Press Releases

Budapest, June 16, 2008 15:30

Magyar Telekom signed today in Budapest an agreement with the European Investment Bank (EIB) for a long-term loan granted through Deutsche Telekom International Finance B.V. as a financial intermediary in the amount of HUF 50.6 billion that will be used to finance its mobile broadband investment projects. The contract was signed by Chairman and CEO Christopher Mattheisen and CFO Thilo Kusch, and on behalf of EIB by Vice-President Marta Gajecka.

Magyar Telekom has been granted a loan in the amount of HUF 50.6 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 2015, and bears fix interest rate.

The loan has been taken for upgrading and further development of Magyar Telekom’s mobile networks to increase the quality and accessibility of broadband services, particularly in rural areas of Hungary. The EIB loan will co-finance the company’s investment projects designed, among others, to expand third generation mobile networks coverage and upgrade network capacity. Access to advanced high-speed mobile broadband services is expected to be a major contributor to the achievement of the company’s strategic growth targets.

Christopher Mattheisen, Magyar Telekom’s Chairman and CEO said, commenting the event: “Magyar Telekom is building broadband communications for its customers in all markets where it is present. Mobile broadband is an important source of growth for Magyar Telekom, and in the next years we aim to continue the dynamic development of our 3G/HSDPA network. We have achieved clear market leadership in mobile broadband development in Hungary through service quality and innovation. Our strategy focusing on mobile broadband and building an advanced broadband infrastructure is in harmony with our ongoing efforts and long-term programs aiming at improving Hungary’s competitiveness and eliminating digital illiteracy as well as the Government program promoting the development of an information society.”

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. The significance of the loan agreement is increased by the fact that after a lapse of some 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.

Marta Gajecka, EIB Vice-President responsible for Bank’s lending operations in Hungary, commented: “I am very pleased that EIB funds help to strengthen the competitiveness of especially Hungary’s rural areas through a substantial improvement of the accessibility and quality of the modern telecommunication services.”

Ákos Bóna, State Secretary of the Ministry of Transport, Telecommunication and Energy said: „The Ministry responsible for telecommunication expects that as a result of Magyar Telekom’s investments financed using the EIB loan that mobile broadband Internet will be accessible at least on 90% of Hungary by the end of 2009, and in this way 98% of the population living there will have access to information society services. The Ministry is hopeful that enhanced competition – resulting partly from these developments – between fixed and mobile broadband infrastructures will lead to further price decrease of broadband Internet services.”

Thilo Kusch, 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 fix 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.”

In November 2007 Magyar Telekom prolonged its 900 MHz mobile concession contract, expiring in November 2008, with the Ministry of Economy and Transport by another 7.5 years. Under this contract Magyar Telekom will spend, in addition to the projects planned earlier, HUF 20 billion on mobile broadband development in the coming two years in Hungary’s six regions. The projects started in early 2008 have to be completed by the end of 2009.