Krasnodar, October 26, 2006: Southern Telecommunications Company(“UTK”) (RTS: KUBN, KUBNP; ?ICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA), the incumbent fixed-line telecommunications operator in the Russia’s Southern Federal District, reports that on October 26, 2006 Standard & Poor's Ratings Services raised its long-term corporate credit rating on Southern Telecommunications Company to “B-“ from “???+”, reflecting the Company’s improving financial risk profile. The outlook is stable. At the same time, Standard & Poor’s raised its long-term Russia national scale rating on UTK to «ruBBB» from «ruBB».

The upgrade is mainly attributable to increase in the Company’s positive free cash flows on the back of drastic reduction of its investment program, strong focus on cost control and sound operating profitability growth. The Company’s liquidity is improving helped by favorable capital markets and declining dominance of short-term debt maturities.

Detailed information on the credit rating upgrade can be viewed on the site https://www.standardandpoors.ru/