№1 Krasnodar, 08 June 2005 Development strategy of “UTK” PJSC – focus on internal reserves (according to Russian Accounting Standards)

№2 Krasnodar, 08 June 2005 Key business highlights GENERAL Share in the fixed-line regional market (`04) – 89.4% Head count – 40.4 ths people Capitalization (as of 01 June 2005) – 338 mln USD NETWORK DEVELOPMENT Total installed capacity – 4.1 mln lines Total equipped capacity – 3.9 mln lines Digitization rate of local networks (`04) - 59% FINANCIAL Revenue (`04, RAS) – RUR 16, 753 mln (+24.1%) EBITDA (`04, RAS) - RUR 4, 287 mln (+25.3%) Revenues from value-added services (`04, RAS) - RUR 882 mln (+73.4%)

№3 Krasnodar, 08 June 2005 Compactness and high economic potential of UTK’s licensed territory GENERAL UTK’s licensed territory ths sq km Population – 18.8 mln people High density of population – 38.6 people per one sq km Relatively high urbanization level – 61.3% Strategic geopolitical location Main health resorts of the country – great amount of tourists ECONOMIC Industrial output (`04) – RUR 567 bln Well-developed business sector – 475 ths enterprises (`04) Growth rate of average wages (`04) – 124.6% Volume of foreign investments in 2004 – USD 689 mln Powerful production basis and developed service sector

№4 Krasnodar, 08 June 2005 Leadership position of UTK in the SFD telecommunications market UTK’s market share in 2004 Maintaining the Company’s positions in all segments of the fixed-line market Speeding up the development of value- added services

№5 Krasnodar, 08 June 2005 UTK’s development strategy is aimed at Reduction of investments by 3.7 times Staff reductions Drastic costs reduction Reorganization of subsidiaries and selling of non-core businesses Growth in local tariffs Optimization of the balance sheet and payables Steady improvements in UTK’s business efficiency and reliability Stabilization of its financial situation Development of new higher-margin telecom services Maintenance of the Company’s leading position in the Southern Russian traditional telephony market Introduction of additional services of traditional telephony Reorganization of the Company’s sales system and optimization of its tariff policy Strengthening its positions in the SFD telecommunications market

№6 Krasnodar, 08 June 2005 Capital investments, RUR mln Breakdown of capital expenditures by kinds of services, % The Company’s investment programs are market-oriented 39,2% 60,8% 78,6% 21,4% 80,8% 19,2% 21,1% 78,9%

№7 Krasnodar, 08 June 2005 Increase in the local network installed capacity served as a basis of the subscriber base growth and network digitization. Rapid growth of network digitization rate in provided for the development of new higher-margin services and strengthening of the Company’s competitive capacities. In 2004 “UTK” PJSC was the second among mega-regional telecom entities in terms of network digitization rate. In “UTK” PJSC was the first among mega-regional telecom entities in terms of its subscriber base increase. Enlargement of the Company’s subscriber base contributes to revenue growth from all types of telecom services

№8 Krasnodar, 08 June 2005 Development of new technologies Number of xDSL subscribers, usersInternet dial-up traffic, mln minutes Number of cable TV subscribers, ths users Number of VPN ports, ports Internet traffic, Т-bytes IP-telephony outgoing traffic, mln minutes

№9 Krasnodar, 08 June 2005 Stable increase in operating profit and operating margin Positive trend in revenue growth compared to the Company’s operating costs

№10 Krasnodar, 08 June 2005 Telecom Services revenue structure, RUR mln Eliminating cross-subsidies between local and long-distance telephone services Growing value- added services’ share in Telecom Services revenue * Revenue structure has been figured without taking into consideration the «Rules on interconnection of telecom networks” approved by the RF Government Regulation №161 оf 28 March 2005.

№11 Krasnodar, 08 June 2005 Costs structure, RUR mln * Costs structure has been figured without taking into consideration the «Rules on interconnection of telecom networks” approved by the RF Government Regulation №161 оf 28 March 2005.

№12 Krasnodar, 08 June 2005 Staff optimization Digitization and reorganization of business processes make it possible to reduce the staff size, thus contributing to the Company’s business efficiency growth

№13 Krasnodar, 08 June 2005 Dynamics of business efficiency indicators

№14 Krasnodar, 08 June 2005 THANK YOU FOR YOUR TIME !