1

Financial Strength & Market Leadership

June 2002

2

Q1 2002 Financial highlights

Q1 2001 Q1 2002

128,549140,983

9.7%

Revenues

13,292

19,946

Net Income50.1%

53,58158,850

9.8%

EBITDA(in HUF million)

EBITDA growth driven by Westel

Net income boosted by Westel and the strong HUF

Q1 2001 Q1 2002 Q1 2001 Q1 2002

Revenue growth due to mobile and international segment

3

Infrastructure based competition RIO based interconnection fees are provided only if there are at least 3 points of

interconnection out of the 10 secondary switches

Price cap regime The overall price cap is 4% in 2002 and CPI minus 3% in 2003 and 2004

Specific price caps for subscription fee and local tariffs

Matáv is a universal telecom service provider Universal Telecom Fund to provide compensation for uneconomical services such as

low-usage package and public payphone service

RUO approved in February

RIO expected to be approved by the end of June Matáv signed IC agreement with Pantel, Vivendi, GTS-Datanet and eTel

Predictable and transparent regulatory environment

4

1,000

1,500

2,000

2,500

3,000

1997 1998 1999 2000 2001 Q1 2002

Lin

es

in '0

00

25%

30%

35%

40%

Pe

ne

tra

tio

n

Residential analogue Business analogue ISDN Channels

Fixed line: Focus on innovative solutions, strong cash generator

Stabilised number of lines

Provide higher value services Shift to ISDN (up by 34%,

representing more than 16% of total

lines)

Respond to emerging competitive

environment Advanced tariff re-balancing

Increasing popularity of the wide

range of tariff packages

13.6% average headcount reduction

at parent company

322 lines per employee in Q1 2002

Number of Access Lines and Penetration in Matáv’s Local Service Areas

2,404

2,672

2,9002,966 2,936

31.7

35.4

38.6

39.5 39.1 39.2

2,939

5

Mobile: Continued delivery of excellent profit growth & efficiency

Mobile penetration in Hungary

reached 53% in Q1 2002

Actively maintained leadership

position (50.6% market share)

EBITDA margin increased to

35.6% in Q1 2002

Westel: ARPU (HUF 6,030)

and MOU (121)

Revenues from enhanced

services up by 63%

The world premier of MMS

0

500

1 000

1 500

2 000

2 500

3 000

1997 1998 1999 2000 2001 Q1 2002

0%

10%

20%

30%

40%

50%

60%

Pre-paid Contract

Su

bsc

rib

ers

in '0

00

842

547363

1,599

GS

M P

enet

rati

on

16.210.6

7.0

30.8

Penetration

48.7

2,493

Westel Subscriber Growth and Mobile Penetration in Hungary

2,711

53.0

6

International: Unchanged expectations, dynamic subscriber growth

Strong revenue growth but temporary slowdown in profitability Fixed-line tariff rebalancing in line with industry normsMobile and Internet customer base more than doubled

Penetration: 27% fixed line, 13% mobile, 1% Internet

Unchanged set of conditions for MakTel

Substantial volume growth potential in all market segments

Drivers of Q1 2002 results

7

Matáv Group: strong financial position

40%38%

33%

21%

47%*45%*

0%

10%

20%

30%

40%

50%

1997 1998 1999 2000 2001 Q1 2002

Net Debt to Total Capital Controlled leverage after the

Westel acquisition

Strong operational cash flow

provides some balance sheet

flexibility for the future

Rating:

S&P BBB+

Moody’s Baa1

Q1 2002 debt structure:

71% EUR, 24% HUF, 5% USD

*MakTel and Westel acquisition were financed from debt

8

Matáv Outlook

Focus on growth businesses (mobile, data)

Solid cash generation and efficiency improvement in fixed line

Transparent environment in key businesses

Targets for 2002: High single-digit revenue growth

Over 40% EBITDA margin

Approximately HUF 105 billion capex