Press Releases

Budapest, June 11, 2002

Matáv will not bid for the tender invited for the privatization of the Bulgarian Telecommunications Company. Over the past month Matáv carried out a thorough and complete business and risk analysis of both the company and the Bulgarian telecom market.

On April 4, 2002 the Bulgarian government invited bids for the privatization of the Bulgarian Telecommunications Company. Matáv took an interest in the offer, purchased the tender documents and its experts carried out due diligence of the company between May 13 and 17. Matáv’s assessment of the material provided covered the results of BTC, its level of development, the size of additional investments required and the market environment.

This assessment showed that strengthening the competitive abilities of BTC and ensuring its profitable operation in the field of fixed line services required substantial transformation of its organization and operations, a great deal of technological development and considerable investment over and above the purchase price in order to comply with the universal service obligation. Furthermore, the possibility of a third GSM license tied in with the transaction represents limited advantages.

Additional concerns are raised by the fact that the privatization of the company is likely to coincide with the start of the liberalization of the Bulgarian telecom market (January 1, 2003) thus the organization restructuring, the modification of the business plans and the modernization of the infrastructure all have to be implemented in an environment where neither the market nor the regulatory conditions are yet sufficiently developed.

After having considered the above factors, the management of Matáv decided not to submit an offer to the Privatization Agency by June 10, the deadline for the first round of the offers.

At the moment, there is no other favorable acquisition offer for Matáv on the Bulgarian telecommunications market but it will continue to monitor the regional expansion possibilities.