Press Releases

Budapest, January 2, 2001

MATÁV (NYSE: MTA.N and BSE: MTAV.BU) is pleased to announce that MATÁV, currently the 50% owner of Emitel Telecommunication Co Ltd. signed an agreement on December 31, 2000 with its joint venture partner Aphrodite BV to buy the remaining 50% stake of Emitel. This is a consequent step to take full control over Emitel after having already had joint control according to the initial arrangement with the Israeli partners.

Emitel is the local telephony operator in three concession areas in the Southern part of Hungary (Baja, Kiskőrös, Kiskunhalas). The company had over 85,000 connected lines as of November 30, 2000.

The transaction is subject to appropriate regulatory approvals.

MATÁV will pay Aphrodite BV a sum, which calculated according to a formula fixed in the agreement. The price will be based on the number of lines connected by Emitel and the debts and assets of Emitel, as measured immediately prior to the closing date of the transaction. In any event, the price will not be less than 46.5 million US dollars. The payment is due after the final regulatory approvals. MATÁV will fully consolidate Emitel in its accounts from the closing date of the transaction.

Aphrodite BV is 66.7% owned by Bezeq, Israel's principal telecommunications provider and 33.3% by Poalim Investment, an Israeli investment and holding company.

MATÁV is the principal provider of telecom services in Hungary and holds the national concession for national and international long distance telephony. MATÁV provides a broad range of services including telephony, data transmission, value-added services, and through its subsidiaries is Hungary's largest mobile telecom provider. Key shareholders as of September 30, 2000 include the Hungarian State (holder of the Golden Share), MagyarCom, owned by Deutsche Telekom AG (59.49%), while 40.51% is publicly traded.