Eesti Telekom                 NEWS RELEASE                      06/07/2004



INCREASING OF SHARE CAPITAL



The extraordinary general meeting of shareholders of AS

Eesti Telekom held  on 15 December  2000  approved  the

issuing of up to 85,000 convertible bonds, including  the

issuing  of  up  to 42,500 A-series and  42,500  B-series

bonds  within the framework of the Eesti Telekom  Group’s

employee  incentive system. A resolution  passed  at  the

same meeting ruled out AS Eesti Telekom shareholders’ pre-

emptive  right to subscribe the convertible bonds  to  be

issued.



During the subscription period of 2.05.2003-2.06.2003 

26 125 A-series bonds were converted into 261 250 AS Eesti 

Telekom A-shares.



The total number  of  bonds outstanding  as of 1 June 2004

were 34,125 B-series bonds.



In  accordance with the "AS Eesti Telekom terms  for  the

issue  of  convertible bonds", an owner of B-series  bond

was entitled to (i) redeem a bond and exchange it for  10

Eesti Telekom A-series shares, which have a nominal value

of  10  kroons  each and a subscription  price  of  90.62

kroons, or (ii) redeem a bond and exchange it for  a  sum

of  money  (the  bond’s nominal value  (10  kroons)  plus

accumulated interest of 7% per annum).



On  4  June 2003 the Management Board of AS Eesti Telekom

approved  the  results  of the subscription  period  that

lasted from 2 May to 2 June 2004. During the said period,

applications  were  received for the exchange  of  31,000

bonds  for 310,000 AS Eesti Telekom A-series shares.  The

Management  Board  of  AS  Eesti  Telekom  approved   the

subscription list, and will submit an application to  the

registry  department of the Tallinn City  Government  for

the  registration  of  310,000  A-series  shares  with  a

nominal  value of 10 kroons and an issue price  of  90.62

kroons, i.e. an issue premium of 80.62 kroons. The shares

issued are in all respects equivalent to the existing  AS

Eesti  Telekom  A-series shares. The new  shares  entitle

shareholders to dividends as of the 2004 financial  year.

The   resolution  passed  at  the  extraordinary  general

meeting  of  shareholders held on 15 December 2000  rules

out  AS Eesti Telekom shareholders’ pre-emptive right  to

subscribe  the  issued AS Eesti Telekom  A-series  shares

under the conditions for convertible bonds.



The  total number of AS Eesti Telekom A shares after  the

emission of the new shares will be 137,954,428 and  share

capital 1,379,544,280 kroons.





Krister Björkqvist

Financial Director

+372 6 272 450