Eesti Telekom                 NEWS RELEASE                01/30/2004 10:00



LEGAL DISPUTE WITH THE COMPETITION BOARD ENDED



On 19 January Tallinn City Court approved the agreement

reached by the Estonian Competition Board and Elion

Ettevõtted AS, a fully owned subsidiary of Eesti Telekom,

to end litigation over the minute rates charged in

Elion’s fixed telephone network. The 10-day deadline for

an appeal set forth in the court ruling expired

yesterday.



On 15 January the Competition Board and Elion Ettevõtted

AS filed an application with Tallinn Administrative Court

to approve their Agreement on ending the lawsuit

litigated by all instances of court because over the

years the case has ceased to be an issue.



In the Agreement Elion concedes that the unified intra-

network minute rates introduced on 1 April 2001 would

have been too high at that time if speech packages and

volume discount had not been introduced.



In its turn the Competition Board acknowledges that Elion

has been complying with the requirements of the precept

by introducing price packages and volume discount, thus

reducing the average minute rates below the price level

established on 1 April 2001.



The Competition Board is explicit in the Agreement that

its decision and the issued precept were fully justified

at that time and it does not wish to annul them. It

concedes, however, that since then the telecommunications

market has changed irreversibly and it does not insist on

any changes in Elion’s intra-network voice tariffs.

Besides, the legislation on responsibility for

malpractice of companies with significant market power

has been amended and therefore it is impossible to impose

any penalty.



For the above-mentioned reasons, including the fact that

Elion has taken the necessary measures and that the

dispute has lost its topicality, the Competition Board

and Elion have both lost interest in pursuing the case.



Under the Agreement Elion is to indemnify the Competition

Board in the amount of 440 000 kroons (28 121 EUR) that

covers partly the expenses incurred.



The rates dispute started on 24 April 2001 while Elion

was still operating under the name of AS Eesti Telefon.

The Competition Board issued a precept on Elion’s unified

rates for local and domestic calls (34 cents/minute (2.2

euro-cents/minute) during peak hours, 28 cents/minute

(1.8 euro-cents/minute) during off-peak hours, and 14

cents/min (0.9 euro-cents/minute) at night). The Board

obliged Elion to lower the tariffs but Elion did not

comply, as the base tariff range of 14 - 34 cents was

cost based. Elion contested the decision in Tallinn

Administrative Court on 23 May 2001 that found in favour

of Elion. The Competition Board appealed to Tallinn

Circuit Court but the sentence was not revoked. However,

on 18 December 2002, upon the Board’s appeal in

cassation, the Supreme Court reviewed the decision,

annulled it and referred the case back to Tallinn

Administrative Court.





Hille Võrk

Financial Manager

6272 460