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North-West Telecom

August 4, 2004

North-West Telecom to establish an interregional subsidiary based on the Novgorodtelecom and Pskov Oblast Elektrosviaz Subsidiaries

The Board of Directors of OJSC North-West Telecom has decided to establish a joint interregional subsidiary based the Novgorodtelecom and Pskov Oblast Elektrosviaz Subsidiaries from the beginning of 2005, to operate in Novgorod region and Pskov region.

The Company restructuring is dictated by the need to concentrate its intellectual, financial, and technological resources in the regions of the highest competition, to reduce the service costs by updating the technologies, and to cut the executive expences.  

The expected results of the restructuring are: 

  • ability to build an interregional subsidiary budget comparable to budgets of larger North-West Telecom subsidiaries, and a better balanced budget on this basis ;
  • prerequisites for a higher cash turnover such as better handling of supplies and accounts payable / receivable;
  • improvement of settlements with large suppliers (OJSC Rostelecom, equipment vendors);
  • ability to concentrate cash resources on priority development lines;
  • cutting down operating and general costs due to a larger scale effect;
  • optimized operation and management of telecommunication networks in Novgorod Oblast and Pskov Oblast, establishment of common exchange operation centers, a common payphone operation center etc.;
  • optimized number of the Company’s staff.

The merger of the Pskov Oblast Elektrosviaz and Novgorodtelecom subsidiaries into an interregional subsidiary is in line with the Company’s development strategy and is being achieved within the framework of the program for OJSC North-West Telecom management structure reform, its business consolidation, and optimization of its staff number.

The subsidiary network optimization started from the first days of existence of North-West Telecom as interregional company. At the first stage, it was decided to establish powerful subsidiaries based on the "one region one subsidiary" philosophy. For example, Vologda region initially had one subsidiary of our Company. After a certain effort, the Cherepovets subsidiary was merged into the Vologda subsidiary. Currently, Stage 2 is underway, and that is transformation of smaller regional subsidiaries into a powerful interregional branch.

 

 

 

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