Hungarian Carrier Cuts Jobs

SEATTLE -- As part of its continuing effort to integrate the businesses of its Hungarian operating subsidiaries (Hungarotel and PanTel) to maximize synergies and extract additional cost savings from the PanTel acquisition, Hungarian Telephone and Cable Corp. (AMEX:HTC - News) announced today a workforce reduction plan and new marketing initiatives.

Following a review of the size and composition of its workforce, Hungarian Telephone has agreed with the Hungarian Trade Unions representing most of its Hungarian-based employees on the key provisions of a workforce reduction plan. Hungarian Telephone will reduce its workforce by approximately 200 employees, which represents about 20% of Hungarian Telephone's workforce. The first step in the process will consist of an offer to employees to voluntarily accept a severance package. If the first step does not meet its target of 200 employees, Hungarian Telephone will take the next step in the process to complete its workforce reduction.

Hungarian Telephone expects to complete its workforce reduction by the end of the year and estimates that the one-time costs associated with the workforce reduction will range from 600 million to 1 billion Hungarian Forints (U.S. $3-5 million), which costs are payable in cash in 2005 and will affect Hungarian Telephone's 2005 reported results. The exact costs of the workforce reduction are dependent on the final composition and seniority of the affected employees as well as the timing of the full implementation of the workforce reduction process. Hungarian Telephone's estimates the future annual cost savings to be around 500 million Hungarian Forints (U.S. $2.5 million).

Hungarian Telephone also announced that it would use the PanTel brand name to market all of its services throughout Hungary. In Hungarotel's existing, historical concession areas, Hungarian Telephone will continue to use the Hungarotel brand name for its existing residential customer base. However, Hungarotel's business and institutional customers will be transferred to PanTel in a process that should be completed by the end of 2006.

COMMENTS FROM TORBEN V. HOLM

Commenting on the workforce reduction plan, Torben V. Holm, President and Chief Executive Officer stated, "With the increasingly fierce competition in the Hungarian fixed telephony markets, it is imperative that we streamline our operations to achieve the necessary long-term cost efficiencies which will enable us to compete in this marketplace. I want to thank the Trade Unions and Workers Council for their cooperation and efforts in this workforce restructuring."

Hungarian Telephone and Cable Corp.