Eesti Telekom                      NEWS RELEASE                         16.12.2004



Sale of majority interest



Elion Enterprises AS, a 100%-owned subsidiary  of  AS  Eesti  Telekom,  sells  51%

majority interest in Eltel Networks to ELTEL Networks Corporation,  which  already

owns 49% interest in this company.

 

Right to  acquire  100%  of  the  company  shares  was  given  to  ELTEL  Networks

Corporation in May 2003, when 49% minority interest was  sold.  Sale  will  enable

Elion to focus its core business that  is  to  provide  telecommunication  and  IT

solutions. Involving  a  strategic partner  has  strengthened  Eltel  Networks  AS

position in offering electrical and  telecommunications solutions and  accelerated

company´s expansion into other Baltic states.



Transition of the shares will take place after approval of the Competition  Board.

Price of the deal is  approximately  3.9  million  euros  (60.4  million  kroons).

Estimated capital gain to be booked in Q4 2004 will be approximately  2.6  million

euros (40 million kroons).  The transition cannot  be  treated  as  a  transaction

with related party, neither Council nor Management Board of Elion  Enterprises  or

Eesti Telekom have no other personal interest in the transaction.



As for the turnover  Eltel  Networks  AS  (www.eltelnetworks.ee)  is  one  of  the

largest company in the Baltics, offering design,  installation,  construction  and

maintenance services for     telecommunication     and     electrical     systems.

The turnover of Eltel Networks AS totalled 20.1 million euros  in  2003,  and  its

profit totalled 1.1 million euros. Company was established  in  2001  and  employs

595 people. The company has subsidiaries  in Latvia and in Lithuania.

 

Eltel  Networks   Corporation  (www.eltelnetworks.com)  is an   Infranet   Company

providing  services  to  networks'  owners  in  Northern  Europe.  Eltel  Networks

engineers, builds and maintains the lifelines of society: electrical, telecom  and

mobile networks. Eltel Networks  Corporation  employs more than 2,300  people  and

in addition to that, more than 800  people  in  its  associated  companies.  Eltel

Networks' estimated turnover for 2004 is EUR 310 million.



Elion  (www.elion.ee)  is  the  largest  telecommunications  and  IT  provider  in

Estonia. It is owned by AS  Eesti  Telekom,  listed  at  the  stock  exchanges  of

Tallinn and London (TSE:ETL/LSE:EETD). In Estonia Elion is the  market  leader  in

fixed network calls, in Internet subscriptions and data  communication  solutions,

and it has made a powerful entry into the IT market. In 2003 the consolidated  net

sales of Elion Group were 2.56 billion kroons, and  the  consolidated  net  profit

was 318 million kroons. At the end of 2003  Elion  Group  employed  the  staff  of

2014.



 

Hille Võrk

Financial Manager

+372 6 272 460