EESTI TELEKOM

ANNOUNCEMENT



DISPUTE OF THE COMPETITION BOARD PRESCRIPTION



Proceeding  from  the  Competition Act, Estonian  Competition

Board  made on April 24, 2001, an obligatory prescription  to

Eesti  Telefon to cancel the following rates for  calls:  the

rate  per  minute  at peak hours of EEK 0.34,  the  rate  per

minute  at off-peak hours of EEK 0.28 and the rate per minute

at  night  time  of  EEK  0.14 in AS Eesti  Telefon  operator

network  from April 1, 2001. The Competition Board prescribed

to  exercise  lower  rates for aforementioned  services  from

April  1,  2001,  proceeding from fair pricing,  proportional

rate  between increase in the prices and growth rate of  CPI,

and acceptable ROE.



Eesti  Telefon is of the opinion that the rates for calls  in

Estonia  from EEK 0.14 to EEK 0.34 per minute are  cost-based

by base price. Eesti Telefon has followed the requirements of

the  Telecommunications Act which requires an  operator  with

significant market power to establish cost-based  prices  and

prohibit  cross-subsidizing. The cost  accounting  system  of

Eesti   Telefon  has  been  audited  by  the  internationally

acknowledged audit company KPMG, and it has been approved  by

the  Communication  Board  as well.  Thereby,  Eesti  Telefon

disagrees with the prescription of the Competition Board  and

disputed it in Court on May 23, 2001.



The  Competition  Board  has composed a  law-breaking  record

which  has been sent to the Administrative Court. In case  of

conviction the maximum fine to Eesti Telefon is EEK 125.3 mln

or 5% of the company's net sales in 2000.



AS Eesti Telefon is a 100% subsidiary of AS Eesti Telekom.





Hille Võrk

Financial manager

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