Eesti Telekom                 FINANCIAL RESULTS           07/15/2004 09:00



Q2 AND HY1 2004 RESULTS, EEK



AS EESTI TELEKOM AND SUBSIDIARY COMPANIES



Financial  statements are prepared in thousands of  Estonian

kroons (EEK)

INCOME STATEMENT

                      6 months to  6 months to       2003

                         30 June 30 June 2003           

                            2004     Restated

Revenues                                        

Net sales              2,493,601    2,277,761  4,777,858

Other revenues            12,694       17,171     30,393

Total revenues         2,506,295    2,294,932  4,808,251

Operating expenses                                      

Materials,             (876,782)    (708,715) (1,662,093)

consumables, supplies

and services

Other operating        (243,985)    (215,491)  (457,253)

expenses

Personnel expenses     (300,531)    (256,395)  (532,140)

Other expenses          (11,643)     (11,791)   (39,164)

Total operating       (1,432,941)  (1,192,392) (2,690,650)

expenses

Profit from            1,073,354    1,102,540  2,117,601

operations before

depreciation

Depreciation and       (416,413)    (449,778)  (880,941)

amortisation

Profit from              656,941      652,762  1,236,660

operations

Net financial income       (383)       57,610     55,462

/ (expenses) from

associates

Other net financing       19,777       18,715     33,495

items

Profit before tax        676,335      729,087  1,325,617

Income tax on          (382,918)    (286,022)  (286,022)

dividends

Profit after tax         293,417      443,065  1,039,595

Minority interest            299            -    (4,047)

Net profit for the       293,716      443,065  1,035,548

period

Earnings per share                              

Basic earnings per          2.13         3.22       7.53

share (in kroons)

Diluted earnings per        2.13         3.22       7.53

share (in kroons)



BALANCE SHEET



                         30 June  31 Dec 2003    30 June

                            2004                    2003

                                                Restated

ASSETS                                          

Non-current assets                              

Property, plant and    2,083,710    2,275,868  2,360,260

equipment

Goodwill                  10,534       10,287      1,957

Licenses, patents and    105,812      113,808     30,330

trademarks

Investments in            16,255       16,638     21,660

subsidiaries and

associates

Other investments          2,700        2,700      2,710

Other non-current          9,313        6,852      2,292

assets

Total non-current      2,228,324    2,426,153  2,419,209

assets

Current assets                                          

Inventories              112,296       97,417    105,478

Trade receivables        581,036      486,037    453,115

Other receivables        218,608      219,893    197,705

Investments held for      28,554       48,709     48,538

trading

Cash and cash          1,094,883    1,320,802  1,132,365

equivalents

Total current assets   2,035,377    2,172,858  1,937,201

TOTAL ASSETS           4,263,701    4,599,011  4,356,410



EQUITY AND                                              

LIABILITIES

Equity                                                  

Issued capital         1,379,545    1,376,445  1,376,445

Reserves                 493,663      468,410    468,410

Translation reserve           11         (11)       (34)

Retained earnings      1,188,792    1,254,670  1,254,670

Net profit for the       293,716    1,035,548    443,065

period

Total equity           3,355,727    4,135,062  3,542,556

Minority interest         13,241       13,540      9,491

Non-current                                    

liabilities

Interest-bearing           1,855        3,694      8,011

loans and borrowings

- due after one year

Provisions                 8,483        8,777      7,340

Total non-current         10,338       12,471     15,351

liabilities

Current liabilities                                     

Trade payables           191,241      226,042    140,640

Other current            171,140      161,829    201,838

liabilities

Tax liabilities          487,878       35,696    414,602

Interest-bearing          30,825        8,346     21,725

loans and borrowings

- due within one year

Provisions                 3,311        6,025     10,207

Total current            884,395      437,938    789,012

liabilities

TOTAL EQUITY AND       4,263,701    4,599,011  4,356,410

LIABILITIES



CASH FLOW STATEMENT



                           6 months to   6 months to

                          30 June 2004  30 June 2004

Operating activities                    

Profit from operations         656,941       652,762

Adjustments for:                                    

Depreciation and               416,413       449,778

amortisation

(Profit) from sales and        (2,705)       (8,531)

write-off of fixed assets

Operating cash flow          1,070,649     1,094,009

before movements in

working capital

Change in current             (97,866)       (8,734)

receivables

Change in inventories         (12,472)      (13,709)

Change in current               36,749       (7,755)

liabilities

Cash generated by              997,060     1,063,811

operations

Interest paid                      115         (630)

Net cash from operating        997,175     1,063,181

activities

Investing activities                    

Purchases of property,       (183,352)     (127,151)

plant and equipment

Purchases of licenses          (7,576)       (1,164)

Proceeds from sales of           5,194        10,465

property, plant and

equipment

Acquisition of                 (3,872)             -

subsidiaries

Proceeds from sales                  -        68,137

subsidiaries

Purchases of trading          (29,356)      (48,524)

investments

Proceeds on disposal of         49,510        79,041

trading investments

Loans granted                  (6,384)         (502)

Cash receipt from                   33            42

repayment of loans

Interest received               30,303        22,998

Net cash used in             (145,500)         3,342

investing activities

Financing activities                    

Repayment of long-term            (48)         (166)

convertible debt

Proceeds from                      233           240

nonconvertible long-term

debt

Repayment of                   (3,688)       (5,533)

nonconvertible long-term

debt

Repayment of long-term               -      (11,636)

borrowings

Repayment of obligations         (394)             -

under finance lease

Repayment of short-term          (176)             -

borrowings

Shares issuance (Rights         27,782        23,413

Offering)

Dividends paid             (1,101,165)     (824,309)

Net cash used in           (1,077,456)     (817,991)

financing activities

Net increase in cash and     (225,781)       248,532

cash equivalents

Cash and cash equivalents    1,320,802       883,988

at beginning of year

Effect of foreign                (138)         (155)

exchange rate changes

Cash and cash equivalents    1,094,883     1,132,365

at end of period





Hille Võrk

Financial Manager

6 272 460