On October 08, 2010 the Standard & Poor’s corporate governance ratings service confirmed the GAMMA corporate governance rating of North-West Telecom at the level of “5+”, and announced its subsequent withdrawal. The rating will be revoked by request of N.W.Telecom because of the forthcoming reorganization of the Company by merger with OJSC Rostelecom and termination of its existence as a separate legal entity.

The following scores were assigned to N.W.Telecom in the four analysis components to a scale with graduations from 1 (low) to 10 (high.)

- Ownership structure and external influence: 5

- Shareholders’ rights: 7

- Transparency, auditing, and risk management: 6+

- Efficiency of the Board of Directors, strategic process, motivation system: 5+

According to Standard & Poor’s analysts, among the strong points of the N.W.Telecom corporate governance practice are:

- Efficient procedures of preparation and conducting of meetings of the shareholders; publication of IFRS annual reporting prior to the annual meeting of the shareholders.

- High level of information disclosure, and in particular, publications of annual and quarterly IFRS financial reporting; maintaining a policy of active interaction with investors.

- Active role of minority shareholders; their interests are represented by three directors. Independent directors are the heads of two Committees of the Board of Directors of four (the Audit Committee included.) An independent majority is noted in the Audit Committee.

- Significant authority of the Board of Directors. The Board’s operation is supported by its four committees. More efficient activity of the Strategic Development Committee compared to the preceding period is noted.

- Availability of structural components of a risk management system in the Company.

- Approval by the annual general meeting of the shareholders of the terms of the IRC integration in Rostelecom. IRC and Rostelecom were valuated by Ernst & Young whose approach included market quotations and discounted cash flow method. Independent directors and IPA representatives have been engaged in the process, in particular via the coordinating board established at the parent company level.

The rating agency’s press release can be seen on Standard & Poor’s website www.standardandpoors.ru

The GAMMA rating describes the opinion of Standard & Poor's on relative pluses and minuses of a given company’s corporate governance practice from the point of view of investors’ interests, i.e. on the company’s ability to prevent reduction of its value due to possible drawbacks in the corporate governance system or due to inability to create a value. The GAMMA ratings are assigned in countries related to developing markets, and primarily in the BRIC countries. The GAMMA rating is assigned as a scale of 1 to 10 (top score.)