AS EESTI TELEKOM      FINANCIAL REPORT     15 JULY 2005                     

                              

AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



II QUARTER INCOME STATEMENT



Financial statements are prepared in thousands of EEK



                              II Quarter  II Quarter

                                    2005        2004

                                            Restated

Revenues                                  

Net sales                      1,244,512   1,280,651

Other operating income             5,900       6,418

Total revenues                 1,250,412   1,287,069

Operating expenses                        

Materials, consumables,        (430,863)   (451,102)

supplies and services

Other operating expenses       (132,549)   (131,380)

Personnel expenses             (129,855)   (147,217)

Other expenses                   (4,710)     (5,554)

Total operating expenses       (697,977)   (735,253)

Profit from operations           552,435     551,816

before depreciation

Depreciation, amortisation     (185,132)   (204,563)

and impairment of fixed and

intangible assets

Profit from operations           367,303     347,253

Net income / (expenses) from       (856)       (201)

associates

Other net financing items         13,920      10,279

Profit before tax                380,367     357,331

Income tax on dividends        (348,517)   (382,918)

Net profit / (loss) for the       31,850    (25,587)

period

Attributable to:                                    

Equity holders of the parent      31,850    (25,635)

Minority interest                      -          48

                                  31,850    (25,587)

Earnings per share for                    

profit attributable to the

equity holders of the parent

during the reporting period

(expressed in EEK per share)

Basic earnings per share            0.23      (0.19)

Diluted earnings per share          0.23      (0.19)





AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



THE FIRST HALF YEAR INCOME STATEMENT



Financial statements are prepared in thousands of EEK



                   I HY 2005  I HY 2004      2004

                              Restated  Restated

Revenues                                 

Net sales          2,461,816 2,493,601 5,116,109

Other operating        8,218    10,940    22,134

income

Total revenues     2,470,034 2,504,541 5,138,243

Operating expenses                                

Materials,         (874,734) (876,782)(1,896,398)

consumables,                                   

supplies and

services

Other operating    (256,213) (243,985) (520,166)

expenses

Personnel expenses (258,850) (300,531) (579,316)

Other expenses       (8,326)   (9,889)  (20,011)

Total operating    (1,398,123)(1,431,187)(3,015,891)

expenses                   

Profit from        1,071,911 1,073,354 2,122,352

operations before

depreciation

Depreciation,      (375,339) (416,413) (816,472)

amortisation and

impairment of

fixed and

intangible assets

Profit from          696,572   656,941 1,305,880

operations

Net income /           2,117     (383)    45,183

(expenses) from

associates

Other net             25,815    19,777    30,315

financing items

Profit before tax    724,504   676,335 1,381,378

Income tax on      (348,517) (382,918) (382,918)

dividends

Net profit for the   375,987   293,417   998,460

period

Attributable to:                                  

Equity holders of    375,987   293,716   993,568

the parent

Minority interest          -     (299)     4,892

                     375,987   293,417   998,460

Earnings per share                       

for profit

attributable to

the equity holders

of the parent

during the

reporting period

(expressed in EEK

per share)

Basic earnings per      2.73      2.13      7.21

share

Diluted earnings        2.73      2.13      7.21

per share



AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



BALANCE SHEET



Financial statements are prepared in thousands of EEK



                       30 June        31   30 June

                          2005  December      2004

                                    2004

ASSETS                                     

Non-current assets                         

Fixed assets         1,833,016 2,014,908 2,083,710

Goodwill                 5,452         -    10,534

Licenses, patents       82,929    91,190   105,812

and trademarks

Investments in          20,921    18,804    16,255

subsidiaries and

associates

Non-current                  -         -     2,700

securities

Other non-current       26,834    19,985     9,313

receivables

Total non-current    1,969,152 2,144,887 2,228,324

assets

Current assets                            

Inventories            111,166   124,382   112,296

Trade receivables      573,474   577,481   581,036

Other receivables      194,735   192,648   218,608

Current securities      32,236    28,874    28,554

Cash and cash        1,249,772 1,456,225 1,094,883

equivalents

Total current assets 2,161,383 2,379,610 2,035,377

TOTAL ASSETS         4,130,535 4,524,497 4,263,701

EQUITY AND                                        

LIABILITIES

Equity                                            

Equity attributable                               

to equity holders of

the parent

Issued capital       1,379,545 1,379,545 1,379,545

Reserves               493,973   493,663   493,663

Translation reserve          -         -        11

Retained earnings    1,078,402 1,188,781 1,188,792

Net profit for the     375,987   993,568   293,716

period

Total equity         3,327,907 4,055,557 3,355,727

attributable to

equity holders of

the parent

Minority interest            -         -    13,241

Total equity         3,327,907 4,055,557 3,368,968

Non-current                               

liabilities

Interest-bearing         1,007       604     1,855

loans and borrowings

Provisions               7,319     8,006     8,483

Total non-current        8,326     8,610    10,338

liabilities

Current liabilities                       

Trade payables         182,338   264,702   191,241

Other current          158,108   139,181   171,140

liabilities

Tax liabilities        447,057    33,023   487,878

Interest-bearing         2,775    18,968    30,825

loans and borrowings

Provisions               4,024     4,456     3,311

Total current          794,302   460,330   884,395

liabilities

TOTAL EQUITY AND     4,130,535 4,524,497 4,263,701

LIABILITIES



AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



CASH FLOW STATEMENT



Financial statements are prepared in thousands of EEK



                             I Half Year I Half Year

                                    2005        2004

Operating activities                      

Profit from operations           696,572     656,941

Adjustments for:                                    

Depreciation, amortisation       375,339     416,413

and impairment of fixed and

intangible assets

(Profit) / loss from sales       (3,962)     (2,705)

and write-off of fixed

assets

Operating cash flow before     1,067,949   1,070,649

changes in working capital

Change in current                 18,953    (97,866)

receivables

Change in inventories             13,217    (12,472)

Change in current                (1,499)      36,749

liabilities

Cash generated by operations   1,098,620     997,060

Interest paid                      (501)         115

Income tax on dividends paid        (24)           -

Net cash from operating        1,098,095     997,175

activities

Investing activities                      

Purchases of property, plant   (182,179)   (183,352)

and equipment

Purchases of licenses            (4,874)     (7,576)

Proceeds from sales of fixed       8,801       5,194

assets

Net cash outflow from            (4,944)     (3,872)

acquisition of subsidiaries

Purchases of current            (24,372)    (29,356)

securities

Proceeds on disposal of           20,794      49,510

current securities

Loans granted                   (29,765)     (6,384)

Repayment of loans granted           565          33

Interest received                 30,798      30,303

Net cash used in investing     (185,176)   (145,500)

activities

Financing activities                      

Repayment of convertible               -        (48)

debt

Proceeds from non-                   793         233

convertible debt

Repayment of nonconvertible      (2,199)     (3,688)

debt

Repayment of long-term             (333)           -

borrowings

Repayment of finance lease      (14,765)       (394)

liabilities

Repayment of short-term                -       (176)

borrowings

Shares issuance                        -      27,782

Dividends paid               (1,103,727) (1,101,165)

Net cash used in financing   (1,120,231) (1,077,456)

activities

Net change in cash and cash    (207,312)   (225,781)

equivalents

Cash and cash equivalents at   1,456,225   1,320,802

beginning of year

Effect of foreign exchange           859       (138)

rate changes

Cash and cash equivalents at   1,249,772   1,094,883

end of period