Invitel's network covers 14% of the population and provides voice, data and internet services to residential and business customers. It serves nearly half a million subscribers and over 20 thousand businesses.

Mid Europa and GMT have entered into agreements relating to the sale of 14.2% of Invitel each to Invitel's senior management (to be structured as a share buy-back by Invitel), thus reducing their holdings from 47.5% to 33.33%. Following the offering the AIG Emerging Europe Infrastructure Fund ("EEIF"- advised by Mid Europa Partners under contract with EMP Global), GMT and Invitel's senior management will each hold 33.33% of Invitel. 

EEIF and GMT each purchased 50% of Invitel's operating subsidiaries (formerly known as Vivendi Telecom Hungary) in May 2003 from Vivendi Telecom International S.A.

Tim Green, Managing Partner of GMT Communications Partners, said: "As the largest telecoms and media private equity specialist in Europe we have been watching carefully the fixed line telecoms industry for some time. There is value in this area of the market. Hungary has a young, educated population who tend to be early adopters of added-value broadband services. This is a great company and management team with strong performance in a recently overlooked segment of the telecoms industry."

Craig Butcher, Partner of Mid Europa, said: "Invitel has proven to be another successful investment for Mid Europa in the Central Europe telecommunication sector. The issue of floating rate senior PIK notes by Invitel used to fund the purchase, the first by a Central European issuer, has allowed Mid Europa and GMT to achieve a return of around 3 times our initial investment so far and remain significant shareholders in Invitel. We look forward to capitalising on its strong cash flow generation potential along with the strategic initiatives that we have put in place with management. We expect these to generate significant shareholder value in the future."

GMT Communications Partners: Mid Europa Partners: 
Tim Green Craig Butcher
+44 (0) 20 7292 9340 +36 1 411 1270

The Maitland Consultancy Citigate Dewe Rogerson:
(for GMT Communications Partners) (for Mid Europa Partners)
William Clutterbuck David Westover
Peter Ogden Agnès Riousse
+44 (0) 20 7379 5151 +44 (0) 20 7638 9571

Important Notice:

This announcement is not an offer of securities for sale in the United States.  Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"). Any public offering of securities to be made in the United States would be made by means of a prospectus that could be obtained from the issuer and that would contain detailed information about the issuer and management as well as financial statements.

Invitel does not intend to register any portion of the offering in the United States or to conduct a public offering of securities in the United States. Consequently, the Notes may not be offered or sold within the United States or to or for the account or benefit of U.S. persons (as defined in Regulation Sunder the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

This announcement and the information contained herein are not for publication, distribution or release in or into the United States.

This announcement is directed only at persons who (i) are outside the United Kingdom or (ii) have professional experience in matters relating to investments or (iii) are persons falling within Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.

This announcement must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.

Notes to editors:

About Mid Europa Partners

Mid Europa Partners is the largest private equity firm investing in Central and Eastern Europe. Operating from London, Budapest and Warsaw, Mid Europa Partners advises and manages funds with committed capital in excess of €1.1 billion. The Mid Europa Partners team has been investing in Central and Eastern Europe since 1999.

 
Mid Europa Partners has made investments in fourteen companies located in nine countries of Central and Eastern Europe. Current investments include Invitel (Hungary's second largest fixed line telecommunications company), Calucem (one of the leading suppliers of calcium aluminate cement in the world, with production facilities based in Croatia), Baltic Rail Services (Estonian rail operator), Pilkington Russia (glass production plant near Moscow), Wheelabrator (a manufacturer of surface treatment equipments) and Aster (the Polish cable TV operator).

Mid Europa Partners employs an active, hands-on investment approach and applies the sector knowledge and operating experience of its people to deliver long-term value creation together with the management teams of portfolio companies.

Mid Europa Partners is the investment manager to Emerging Europe Convergence Fund II, L.P. whose fund manager and general partner is EMP Europe Management (CI) LP and is the advisor to the AIG Emerging Europe Infrastructure Fund LP under contract with EMP Global.

For additional information on Mid Europa Partners please visit: www.mideuropa.com.

About GMT Communications Partners

GMT Communications Partners is Europe's largest independent private equity group focused exclusively on the communications sector, having actively invested in the European marketplace for the past decade. 

GMT's founders created the first pan-European fund focused on the media and telecommunications sectors, Baring Communications Equity, in 1992 with the backing of investment bank ING Barings. Since that time, the Group has completed 25 investments across 17 countries and has managed a series of successful funds comprising €700 million of capital.

The Partners of GMT have together completed over 100 transactions in the European media and telecoms industry. Significant investments include Orion Publishing Group (UK), Mobifon (Romania), Invitel (Hungary), YBR Group (Netherlands), Internet Network Services (UK), Multicom (Sweden), EUSA (Spain), Redext (Spain) and PEPcom (Germany).

For additional information please visit www.gmtpartners.com.