Eesti Telekom                 NEWS RELEASE                      12/18/2003



MERGER OF CONNECTO AND ELTEL NETWORKS



Jaanus  Paas, the chairman of the board of AS Connecto  and

Andres  Alamaa, the chairman of the board of Eltel Networks

AS,  signed  the merger agreement on the 18th  of  December

2003.  The  agreement serves as basis  for  initiating  the

merger proceedings.   AS Connecto is a subsidiary of  Elion

Enterprises  Ltd  which  owns  51%  of  its  shares.  Elion

Enterprises Ltd is a subsidiary of Eesti Telekom AS,  which

owns  100% of its shares. A Finnish company Eltel  Networks

Corporation owns 49% of shares of AS Connecto.



The  merger  supports the company’s development plans  that

foresee  combining the resources and know-how in the  field

of   electrical   and  telecommunication  networks,   which

provides  the  opportunity  to  offer  integrated   network

solutions for customers.



After merger company’s name will be Eltel Networks AS.  The

merger   shall  be  completed  by  spring  2004  when   the

corresponding  entry  will  be  done  into  the  Commercial

Register.



As  for the turnover, AS Connecto (www.connecto.ee) is  one

of  the  largest  companies in the Baltic States,  offering

design,   construction   and   maintenance   services   for

telecommunication and electrical systems. The  turnover  of

AS  Connecto  totalled 260.8 million kroons  (16.6  million

euros)  in 2002 and its profit totalled 12.6 million kroons

(0.8  million  euros).  The  company  was  founded  in  the

beginning  of 2001 and it employs 445 people.  AS  Connecto

has   two  subsidiaries:  Reveko  Telekom  in  Estonia  and

Connecto Latvia in Latvia.



Eltel  Networks  AS  is  Connecto’s  100%-owned  subsidiary

founded  in  1999. The company’s main area of  business  is

construction of electrical and telecommunication  networks.

The  turnover  of AS Eltel Networks totalled  35.6  million

kroons  (2.28  million euros) in 2002 and  its  net  profit

totalled  0.21  million kroons (0.013 million  euros).  The

company employs 48 people.



Information:

Tuuli Mathisen

Marketing Manager

Phone 372 606 3124

GSM 372 50 62839

e-mail: tuuli.mathisen@connecto.ee





Hille Võrk

Financial Manager

+372 6272460