Budapest,

On August 14, 2003 Matáv raised a short-term loan of 126.6 billion HUF from Deutsche Telekom. In order to finance the remaining 76.6 billion HUF stake, on August 23, 2004 Matáv is borrowing a 20 billion HUF short-term (maturity: January 2005), a 14 billion HUF three-year (maturity: 2007) and a 30 billion HUF five-year (maturity: 2009) loan from Deutsche Telekom.

The maturity of the short-term loan is adjusted to Matáv's cash flow generating capability, while the medium- and longer term loans are borrowed in order to extend the average maturity term of the loan portfolio. The loans bear fixed interest: the short-term loan has an annual interest rate of 11.16%, the one maturing in 2007, 10.20% and the third maturing in 2009 bears 9.62% interest rate annually. The other conditions of borrowing are similar to those specified in earlier agreements with Deutsche Telekom.

At present, Matáv is rated BBB+ by Standard&Poor's and Baa1 by Moody's.