CANTV Board Recommends Shareholders Reject AES Offer.

Business Editors

CARACAS, Venezuela & NEW YORK--(BUSINESS WIRE)--Oct. 2, 2001

Compania Anonima Nacional Telefonos de Venezuela (CANTV) (Caracas: TDV; NYSE: VNT) today announced that all members of its Board of Directors present at its meeting held on October 1, 2001, including representatives of the Venezuelan government, current and retired employees of CANTV, Verizon and Telefonica de Espana, voted unanimously to recommend that CANTV shareholders reject AES Corporation's (NYSE: AES) offer to purchase 28,566,944 of CANTV's outstanding American Depository Shares (ADSs) (each ADS represents seven shares of Class D common stock of CANTV) for $24.00 per ADS in cash in a U.S. offer and an additional 199,968,608 of its common shares for $3.4285714 per share in cash in a simultaneous Venezuelan offer ("the Offers").

After reviewing the Offers and consulting with its financial and legal advisors, the Board determined that the Offers are not in the best interests of CANTV or its shareholders and ADS holders and recommended the rejection of the Offers. Among the factors that the Board took into account were the following:

-- The Board is not satisfied with the price offered for the partial offer for
the shares and ADSs.

-- The proposed transactions will have adverse tax effects on remaining
shareholders and ADS holders.

-- The Merger proposed by AES will result in the Company's employees being
employed by a new employer, which may adversely affect the successor
corporation and its shareholders.

-- The plans of AES following successful conclusion of the Offers and
consummation of the transactions contemplated by the Offers would leave the
Company in a weakened financial and operational position and create significant
uncertainty as to the amount and timing of the payment of dividends.

-- AES has no experience in operating a national telecommunications network and
there are no material synergies between the Company and AES.

-- The Offers are highly conditional.

-- The purchase of the shares and the ADSs in the Offers will adversely affect
the liquidity of the remaining shares and ADSs.

-- The Offers are coercive because the Offers are partial Offers and there is
uncertainty over the value of the remaining shares.

Gustavo Roosen, President and Chief Executive Officer of CANTV, stated, "Our Board has concluded that AES's offer is not in the best interests of CANTV or our shareholders and ADS holders. The partial Offers are at levels significantly below the premiums offered in other sale of control transactions. Moreover, AES has no experience in managing or operating a national telecommunications network, and our Board is concerned about the effect of a change of control on CANTV, its shareholders and ADS holders, its customers and its employees and on the continued reliability of telephone service in Venezuela. CANTV has an experienced management team, promising business prospects and a strong cash flow and we believe is well positioned to continue to enhance shareholder value."

In making its determination, the CANTV Board considered the following:

-- The Board is not satisfied with the price offered for the

partial offer for the shares and ADSs. The premium of AES's

Offers is 9.2% over the price immediately prior to the Offers

and 4.4% over the ADS price 30 days prior to the AES

announcement. The Offers represent an approximate 5.0% and

6.6% premium over the six-month and one-year weighted

averages, respectively, and a 5.1% discount on the two year

weighted average. The previously described premiums are

significantly lower than premiums generally paid in

transactions that involve a change in control. In addition, in

1999 and 2000, the Company effected two buyback programs at an

approximate average price of $29 and $27 per ADS,

respectively, well above the price offered by AES in the

Offers.

-- The proposed transactions will have adverse tax effects on

remaining shareholders and ADS holders. Shareholders who are

subject to U.S. taxes and who either do not tender their

shares to AES, or who tender their shares but whose shares are

subsequently not accepted by AES as a result of proration or

otherwise, will be required to recognize unrealized gains or

losses on the shares they retain following the contemplated

merger. Under Venezuelan law, shareholders and holders of ADSs

subject to Venezuelan taxes, including non-Venezuelans who

reside in the United States or who have a permanent

establishment in Venezuela, who either do not tender their

shares to AES, or who tender their shares but whose shares are

subsequently not accepted by AES as a result of proration or

otherwise, will be subject to up to a 34% tax on the

unrealized gain on the shares they retain after the

contemplated merger.

-- The Merger proposed by AES will result in the Company's

employees being employed by a new employer, which may

adversely affect the successor corporation and its

shareholders. This substitution of employers may impair the

morale of these employees, with adverse affects of the Company

and its shareholders. Moreover, under Venezuelan labor law,

the Company's employees may be entitled to consider this

change of employers an unjustified termination of their

employment relationship with the Company, which may result in

adverse consequences to the successor corporation and its

shareholders.

-- The plans of AES following successful conclusion of the Offers

and the consummation of the transactions contemplated by the

Offers would leave the Company in a weakened financial and

operational position and create significant uncertainty as to

the amount and timing of the payment of dividends. The Company

has a Floating Rate Note facility, under which $72.5 million

is outstanding, containing change of control provisions which

would trigger a right of acceleration of repayment if AES were

to consummate the Offers. The Company and Telecomunicaciones

Movilnet, C.A. ("Movilnet") are also parties to IFC loans,

under which an aggregate of $91.3 million is outstanding,

which would become subject to acceleration if CANTV were to

transfer ownership of Movilnet as contemplated by the Offers.

An acceleration of the payment of these amounts would trigger

cross-default provisions under an additional U.S. $200 million

of the Company's outstanding Fixed Rate Notes. Should these

amounts be accelerated, the Company would partially deplete

its cash reserves in order to pay such debts. Although

promising to distribute the Company's cash to shareholders,

AES has not indicated the size of that dividend and the value

AES intends to deliver to shareholders. In addition, the Board

feels that Movilnet is at risk of being sold by AES to extract

cash from the Company without giving careful consideration to

all possible buyers of Movilnet and the conditions and timing

of any sale.

-- AES has no experience in operating a national

telecommunications network and there are no material synergies

between the Company and AES. Because AES has no experience in

managing or operating a national telecommunications network,

the Board is concerned about the effect a change of control

will have on the Company, its shareholders and ADS holders,

customers and employees and the continued reliability of

telephone service in Venezuela. Apart from the potential for

AES to exercise a dominant economic influence in certain

markets acting through the Company and through C.A. La

Electricidad de Caracas, its electric subsidiary in Venezuela,

a matter currently under review by Superintendecia para la

Promocion y Proteccion de la Libre Competencia

("Procompetencia"), the combination of the two businesses

would not result in any material synergies which makes the

combination attractive. Additionally, the acquisition of

control of the Company by AES would likely cause the Company

to lose the technical and related support it has received from

Verizon Communications Inc. and Telefonica S.A..

-- The Offers are highly conditional. The consummation of the

Offers is subject to a number of conditions including, among

others the receipt of all necessary government approvals,

including the approval by the Comision Nacional de

Telecomunicaciones ("CONATEL"), the absence of an objection to

the Offers by Procompetencia, and that AES be reasonably

satisfied that Banco de Desarrollo Economico y Social

("BANDES"), the Venezuelan government agency that holds the

Class B Shares, has agreed to vote in favor of the merger of

the Company with the Purchaser (the "Merger"). A number of

conditions exist which the Board believes will not be met and

numerous other conditions are uncertain. Nevertheless, the

Offers place the Company's shareholders in the position of

having to determine whether to tender to AES on or prior to

the expiration date without knowing whether AES intends to

consummate the Offers.

-- The purchase of the shares and the ADSs in the Offers will

adversely affect the liquidity of the remaining shares and

ADSs. The Offers will materially reduce the number of Shares

and ADSs that trade publicly and the number of shareholders

and ADS holders.

-- The Offers are coercive because the Offers are partial Offers

and there is uncertainty over the value of the remaining

shares. The Offers seek to acquire Shares and ADSs which,

together, represent only up to 43.2% of the issued and

outstanding Shares of the Company. The Offers may result in

adverse tax consequences for remaining shareholders and ADS

holders and make no provision for remaining shareholders and

ADS holders to receive value for their shares and ADSs and the

value of the remaining shares and ADSs remains highly

uncertain. The value of the remaining shares may be adversely

affected by AES's successful consummation of the Offers and

the transactions contemplated by AES following the

consummation of the Offers, including uncertainty as to the

amount and timing of dividends, the uncertainties as to the

proceeds from the contemplated sale of Movilnet and as to the

ability to consummate any such sale, the weakened financial

condition of the Company and its effect on the Company's

financial position and results of operations.

IMPORTANT INFORMATION

YOU SHOULD READ CANTV'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WHEN IT IS FILED WITH THE SEC BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. YOU WILL BE ABLE TO OBTAIN A FREE COPY OF THE SOLICITATION/RECOMMENDATION STATEMENT, AND ANY OTHER FILINGS WITH THE SEC CONTAINING INFORMATION ABOUT CANTV, WITHOUT CHARGE, AT THE SEC'S INTERNET SITE (HTTP://WWW.SEC.GOV). COPIES OF ANY FILINGS CONTAINING INFORMATION ABOUT CANTV CAN ALSO BE OBTAINED, WITHOUT CHARGE, BY DIRECTING A REQUEST TO COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA, AVENIDA LIBERTADOR, CENTRO NACIONAL DE TELECOMINICACIONES, NUEVO EDIFICIO ADMINISTRATIVO, PISO.1, APARTADO POSTAL 1226, CARACAS, VENEZUELA 1010, ATTENTION: INVESTOR RELATIONS.

About CANTV

CANTV is a full service telecommunications provider in Venezuela with 2.6 million access lines in service, 1.9 million cellular subscribers and 303 thousand Internet users as of June 30, 2001. CANTV was privatized in December 1991 when VenWorld Telecom, C.A., a consortium led by GTE Corporation (currently Verizon Communications Inc.), originally acquired 40% of CANTV's equity share capital, as well as operating control, from the Venezuelan Government.