Q2 and HY1 2009 resultsJuly 2009

Management commentary to Stock Exchange about Q2 2009 results

The Group’s sales revenues in the second quarter were primarily impacted by regulations (European Union regulations applied on the mobile sector) and the economic downturn (reduction of sales of goods and changes in consumer behavior). At the same time, there is a continuing growth of mobile postpaid, mobile and fixed broadband and TV customers.

EMT’s market position

EMT’s estimated market share (by number of active SIM-cards)

was 47%

June 2009

June 2008

+/-

Mobile postpaid users (in th.) 484,0 480,0 4,0

March 08 June 08 Sept 08 Dec 08 March 09

480,000 484,000 487,000 488,000 484,000

275,000 293,000 292,000 278,000 262,000

7,0

00

4,0

00

3,0

00

1,0

00

-4,0

00

-3,0

00

18

,00

0

-1,0

00

-14

,00

0

-16

,00

0

755,000 777,000 779,000 766,000 746,000

Contractual Prepaid Contractual, Change

Prepaid, Change

Elion’s market positionJune 2009

June 2008

+/-

No of permanent Internet connections (in th.)

175,2 168,3 6,9

No of IP and cable-TV customers (in th.)

88,4 67,7 20,7

Total means of communication (in th.)

460,0 473,0 -13,0

Elion 54%

Others46%

54% of permanent Internet connections

Elion80%

Others20%

80% of fixed voice market

Elion29%

Others71%

29% of cable-TV market

Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008Consumer broadband market Paid TV market Fixed voice market

0%

20%

40%

60%

80%

100%

54 54

29 24

80 81

46 46

71 76

20 19

Market shares

Elion Others

Financial resultsEesti Telekom Group

Dynamics of sales

• Continued customers’ growth in broadband services and mobile communication segments;

• Sales revenues were primarily impacted by regulations that EU applies to the mobile sector and by the economic downturn

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

804886 826

727 737

Broadband services segment

Other (incl. sales of equimpent) Internet, Data and IT Voice & CapacitySeries4

mE

EK

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

938 966904

740 768

Mobile communications segment

Other (incl. sales of equimpent) VAS Call charges Series4

mE

EK

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

-1.0% -2.9% 0.2%

-10.0%-13.9%

Consolidated net sales growth, Y-to-Y, %

ARPU

Dynamics of OPEX

• Decline in retail and wholesale volumes

• Significant impact of efficiency projects to IT, maintenance and personnel costs

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

563639 644

482 505

Broadband services segment

Production costs Sales & admin. costs Series3

mE

EK

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

576 586 569

468 472

Mobile communications segmentProduction costs Sales & admin. costs Series3

mE

EK

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

-3.4% -5.2%4.6%

-9.6%-14.6%

Consolidated OPEX growth, Y-to-Y, %

Dynamics of EBITDA

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

3.8% 0.1%-7.9% -10.3% -12.6%

Consolidated EBITDA growth, Y-to-Y, %

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

38.9% 39.6%

37.4% 37.0%38.9%

30.6%

27.9%

22.8%

34.1%

31.7%

EBITDA margin

Mobile commu-nications seg-ment

Broadband services seg-ment

Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

365 383338

274 299246 247

188248 233

EBITDA

Mobile communications segment Broadband services segment

mEEK

CAPEX and depreciation

Investing priorities:

BroadbandDevelopment of network

resources, changes in the product portfolio, the improvement of and expansion of the availability of the triple-service packages

MobileImplementation of technologies

supporting high-speed data communications;

ITExpansion of the infrastructure

necessary for the provision of services

Cash position

Eesti Telekom group paid dividends on 16 June 2009: 10.50 EEK per share;

In total, 1,449 mln EEK was paid out.

Openi

ng bal

ance

EBITDA

CAPEX

Dividen

ds*)

Tax

in d

ividen

ds

Other

Closin

g ba

lanc

e

1,212 536

-125 -1,454-400 473

242

Change in net cash (quarterly)

mEEK

*) Dividends include paid dividends to Serenda Invest OÜ minority shareholders

Net cash = Cash & cash equivalents + ST investments - Interest bearing loans

Largest shareholders of AS Eesti Telekom

No of shares Participation

Baltic Tele AB 82,936,299 60.12% 0

Ministry of Finance 33,346,464 24.17% 0

Development Fund 4,138,636 3.00% 0

SEB clients 2,349,205 1.70% (469 541)

ING Luxembourg S.A. 2,137,813 1.55% 82 030

Deutsche Bank (GDR accounts) 1,810,971 1.31% (435 867)

Clearstream Banking Luxembourg S.A. clients 623,158 0.45% 44 857

Mellon Treaty Omnibus 496,473 0.36% 133 000

UniCredit Bank Austria AG 439,918 0.32% (32 230)

State Street Bank and Trust Omnibus Account 381,045 0.28% 45 100

30 June 2009 Changes since 31 March 2009

Trading statistics in Tallinn

AS Eesti Telekom has been listed on the Tallinn and London Stock Exchanges (OMX:ETLAT/LSE:EETD)

since 1999.

SHARE INFORMATION

Veerg1 2005 2006 2007 2008

Year-end number of shares 137,954,528 137,954,528 137,954,528 137,954,528

Annual average number of shares 137,954,528 137,954,528 137,954,528 137,954,528

Equity per share, EEK 29.28 29.78 31.19 31.08

Earnings per share, EEK 7.88 9.49 10.91 10.40

P/E ratio 15.1 13.8 11.2 5.9

Dividends per share for the year, EEK 9.00 9.50 10.50 10.50

Dividend payout ratio, % 114.2 100.1 96.2 101.0

TRADING HISTORY ON THE TALLINN STOCK EXCHANGE (in EEK)

Veerg1 2005 2006 2007 2008 6M 2009

High 134.56 131.43 168.51 125.02 85.27

Low 111.09 108.74 102.80 59.61 64.15

Last 118.91 131.43 122.04 61.02 67.91

Change, % 5.56 10.53 -7.14 -50.00 11.29

Traded volume 23,749,354 19,336,241 23,693,032 17,636,495 5,017,457

Turnover, mln 2,907.63 2,327.76 3,025.48 1,822.37 379.52

Capitalisation, mln 16,404.66 18,131.56 16,836.45 8,418.23 9,454.02

Source: NASDAQ OMX Tallinn

Structure of the Group