Press Releases

Budapest, April 26, 2002

On April 26, 2002, Matáv held its Annual General Meeting. The AGM approved the Board of Directors’ report on the management, the business policy and financial status of Matáv, as well as the 2001 consolidated financial statements of the company.

Year 2001 revenues according to the International Accounting Standards (IAS) grew 22.8% over 2000 to reach HUF 547.7bn. Net income amounted to HUF 82.6bn. The balance sheet total rose 15.7% to reach HUF 1104.2bn. HUF 127.7bn was spent on development and modernization projects.

In order to meet the challenges of the new liberalized market and of technological advances, the management of Matáv introduced a new management structure as of January 1, 2002. Matáv Group, as established as of January 1, covers four lines of business through the coordinated operations of Matáv and its associated companies: mobile telephony, internet, and services provided to business and residential customers.

Chairman and CEO Elek Straub presented the shareholders with his evaluation of Matáv’s performance in 2001. The following were among his comments:

“The full opening of the market, for which we have been preparing for years, happened at the end of 2001. We successfully completed the eight-year concession-based development program, which we launched simultaneously with the privatization of Hungarian telecommunications and laid the foundations for a competitive market. We were successful in expanding Matáv Group in 2001. With the acquisition of the Macedonian Telecommunications Company (MakTel) we have proved ourselves able to achieve our regional expansion targets. We managed to integrate both MakTel and Emitel that were acquired as a result of our domestic expansion efforts, and both subsidiaries contributed to our 2001 results beyond our expectations. In December of 2001, we concludeda transaction with which we acquired the remaining 49% of Westel Mobil Távközlési Rt. and Westel Rádiótelefon Kft. to become the full owner of these two mobile carriers. In 2001, Matáv’s business units showed outstanding performance even by international standards in terms of efficiency, growth rate and financial stability. We have achieved our key targets, and fulfilled – in certain cases even overfulfilled – our business plans. In 2002, our major objective is to strengthen our position in an increasingly competitive market and to maintain the leadership of the Matáv Group."

Liberalized services are gaining increasing weight within the Matáv Group portfolio. In 2001, about half of revenues were generated from services provided on a competitive basis.

Today, the mobile business is the principal engine of the growth for the Matáv Group. Westel remains the leading player of the mobile telephony market in Hungary in terms of customer base, revenue and profit. Last year Westel increased its customer base by 56% to almost 2.5 million to maintain its more than 50% share in the three-player GSM market.

Another dynamically growing business of the Matáv Group is data and business communication. In 2001, the number of data transmission access points rose to over 16,000 while the bandwidth provided doubled. ISDN channels grew almost 47% to exceed 448,000, that is 15% of all fixed lines. The number of cable television subscribers has grown to over 300,000.

The internet service customer base also expanded dynamically; at the end of the year Axelero had more than 133,000 customers. The key target of the company invariably is to speed up the growth of internet use and acquire market leadership both in the residential and the business market segments.

The AGM approved a dividend of HUF 11 per share which means a total of a HUF 11.4bn dividend payment to the shareholders from 2001 profits. The dividend payment is scheduled for June 3, 2002. On May 15, 2002, Matáv will publish an announcement on the details of dividend payment.

Matáv's current long-term management incentive plan, launched on July 1, 1998, will expire on June 30, 2002. 320 managers shall be eligible to participate in the new stock option plan, planned to start in July 2002. Options for total of 17 million shares will be granted in three series once a year over three years. Options will have a life of five years and options not exercised five years from the grant date will expire. The options issued shall be subject to a graded vesting provision under which the employee may not exercise any options until the first anniversary of the grant, at which time 1/3 of the options will vest. The remaining options will vest in equal instalments such that all options will be exercisable as of the third anniversary of the grant date.

The AGM approved certain amendments to the Articles of Association of the Company. The amendments were made primarily due to the changes connected with the end of the exclusivity, the universal telecommunications service provider role, the organization transformation and the stock exchange regulations.

The shareholders elected the members of the Board of Directors and the Supervisory Board.

Members of the Board of Directors of Matáv remain until the date of the Annual General Meeting that will close business year 2002:

Elek Straub, Hans Albert Aukes, dr. Sándor Csányi, Gyula Gansperger, Jan Geldmacher,

Fridbert Gerlach, Michael Günther, dr. Klaus Hartmann, dr. Mihály Patai.

Members of the Supervisory Board of Matáv remain until the date of the General Meeting that will close business year 2002:

Géza Böhm, dr. Árpád Herbst , Gellért Kadlót, Joachim Kregel, dr. Erbil Kurt, dr. Klaus Nitschke, dr. László Pap, dr. Ralph Rentschler, Péter Vermes.

PricewaterhouseCoopers will remain Matáv’s Auditor for another two business years.