Letterhead of TDC A/S]

Exhibit 7.16

[Letterhead of TDC A/S]

Date:		3 September 2004
To:		Xxxxxxx Global Special Situations Fund Limited (“GSSF”)
		c/x Xxxxxxx Investment Management Limited (“Xxxxxxx”)
		20 Bedfordbury
		London
		WC2N 4BL
		United Kingdom
Facsimile:		x00 000 000 0000
From:		TDC A/S (“TDC”)
Re:		Physically-Settled Preferred Stock Share Option Transaction

Dear Sirs

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between us on the Trade Date specified below (the “Transaction”).

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation will govern.

This Confirmation evidences a complete binding agreement between you and us as to the terms of the Transaction to which this Confirmation relates. This Confirmation, together with all other documents referring to an ISDA Master Agreement (each a “Confirmation”) confirming transactions (each a "Transaction”) entered into between us (notwithstanding anything to the contrary in a Confirmation), shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement as if we had executed an agreement in such form (but without any Schedule except for the election of English law as the governing law and USD as the Termination Currency) on the Trade Date of the first such Transaction between us. In the event of any inconsistency between the provisions of that agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction.

1. The terms of the particular Transaction to which this Confirmation relates are as follows:

		General Terms:
				Trade Date:		3 September 2004
				Option Style:		American
				Option Type:		Call
				Seller:		Xxxxxxx

				Buyer:		TDC
				Shares:		Series A Convertible Preferred Stock, par value USD 0.01 per share, of Hungarian Telephone and Cable Corp., a Delaware corporation (“HTCC”).
				Number of Options:		18,000
				Strike Price:		In the event that the Options are exercised during the portion of the Exercise Period that:
						(i)		commences on the Commencement Date and ends on the 14th day after the Commencement Date, USD 55.11 per Share;
						(ii)		commences on the 15th day after the Commencement Date and ends on the 28th day after the Commencement Date, USD 55.44 per Share;
						(iii)		commences on the 29th day after the Commencement Date and ends on the 42nd day after the Commencement Date, USD 55.88 per Share; and
						(iv)		commences on the 43rd day after the Commencement Date and ends on the Expiration Date, USD 56.32 per Share.
				Premium:		USD 1.00
				Premium Payment Date:		The Trade Date
				Exchange:		Such exchange or quotation system, if any, as the Calculation Agent considers appropriate
				Related Exchange(s):		Such exchange or quotation system, if any, as the Calculation Agent considers appropriate
				Knock-in Event:		Applicable. For the purposes of this Option Transaction, the Knock-In Event is (i) the release by the Escrow Agent (as defined in Exhibit C to the Purchase and Sale Agreement, dated the date hereof, between CU Capital LLC (formerly CU Capital Corp.) and GSSF (the “GSSF Purchase and Sale Agreement”)) of (x) new share certificates to GSSF (as buyer) and (y) the Purchase Price (as defined in the GSSF Purchase and Sale Agreement) to the seller

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						thereunder pursuant to the GSSF Purchase and Sale Agreement and (ii) the exercise by TDC of both the EMDCD Option and the AEEP Option. For the purposes hereof “EMDCD Option” means the Physically-Settled Common Stock Share Option Transaction between EMDCD and TDC and “AEEP Option” means the Physically-Settled Common Stock Share Option Transaction between AEEP and TDC, each with a Trade Date as of the Trade Date of this Transaction.
				Knock-in Determination Day(s):		Any Scheduled Trading Day during the Exercise Period
		Procedures for Exercise:
				Commencement Date:		The date of the signing of the GSSF Purchase and Sale Agreement
				Latest Exercise Time:		5:00 p.m. (local time in London, England)
				Expiration Time:		5:00 p.m. (local time in London, England)
				Expiration Date:		60 days after the Commencement Date
				Multiple Exercise:		Not Applicable
				Automatic Exercise:		Not Applicable
				Seller’s Telephone Number, and Facsimile Number and Contact Details for purpose of giving Notice:		Xxxxxxx Xxxx/Xxx Xxxxx,
						Funds Administration Department
						Tel: x00 000 000 0000
						Fax: x00 000 000 0000
		Settlement Terms:
				Physical Settlement:		Applicable
				Settlement Currency:		USD
		Dividends:
				Extraordinary Dividends:		As determined by the Calculation Agent
		Adjustments:
				Method of Adjustment:		Calculation Agent Adjustment
		Extraordinary Events:

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		Consequences of Merger Events:
				Share-for-Share:		Calculation Agent Adjustment
				Share-for-Other:		Calculation Agent Adjustment
				Share-for-Combined:		Calculation Agent Adjustment
		Tender Offer:				Applicable
		Consequences of Tender Offers:
				Share-for-Share:		Calculation Agent Adjustment
				Share-for-Other:		Calculation Agent Adjustment
				Share-for-Combined:		Calculation Agent Adjustment
		Composition of Combined Consideration:				Not Applicable
		Nationalization, Insolvency or Delisting:				Negotiated Close-Out
		Non-Reliance:				Applicable
		Agreements and Acknowledgments
		Regarding Hedging Activities:				Applicable
		Additional Acknowledgments:				Applicable
2.		Calculation Agent:				Party A and Party B. If at any time the parties are unable to agree on a determination within one Business Day of the day on which a determination would, but for such inability, be made, each party agrees to be bound by the determination of an independent leading dealer in shares, mutually selected by the parties, who shall act as the substitute Calculation Agent for the purposes of that determination, with the fees and expenses of such substitute Calculation Agent (if any) to be met equally by the parties. If the parties are unable to agree on an independent leading dealer to act as substitute Calculation Agent, each party shall select an independent leading dealer and such independent dealers shall agree on an independent third party who shall be deemed to be the substitute Calculation Agent for the purposes of that determination.
3.		Account Details:
		Account for payments to GSSF:				Barings (Guernsey) Limited
						Account No.: 10454720230

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						ABA No.: 02600112 CHIPS UID: 0112/177860 Swift Code: XXXXXX00 For further credit to GSSF 18887
		Account for delivery of Shares to TDC:				Certificates representing the Shares to be delivered (and held in escrow to the order of GSSF by Clifford Chance until confirmation of the receipt of payment by GSSF), in genuine unaltered form, duly endorsed in blank or accompanied by duly executed stock powers in blank, with all requisite stock transfer tax stamps, if any, attached thereto, to the offices of:
						Xxxxxxxx Chance Limited 00 Xxxxx Xxxx Xxxxxx Xxxxxx Xxxxx Xxxxxx X00 0XX Xxxxxx Xxxxxxx Attn: Xxx Xxxxxx-Xxxxxx
4.		Offices:
		(a)		The Office of TDC for the Transaction is:
				TDC A/S Xxxxxxxxxx 00 0000 Xxxxxxxxxx X Xxxxxxx Attn: Xxxxxx Xxxxxxx Tel no. x00 00 00 00 00 Fax no. x00 00 00 00 00
				and
		(b)		The Office of GSSF for the Transaction is:
				Barings (Guernsey) Limited P.O. Box 71 Trafalgar Court Les Banques St. Xxxxx Port Guernsey GY1 3DA Attn: Xxxxx Xxxxxxx Tel no. x00 00 00 00 00 00 Fax no. x00 00 00 00 00 00
5.		Governing law: English law
6.		Xxxxxxx as Agent
6.1		All the provisions of this Confirmation (and the related agreement in the form of the 2002 ISDA Master Agreement) apply with GSSF as principal. For the avoidance of

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		doubt, but without limitation, the events set forth in Section 5 and 6 of such ISDA Master Agreement apply in relation to GSSF as principal.
6.2		GSSF represents and warrants to TDC that:
		(i)		it is duly established under the laws of the jurisdiction of its establishment and, if relevant under such laws, in good standing;
		(ii)		Xxxxxxx has the authority to enter into this Confirmation and to execute this Confirmation as agent on behalf of GSSF and to give instructions for settlement of the same utilising assets of GSSF as principal; and
		(xxx)		Xxxxxxx has been duly appointed and authorised by GSSF as principal to enter into this Confirmation on behalf of, and to bind, GSSF as principal and its assets.
6.3		GSSF warrants and undertakes to TDC that it will, as soon as reasonably practicable, notify TDC if Xxxxxxx’x appointment as agent for GSSF as principal is terminated.
7.1		GSSF agrees and covenants to enter into a Stockholders’ Agreement with TDC and/or its assigns, promptly after the Trade Date, substantially in the form attached hereto as Annex I.
7.2		GSSF agrees that TDC may transfer its rights and obligations hereunder to any of its Affiliates provided however that TDC shall be liable to GSSF for the performance of all of any such Affiliate’s obligations hereunder after any such transfer.
7.3		TDC represents and warrants to GSSF that it (A) understands that the Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or under any state securities laws of the United States, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (B) is acquiring the Shares solely for its own account for investment purposes, and not with a view to the distribution thereof in violation of any applicable securities laws, (C) is a sophisticated investor with knowledge and experience in business and financial matters, (D) has received certain information concerning HTCC and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Shares and (E) is able to bear the economic risk and lack of liquidity inherent in holding the Shares.
7.4		TDC represents and warrants to GSSF that it (A) is a sophisticated buyer with respect to the purchase of the Shares, (B) has adequate information concerning the business and financial condition of HTCC to make an informed decision regarding the purchase of the Shares, (C) has independently and without reliance upon GSSF, and based on such information as TDC has deemed appropriate, made its own analysis and decision to enter into this Agreement, (D) understands that the Shares are “restricted securities” (within the meaning of Rule 144 of Securities Act) have not been registered under the Securities Act, and cannot be resold except pursuant to registration under the Securities Act or an exemption from registration; and (E) acknowledges that the certificates representing the Shares shall bear a legend noting their restricted nature.
7.5		GSSF agrees and covenants to use its commercially reasonable endeavours, after the Exercise, to cause TDC to become a party to, and have the benefits and obligations of a

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Stockholder (as defined in the GSSF Purchase and Sale Agreement) under, the Registration Agreement (as defined in the GSSF Purchase and Sale Agreement).

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this Confirmation in the space provided below and returning it to us.

Yours sincerely

TDC A/S

By:

Name:

Title:

Confirmed as of the date first above written:

XXXXXXX GLOBAL SPECIAL SITUATIONS FUND LIMITED
BY ITS AGENT
XXXXXXX INVESTMENT MANAGEMENT LIMITED

By:

Name:

Title:

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ANNEX I

[Form of Stockholders Agreement]

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