MAGYAR TELEKOM GROUP FULL YEAR AND Q4 2014 RESULTS PRESENTATION FEBRUARY 26, 2015

FULL YEAR RESULTS, OUTLOOK AND GUIDANCE

3 3

HIGHLIGHTS

STRENGTHENED MARKET POSITIONS

We are now market leaders in all segments of the Hungarian telecommunication market

Acquisition of crucial frequencies in 2014 coupled with the network and frequency sharing agreement with Telenor on the 800MHz spectrum strongly supports our mobile market leadership

The acquisition of GTS Hungary strengthens our market positions among business customers

2014 FINANCIAL TARGETS MET

Revenues declined by 1.7% due to voice revenue erosion and lower energy and SI/IT sales

EBITDA grew by 1%, exceeding slightly our public target thanks to improved gross margins and headcount efficiency

Capex* of HUF 86.8 billion was driven by increased spending on the Hungarian mobile network which resulted in population based coverage of 78% by end-2014

GUIDANCE FOR 2015 AND 2017

Revenues to increase driven by successful rebalancing and bundling strategy

EBITDA to be supported by further efficiency measures, EBITDA to surpass HUF 185bn by 2017

Capex spending in 2015 to be dominated by Hungarian fixed HSI network investments

FCF** to reach at least HUF 50 billion by 2017

*excluding spectrum license fees and annual frequency fee capitalization **after minority dividend payments

4 4

TOTAL MOBILE

FIXED VOICE

subscribers

6,000,000

3,000,000

0

4,500,000

1,500,000

+1% +1%

2014 2013 2012

500,000

1,000,000

2,000,000

1,500,000

0

-1% -2%

2014 2013 2012

0

2,500,000

500,000

1,000,000

2,000,000

1,500,000

+17%

+27%

2014 2013 2012

1,200,000

900,000

600,000

300,000

0

+8% +8%

2014 2013 2012

1,200,000

900,000

600,000

300,000

0

+5%

2013

+6%

2014 2012

MOBILE BROADBAND

PAY TV FIXED BROADBAND

subscribers

subscribers subscribers subscribers

Market share* 60% 58% 56% Market share* 37% 38% 38% Market share* 25% 26% 27%

* Based on the total fixed voice / BB / pay TV market estimated by the National Media and Infocommunications Authority

MARKET POSITIONS ON THE HUNGARIAN TELECOMMUNICATION MARKET

5 5

GROUP EBITDA

2014 GROUP RESULTS – REVENUES AND EBITDA

640

635

630

625

0

HUF bn -1.7%

2014

626.4

Other

-0.7

Energy

-4.8

SI/IT

-4.8

TV

3.6

Fixed BB

1.9

Fixed voice

-8.1

Mobile equip.

3.1

Mobile non-voice

4.9

Mobile voice

-6.1

2013

637.5

GROUP REVENUES

Decline in mobile voice revenues counterbalanced by strong growth in mobile data usage resulting also in higher smart mobile device sales

Traditional fixed voice revenue decline partly offset by growth in fixed broadband and TV revenues driven by the continuous increase in the customer base

Lower SI/IT revenues caused by change in product mix

Energy revenue decline due to regulated price reductions

Direct margin erosion driven by higher bad debt but partly mitigated by improved SI/IT and energy margin

Savings in employee related expenses due to headcount reduction measures in 2013 in Hungary and Macedonia

Lower operating expenses mostly driven by the reduction and changed accounting treatment of the annual frequency fees

Higher operating taxes* due to increase in the rate of the telecom tax from August, 2013

0

184

182

180

2014

181.2

Taxes*

-2.1

net other opex

4.8

bad debt

-3.0

HUF bn

1.0%

gross margin w/o bad debt

2.1

2013

179.5

*telecom and utility taxes

6 6

2014 GROUP RESULTS – CAPEX AND FCF

0

50

100

150

200

HUF bn HUF +38.2bn

2014

184.4

Other

6.5

Annual freq. fee cap. in 2014

38.9

Spect. licenses in 2014

58.7

STB in 2013

-7.2

Annual freq. fee cap. in 2013

-17.5

Spect. licenses in 2013

-41.1

2013

146.1

HUF 38.0bn Capex related to the Hungarian spectrum license extension and HUF 3.1bn 4G spectrum license fee in Macedonia in 2013

HUF 58.7bn Capex related to the Hungarian spectrum license acquisition in 2014

Hungarian annual frequency fees were capitalized resulting in a HUF 17.5bn increase in book Capex in 2013 and HUF 38.9bn in 2014

Change in the accounting treatment of set top boxes in 2013 affected reported Capex

Working capital improvement due to:

− reverse factored vendor invoices in 2013

− lower increase in receivables related to equipment installment sales

− favorable change in provisions

Higher spectrum related payments in 2014

Increase in repayment of other liabilities mainly due to higher payments related to reverse factored vendor invoices in 2014 compared to 2013

-15

0

15

30

HUF bn

HUF -14.4bn

2014

-13.8

other

-2.6

repayment of other fin.liab.

-7.4

other cash

Capex

-4.4

spectrum payments

-17.6

working capital

15.8

EBITDA

1.8

2013

0.6

*FCF defined as Net cash generated from operating activities + Net cash used in investing activities + Repayment of other financial liabilities - Proceeds from / (Payments for) other financial assets - net

GROUP FCF* GROUP CAPEX

7

REVENUE

EBITDA

CAPEX*

surpassing HUF 185bn

around HUF 80bn

up to 3% decline

around HUF 105bn

**excluding spectrum license fee

HUF 626.4bn (-1.7%)

HUF 181.2bn (+1.0%)

HUF 86.8bn

2014 RESULTS 2015 TARGETS 2017 TARGETS

FCF**

*excluding spectrum license fees and annual frequency fee capitalization **after minority dividend payments

surpassing HUF 50bn

roughly stable compared to 2014 level

up to 3% increase

ca. HUF -19.0bn

Dividend minimum HUF 15 per

share HUF 0

FINANCIAL OUTLOOK

8

0

150

300

450

600

750

2017E 2015E 2014 2013 2012

Mobile voice & non-voice

Equipment and other (fixed and mobile)

Fixed voice, data, internet &TV

SI/IT

Energy

0-3% revenue growth anticipated for 2015 vs. 2014

2017 revenues to be roughly stable compared to the 2014 level due to the fall out of business energy revenues

Mobile broadband growth mostly compensates for the decline in voice revenue

Fixed voice revenue decline mitigated by growth in TV and BB revenues

Growth in SI/IT revenues supported by market expansion

HUF bn

GROUP REVENUE DEVELOPMENTS

REVENUE GROWTH DRIVEN BY SUCCESSFUL REBALANCING

9

EBITDA AND COST DEVELOPMENTS (RELATIVE TO REVENUES)

2015 EBITDA to decline by a maximum 3% vs. 2014 level

2017 EBITDA expected to surpass HUF 185 billion

2015 indirect costs include the expected ca. HUF 8 billion severance expense related to the redundancy program involving ca. 1,000 employees

Direct costs expected to moderately rise in parallel with increasing revenues and change in product mix

Constant operating* taxes assumed

5% 5%5%

32% 37% 36% 37% 37%

0%

20%

40%

60%

80%

100%

2017E

32%

26%

2015E

28%

30%

2014

29%

30%

2013

28%

5%

29%

2012

32%

5%

31%

Indirect costs *Special-, telecom - and utility tax EBITDA Direct costs

DISCIPLINED COST MANAGEMENT

10

0

20

40

60

80

100

120

2017E 2015E 2014 2013 2012

Subsidiaries

Run the business

Efficiency

Mobile access

Fixed access

New technologies and services

Ca. HUF 105 billion Capex earmarked for 2015

Fixed access: focus on increasing HSI coverage

Mobile access: 4G population coverage to reach 97% by end 2015

Efficiency investments: – Replacement of legacy network – PSTN migration – Online front end development – Mobile network modernization – CRM & Billing system project

New technologies and services: – All IP network – Service innovation – HW as a service

CAPEX*/Sales

HUF bn

15% 14% 16% 14% 13%

EFFICIENCY INVESTMENTS FREE UP CAPEX FOR NEW TECHNOLOGIES AND SERVICES

*CAPEX excluding spectrum license fees and annual frequency fee capitalization

CAPEX DEVELOPMENTS*

11 11

*defined as net debt / total capital

50 50 50

0

10

20

30

40

50

60

70

0%

10%

20%

30%

40%

50%

Dividend per share (HUF) Net debt ratio*

2014

0

45.7%

2013

0

43.8%

2012

34.3%

2011

34.1%

2010

32.7%

Dividend payment Net debt ratio

TARGET

**subject to the Board of Directors’ future proposal to the General Meeting, which will be made in due course, when all necessary information is available and all prerequisites to making such proposal are met

DIVIDEND POLICY

DIVIDEND PAYMENT AND NET DEBT RATIO DEVELOPMENTS

Maintain net debt ratio (net debt/total capital) target of 30% - 40%

Board of Directors proposes no dividend payment on 2014 earnings for approval to the AGM

Based on the current operating, regulatory and taxation environment and outlook coupled with the anticipated significant improvement in the free cash flow generation, the Company believes that it will be able to pay at least HUF 15 dividend per share on 2015 results**

Q4 2014 RESULTS

13 13

GROUP EBITDA

Q4 2014 GROUP RESULTS – REVENUES AND EBITDA

165

171

170

169

168

167

166

130

-1.9

SI/IT

-1.4

TV

0.8

Fixed BB

0.7

Fixed voice

-2.4 3.9

M. non-voice

1.5

Mobile voice

-0.9

Q4 2013

HUF bn

Mobile equip.

-0.3%

Q4 2014

165.3

Other

-0.8

Energy

165.7

GROUP REVENUES

Mobile non-voice revenues boosted by increasing mobile internet customer base and usage

Higher mobile equipment revenues thanks to increased sales and higher average handset prices

Lower fixed voice revenues partly mitigated by fixed BB and TV revenue growth

SI/IT revenue decline due to a shift in focus to less equipment intensive deals

Lower energy revenues due to regulatory price cuts

Gross margin decline driven by lower fixed service margin partly offset by improvement in mobile service margins

Lower severance expenses as the majority related to 2014 headcount reduction was booked in Q3 2014

Lower other opex thanks to employee efficiency improvements

Taxes* remained on the same level

42

41

0

38

39

40

+8.0%

Q4 2014

HUF bn

38.8

Q4 2013

-0.6

Gross margin

3.0

Net other opex

Severance rel. exp

0.7 0.0

Taxes*

41.9

*telecom and utility taxes

14

42

41

40

39

0

Measurement diff.

41.9

Q4 2014

8.0% HUF bn

38.8

Q4 2013

1.7

T-HU

0.9 0.1

T-Systems Maced.

0.4

Monten.

0.1

0

168

166

164

162

-0.3%

Q4 2014

165.3

Elim. Monten.

-0.2

Maced.

-0.4

T-Systems

-3.7

HUF bn

165.7

Q4 2013

0.6

T-HU

3.2

+1% -11% -3% +16% -3% +43% +6% +2% Change Y-o-Y Change Y-o-Y

Q4 2014 SEGMENT RESULTS – REVENUES AND EBITDA

T-Hungary: lower revenues from fixed voice and energy services offset by higher BB, mobile equipment and TV revenues

T-Systems: lower volume of application and internal revenues

Macedonia: mobile voice revenue decline primarily driven by MTR cuts while fixed voice revenue decline is mostly due to mobile substitution

Montenegro: TV and internet growth mostly mitigated voice revenue decline

T-Hungary: higher mobile gross margin coupled with lower severance expenses and employee costs

T-Systems: higher bad debt expense compensated by lower opex also reflecting the absence of the one-off non-deductable VAT charge booked in Q4 2013

Macedonia: slight decline in gross margin mitigated by savings in operating costs

Montenegro: gross margin decline offset by lower other operating expenses

SEGMENTS’ EBITDA DEVELOPMENT SEGMENTS’ REVENUE DEVELOPMENTS

15 15

TELEKOM HUNGARY FIXED VOICE SUBSCRIBERS

TELEKOM HUNGARY – FIXED LINE MARKET

FIXED BROADBAND SUBSCRIBER BREAKDOWN

2,000,000

1,500,000

1,000,000

500,000

0

-1%

Dec 2014

1,418,207

64%

22%

14%

Dec 2013

1,430,280

71%

17%

12%

TV SUBSCRIBER BREAKDOWN

Subscribers

1,000,000

750,000

500,000

250,000

0

31%

6%

+5%

Dec 2014

969,102

5%

57%

32%

6%

Dec 2013

921,711

8%

56%

750,000

1,000,000

500,000

250,000

0

+4%

Dec 2014

924,628

19%

48%

33%

Dec 2013

887,716

22%

37%

35%

Reduction in fixed voice churn due to the retention effect of local packages, 2Play/3Play offers and retail energy bundling

Growth in broadband market driven by cable and fiber

Significant migration from cable to IPTV

KPIs (Q4-o-Q4):

Fixed voice ARPU: HUF 2,521 (-7.6%), due to local packages

Fixed voice MOU: 163 (-8.4%)

Broadband ARPU: HUF 3,478 (1.0%) thanks to upsell impacts

TV ARPU: HUF 3,155 (0.5%) thanks to increasing number of interactive IPTV customers

Cable TV

Satellite TV

IPTV

VoCa

VoIP

PSTN

ADSL

Fiber

Wholesale

Cable BB

16 16

REGULATORY DEVELOPMENTS

10% and 11% residential retail price reduction since January and November 2013, respectively

Further 6.5% gas and 5.7% electricity price reductions effective from April and September 2014, respectively

TELEKOM HUNGARY – ENERGY RETAIL

GAS AND ELECTRICITY POINTS OF DELIVERY (POD)

REVENUE PERFORMANCE

0

50

100

150

200

Sep 2014

105.8

66.8

Jun 2014

106.4

66.8

Mar 2014

106.8

67.5

Dec 2013

106.3

67.6

Sep 2013

106.8

67.6

Jun 2013

106.2

68.7

Mar 2013

100.1

68.0

Dec 2012

87.9

59.9

67.1

104.8

Dec 2014

Electricity Gas

18,000

15,000

12,000

9,000

6,000

3,000

0

Q4 2014

11,968

36%

64%

Q3 2014

8,721

58%

42%

Q2 2014

8,096

60%

40%

Q1 2014

13,509

37%

63%

Q4 2013

13,898

40%

60%

Q3 2013

8,650

69%

31%

Q2 2013

9,255

57%

43%

15,337

33%

67%

Q4 2012

11,248

Q1 2013

70%

30%

Electricity Gas

PODs (thousand)

HUF mn

RETAIL ENERGY BUSINESS

Discounts offered to residential customers compared to the regulated universal service prices were cut to 2-3% from 5-8% to mitigate the unfavorable changes in the regulatory environment

Increasing ratio of energy revenues generated from competitive segment customers (ca. 60% of total revenues in 2014)

17 17

TELEKOM HUNGARY – MOBILE MARKET

TELEKOM SMARTPHONE PENETRATION

0 %

10 %

20 %

30 %

40 %

50 %

% of total handsets

2013

41.1 %

2012

31.3 %

2011

18.4 %

2014

49.8 %

2x30 MHz

CURRENT SPECTRUM OWNERSHIP OF MAGYAR TELEKOM

900 MHz

1800 MHz

2100 MHz

800 MHz

2600 MHz

Won in September 2014 Owned previously

2x10 MHz

2x10 MHz

2x15MHz 1x5 MHz

2x15MHz 2x10 MHz

2x2 MHz

KPIs (Q4-o-Q4):

RPC: 4.96 million (+1.6%)

Postpaid ratio: 50.0% (+1.5ppt)

ARPU: HUF 3,546 (+3.4%)

Mobile MOU: 177 (+9.3%)

SAC/gross add: HUF 7,224 (-6.9%)

SRC/retained customer: HUF 16,551 (-13.8%)

VAS within ARPU: HUF 968 (+7.8%)

MOBILE BUSINESS

Smartphone sales reached 95% of postpaid handsets in Q4 2014

Mobile broadband subscription attach rate at ca. 90%

78% population-based countrywide 4G coverage

MTRs currently at HUF 7.06 / min

HUF 58.7bn payment for new frequency licenses due in Q4 2014

18 18

MACEDONIA AND MONTENEGRO

Leading fixed line operation with 64% voice, 51% internet and 23% TV market shares

Intense competition from cable operators on the fixed line market

Declining mobile revenues due to intense competition

KPIs (Q4-o-Q4):

Fixed voice churn: 5%

Fixed BB customers: +2.7%

TV customers: +12%

48%

28%

24%

2012

48%

28%

24%

2011

52%

+4%

22%

2010

56%

20%

24%

1,500,000

1,000,000

500,000

0

-1% 0% -8%

2014

47%

28% 26%

25%

2013

Subscribers

2,500,000

2,000,000

T-Mobile

VIP (T. Austria)

One (T. Slovenia) MACEDONIAN MOBILE MARKET

28%

34%

38%

2013

36%

26%

38%

2012

34%

1,500,000

40%

2011

35%

25%

41%

2010

37%

23%

40% 900,000

600,000

1,200,000

300,000

0

Subscribers

26%

-6%

+2% 0%

2014

-14%

Telenor

m:tel (T. Serbia)

T-Mobile

MONTENEGRIN MOBILE MARKET

Leading fixed line operation with 98% voice, 86% internet and 42% TV market shares

Strong seasonality on the mobile market driven by tourism

Economic environment restricts performance

KPIs (Q4-o-Q4):

Fixed voice churn: 2%

Fixed BB customers: +3.5%

TV customers: +3.3%

Mobile ARPU: HUF 1,775 (-9%)

Mobile MOU: 214 (+9%)

Mobile ARPU: HUF 2,572 (+2%)

Mobile MOU: 177 (+11%)

FINANCIALS

20 20

MAGYAR TELEKOM – CONSOLIDATED INCOME STATEMENT

HUF million Change

Mobile revenues 78,753 84,375 7.1%

Fixed line revenues 54,867 52,093 -5.1%System Integration/Information Technology revenues 18,223 16,828 -7.7%

Revenue from Energy Services 13,898 11,968 -13.9%Revenues 165,741 165,264 -0.3%

Direct costs (67,728) (67,841) 0.2%

Employee-related expenses (27,346) (23,186) -15.2%Depreciation and amortization (27,006) (26,694) -1.2%

Hungarian telecommunications and other crisis taxes (6,666) (6,664) 0.0%Other operating expenses (26,758) (26,861) 0.4%

Total operating expenses (155,504) (151,246) -2.7%

Other operating income 1,510 1,150 -23.8%Operating profit 11,747 15,168 29.1%

Net financial results (8,026) (7,944) -1.0%Share of associates' profits 0 0 n.a.

Profit before income tax 3,721 7,224 94.1%

Income tax expense (2,476) (4,574) 84.7%Profit for the period 1,245 2,650 112.9%

Non-controlling interests 992 1,110 11.9%Equity holders of the Company (Net income) 253 1,540 508.7%

Q4 2013 Q4 2014

21 21

MAGYAR TELEKOM - CONSOLIDATED BALANCE SHEET

HUF million Change

Current assets 193,941 197,897 2.0%Cash and cash equivalents 14,633 14,625 -0.1%

Other current financial assets 28,615 23,690 -17.2%

Non current assets 897,307 992,879 10.7%Property, plant and equipment - net 493,619 487,778 -1.2%

Intangible assets 381,199 478,486 25.5%

Total assets 1,091,248 1,190,776 9.1%

Equity 489,211 518,940 6.1%

Current liabilites 307,223 329,836 7.4%Financial liabilities to related parties 58,682 110,858 88.9%

Other financial liabilities 100,060 65,131 -34.9%

Non current liabilites 294,449 336,542 14.3%

Financial liabilities to related parties 239,522 245,071 2.3%Other financial liabilities 26,214 59,422 126.7%

Total equity and liabilites 1,090,883 1,185,318 8.7%

Dec 31, 2013 Dec 31, 2014

22 22

MAGYAR TELEKOM - CONSOLIDATED CASH FLOW STATEMENT

*Free cash flow defined as Net cash generated from operating activities plus Net cash used in investing activities, adjusted with Proceeds from / Payments for other financial assets and Repayment of other financial liabilities

HUF million Change

Net cash generated from operating activities 131,612 145,495 10.5%

Investments in tangible and intangible assets (146,122) (184,364) 26.2%

Adjustments to cash purchases 25,984 42,211 62.4%

Purchase of subsidiaries and business units (871) (1,210) n.a.

Cash acquired through business combinations 0 0 n.a.

Payments for / proceeds from other financial assets - net 13,772 10,227 -25.7%

Proceeds from disposal of subsidiaries 0 0 n.a.

Proceeds from disposal of PPE and intangible assets 1,188 2,635 121.8%

Net cash used in investing activities (106,049) (130,501) 23.1%

Dividends paid to shareholders and minority interest (65,405) (6,761) -89.7%

Net payments of loans and other borrowings 50,244 9,751 -80.6%

Repayment of other financial liabilities (11,157) (18,541) 66.2%

Net cash used in financing activities (26,318) (15,551) -40.9%

Free cash flow* 634 (13,774) -2272.6%

Dec 31, 2013 Dec 31, 2014

Investor Relations Phone: +36 1 458-0424 Fax : +36 1 458-0443 e-mail: investor.relations@telekom.hu

For further questions please contact the IR department:

In addition to figures prepared in accordance with IFRS, Magyar Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin, and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter “Reconciliation of pro forma figures”, which is posted on Magyar Telekom’s Investor Relations webpage at www.telekom.hu/investor_relations.

Abbreviations: 3G: third generation, 4G: fourth generation, ARPU: average revenue per user, BB: broadband, IP: internet protocol, IT: information technology, LTE: long term evolution, MOU: minutes of use, MTR: mobile termination rate, NRA: National Regulatory Authority, POD: points of delivery, R/E: real estate, RPC: revenue producing customer, SAC: subscriber acquisition cost, SRC: subscriber retention cost, SI: system integration, SIM: subscriber identity module, SMB: small and medium businesses, TWM: Total Workforce Management, VAS: value added services, VoCaTV: Voice over Cable TV, WS: wholesale