HTC Reports Q1

SEATTLE -- Hungarian Telephone and Cable Corp. ("HTCC") (AMEX:HTC - News), the leading alternative telecommunications service provider in Hungary, today announced results for the first quarter of 2005. Results for the first quarter include the results of PanTel, the Company's recently acquired business, for one month.

For the quarter ended March 31, 2005, the Company reported net telephone service revenues of $20.4 million, an increase of 32% compared with the first quarter of 2004. Net measured service and subscription revenues increased 1% to $13.1 million, while other operating revenues, which includes revenues generated from the provision of leased lines, ADSL access, VPN services, Internet services and other services, increased 253% to $6.7 million, over the comparable period during 2004.

The Company's income from operations and net loss attributable to common stockholders, determined in accordance with U.S. generally accepted accounting principles (GAAP), were $5.5 million and ($0.7) million, respectively, for the first quarter of 2005, compared with income from operations of $6.7 million and net income attributable to common stockholders of $7.6 million in the same period last year. GAAP diluted loss per share was ($0.06) for the quarter ended March 31, 2005, compared with diluted earnings per share of $0.59 in the same period last year. The Company reported a net foreign exchange loss of $3.6 million for the quarter ended March 31, 2005, compared to a net gain of $3.7 million for the first quarter of 2004. The loss for the quarter reflects the weakening of the Hungarian forint against the euro and U.S. dollar during the period.

Pro-forma net income and adjusted EBITDA, which excludes foreign exchange losses/gains and variable option non-cash accounting charges, were $4.6 million and $11.6 million, respectively, compared with $3.9 million and $9.7 million in the same period last year. This represents growth of 17% in pro-forma net income and 20% growth in adjusted EBITDA comparing the two periods, while pro-forma diluted earnings per share were $0.32 for the quarter ended March 31, 2005.

A reconciliation of GAAP to Non-GAAP financial measures has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Cash from operations for the first quarter of 2005 was $12.4 million, an increase of 56% on a year-over-year basis. HTCC had cash and cash equivalents of $28.4 million at March 31, 2005.

COMMENTS FROM OLE BERTRAM

Commenting on these results, Ole Bertram, President and Chief Executive Officer stated, "We are pleased with the contribution PanTel made to the results of HTCC for the quarter and we expect the contribution of PanTel to the Company's results to continue to increase in the future. In addition, as a result of the nation-wide network of PanTel, Hungarotel has recently begun to compete for residential customers of Matav, within Matav's operating areas, by offering carrier selection services. HTCC has many possibilities for future growth as a result of the acquisition of PanTel and the Company has a sound base to move forward in the competitive Hungarian telecommunications market."

Mr. Bertram went on to say, "I would like to thank all of our shareholders for their continued support of HTCC and I believe that the best is yet to come for the Company. I look forward to seeing you at the annual shareholders meeting."

Hungarian Telephone and Cable Corp.