Press Releases

Budapest, May 2, 2005

Hungary's biggest rebranding operation ever will be implemented within a few days: Matáv Group will change its name. The new company name of Matáv Rt. will be Magyar Telekom, and its business lines will adopt the international T-brands: T-Com (formerly Matáv Wireline Services Line of Business), T-Online (formerly Axelero), T-Mobile, T-Systems (formerly Matáv Business Services Line of Business) and T-Kábel (formerly MatávkábelTV). The rebranding will give fresh impetus to every member of the group in product development and customer service.

On February 22, 2005 the Annual General Meeting approved the decision of the Board of Directors taken on January 20 on changing the name of Matáv to Magyar Telekom and on adoption of the full range of the T-brands. So Hungary's biggest single rebranding operation ever can be carried out within a few days, pending the registration of the name change by the registration court.

The years of close cooperation between the Magyar Telekom Group and its parent Deutsche Telekom (DT) will deepen further with the introduction of the new T-brands in Hungary. Closer integration with the DT Group will offer opportunities for sharing international know-how and experience and engaging in joint development. The resulting benefits will be enjoyed by the customers.

Dr. Karl-Gerhard Eick, Deutsche Telekom's Management Board member responsible for Finance and in charge of Central and Eastern European subsidiaries said: 'The "T"'-brand visually sums up the value generated by our international corporate group - customers recognize it clearly and associate it with clear promises of quality and performance. The "T" is a brand of excellence, a symbol worldwide for quality, innovation and efficiency. Magyar Telekom will profit from this brand value while enhancing it further. I have no doubt about that.'

The T-brand stands for top-of-the-class telecommunications services and superior quality in all the markets where the representatives of the T-brand are present. This name change and rebranding is part of an overall renewal process also in the case of the Magyar Telekom Group and, besides the introduction of several new services and innovative solutions, it is a good opportunity for the group also to change its "interior" and improve its customer service.

"The rebranding may dynamize the wireline business. Through standard quality and efficient customer service it will be easier to retain the old customers and win new ones. Our goal is to offer our customers even more state-of-the-art services of higher quality, better value for their price which are simple and comfortable to use. Uniquely in the Hungarian telecommunications market the T-brand represents the entire communications portfolio because there is no telecommunications service in Hungary the Magyar Telekom Group cannot provide," said Elek Straub, Chairman and Chief Executive Officer of Magyar Telekom.

In addition to the above, it is considered a key objective that the group's already high-level and recognized social contribution and sponsorship role further strengthen in the future. Thanks to the rebranding, new dimensions will open in sponsoring, too; we will be able to appear in outstanding international events (e.g. the 2006 Football World Cup in Germany). However, the local nature of the sponsoring and donation activity will be maintained and local initiatives will continue to constitute the backbone of our support activities.

Elek Straub stressed: "The Hungarian Telekom Group, as part of the international DT Group, will remain Hungary's leading telecommunication service provider. Our primary objective remains the satisfaction of the requirements of the domestic customers. The new brands will inherit the strengths of the business lines whose name they bear, and will be enriched by additional values."

Magyar Telekom

Matáv Rt.'s legal status will not be affected by the change of name; this fact will ensure legal continuity for the partnership with all existing customers. As regards its future appearance, Magyar Telekom will be a holding that will exercise the ownership rights, coordinate and direct the activities of the business lines belonging to the group and operating under an independent brand name. It will also provide group-level services, and will represent the group as a whole. (The ticker identifying the shares issued by the company will change from MATÁV to MTELEKOM at the Budapest Stock Exchange, while the MTA ticker used at the New York Stock Exchange will not change.)

We will continue to evaluate opportunities for value creative international expansion under the name Magyar Telekom since the elements of the medium term strategy announced last August have not changed. In this context the visible membership in an international group is also an advantage showing its first results in the successful acquisition of Telekom Montenegro (telecommunications company in Montenegro). For the time being the names and brands of the member companies within the international portfolio of the Magyar Telekom Group, i.e. MakTel (telecommunications company in Macedonia) and Telekom Montenegro remain unchanged.

Beyond the above, our customers will only seldom meet the name of Magyar Telekom, as they will be "addressed" by the business line dedicated to serve them and operating under an independent brand.

T-Com

Matáv's Wireline Services Line of Business will adopt the T-Com brand name. In future, our residential customers will most often meet this brand.

T-Com, comprising the wireline services of Magyar Telecom, i.e. telephone, internet, cable television, will open new dimensions in wireline telecommunications. T-Com, in cooperation with T-Online and T-Kábel, will offer the whole range of wireline telecommunications to residential and SME customers.

Thanks to its international background, experience and the synergies rooted in closer cooperation, T-Com will become a modern, dynamic, innovative area focusing on the satisfaction of customers' requirements.

In the spirit of focus on the customer, T-Com is starting to develop an integral shop network called T-Pont. The T-Com network of 18 new or converted T-Pont shops will focus on high-level service for customers and on making available all the offers belonging to the T-brands in the same place. So the T-Pont shops will sell, besides T-Com products, also T-Online, T-Kábel and T-Mobile products and services. At the same time, several T-Mobile shops will offer T-Com products. The simple, transparent internal structure of the shops, and a significantly enlarged sales and customer contact staff will facilitate the faster and more convenient administration.

Building on the existing product portfolio offered to residential and SME customers, T-Com will come out with various innovative offerings during the year, in the field of both voice and internet services. From June on, significant discounts (up to 50%) will be introduced for calls initiated to countries where the T-brand is present. In addition, further advantageous, flat-rate tariff packages are expected to be introduced. T-Com will launch a new loyalty program in the second part of the year.

T-Com has committed itself to the building of the information society and the fast spread of the internet in Hungary. Accordingly, T-Com will continuously reduce internet fees, and has set the new goal of having 600 000 ADSL subscribers by the end of 2006. In addition, from May T-Com will, similarly to last year, again double the maximum speed of broadband accesses without any additional charge to the subscribers.

T-Online

T-Online (formerly: Axelero) is one of the strategic pillars of the T-Com business and the market leading internet service provider of the Magyar Telecom Group.

T-Online is the youngest but fastest growing business of the Magyar Telekom Group. As regards its financial dynamism, the figures of the past few years speak for themselves: Axelero closed 2004 with 737 million HUF profit. The milestones of innovation are also remarkable: it is top of the league in content services (origo(, prepaid internet service, and the introduction of broadband content service (music store, video service) is also associated with the company's name.

T-Online wishes to retain its pioneering/innovative role also in the future, and it also wants to be loyal to the values of the T-Online brand - dynamic, friendly, innovative - by making the rebranding a fast and seamless transition and exploiting the advantages it offers. T-Online will renew its product offering and will introduce new, innovative content services better suited to the individual requirements of its customers, and will lay even more weight on seamless service for its customers.

T-Kábel

The other strategic pillar of the T-Com business is T-Kábel, the cable television service provider of the Magyar Telekom Group, formerly known by the name of MatávkábelTV.

Besides "traditional" analog cable television, the T-Kábel portfolio also comprises Kábelnet, the modern broadband internet access. T-Kábel's goal is to offer high-quality leisure-time entertainment so that, through its services, the world will widen and its existing and future customers will enjoy common experiences. T-Kábel also plans to introduce cable telephone and digital services.

From the end of May, T-Kábel will offer its services with discount entrance fees in order to win new customers.

T-Systems

The Magyar Telekom Group business in charge of serving large corporate customers, the former Business Services Line of Business will adopt the T-Systems brand.

With the support of the T-Systems brand and the competence behind it, the Magyar Telekom Group's T-Systems business line will have fast and in-depth access to the international trends and experience, which will help it gain new ground in the systems integration market.

T-Systems has full telecommunications, information technology and outsourcing competence in Hungary, serving the 3000 largest Hungarian businesses, offering complex solutions as a flexible business partner. T-Systems is aware of and understands the objectives and expectations of the business markets, this enables it to develop customized solutions. It is proactive in meeting halfway the challenges of the infocommunications market, and offers customized solutions enabling its customers to focus on their core business. In this way T-Systems optimizes the business processes of the customers, reduces the costs and, through all this, increases the competitiveness of the customer.

It is a key task of the T-Systems business line of the Magyar Telekom Group to develop close cooperation and coordinate activities with T-Systems Hungary Kft. which is already present in Hungary and 49% owned by Magyar Telekom. As a result, they will be able to offer integrated telecommunications services, infocommunications solutions and outsourcing services. Thanks to the cooperation, the strongest Hungarian infocommunications solution provider will emerge.

In future, the T-Systems business line of the Magyar Telekom Group and T-Systems Hungary Kft. will offer joint account management for the TOP 100 corporate customers.

T-Systems as a member of the Magyar Telekom Group will soon launch its internet-based development, the Távszámla (e-bill) service which is unique in Hungary. This electronic bill presentation and payment service will handle bills issued by the business lines of Magyar Telekom Group (T-Com, T-Online, T-Mobile, T-Systems and T-Kábel). This service will allow that bills be presented and paid via the internet; in this way, the customers using this service will receive their bills not in a paper format but electronically via the internet.
Any bill issuing enterprise may join the Távszámla service. The goal of Távszámla is to enable the users of this service to handle all bills (water, gas, telephone, electricity, etc.) via the internet.

In the future, the business line will promote IP-telephony in the corporate customer bases under the T-Systems brand, and in addition to the telecommunications services provided so far, T-Systems will also offer its customers LAN market and IT security services.

T-Mobile

On June 5, 2004, 10 years after entering the market, the biggest Hungarian mobile operator and market leading service provider adopted the T-Mobile brand name. T-Mobile services have around 80 million subscribers in 9 countries around the world.

In the rebranding operation the T-brand was introduced alongside the already existing values, in one step, in just five weeks. The similarity of the brand values, and its essentially similar corporate structure helped T-Mobile Hungary adopt reliability, simplicity and inspiration as integral values very quickly.

Hungarian consumers have learned and become fond of the T-Mobile brand. Research clearly proves that the change implemented in an unprecedentedly short time met with very good reception on the part of the customers. By early November, the supported awareness of the T-Mobile brand reached 100 per cent. Spontaneous mentioning of the company's name by the respondents was also exceptionally high, 85% in that period.

The rebranding marked the beginning of an evolution process, which set the company on a new trajectory. The customers of T-Mobile Hungary can enjoy the benefits of international presence and relations in a tangible form, such as the Relax packages, the mobile phones developed specially for the T-Mobile group, the Blackberry service developed under an international cooperation scheme or the roaming benefit offered in the countries covered by T-Mobile. Loyalty is becoming increasingly important in the present phase of development of the Hungarian mobile market. The company is expanding the Kapcsolat Aranykártya (Connection Gold Card) loyalty program with new benefits. Since the rebranding, this program has been renewed - both in terms of name and features - and also covers Domino prepaid card customers. T-Mobile is also developing multimedia and comfort m-com services.

T-Mobile, now approaching its first anniversary, is leading its customers through to the world of third generation services under a strong international brand.

Financial impact of the rebranding

Deutsche Telekom will bear the direct operational expenses of the name change. The cost of the name and brand change, and the reimbursement received from the DT Group, will be accounted on net basis, so they will not impact the EBITDA guidance of the Magyar Telekom Group. In the financial statements of the Magyar Telekom Group there is no brand name capitalized which the rebranding would impact, so no brand value loss will be recognized through the name change.