Press Releases

Budapest, April 23, 2003

The Ministry of IT and Communications and Westel have reached an agreement on amendment of the Concession Contract of Westel Rádiótelefon Kft. (Westel 0660) and termination of the NMT service from June 30, 2003.

In 1990 Westel 0660 – the first mobile carrier in Hungary – was the first to start provision of analog mobile phone service in Central Europe. The company played a big role in spreading mobile telephony in Hungary; in 1999 the number of customers reached close to 100,000. As a result of the operations of the carriers on the three-player GSM market the importance of the analog service has been continuously decreasing since 1999. Westel 0660 cannot compete with the carriers providing up-to-date and more efficient mobile services in terms of either quality or choice of services. Today about 7 million customers use GSM services in Hungary, while Westel 0660 has less than 17,000 customers. Consequently the company's operation became loss-making in 2002.

For this reason since early this year Matáv was conducting negotiations with the Ministry of IT and Communications on amendment of the Concession Contract of Westel 0660 and termination of the service. An agreement has been reached at the negotiations that the NMT service would be terminated on June 30, 2003.

The Matáv Group is making efforts to ensure that the termination of service causes the least possible inconvenience to customers. The customers can opt to migrate to the GSM service of their choice and the terminated service provider will give an offer to the active 0660 customers to ensure continuity of the mobile service.

Over the past years Westel Mobile Telecommunications Company Ltd. has made significant investments to improve coverage and so did the other carriers operating on the mobile market. As a result the coverage of the GSM providers is almost identical with that of the NMT provider while they offer better quality and service standards.

The termination of Westel 0660 services will not impact the Matáv Group's profitability this year since already last year the company accrued the provisions needed to cover the costs to be incurred in connection with the termination. The value of the assets connected with the concession has been written off over the last years.

Westel 0660 is a radio telephone service provider with 100% Matáv ownership.