Budapest, May 25, 2007 15:00

Magyar Telekom’s Board of Directors made a proposal today for further integration steps within the Magyar Telekom Group to improve service quality and increase efficiency. According to the proposal, T-Online Hungary’s Internet access area and Emitel will be integrated within the Wireline Services (T-Com) line of business of Magyar Telekom.

The proposal of the Board of Directors for further integration steps within the Hungarian operations of T-Com is in line with the Group’s strategy of increasing focus on service quality and operational efficiency, and taking into account the positive experience from the merger of Magyar Telekom Plc. and T-Mobile Hungary.

The business activities of T-Online Hungary to be integrated comprise the access business area which includes the Internet access products like ADSL, dial-up, cable internet, as well as IPTV and VoIP services. Driven by the increasing demand for broadband services and the spread of integrated services, the Board of Directors proposes to integrate the Internet access area into the T-Com segment. The merger will improve service quality and facilitate broadband market development thanks to the integrated customer service, as well as ensure increased organizational efficiency. The remaining business entity of T-Online, the content and web portal area, will focus on media, content and other new business areas.

Emitel is offering telecommunications services in three primary areas of the South Hungary region and it operated 72,000 fixed lines at the end of March 2007. The increasing competition generates the need for further efficiency improvements which can be ensured through integrating the company into Magyar Telekom. Following the integration, we aim to achieve increased efficiency through integrated marketing and communication activities and customer relations, as well as a simplified operating structure by eliminating overlaps in activities.

Our intention is that the integration will deliver concrete benefits for customers and result in tangible, favorable changes. Over the medium term customer service will become simpler, more flexible and faster due to the integrated systems and processes. The unified customer service will provide for easier administration, purchase, bill management and technical assistance. It will enable customers to acquire our products and integrated solutions including advisory service in a comfortable, one-stop process. We also expect that all this will improve the customers’ perception of us, substantially increase their satisfaction, and make our customers willing to remain loyal to us.

The Board’s proposal is subject to approval by Magyar Telekom’s Extraordinary General Meeting to be held on June 29, 2007 and the supreme bodies of the two subsidiaries. The merger process will end with the registration by the Court of Registry, expected some time in September. Following that, Magyar Telekom will be the legal successor of both Emitel and the merged area of T-Online Hungary. As both companies are fully owned subsidiaries of Magyar Telekom, the planned steps do not require approval from the Hungarian Competition Authority.