Press Releases

Budapest, July 3, 2006 18:15

Magyar Telekom today announced that it has notified the U.S. Securities and Exchange Commission of the late filing of the 20F annual report for the fiscal year 2005 under Form 12b-25 as it was unable to meet the June 30, 2006 deadline prescribed by the U.S. Exchange Act 1934. The Company has filed the Form 12b-25 with the following content:

"In the course of the audit of the financial statements of Magyar Telekom Plc. (the "Company") and certain subsidiaries of the Company for the year ended December 31, 2005, the auditors, PricewaterhouseCoopers raised concerns regarding two contracts entered into by subsidiaries of the Company, that potentially involve violations of the Company's system of internal control and applicable law and regulation. In particular, the auditor noted the unusual nature of these contracts and apparent absence of a benefit to the Company and its subsidiaries. The Company has launched an investigation into these contracts. This investigation is being conducted by an independent law firm under the supervision of the Audit Committee of the Supervisory Board of the Company. The Company has also engaged a firm of forensic accountants to assist with this investigation.

Pending the investigation, the Company's Board of Directors has not yet approved annual financial statements of the Company for the year ended December 31, 2005 (the "2005 financial statements") and as a consequence the auditor is unable to complete its audit of the 2005 financial statements or to issue an audit opinion. The Company has notified the Hungarian Financial Supervisory Authority, the U.S. Department of Justice, the U.S. Securities and Exchange Commission and other regulatory authorities of the investigation.

The investigation was not completed by June 30, 2006, and the Company does not expect it to be completed by July 15, 2006 either, and as such does not expect its audited 2005 financial statements to be available by either of those dates. The Company is uncertain as to when such investigation will be completed or these financial statements will be available.

The Company has notified the market on February 13, March 30, April 26 and May 11, 2006 of the pending investigation. To keep the market informed until issuance of the Company's audited 2005 financial statements and the filing of the related annual report on Form 20-F, the Company has released to the public unaudited financial information for the year ended December 31, 2005 and quarter ended March 31, 2006."

The Company also stated in the notification, that it does not anticipate any significant changes in results of operations for the last fiscal year to be reflected in the earnings statements.

The Company is committed to complying fully with the requirements and requests of the authorities that have jurisdiction over it. The Company will seek to hold an AGM and have its annual results and dividend proposal approved as soon as reasonably practicable.