction is to be financed by the subsidiary from an inter-company loan provided by Matáv. Emitel paid a dividend of HUF 4.6 bn in 2002 in respect of the financial year of 2001 primarily financed by an inter-company loan provided by Matáv and internal cash-flow. The net proceeds from Westel and Emitel are to be used for debt repayment.

Westel is the largest mobile operator in Hungary with approximately 2.7 million subscribers and GSM market share of over 50% at the end of March 2002

Matáv has 100% ownership in Emitel, the local telecommunications operator of southern Hungary, which operated nearly 81,000 lines at the end of March 2002