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 EUR



                                II Quarter         II

                                      2005    Quarter

                                                 2004

                                             Restated

Revenues                                    

Net sales                           79,540     81 848

Other operating income                 376        410

Total revenues                      79,916     82 258

Operating expenses                          

Materials, consumables,           (27,537)   (28 831)

supplies and services

Other operating expenses           (8,471)    (8 397)

Personnel expenses                 (8,300)    (9 408)

Other expenses                       (301)      (355)

Total operating expenses          (44,609)   (46 991)

Profit from operations before       35,307     35 267

depreciation

Depreciation, amortisation and    (11,833)   (13 074)

impairment of fixed and

intangible assets

Profit from operations              23,474     22 193

Net income / (expenses) from          (55)       (12)

associates

Other net financing items              890        657

Profit before tax                   24,309     22 838

Income tax on dividends           (22,274)   (24 473)

Net profit / (loss) for the          2,035    (1 635)

period

Attributable to:                                     

Equity holders of the parent         2,035    (1 638)

Minority interest                        -          3

                                     2,035    (1 635)

Earnings per share for profit               

attributable to the equity

holders of the parent during

the reporting period (expressed

in EUR per share)

Basic earnings per share              0.01     (0.01)

Diluted earnings per share            0.01     (0.01)





AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



THE FIRST HALF YEAR INCOME STATEMENT



Financial statements are prepared in thousands of EUR



                           I HY 2005  I HY 2004     2004

                                      Restated Restated

Revenues                                         

Net sales                    157,340   159,370  326,980

Other operating income           525       699    1,415

Total revenues               157,865   160,069  328,395

Operating expenses                               

Materials, consumables,     (55,906)  (56,036) (121,202)

supplies and services                                 

Other operating expenses    (16,375)  (15,594) (33,245)

Personnel expenses          (16,544)  (19,207) (37,025)

Other expenses                 (532)     (632)  (1,278)

Total operating expenses    (89,357)  (91,469) (192,750)

                                                      

Profit from operations        68,508    68,600  135,645

before depreciation

Depreciation, amortisation  (23,989)  (26,614) (52,182)

and impairment of fixed

and intangible assets

Profit from operations        44,519    41,986   83,463

Net income / (expenses)          135      (24)    2,888

from associates

Other net financing items      1,650     1,264    1,937

Profit before tax             46,304    43,226   88,288

Income tax on dividends     (22,274)  (24,473) (24,473)

Net profit for the period     24,030    18,753   63,815

Attributable to:                                 

Equity holders of the         24,030    18,772   63,502

parent

Minority interest                  -      (19)      313

                              24,030    18,753   63,815

Earnings per share for                           

profit attributable to the

equity holders of the

parent during the

reporting period

(expressed in EUR per

share)

Basic earnings per share        0.17      0.14     0.46

Diluted earnings per share      0.17      0.14     0.46



AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



BALANCE SHEET



Financial statements are prepared in thousands of EUR



                           30 June       31   30 June

                              2005 December      2004

                                       2004

ASSETS                                        

Non-current assets                            

Fixed assets               117,151  128,776   133,173

Goodwill                       348        -       673

Licenses, patents and        5,300    5,828     6,763

trademarks

Investments in               1,337    1,202     1,039

subsidiaries and

associates

Non-current securities           -        -       173

Other non-current            1,716    1,277       595

receivables

Total non-current assets   125,852  137,083   142,416

Current assets                                       

Inventories                  7,105    7,949     7,177

Trade receivables           36,652   36,908    37,135

Other receivables           12,445   12,313    13,971

Current securities           2,060    1,845     1,825

Cash and cash equivalents   79,875   93,070    69,976

Total current assets       138,137  152,085   130,084

TOTAL ASSETS               263,989  289,168   272,500

EQUITY AND LIABILITIES                               

Equity                                               

Equity attributable to                               

equity holders of the

parent

Issued capital              88,169   88,169    88,169

Reserves                    31,571   31,550    31,550

Translation reserve              -        -         -

Retained earnings           68,922   75,976    75,977

Net profit for the period   24,030   63,502    18,772

Total equity attributable  212,692  259,197   214,468

to equity holders of the

parent

Minority interest                -        -       846

Total equity               212,692  259,197   215,314

Non-current liabilities                              

Interest-bearing loans          64       38       119

and borrowings

Provisions                     468      512       542

Total non-current              532      550       661

liabilities

Current liabilities                                  

Trade payables              11,654   16,918    12,223

Other current liabilities   10,105    8,895    10,939

Tax liabilities             28,572    2,111    31,181

Interest-bearing loans         177    1,212     1,970

and borrowings

Provisions                     257      285       212

Total current liabilities   50,765   29,421    56,525

TOTAL EQUITY AND           263,989  289,168   272,500

LIABILITIES

AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



CASH FLOW STATEMENT



Financial statements are prepared in thousands of EUR



                                     I Half     I Half

                                  Year 2005  Year 2004

Operating activities                         

Profit from operations               44,519     41,986

Adjustments for:                                      

Depreciation, amortisation and       23,989     26,614

impairment of fixed and

intangible assets

(Profit) / loss from sales and        (253)      (173)

write-off of fixed assets

Operating cash flow before           68,255     68,427

changes in working capital

Change in current receivables         1,211    (6,256)

Change in inventories                   845      (797)

Change in current liabilities          (96)      2,349

Cash generated by operations         70,215     63,723

Interest paid                          (32)          7

Income tax on dividends paid            (2)          -

Net cash from operating              70,181     63,730

activities

Investing activities                         

Purchases of property, plant and   (11,643)   (11,718)

equipment

Purchases of licenses                 (311)      (484)

Proceeds from sales of fixed            562        332

assets

Net cash outflow from                 (316)      (247)

acquisition of subsidiaries

Purchases of current securities     (1,558)    (1,876)

Proceeds on disposal of current       1,329      3,164

securities

Loans granted                       (1,902)      (408)

Repayment of loans granted               36          2

Interest received                     1,968      1,937

Net cash used in investing         (11,835)    (9,298)

activities

Financing activities                         

Repayment of convertible debt             -        (3)

Proceeds from non-convertible            51         15

debt

Repayment of nonconvertible debt      (141)      (236)

Repayment of long-term                 (21)          -

borrowings

Repayment of finance lease            (944)       (25)

liabilities

Repayment of short-term                   -       (11)

borrowings

Shares issuance                           -      1,776

Dividends paid                     (70,541)   (70,377)

Net cash used in financing         (71,596)   (68,861)

activities

Net change in cash and cash        (13,250)   (14,429)

equivalents

Cash and cash equivalents at         93,070     84,414

beginning of year

Effect of foreign exchange rate          55        (9)

changes

Cash and cash equivalents at end     79,875     69,976

of period