On September 14, 2004 the Board of the Federal Tariff Service (FTS) of the Russian Federation reviewed the applications of OJSC Lensviaz and OJSC Sviaz of the Republic of Komi to revise the tariffs for the service of providing local telephone connection. By the resolution of FTS, the new local communication rates for corporations will become effective from October 1, 2004.

According to the resolution of the General Meeting of OJSC North-West Telecom shareholders, OJSC Lensviaz and OJSC Sviaz of the Republic of Komi will become parts of OJSC North-West Telecom as its regional subsidiaries from October 1, 2004. However, in accordance with Resolution No. 715 of the RF Government dated 11.10.2001, the subsidiaries to be of the Company have applied to the regulatory body on their own, and OJSC North-West Telecom has sent a letter to FTS asking to accept the applications of the individual operators for review and set tariffs for them as for parts of OJSC North-West Telecom. Therefore, the decision made by the Board of FTS has in fact finalized the current tariff campaign of OJSC North-West Telecom.

When drafting the applications, and making the decisions on the tariffs to be set for OJSC Lensviaz and OJSC Sviaz of the Republic of Komi, the same principles were used as in considering the tariff revision for other subsidiaries of OJSC North-West Telecom. In particular, the exiting investment program aimed at the development and updating of communication services was taken into account.

For the local and long distance telephone services in general, the weighted average increase of the average annual tariffs will be 10% for OJSC Lensviaz and less than 7% for OJSC Sviaz of the Republic of Komi.

The tariff increase will not materially affect the proportion of communication services costs in the budget of an average family in the region, and even slighter changes are expected for this proportion in the costs of an organization, since the communication service costs do not exceed 1% of the total costs of organizations.

Local telephone connection (subscriber fee) for individuals*, RUR/month, VAT included:

• Lensviaz: RUR 165 
• Sviaz of the Republic of Komi: RUR 185 (Rural network: RUR 175)

*This is the charge for local telephone connection according to the subscriber system of local telephone service charging (monthly subscriber fee for the use of a subscriber set) via a wire subscriber line from a basic individual-use subscriber set. According to the time-based charging system, special tariffs are charged for two-party or parallel subscriber sets, and for multiple-access subscriber sets.

Local telephone connection (subscriber fee) for organizations*, RUR/month, less VAT:

• Lensviaz: RUR 230
• Sviaz of the Republic of Komi: RUR 250

*This is the charge for local telephone connection according to the subscriber system of local telephone service charging (monthly subscriber fee for the use of a subscriber set) via a wire subscriber line from a basic individual-use subscriber set. According to the time-based charging system, special tariffs are charged for two-party or parallel subscriber sets, for multiple-access subscriber sets, and for corporate exchanges having access to a public network.