Moscow – November 9, 2010 – Rostelecom OJSC (“the Company”) (RTS, MICEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces its unaudited results for the first nine months of 2010 ended September 30, 2010, in accordance with the Russian Accounting Standards (RAS).

· Revenue of RUB 43.5 bln

· OIBDA* of RUB 9.3 bln, OIBDA margin of 21.4%

· Net income of RUB 4.0 bln

· An EGM has been scheduled by the BoD for November 10, 2010 to vote on the dividend payment for the first nine months of 2010 which is to be paid to the shareholders on the Register as at September 21, 2010 and which amounts to:

- 0.0000000411722654% of the Company RAS net profit for the first nine months of the 2010 financial year or RUB 1.6667  per preferred share, and

- 0.0000000274519684% of the Company RAS net profit for the first nine months of the 2010 financial year or RUB 1.1113 per ordinary share

· Rostelecom acquired the 25%+1 share in the charter capital of Telecommunication Investment Joint Stock Company (“Svyazinvest”) for RUB 26.0 bln from Comstar Group using RUB 23.0 bln from the credit lines, opened by Sberbank with the weighted average interest rate of 7,89%, and RUB 3.0 bln of its own funds%, and RUB 3.0 bln of its own funds

· Net assets of RUB 56.1 bln

Rostelecom’s reported revenue for the first nine months of 2010 of RUB 43.5 billion, while revenue for the third quarter alone amounted to RUB 15.1, a 1% increase compared to the same period last year due to the 100% increase in revenues from new and value-added services, mainly 44% increase in revenues from Internet and 366% increase in revenues from VPN services. Year on year revenue dynamics for the first nine months is attributable to the expected decrease in revenues from traditional long-distance services, which was partially offset by the increased revenues from new and value-added services in line with the continued diversification of the business.

Revenues from data transmission and telematic services, as well as intelligent network services (INS) increased 1.5 time year on year to RUB 7.1 billion and represented 16% of Rostelecom’s total revenue compared to 10% a year ago. Revenues from data transmission and telematic services (mainly Internet and VPN services) increased in 1.6 time year on year to RUB 6.2 billion, including revenue from VPN services of RUB 2.3 billion  (3.3 time increase year on year). Revenue from INS increased by 18% year on year.   

Rostelecom’s operating expenses decreased by 3% year on year to RUB 38.2 billion, largely due to a reduction in direct costs, including the decrease in expenses for termination and transit of international traffic and payments to national operators for traffic initiation and termination.

OIBDA remained flat year on year at RUB 9.3 billion, OIBDA margin increased to 21.4% from 20.6% a year ago.

Depreciation for the first nine months of 2010 increased by 19% year on year to RUB 4.0 billion in line with increased capital expenditures into the development of the Company’s own IP/MPLS network and other investments.

Operating profit for the first nine months of 2010 decreased 11% year on year to RUB 5.4 billion in line with revenue dynamics.

The Company reported other gains and losses for the first nine months of 2010 of RUB 220.5 million net loss, which decreased by 27 % year on year due to the decrease in foreign exchange losses in line with the differential of the Russian Ruble against US dollar.

Net income for the first nine months of 2010 decreased by 11% year on year to RUB 4.0 billion. An EGM has been scheduled by the BoD for November 10, 2010 to vote on the dividend payment for the first nine months of 2010 which is to be paid to the shareholders on the Register as at September 21, 2010 and which amounts to 0.0000000411722654% of the Company RAS net profit for the first nine months of the 2010 financial year or RUB 1.6667 per preferred share, and 0.0000000274519684% of the Company RAS net profit for the first nine months of the 2010 financial year or RUB 1.1113 per ordinary share.

* OIBDA is calculated as total revenues less operating expenses excluding depreciation.