Press Releases

Budapest, October 6, 2005 14:00

Today Magyar Telekom's Board made a proposal for the merger of Magyar Telekom and T-Mobile Hungary. The Shareholders' Meeting needs to make the relevant decision. This proposal is in line with the medium-term strategy announced in 2004 with the use of Group-level synergies as one of the key pillars. If the merger is made T-Mobile will continue to exist as an independent brand and operate as an independent line of business within the Magyar Telekom Group, but the Group expects that the merger would bring tangible advantages for the customers and have a positive impact on the market and competition.

In line with the Magyar Telekom Group's medium-term strategy announced in 2004 Magyar Telekom's Board today made a proposal for the merger of Magyar Telekom and T-Mobile Hungary. The merger will facilitate capitalizing on the Magyar Telekom Group's value creation possibilities that can be sustained also in the long term, with special regard to keeping and extending the customer base, optimizing efficiency and cost levels and using the advantages offered by new innovative technologies. As a result, the combined annual financial benefit is expected to reach several tens of billions HUF within a few years.

The idea of aiming at harmonization of the fixed-line and mobile areas is not unique; numerous European national operators with both fixed-line and mobile LoBs (British Telecom, France Telecom, Telekom Italia, etc.) have realized the strategic advantages and possibilities resulting from convergence.

Merger of Magyar Telekom and T-Mobile will further intensify competition both on the fixed-line and mobile markets through combined fixed-line-mobile value propositions. Additionally the merger will contribute to creation of a framework for long-term service-based competition.

Merger of the two companies will bring tangible advantages also for the customers. Standardized service provision will offer the customers simpler administration, buying, bill management and technical assistance. Additionally harmonization of the fixed-line and mobile activities will enable the introduction of new integrated services.

Merger milestones

The Board's proposal needs to be approved by the Shareholders' Meeting of both companies. The merger process will end with registration by the Court of Registry. After registration by the Court of Registry T-Mobile will continue its operations within Magyar Telekom Ltd. as an independent brand and an independent line of business.

There is no legal obstacle to the merger, it complies with applicable national and international laws. Since T-Mobile Hungary is already a full-owned Magyar Telekom subsidiary the planned step does not require obtaining the approval of the Hungarian Competition Authority.