Investor Releases

September 18, 2002

Matáv (NYSE: MTA.N and BSE: MTAV.BU), the leading Hungarian telecommunications service provider, today announced that it will implement a nearly 9% headcount reduction in 2003 and plans to carry out an approximate 3% reduction in 2004 on Group level in order to further increase efficiency.

An agreement was reached on September 17, 2002 between Matáv Rt. and the Trade Union regarding the 2003 and 2004 headcount reductions and the 2003 wages and social benefits. Included in the agreement, the 2003 wage increase will result in a 6.4% average wage increase within Matáv Rt. for the whole year. As part of this, 7% of general wage increase shall take place as of April 1, 2003 and an additional 1.5% of increase shall promote labor-force policy purposes during the rest of the year. The headcount is expected to be reduced by 1,100 at Matáv Rt. in 2003 and 250 in 2004. Based on preliminary management estimates, the cost of the headcount rationalisation in 2002 will be approximately HUF 8 bn depending on the detailed plan of the reductions, which will be finalized by the end of 2002

In addition, the headcount of the subsidiaries will also be trimmed by around 330 in 2003 and in 2004 Matáv plans to reduce the headcount of the subsidiaries by at least 200. The costs of these reductions are still to be determined.

As a result, Group closing headcount in 2003 will be approximately 1,430 lower than the end-year number of 2002, whilst the reduction in 2004 will be at least 450.