Eesti Telekom                 CORRECTIVE RELEASE                07/18/2002



CORRECTED RELEASE ABOUT FINANCIAL RESULTS, H1 2002, EEK



In previously discloused announcement about financial results, H1 2002, EEK, 

there was a mistake in the number of main lines. 

The correct sentence would be 

"The  number of main lines in use at the end of June was  472

thousand  (a penetration of 34.7 lines per 100 people)."



Corrected announcement follows:

-------------------------------



18 July 2002









    THE FINANCIAL RESULTS OF THE FIRST SIX MONTHS OF 2002

                              



Eesti  Telekom,  the  leading provider of  telecommunication

services  in Estonia, hereby announces its results  for  the

six-month period ended 30 June 2002.







Financial highlights

                     6 months 2002      6 months Change, %

                                            2001

Total     revenues,          2,272         2,071        10

mEEK

EBITDA, mEEK                 1,090         1,016         7

EBITDA margin, %                48            49          

EBIT, mEEK                     578           495        17

EBIT margin, %                  25            24          

Profits      before            572           531         8

taxes, mEEK

Net profits for the            479           499        -4

period, mEEK

EPS, EEK                      3.48          3.64        -4

No. of A- shares       137,383,178   137,383,178          

Investments, mEEK              207           430       -52

Net gearing, %               -12.0           2.4          

ROA, %                          23            23          

ROE, %                          33            31          





Commenting on these financial results, Chairman Jaan  Männik

stressed:



"Several  favourable trends in the operations of  the  Group

have  continued  to  prevail during the first  half-year  of

2002.  Measures  oriented  on  efficiency  improvement  have

started to show positive results."



 For further information, please contact:



Krister Björkqvist                  +372  6272 465

CFO



Hille   Võrk                        +372 6272 460

Financial Manager





CHAIRMAN’S STATEMENT



Results  of the first half-year of 2002 were favourable  for

the Eesti Telekom Group. Although the Estonian mobile market

has been intensively penetrated, AS EMT, the mobile operator

of   the  Group,  has  still  found  new  possibilities  for

increasing  its revenues and profits. The fixed  market  was

liberalized on January 1, 2001. AS Eesti Telefon, the  fixed

communications  operator,  has  adjusted  to  the   existing

working  environment  and has been  able  to  stabilize  its

market shares.



Last  year, we talked extensively about measures  meant  for

improving efficiency. Our investing policy and the structure

of  our tangible assets were reviewed. Changes were made  in

our customer service sphere. As a result, the profit margins

of  almost  all the companies of the Group improved  in  the

first half of 2002.



The  Eesti  Telekom  Group cash flow  has  continued  to  be

positive. Net gearing has reached -12%.



Revenues, expenses and profit



In  the  first  half of 2002, consolidated revenues  of  the

Eesti  Telekom  Group amounted to 2,272 mln EEK,  showing  a

rise  of  10%  compared  to  the first  half-year  of  2001.

Operating expenses were 1,182 mln EEK, up by 12%. EBITDA  of

the Group was 1,090 mln EEK (margin 48%), showing a rise  of

7%.  Depreciation for the period was 2% lower  than  a  year

ago.  EBIT of the Group was up by 17%, amounting to 578  mln

EEK.  On  June 19, 2002, AS Eesti Telekom paid out dividends

in  the  amount of 756 mln EEK to its shareholders  for  the

year  2001. Income tax on dividends amounted to 94  mln  EEK

(31  mln  EEK in 2001). The net profit of the Eesti  Telekom

Group  in  the first half-year of 2002 was 479 mln  EEK,  or

3.48 EEK per share.



Outcomes  of  the  first six months of 2001  and  2002  were

influenced by the following extraordinary factors:



                       2002                   2001

Total revenues AS Eesti Telefon sold  

               property    with    a

               capital  gain  of  54

               mln EEK.

               

Total expenses                        AS    Eesti   Telefon

                                      released a 46 mln EEK

                                      reserve  related   to

                                      the    OÜ    Albufent

                                      claim.

                                      

Income    from                        AS Eesti Telefon sold

associates                            its  ownership in  AS

                                      Teabeliin. 33 mln EEK

                                      of     profit    were

                                      accounted  as  income

                                      from associates.

                                      



The   consolidated  revenues  of  the  Eesti  Telefon  Group

amounted  to 1,326 mln EEK, down by 9% compared to the  same

period in 2001. Operating expenses were 799 mln EEK, down by

16%.  EBITDA of the Group was 527 mln EEK. The EBITDA margin

has  risen to 40%. Depreciation during the first six  months

of  the  year was significantly lower than in 2001 (down  by

9%).  EBIT of the group was up by 40%, amounting to 188  mln

EEK.  The  Eesti  Telefon Group earned 174 mln  EEK  of  net

profit  in the first half-year of 2002 (up by 18%,  compared

to the same period in 2001).



The operating revenues of AS Eesti Telefon were down by 11%,

compared  to  the  same period in 2001.  Revenues  from  all

categories  of voice-communication services to end-customers

were  down: domestic call revenues by 17%, dial-up  revenues

by 41%, international call revenues by 9%, and revenues from

calls  to  mobile  networks by 14%. On  the  positive  side,

revenues  from  monthly fees were up by 26%.  Revenues  from

data  communications and the Internet grew by  89%.  In  the

first half of 2002, Eesti Telefon made a capital gain of  54

mln  EEK  from  the  selling  of various  assets,  which  is

categorized under "other revenues".



Market  shares  of  AS Eesti Telefon have been  stable.  The

company  estimates its share of total call minutes, domestic

call  minutes,  fixed to mobile minutes,  and  international

call minutes to be 89%, 89%, 75%, and 71%, respectively.



The operating expenses of AS Eesti Telefon were down by 18%.

The   largest  part  of  the  decrease  was  due  to   lower

interconnection costs resulting from directing a large  part

of mobile calls directly from the network of one operator to

the network of another. Personnel expenses were down by 10%.

The  number of employees of AS Eesti Telefon had  fallen  to

1,418 by the end of June 2002 (June 2001: 1,797).



The  total  revenues of the EMT Group amounted to 1,164  mln

EEK, up by 10%. The operating expenses of the Group were 590

mln EEK, also up by 10%. EBITDA of the EMT Group was 574 mln

EEK,  with a margin of 49%. The net profit of the Group  was

405 mln EEK, up by 6%, compared to the same period in 2001.



The  number  of customers of AS EMT reached 406 thousand  by

the  end  of  June. The company had 267 thousand contractual

customers and 139 thousand prepaid-card users. Monthly  ARPU

(Average Revenues Per User) has been traditionally high over

the  summer.  Monthly ARPU in June 2002 was  451  EEK  (June

2001: 469 EEK, December 2001: 439 EEK).



EMT’s  revenues from all main categories were up during  the

first  half-year of 2002. Revenues from SMS had the  highest

growth-rate, exceeding the corresponding figure in  2001  by

28%.  The growth resulted from a wider customer base and new

services being offered by EMT. A good example is the  multi-

SMS  service, which allows enterprisers to send messages via

Internet  to  their  numerous customers’ mobile  phones,  or

offers consumers the possibility of paying for purchases  by

mobile  phone.  For  instance,  at  the  recent  exceedingly

popular beer festival in Tallinn, it was possible to pay for

a  glass  of beer by mobile phone. In February, Sonera,  the

Finnish  mobile operator, and EMT successfully  demonstrated

the roaming and interconnection capability of the multimedia

messaging  service  (MMS)  between  the  various  pay   GPRS

networks   available   to  the  consumer.   The   successful

implementation   of   this  service   showed   that   mobile

subscribers  can send and receive multimedia  messages  even

through  other  networks.  Sonera and EMT also  demonstrated

how   multimedia  messages  can  be  exchanged  between  the

subscribers  of different operators. In June, EMT  continued

testing  MMS  in Estonia in cooperation with Ericsson.  But,

despite rapid growth, SMS revenues were only 3% of the total

revenues  of  AS  EMT  during the first half-year  of  2002,

thereby  showing  that there is still plenty  of  space  for

future growth.



Balance sheet and cash flows



At  the  end  of June, 2002, the total assets of  the  Eesti

Telekom  Group  amounted to 4,037 mln  EEK  (December  2001:

4,236  mln  EEK).  Tangible assets were  reduced,  from  the

beginning  of  the  year, by 324 mln EEK. Current  and  non-

current  interest  bearing liabilities  of  the  Group  were

reduced by 18 mln EEK. By the end of the period, net debt of

the  Group  amounted to -399 mln EEK, and  net  gearing  was

-12%.



Net  cash  inflows of the Group in the first  half  of  2002

amounted 55 mln EEK. Net operating cash flow was 950 mln EEK

(first  half-year of 2001: 795 mln EEK). The operating  cash

flow  does not include income tax on dividends in the amount

of  94  mln EEK. Cash outflow into investing activities  was

essentially  smaller than a year ago: 121 mln EEK  in  2002,

364  mln EEK in 2001. Cash outflow into financing activities

was 774 mln EEK, including dividends of 756 mln EEK.



Investments



The  Eesti  Telefon Group invested 110 mln  EEK  during  the

first  half of 2002 (first half-year of 2001: 291 mln  EEK).

The  majority  of  the investments went into  improving  the

quality   of   the  network.  By  the  end  of   June,   the

digitalisation  rate  had  risen to  74.1%  (December  2001:

71.8%). 5,400 new ADSL connections were installed during the

six-month period. The total number of Atlas ADSL connections

reached  22,300 (a penetration of 1,7 lines per 100 people).

In May, the speed of most ADSL Internet permanent connection

packages  was  as  much  as doubled, allowing  customers  to

better  enjoy the various multi-media and content  services.

If,  up  until now, ADSL services could primarily be enjoyed

by  the  consumers  and firms located  in  the  more  highly

populated areas, then in July 2002, Eesti Telefon  began  to

offer  a  new  wireless Internet permanent connection  Atlas

RDSL. New connection functions through radio waves and gives

rural  consumers  also  an opportunity  to  make  use  of  a

practical and even faster Internet permanent connection.



The  number of main lines in use at the end of June was  472

thousand  (a penetration of 34.7 lines per 100 people).  The

number of main lines, compared to the beginning of the year,

has   been   reduced  by  29  thousand.  Mainly  residential

customers have been giving up their fixed lines. The  number

of lines per employee was 326.



The  second biggest sphere of investment for Eesti  Telefon,

during  the first half-year, was the development of  an  in-

house  IT  network. In February, the Group expanded  through

the  acquisition  of  a  new  firm.  So  as  to  extend  its

activities beyond Estonia, AS Connecto, a subsidiary of  the

Group,   acquired  100  %  of  the  shares  of  the  network

construction  company  SIA Connecto Latvia  (previously  SIA

Link),  which operates in Latvia. In April, AS Eesti Telefon

invested  an additional 5 mln EEK into the Group  associated

firm AS Sertifitseerimiskeskus.



The EMT Group invested 97 mln EEK during the first half-year

(2001: 138 mln EEK). The majority of investments made by EMT

went into base stations and exchanges. AS EMT also made also

a 5 mln EEK investment into AS Sertifitseerimiskeskus.



On  May  21,  2002, the Ministry of Roads and Communications

presented  to  the  Riigikogu (Parliament) an amendment  for

the Telecommunications Act, which establishes the conditions

for  the  issuing  of  the third generation  mobile  network

licenses. According to the Ministry’s proposal, the licenses

would be issued on a tender basis. The participation fee  in

the  tender would be 50 mln EEK. The Ministry’s plan  is  to

issue four third generation licenses. The tender is expected

to take place in the beginning of 2003. It is the opinion of

the  management  of  AS EMT, that for a  small  market  like

Estonia,  four licenses are too many. If four  licenses  are

issued,  the capacity of the frequency band of each operator

would  be  quite  limited, leading to  lower  efficiency  of

investments, and higher prices for the final consumers.



Relations with state regulators



During  the  second  quarter of  2002,  two  legal  disputes

between  AS  Eesti  Telefon and certain government  agencies

came to an end.



On  April  24, 2001, the Competition Board issued a precept,

based on the Competition Act, prohibiting Eesti Telefon from

levying a per-minute rate of 34 cents at peak time, 28 cents

at  off-peak time, and 14 cents at night for voice calls  in

its network. Eesti Telefon was expected to levy a rate lower

than  the aforementioned rates. According to the Competition

Act,  a fine in the amount of up to 5% of the net sales  for

the  year preceding the decision to impose the fine  can  be

imposed for the abuse of a market dominant position.



Eesti  Telefon  was  of the opinion that the  aforementioned

rates  were  cost-based, and contested the  precept  at  the

Tallinn  Administrative Court on May 23, 2001.  The  Tallinn

Administrative Court agreed with Eesti Telefon and nullified

the  precept of the Competition Board on January  17,  2002.

The  Competition Board appealed to a higher court,  but  the

Circuit Court confirmed the Administrative Court’s decision.



On April 18, 2001, the Communications Board issued a precept

to  Eesti  Telefon, which required Eesti Telefon to  provide

interconnection  services below the  cost  of  the  service.

Eesti  Telefon  contested the precept. In June  2002,  Eesti

Telefon  decided to end the actions concerning the  legality

of  the  precept,  and   the conformity  of  the  underlying

provisions   of   the   Telecommunications   Act   to    the

Constitution, because the legal action had lost its  meaning

for   Eesti  Telefon.  Namely,  these  provisions   of   the

Telecommunications Act expired on December 31,  2001.  Thus,

the cause of the legal action became null and void.



Potential change in the ownership structure



On  March  26, 2002, Sonera of Finland and Telia of  Sweden,

the  strategic partners of AS Eesti Telekom, announced  that

they are planning to merge. Telia will make a purchase offer

to the shareholders of Sonera, offering 1.51440 Telia shares

for  one Sonera share. The Sonera and Telia merger plan  was

presented  to  the  European Union for approval,  which  was

given  on  July 10, 2002. However, the approval is dependent

upon  the  fulfilment of certain conditions  by  Sonera  and

Telia.



Annual General Meeting of  the Shareholders



The  Annual General Meeting of the Shareholders of AS  Eesti

Telekom  took  place on May 17, 2002. The  meeting  approved

Annual  Report 2001, and the proposal for allocation of  net

profit. It was decided that the owners of A-shares would  be

paid  dividends of 5.50 EEK per share (in total 756 mln EEK,

or  97%  of the net profit of 2001).   The owner of  B-share

was entitled to dividends of 10,000 EEK.



The list of shareholders entitled to dividends was fixed  on

June 5, 2002 and dividends were paid out on June 19, 2002.



The  General Meeting authorised AS Eesti Telekom to acquire,

within  one year, AS Eesti Telekom A-series shares, so  that

the  total  nominal value of own shares  held  by  AS  Eesti

Telekom  would not exceed the legal limits, and so that  the

price  payable per share would not exceed the highest  price

paid  for  an AS Eesti Telekom A share on the Tallinn  Stock

Exchange,  on the day of acquiring the shares. Any  possible

share  buy-back  shall  be  approved  by  AS  Eesti  Telekom

council.



Kennet  Rådne,  Heido Vitsur, Raivo Vare, and Aimo  Eloholma

were elected to be new members of the Supervisory Council of

Eesti Telekom, where they replaced Mart Nurk, Andrus Villem,

Madis  Üürike, and Timo Virtanen. The remaining six  members

of  the council were re-elected for one more term. Aare Tark

continues as the chairman of the Council.



Villu  Vaino  from AS Deloitte & Touche Audit  continues  to

audit Eesti Telekom in 2002.





Definitions



Net debt - long term and short term debt, less cash and cash

equivalents and short term investments

ROA  - Net profit for the period expressed as percentage  of

average total assets

ROE - Pre-tax profit for the period expressed, as percentage

of average equity





AS EESTI TELEKOM AND SUBSIDIARY COMPANIES

INCOME STATEMENT

In thousands of Estonian kroons (EEK)

                       6 mths to    6 mths to      2001

                      30 June 02   30 June 01          

                                     Restated          

Revenue                                       

Net sales              2,195,973    2,031,444  4,154,43

                                                      8

Change in work-in-         3,501        3,750       529

progress

Capitalized self-          5,847       17,657    87,112

constructed assets

Other revenue             66,265       17,920    42,461

Total revenue          2,271,586    2,070,771  4,284,54

                                                      0

                                                       

Operating expenses                                     

Materials,               697,694      582,370  1,290,73

consumables,                                          0

supplies and

services

Other operating          220,004      198,449   494,962

expenses

Personnel expenses       246,780      258,297   534,754

Other expenses            17,078       15,670    33,118

Total expenses         1,181,556    1,054,786  2,353,56

                                                      4

                                                       

Profit from            1,090,030    1,015,985  1,930,97

operations before                                     6

depreciation and

amortisation

                                                       

Depreciation and         511,830      521,066  1,135,66

amortisation                                          1

                                                       

Profit from              578,200      494,919   795,315

operations

                                                       

Income/ expenses          -3,513       32,684    26,828

from subsidiaries

and associated

companies (net)

Other net financing       -2,261        3,335   -11,719

items

                                                       

Profit before tax        572,426      530,938   810,424

                                                       

Income tax on             93,660       30,932    30,932

dividends

                                                       

Profit after tax         478,766      500,006   779,492

                                                       

Minority interest              0          557       557

                                                       

Net profit from          478,766      499,449   778,935

ordinary activities

                                                       

Net profit for the       478,766      499,449   778,935

period

                                                       

Earnings per share                                     

Basic earnings per          3.48         3.64      5.67

share (in kroons)

Diluted earnings per        3.48         3.64      5.67

share (in kroons)

AS EESTI TELEKOM AND SUBSIDIARY COMPANIES

BALANCE SHEET

In thousands of Estonian kroons (EEK)

                         30 June     31 Dec    30 June

                            2002       2001       2001

                                              Restated

ASSETS                                           

Current assets                                   

Cash and cash            518,781    464,217    245,254

equivalents

Trade receivables,       469,534    403,324    427,102

net

Other receivables         12,364     10,715      7,183

Accrued income           120,508     99,242     95,520

Prepaid expenses          14,223     28,159     27,606

Inventories              104,085    104,013    160,566

Total current assets   1,239,495  1,109,670    963,231

                                             

Non-current assets                               

Long term financial       32,749     26,464     36,824

assets

Tangible assets, net   2,719,860  3,043,869  3,127,977

Intangible assets,        44,494     56,139     56,255

net

Total non-current      2,797,103  3,126,472  3,221,056

assets

                                                      

TOTAL ASSETS           4,036,598  4,236,142  4,184,287

                                                 

EQUITY AND                                       

LIABILITIES

Current liabilities                              

Interest bearing          83,219     88,166    207,890

loans and borrowings

Customer prepayments       3,636      9,237      6,083

Accounts payable to      130,838    260,932    204,518

suppliers

Other payables                 0        168        647

Tax liabilities          215,853     32,697    119,367

Accrued expenses         214,381    152,644    143,637

Provisions                12,369     17,482      6,427

Prepaid revenue            1,626     10,350     43,401

Total current            661,922    571,676    731,970

liabilities

                                             

Non-current                                           

liabilities

Interest bearing          36,108     49,115    116,452

loans and borrowings

Total non-current         36,108     49,115    116,452

liabilities

                                                 

                                                 

Equity                                           

Issued capital         1,373,833  1,373,833  1,373,833

Share premium            309,964    309,964    309,964

Statutory legal          137,384    137,384    137,384

reserve

Retained earnings      1,038,621  1,015,235  1,015,235

Net profit for the       478,766    778,935    499,449

period

Total equity           3,338,568  3,615,351  3,335,865

                                                 

TOTAL EQUITY AND       4,036,598  4,236,142  4,184,287

LIABILITIES



AS EESTI TELEKOM AND SUBSIDIARY COMPANIES

CASH FLOW STATEMENT

In thousands of Estonian kroons (EEK)

                                   6 mths to   6 mths to

                                  30 June 02     30 June

                                                      01

                                                Restated

Cash flows from operating                     

activities

Profit before tax and minority       572,426     530,938

interest

Adjustments for:                              

Depreciation and amortisation        511,830     521,066

Profit/loss from disposal of         -52,693      -4,702

fixed assets

Income/ expense from                   3,513     -32,684

subsidiaries and associates, net

Interests income/ expense, net        -7,141      -4,572

Other non-cash adjustments               699       2,302

Operating profit before working    1,028,634   1,012,348

capital changes

                                              

Change in current receivables        -73,961     -72,955

Change in inventories                  1,019     -11,343

Change in current liabilities         -1,800    -122,054

(except loans)

Adjusted cash generated from         953,892     805,996

operations

Interest paid                         -4,051     -10,971

Net cash flows provided by           949,841     795,025

operating activities

Cash flows from investing                     

activities

Purchase of tangible assets         -185,544    -399,618

Purchase of licenses                 -11,135      -9,466

Purchase of shares, investments      -10,000     -21,986

and other

Proceeds from sales of tangible       74,487       7,520

assets

Proceeds from sales of                     0      43,500

associates

Loans granted                           -128        -319

Cash receipts from repayment of           24          52

loans

Dividends received                        96           1

Interest received                     11,005      16,265

Net cash flows used in investing    -121,195    -364,051

activities

Cash flows from financing                     

activities

Proceeds from convertible long-           32         438

term debt

Repayment of convertible long-            -8          -8

term debt

Proceeds from nonconvertible           1,235           0

long-term debt

Repayment of nonconvertible long-     -3,783      -3,402

term debt

Repayment of long-term               -15,941     -20,245

borrowings

Payment of finance lease                   0     -16,629

liabilities

Dividends paid                      -755,617    -755,617

Net cash flows used in financing    -774,082    -795,463

activities

Net increase / (decrease) in          54,564    -364,489

cash and cash equivalents

Cash and cash equivalents at         464,217     609,743

beginning of year

Cash and cash equivalents at end     518,781     245,254

of period



                        REVIEW REPORT





To  the  Management  Board  and  shareholders  of  AS  Eesti

Telekom:



We  have  reviewed  the  accompanying  consolidated  balance

sheets  of  AS  Eesti  Telekom and  its  subsidiaries  ("the

Group")  as  at  30  June  2002 and  2001  and  the  related

consolidated statements of income, cash flows and changes in

shareholders’ equity for the periods from 1 January to

30  June  2002  and  2001, respectively. These  consolidated

financial statements are the responsibility of the AS  Eesti

Telekom management. Our responsibility is to issue a  report

on these financial statements based on our review.



We conducted our review in accordance with the International

Standards  on  Auditing  applicable to  review  engagements.

These  Standards require that we plan and perform the review

to  obtain  moderate assurance as to whether  the  financial

statements  are free of material misstatement. A  review  is

limited  primarily  to  inquiries of Group’s  personnel  and

analytical  procedures  applied to  financial  data.  It  is

substantially  less  in  scope than an  audit  conducted  in

accordance   with  International  Auditing  Standards,   the

objective of which is the expression of an opinion regarding

the  financial  statements taken as a  whole.  We  have  not

performed  an audit, and accordingly, we do not  express  an

audit opinion.



Based on our review, nothing has come to our attention  that

causes  us  to  believe  that the accompanying  consolidated

financial  statements  are  not  presented  fairly,  in  all

material   respects,   in  accordance   with   International

Accounting Standards.

















Deloitte & Touche



17 July 2002





Hille Võrk

Finantsjuht

6 272 460