Svyazinvest: 1H2004 Key Performance

Indicators

November, 2004

2

Svyazinvest holds a leading position in the Russian fixed-line market

Company JSC Svyazinvest Foreign shareholders Other

CenterTelecom 51% 8% 41%

North-West Telecom 51% 14% 35%

VolgaTelecom 51% 17% 32%

South Telecom 51% 10% 39%

Uralsvyazinform 53% 13% 34%

Sibirtelecom 51% 7% 42%

Dalsvyaz 51% 16% 33%

Rostelecom 51% 27% 22%

State75% - 1 share

Mustcom25% + 1 share

JSC Svyazinvest

7 mega-regionals

JSC Rostelecom MGTSOther

Controlling stake

Blocking stake

Company profile:

• Svyazinvest foundation – 18 September, 1995

• Sale of Svyazinvest stake to Mustcom – July 1997

• Consolidation of companies – 72 regional telecom operators were merged into 7 mega-regionals in 2000-2002

Share capital (voting stock)

3

JSC North West Telecom 3.4 m lines in service market cap. $372 mn

JSC CenterTelecom 5.8 m lines in service market cap. $518 mn

JSC South Telecom 3.4 m lines in service market cap. $272 mn

JSC Dalsvyaz 1.1 m lines in service market cap. $106 mn

JSC Sibirtelecom 3.5 m lines in service market cap. $620 mn

JSC Uralsvyazinform 3.3 m lines in service

market cap. $1,117 mn

JSC VolgaTelecom 4.0 m lines in service market cap. $726 mn

Consolidation of telecom operators has enabled Svyazinvest to create economically viable and competitive companies

As a result of consolidation, mega-regionals have:

become more investor attractive reduced the cost of borrowed funds optimized equipment purchase

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Svyazinvest in 2003

Revenues from core operations - USD 4.74 bn (up 51.0% against 2002)

Gross revenue – USD 4.92 bn (up 29.0%) Operating costs – USD 3.64 bn (up 29.0%) Profit from sales – USD 1.29 bn (up 28.9%) Payroll – USD 1.02 bn (up 29.6%) Average number of employees – 350,305 (down 3.8%) Average monthly salary – USD 256 (up 39.2%)

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1H03 1H04

Revenues per line, USD 73 98 +34%

Revenues per employee, USD, th 6.06 8.97 +48%

Lines per employee 83 92 +11%

Profit per line, USD 19 24 +26%

Domestic/international traffic per line, min 237 251 +5.5%

Svyazinvest major economic indicators, 1H2004

1.75

1.24

2.14

1.58

3.05

2.30

1H02 1H03 1H04 1H02 1H03 1H04

Revenues CostsOperating profit, USD mnEBITDA, USD mn

US

D b

n

Revenues and costs* Operating profit* and EBITDA*

27.8

29.4

Average number of lines 31.3

1H02 1H03 1H04

Lin

es m

n

* data include JSC MGTS figures

523

744

559503

677

906

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2004 Investment Program

•Total capex of Svyazinvest group of companies is estimated at USD 1.92 bn

•4 mn telephone lines, planned for commissioning, will raise network digitalization rate to 51.3% and expand installed capacity to 35 mn lines.

Installed capacity

lines, mn

2025303540455055

2001 2002 2003 2004

Local network digitalization

%

27

30

33

36

2001 2002 2003 2004

31.1237.5

43.8

51.3

29.7

31.3

33.0

34.9

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Marketing Strategy2004 key marketing objectives

To strengthen company’s presence in the telecom market

To increase market share in certain segments

To increase company’s profit margins by enhancing revenue per customer and expanding subscriber base

To build a steadily growing client-base by boosting customer loyalty

Work with allied operators

MRCs’ marketing strategies Clear-cut system of marketing planning and accounting

Program of aggressive service promotion for each customer category

Regular marketing researches

Implementation of customer relationship management concept Improvement of client service

Transfer to unified billing system

Upgrade of sales and major corporate client servicing systems

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01/01/03 01/08/03 01/10/04

Customers(includingVAT)

Organizations(excludingVAT)

USD

Monthly rate for urban fixed subscribersTariffs growth for local telephone services in 2004:

Urban

telephony

Rural

telephony

Residential

customers

30% 31%

Business

organizations

29% 30%

In 2003 tariffs for domestic long-distance calls for budget-funded institutions, business organizations and residential customers were brought to a similar level.

In 2004 Svyazinvest will carry on increasing tariffs for local telephone services to the level of economically feasible costs, inclusive of target profitability, as well as optimizing ILD tariff.

Average zonal tariff revision for domestic long-distance calls

Res

iden

tial

cu

sto

mer

s

Bu

dg

et-

fun

ded

in

stit

uti

on

s

Bu

sin

ess

org

aniz

atio

ns

+2.3%

-14.3%

+1.5%

-8.3% -10.3%

-25%Zones 1-4 Zones 5-7

Rebalancing of tariffs for telecom services

5.5

7.5

4.1

5.6

3.0

4.3

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Tariffs for local telephone services compared to European telecom operators

Average monthly rate, US$

Average monthly rate in

Russia is still about 70%

lower than in Central and

Eastern Europe, and is 80%

lower than in Western

Europe.

Average monthly rate at mega-regional companies amounts to $ 4.4

3.9

3.7

4.2

4.3

4.4

5.2

5.4

11.4

15.8

12.5

CenterTelecom

South Telecom

VolgaTelecom

Sibirtelecom

North-West Telecom

Urasvyazinform

Dalsvyaz

Cesky Telecom

TPSA

Matav

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Corporate governance rating of mega-regional companies (Standard & Poor’s)

Company 1Н 2003 1Н 2004 Change

JSC North-West Telecom 5.6 5.9 0.3

JSC CenterTelecom 5.3 5.8 0.5

JSC South Telecom 5.2 5.6 0.4

JSC VolgaTelecom 5.8 5.9 0.1

JSC Uralsvyazinform 6.0 6.2 0.2

JSC Sibirtelecom - 5.7

JSC Dalsvyaz 5.3 5.8 0.5

JSC Rostelecom - 6.4

Corporate governance ratings of all mega-regional companies assigned by S&P were above average (5 points out of 10);

Corporate governance ratings of six companies were upgraded;The holding company’s target for 2004 is to further improve its corporate governance, meeting

international standards.

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Credit ratings of mega-regional companiesCompany Rating Outlook Agency

North West Telecom В- Stable S&P

South Telecom В- Negative S&P

CenterTelecom CCC+

Stable S&P

VolgaTelecom В Stable S&P

Dalsvyaz В Positive Fitch

Uralsvyazinform В/ВB- Stable /Stable

S&P/Fitch

Sibirtelecom В+ Positive Fitch

Rostelecom В Positive S&P

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License Portfolio of Svyazinvest GSM operators

- GSM-1800

- GSM-900

- GSM-900/1800

As of Subscriber base Growth rate

January 1, 2000 113,000

January 1, 2001 250,000 up 120%

January 1, 2002 530,000 up 100%

January 1, 2003 2,150,000 up 300%

January 1, 2004 3,000,000 up 50%

Subscriber growth

Volga the Urals Siberia

Svyazinvest 19% 50% 18%

MTS 27% 27% 35%

Bee Line 20% 5% 32%

Megafon 22% 12% 0%

Other 12% 6% 15%

Svyazinvest share in the cellular market

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Cellular Business Development – an important part of Svyazinvest holding’s investment strategy

Svyazinvest holds a strong position in regional cellular market and is focused on further reinforcing this position by developing the existing operators:

In Urals region: Uralsvyazinform’s Board of Directors has decided to consolidate the assets of its subsidiary GSM-operators.

In Volga region: VolgaTelecom’s Executive Board is currently working to consolidate the assets of its subsidiary GSM-operators.

In the Far East region: to increase its coverage territory, Dalsvyaz is planning to acquire cellular assets: ZAO Akos, Primorsky krai company-operator and OOO Wireless Information Technologies, a license holder in Sakhalin and Chukotka.

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Svyazinvest 2004 target performance indicators:

Revenues from core operations - USD 6.32 bn (up 33.4% against 2003)

Gross revenue – USD 6.54 bn (up 32.8%) Operating costs – USD 4.82 bn (up 32.4%) Profit from sales – USD 1.72 bn (up 33.8%) Labor remuneration fund – USD 1.35 bn (up 32.0%) Average number of employees – 337,300 (down 3.7%) Average monthly salary – USD 354.6 (up 38.5%)

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Thank you!