Budapest, December 8, 2000

As the first step of the new corporate strategy launched to prepare for liberalization, MATÁV made a decision on taking significant measures. The major components of the program include restructuring the area of fixed line services that will be accompanied at MATÁV by a 16% headcount reduction and accelerated depreciation of certain analog and other assets. At the same time focus will shift to high growth areas (mobile, Internet, data communication), including the possibility of geographical expansion. According to a Board resolution adopted yesterday MATÁV will submit a binding bid for the purchase of a 51% ownership share of the Macedonian telephone company.

Elek Straub, Matáv's Chairman-Chief Executive Officer said: "The objective of the restructuring program is to redefine the focus of the company's operations to better follow rapid changes in technology and consumption patterns. MATÁV will reallocate substantial human and financial resources to the mobile communications, data communication and Internet areas. The company has already achieved a strong position in these fully liberalized areas thereby contributing to the growth of the Hungarian infocommunication industry and creating the possibility of further development."

As a result of the restructuring efforts about 150 organization units will be discontinued. The technical area will be completely reorganized, some directorates will cease to operate, while new directorates will be established. Customer care organizations will also be affected by restructuring; reorganization is expected to produce significant efficiency improvement in this area too.

The above changes will be carried out over the next months in several steps and completed by the end of 2001. MATÁV estimates that this restructuring program will require about HUF 13-15 billion one-time expenditure in 2000 that includes the costs of restructuring, severance payments and write-offs.