Commenting on the results, Mr. Dong Sung Cho, Chief Financial Officer of Hanaro, said, Hanaro’s growth continues at a pleasing pace this quarter, having achieved positive operational results, as anticipated, ahead of schedule despite a backdrop of challenging macro conditions. This milestonewas reached within 2 years from our business inception, highlighting Hanaro’s rapid success in bundling Internet access, multimedia content and local telephonyservices.

As previously conveyed, Hanaro’s focus is now on increasing subscriber penetration within our existing service area covering 66 cities, there by reducing capital expenditure and accordingly, enhancing liquidity. Through strict cost controlling methods, we anticipate the Company’s profitability continuing to strengthen, with only depreciation and variable costs increasing in line with subscribers. Building on this momentum, we aim to achieve positive net profitearlier than projected and continue to enhance shareholder value.

Operational Highlights and Review

The total subscriber base at the end of 1Q01 was 1,445,250, which includes 1,278,410 broadband subscribers, an increase of 15.3% from 1,253,172 at the end of 2000. In terms of net additions, the subscriber increase in the first quarter slowed compared to the fourth quarter of 2000. The reasons for the decrease include: 1) the cable modem connection rate was low due to heavy snowfalls in January and February, 2) there were fewer business days compared to previous quarters,3) all sales promotion programs were discontinued from the beginning of 2001, and 4) commission cuts.

Although subscriber growth slowed in the first quarter, we expanded our subscriber base significantly in April with monthly net new additions of 117,184, which includes 107,455 broadband subscribers. These April additions are largely attributable to effective sales promotional programs newly initiated for the month of April, which included exemption of installation fees.

As of the end of 1Q01, the proportion of ADSL Pro (up to 8 Mbps) and Lite (up to 1 Mbps) was 14.0% and 86.0% respectively, with 32.5% of ADSL customers subscribing telephony service bundled with ADSL.

Hanaro Telecom plans to add 954 thousand more broadband subscribers in 2001 in order to expand its broadband subscriber base to 2.1 million by the end of 2001.

Brand Recognition

Hanaro won first place in the high-speed Internet service category of the National Customer Satisfaction Index’s (NCSI) April- 2001 survey, once again highlighting the Company’s strong brand image and reputation of excellence.

The NCSI survey is conducted by University of Michigan of the U.S., the Korea Productivity Center, a quasi-government organization, and Chosun Daily Newspaper. The survey evaluates the degree of customer satisfaction of products or services utilizing an evaluation model co-developed by the Korea Productivity Center and the National Quality Research Center of University of Michigan.

The survey targeted Internet usersaged from late teens (high school students) to fifty, whom have accessed high-speed Internet on a regular basis more than twice a week for more than three months. The survey interviewed approximately 300 users for each company, which included Hanaro, Korea Telecom and Thrunet.

The high-speed Internet service category was only included in the survey from 2001, so Hanaro became the first provider in Korea to win this survey category, clearly depicting the company’s leading position in high-speed Internet services.

3G Business

Hanaro’s resolute adherence to strict business criteria was illustrated last quarter by our decision to limit our equity participation in the 3G consortium to 10%, and there has not been any material developments since 4Q00. The Grand Consortium, in which Hanaro is participating, sees that the 3G business will proceedmore effectively if those local and overseas companies wishing to participatein Korea’s 3G business based on cdma2000 technology, join the existing Grand Consortium rather than forming another independent consortium.

With a 10% stake in the Grand Consortium, Hanaro will become one of its major shareholders,enabling Hanaro to utilize its network to increase revenues for its leased line business while capturing synergies through its broadband contents. These benefits are pursued at, what we anticipate will be, a reduced financial burden to Hanaro, since currently the MIC or Ministry of Information and Communication is considering a significant cut in license fees. The total fee reduction will be decided in line with the MIC’s policy for cdma2000 business in Korea.

Capital Expenditure

CAPEX in the first quarter decreased sharply to KRW 139.6 billion, attributable to no further expansion of service coverage, maximum utilization of existing facilities, and a drop in telecommunications equipment prices.

The total CAPEX for 2001 was scaled back to KRW 850 billion from the previous KRW 949.8 billion. Such a decrease reflects a fall in telecommunications equipment prices, which consequently contributed to reducing our financial burden.

Financing Activities

During 1Q01, the Company succeeded in raising an aggregate amount of approximately KRW 180 billion,consisting of US$ 100 million of overseas bonds with warrants, KR W30 billion from the issuance of local corporate bonds, KRW 6.3 billion from the Information Promotion Fund set by the government to facilitate development of information infrastructure, and KRW 14.4 billion in vendor financing.

Having managed CAPEX resiliently and turning EBITDA positive in the first quarter, our cash onhand at the end of March was KRW 512.1 billion, closely approximating that of the previous quarter.

At the end of March 2001, average debt costs for outstanding loans was 9.13% p.a. with nearly all of the debts having long-term maturities.

Foreign Exchange (FX) Risk Management

Generally, all transactions Hanaro makes including telecommunications equipment purchases are denominated in local currency, which leads to minimal foreign exchange exposure on trade. However, of the aforementioned debts related to the Company’s financing activities, foreign exchange exposure may be incurred from US$ 100 million overseas BW and US$ 51.3 million in vendor financing.

In addition, Hanaro held US$ 37.5 million of US dollar deposits as of March 31, 2001. The Company saw a gain on foreign exchange translation and foreign transaction during the first quarter amounting to KRW1.9 billion and KRW1.7 billion respectively. The current US dollar deposit is expected torepay US$ 14.8 million of vendor financing maturing this year. Overall, management believes Hanaro’s

foreign exchange risk has been well controlled.