On 1 November 2007 OJSC North West Telecom celebrates the fifth anniversary of the establishment of a joint interregional telecommunication company in the North West of Russia. Exactly five years ago, on 1 November 2002, joint stock companies Murmanelectrosvyaz , Artelecom , Elektrosvyaz of the Kaliningrad Region, Electrosvyaz of the Republic of Karelia, Novgorodtelecom, Electrosvyaz of the Vologda Region, Electrosvyaz of the Pskov Region and Cherepovetselectrosvyaz were merged with OJSC St Petersburg Telecommunication Network and became branches of OJSC North West Telecom .* On 1 October 2004, Lensvyaz and Svyaz of the Komi Republic were merged with OJSC North West Telecom . The official establishment of the joint telecommunication company in the North West Federal District can be considered to have been complete on 1 April 2006 with the standardisation of the regional branch names (the new names were formed on the basis of geographical location).

From the moment of its establishment, OJSC North West Telecom aimed to occupy the leading position in the telecommunication services market, to satisfy most fully the needs of its customers by providing ultra-modern services with the most advanced equipment, and to remain a profitable Company with a growing capitalisation level and investment appeal. In order to achieve those objectives, in the past several years OJSC North West Telecom has radically changed its business priorities - from technocratic to customer-oriented - and improved the corporate structure by reducing the number of management levels, to comply with the principle of functionality.

OJSC North West Telecom traditionally gives a lot of attention to the development of the technical facilities and to the construction and utilisation of its own transport infrastructure, since it is impossible to provide high-quality modern telecommunication services without those vital components. The five years saw a more than 2.5 times increase in the number of digital telephone exchanges (there were 429 by the end of 2002, while by the end of 2007 there will be 1044) and the replacement of almost all step-by-step exchanges with the modern digital ones. In 2003-2007 the Company put into operation over 1,600,000 telephone lines. The overall queue for telephone installation in the OJSC North West Telecom regions has been reduced to one ninth of its original size. In the course of the five years, the transport infrastructure was undergoing a busy development: the Company constructed its own fibre-optic telecommunication networks, which at the end of 2007 total almost 12 thousand kilometres (the respective figure for 1 January 2003 was 2.5 thousand kilometres). In 2005 OJSC North West Telecom established the multiservice telecommunication network (MSS), which today has come to include almost all regional and republican centres and gives the opportunity to provide a wide range of services, such as the xDSL broadband Internet access, protected private corporate networks for the corporate clients (VPN) and the content for broadband service users (file exchange, gaming services, database access, etc.).

In the course of the five years, the profit of OJSC North West Telecom increased by 91%: it amounted to 12.3 billion roubles as of 1 January 2003, and is expected to reach 23.5 billion roubles by 1 January 2008. The profit received from new services increased more than eight times, which is due to market changes and to the active marketing policy by OJSC North West Telecom to promote the new services both to individual and corporate customers. This active development of new services allowed the Company to compensate for the income from long-distance telecommunication, which was discontinued from 1 January 2006. The Company's expenses similarly grew in the course of the five years, which was due to the rise in tariffs on electricity and energy sources, higher rent, higher costs of contractor services, changes in the relationships with telecommunication operators, etc. The cost increase rate for 2002-2007 amounted to 192.32%. The net profit of OJSC North West Telecom between 1 January 2003 and 1 January 2008 will rise more than eight times (333.48 million roubles as of 1 January 2003, estimated 2.85 billion roubles on 1 January 2008); EBITDA growth is 181.5%; EBITDA margin has risen by 17.4 percentage points.

In the course of the five years, OJSC North West Telecom gave a lot of attention to corporate management, increased investment appeal, and interaction with the investment community, which has resulted in a continuous improvement of the corporate management quality appraisals made by the leading Russian and international rating agencies. For example, the credit rating of OJSC North West Telecom has risen five positions on the national scale and three positions on the international scale; the Company's information transparency level went from 43% in 2002 to 72% in 2007. The Company has a top corporate management rating among the interregional telecommunication companies.

The major events of the first five years of OJSC North West Telecom include the Company's participation in the celebrations of the 300 year anniversary of St Petersburg in 2003. During the celebrations OJSC North West Telecom was the main telecommunication operator, and also coordinated the work of all the telecommunication companies in the city. During the anniversary celebrations, the St Petersburg Branch of OJSC North West Telecom launched several new telecommunication services for the city's inhabitants and visitors, such as mobile payphones, multimedia or "web" payphones that combine the functions of a standard payphone and a computer, and the "006" free inquiry service in two languages, Russian and English.

One of the largest and socially significant projects in 2004-2005 was the "Programme of Telephone Line Installation for the Disabled and the Participants of the Great Patriotic War", which was completed by OJSC North West Telecom by the 60th anniversary of Victory. All participants of the Great Patriotic War living in the North West Federal District were provided with a telephone line; in total, the Company responded to over six thousand applications.

An important event for the Company was the completion of the "Programme of Telecommunication Services Provision to the Inhabitants of St Petersburg for 2005-2007", done ahead of schedule in December 2006. The Programme eliminated the years-long queue for telephone line installation in St Petersburg. In the course of the Programme, the Company responded to over 122 thousand applications for telephone line installation; by 1 January 2007, the queue that had included 56.8 thousand applications as of 1 January 2005 was reduced to the 5.6 thousand applications that had been submitted to the St Petersburg Branch of OJSC North West Telecom in the end of 2006.

February 2006 saw the general market launch of the broadband Internet access service under the Avangard trademark. The service was first launched in St Petersburg in February 2006 and in the course of the year was extended to the whole of the North West Federal District. Presently the number of Avangard service users amounts to 200 thousand.

On 1 February 2007 over 4 million lines - or 92% of the OJSC North West Telecom subscriber base - were transferred to the new system of local call rating with the time-based billing option (SPUS). The technical capability of per-minute charging was provided, as of 1 February 2007, at 825 exchanges with the total installed capacity of 4.3 million lines, including 381 analog exchanges with the capacity of 1.6 million lines.

In 2006-2007 OJSC North West Telecom paid considerable attention to the implementation of national and socially significant projects. By 1 September 2007 the Company completed, ahead of schedule, implementation of a high-priority national project "Education": under the project, 2842 educational institutions in the North West Federal District were provided with Internet access. The Company also started implementation of universal telecommunication services by installing universal service payphones. According to the provisions of the tenders won by OJSC North West Telecom in 2006-2007, 14,688 payphones will be installed in the North West Federal District. By 1 October 2007 the Company had already installed 6,454 universal service payphones.

On 1 November 2007 OJSC North West Telecom will stage celebrations to mark the first five years of the Company. The programme includes a celebratory videoconference between the OJSC North West Telecom senior management and the Company branches, presentation of sectoral awards and badges to the best employees, greetings to the winners of corporate competitions, and other festive events for both the employees and customers of the Company.

* formally OJSC North West Telecom was listed as a Russian joint stock company in the end of 2001

** in order to produce comparable figures, the data excludes the sale of shares of OJSC Telecominvest . If the transaction is taken into account, the net profit of OJSC North West Telecom on 1 January 2008 is estimated at 10.8 billion roubles.