1. 1 Review from the Eastern outskirts A CEE operator’s perspective on SERENATE by Béla Gellai Matáv - Hungarian Telecommunications Company Limited

2. 2 Summary Telecommunications in CEE after velvet/bloody revolution(s) EU sponsored initiatives: PHARE and other regional development projects Deregulation at the time of IP-IT bubble-bursting Flexible and reliable incumbents meet the demands

3. 3 Post-revolution telecoms... Transition from National PTT in planned economy into national service provider stock-company(ies) in market economy Technological metamorphosis: shift from copper to fibre, analogue - digital, rotary - crossbar - digital, PDH - SDH - ATM -WDM Change in management style: strong technology-based hierarchy - functional management model ruled by economists - overwhelming marketing orientation, divisional management and EBITDA-kingdom Support from the Western side : technical-scientific consulting, management consulting, restructuring funds, IMF WB and other development loans/programs Strategic partners through privatisation

4. 4 Regional telecom development in EU ante-room + Sponsoring the break-through in telecom technology + Participation in establishing market economies and national telecom operators + Co-ordination of international network development in the region (TEL, TET, TAE and other projects) ------------------------------------- Chain of well-equipped, strong incumbents-monopolists with Western-style management integrated in a meshed international network

5. 5 Deregulation Legislation environment tailor-made, supportive of emerging carriers and forward-looking Market liberalisation time-settings almost according to EU milestones CEE alternative operators and public utility companies entering into partnership Global network operators appearing in the region but a bit late… Market growth rate smaller than expected Operational margins shrinking Price war in data market destabilising players Bad news from the stock-exchange

6. 6 Incumbents meet the demands (Matáv’s example for contribution) First 34 Mbps link to Vienna in TEN-34 Expanding it to TEN-155 GÉANT 1st phase: via Telekom Global Network Budapest - Vienna and Budapest - Bratislava (as Deutsche Telekom’s subcontractor) GÉANT 2nd phase: Connectivity to Zagreb from Budapest and Vienna (as DT’s subcontractor in closed co-operation with Croatian Telecom)

7. 7 for GEANT: 2,5Gbps Bratislava-Budapest 2,5Gbps Budapest-Wien 622Mbps Budapest-Zagreb 622Mbps Wien-Zagreb Telekom Global Network (TGN)

8. 8 Regional perspectives for Matáv Strong presence in South-Eastern Europe Connectivity to each ex-Yugoslav republic, in some cases international 1+1 protection is available Stake in Macedonian Telecom, transmission route to Albania Budapest node in double function: regional transmission hub and PoP of Telekom Global Network (DT) regional market knowledge: traditional partnership with incumbents and business contacts with emerging carriers flexibility in pricing and reliability in operation

9. 9