Press Releases

Budapest, January 12, 2006 15:00

Magyar Telekom signed an agreement with the European Investment Bank (EIB) today for a long-term loan, granted through Deutsche Telekom International Finance B.V. as a financial intermediary, in the amount of HUF 47.4 billion that will be used to finance its broadband investment projects.

Magyar Telekom has been granted a loan in the amount of HUF 47.4 billion by the EIB through DT International Finance B.V., a Deutsche Telekom subsidiary managing Group financing, as a financial intermediary. The loan matures in January 2013, and will be repaid in five equal installments starting in 2009 after two years grace period. The loan bears a variable interest rate based on the 3-month BUBOR.

Magyar Telekom will use the loan entirely to finance its broadband investment projects. A key strategic target of Magyar Telekom is to maintain the continuing growth in broadband internet penetration. As the leading service provider in Hungary, Magyar Telekom aims to increase its broadband connections to 600,000 by the end of 2006.

The contract guarantees a direct HUF project financing from international markets; in this way, another source of long-term HUF financing will be available for Magyar Telekom. Magyar Telekom currently holds an A- long term credit rating from Standard & Poor's and Baa1 from Moody's.

Dr. Klaus Hartmann, Magyar Telekom's CFO commented: "We have arrived at another important milestone in the long-standing relationship with the EIB. Today we have signed an agreement with conditions better than those Magyar Telekom could reach for such an amount on the Hungarian market. By taking out a variable interest rate loan, Magyar Telekom continues to balance the variable and fixed rate elements of its loan portfolio. At the same time, the average maturity of the loan portfolio will increase and due to the repayment structure, the cash-flow of the loan will broadly match the cash-flow of the project."

On behalf of the Republic of Hungary as a co-owner of the EIB, Mr. Mihály Jambrik, the Administrative State Secretary of the Ministry of Informatics and Communications was also present at the loan agreement signing. On that occasion he stated: "By enabling widespread access to broadband electronic communications services and networks, Magyar Telekom's investment projects efficiently facilitate the development of an information society, contributing in this way to the strengthening of economic competitiveness and of equal opportunities in Hungary. Improving broadband internet accessibility and increasing internet penetration are key targets of the National Broadband Strategy adopted by Hungary's Government on December 6, 2005."

The significance of the loan agreement is increased by the fact that after a lapse of several years the EIB, the European Union's bank based in Luxembourg, will again finance telecommunications investment projects in Hungary. The EIB, in line with its "Innovation 2010 Initiative" launched in 2003, has a special focus also to financing projects that facilitate widespread access to high-capacity and high-quality information and communications technology infrastructure and networks.