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Mid Europa Partners and GMT Communications announce sale of Hungary’s Invitel for €470 million

09 January 2007

GMT Communications Partners ("GMT") and Mid Europa Partners announced today that they expect to raise €52.0m through the sale of 66.66% of the share capital of Matel Holdings N.V., owner of Invitel Távközlési ZRt. ("Invitel"), Hungary's second largest fixed line telecoms operator, to Hungarian Telephone & Cable Corp ("HTCC").

At the same time the senior management of Invitel have also agreed to sell their holdings in the company, enabling HTCC to acquire 99.98% of Invitel for a total consideration of €470 million.

Following the completion of the sale, GMT and Mid Europa Partners will each receive €26.0m. The sale is subject to obtaining certain regulatory approvals from the Hungarian and Romanian authorities and is expected to close in the first half of 2007.

GMT and Mid Europa acquired Invitel in May 2003 from Vivendi Telecom International S.A. for €325 million. Under their ownership, the Chairmanship of Ian Mckenzie and the management of Chief Executive Officer, Martin Lea, Invitel has seen recurring EBITDA increase from €59.1 million in 2002 to €82.4 million in 2005. 

Invitel is the incumbent fixed telecommunications services provider in its historical concession areas, which covers approximately 1.4 million people, representing 14% of Hungary's population. Invitel also provides fixed telecommunications services as an alternative operator in the remainder of Hungary, through its network covering 16 major urban centres.

HTCC, through its Hungarian subsidiary Hungarotel Távközlési Zrt., is the incumbent fixed telecom service provider in historical concession areas covering 7% of Hungary's population and also has a nationwide network serving predominantly business customers in the remainder of Hungary.

Craig Butcher, Partner of Mid Europa, said: "We are delighted to announce another successful transaction for Mid Europa. During the last 12 months we had a very active period, especially in the telecommunication sector, where, as well as our Invitel transactions, we acquired Radiokomunikace in November. The sale of Invitel now enables us to achieve a return of 3.9x our original investment. We would like to thank everyone at the company for all we have achieved together in the last three years".

Tim Green, Managing Partner of GMT Communications Partners, said: "Invitel has been a very successful investment for GMT. As the largest telecoms and media private equity specialist in Europe, we are proud to have helped build the strong operating performance of the company since our acquisition, alongside an outstanding management team and group of employees. The sale of Invitel, following the sale of Casema in 2006, completes a record period of distributions to our investors and we look forward to an even more successful 2007."

JP Morgan acted as financial advisor to Invitel and White & Case as its legal counsel on this transaction.

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