889949--3/19/2007--HUNGARIAN_TELEPHONE_&_CABLE

related topics

{acquisition, growth, future}

{regulation, change, law}

{debt, indebtedness, cash}

{product, market, service}

{system, service, information}

{operation, international, foreign}

{control, financial, internal}

{personnel, key, retain}

{condition, economic, financial}

{stock, price, operating}

{stock, price, share}

{cost, contract, operation}

{cost, operation, labor}

{competitive, industry, competition}

We face significant competition due to increased telecommunications industry liberalization and other market forces, which competition could adversely affect our business, operating results and financial condition. If we are not able to stem the loss of telephone lines or grow other areas of our business to compensate for these losses, our revenue may continue to decline in the Hungarotel Operating Areas. Our strategy to expand into new markets may not be successful. We may need to introduce new products outside of our traditional products in order to remain competitive and such efforts may not be successful. Our failure to increase revenue from the Internet services market may adversely affect our business, results of operations and financial condition. If we are not able to manage costs while effectively responding to competition and changing market conditions, our business and results of operations may be adversely affected. Economic conditions could continue to negatively affect our business and results of operations. We may not be able to adapt to technological changes in the telecommunications marketplace. Network or system failure could result in lost revenue, increased capital expenditures or a damaged brand name. Our IT Systems are critical to our business and a failure of those systems could materially harm our business. The loss of key employees could adversely affect us. Risks Relating to Regulatory Matters We are subject to substantial government regulation, which could result in adverse consequences for our business, results of operations and financial condition. Hungary has recently joined the European Union and its integration may cause changes in Hungary s laws, which could result in adverse consequences for our business, results of operations and financial condition. Risks Relating to Our Existing Debt Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate sufficient cash to service our debt. We are subject to currency exchange rate risks. We are subject to risks resulting from fluctuations in interest rates. Our secured bank credit facility imposes restrictions on our ability to take certain actions and contains financial covenants that we could fail to satisfy. Our secured bank credit facility enumerates certain events which, if they were to occur, could trigger a mandatory prepayment provision, which could require us to make a prepayment on the outstanding balance under the secured bank credit facility. Risks Relating to Our Reported Financial Results as a U.S. Public Company We are subject to fluctuations in currency exchange rates which could have an adverse effect on our reported financial results. Changes in accounting rules could have a material impact on our financial results. Changes in accounting assumptions or regulations could affect our financial results. The failure of our internal control over financial reporting could harm our business and financial results. Risks Relating to the Invitel Acquisition We many not be able to successfully complete the Invitel acquisition. We may not be able to get the governmental approvals to complete the Invitel acquisition. We may not be able to get the financing to complete the Invitel acquisition. If we acquire Invitel, we may not be able to successfully integrate Invitel which could harm our business and our competitive position. The loss of key senior management could negatively affect us. If we acquire Invitel, our substantial debt could adversely affect our financial position. If we acquire Invitel, we will also acquire obligations related to Invitel s debt obligations which may limit our ability to take certain actions . Risks Relating to Other Strategic Investments or Acquisitions We may engage in future acquisitions and strategic investments that dilute the ownership percentage of our stockholders and require the use of cash, incur debt or assume contingent liabilities. We may not realize the anticipated benefits of future acquisitions and strategic investments, and the integration of acquisitions may disrupt our business and management. Our business is subject to increasingly complex corporate governance, public disclosure, accounting, and tax requirements that have increased both our costs and the risk of noncompliance. We have a majority stockholder whose interests may be different from the minority stockholders with respect to some matters. The low trading volume in our stock and the small public float of our stock subjects our common stock to volatile trading.

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889949--3/19/2007--HUNGARIAN_TELEPHONE_&_CABLE_CORP