Southern Telecommunications Company (“UTK”) (RTS: KUBN; OTC: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, announces that on September 04, 2004 it ended its participation in “Sotovaya Svyaz-Alania” CJSC (NMT-450 standard cellular operator), selling its 30%- stake in this company to “MS-Direct” Ltd. Total amount of the transaction makes 300 thousand US dollars. "UTK" PJSC has engaged an independent appraiser “Financial and accounting advisors” Ltd to estimate the value of the Company’s stockholding in “Sotovaya Svyaz-Alania”CJSC.

The decision on selling the stake in the share capital of “Sotovaya Svyaz-Alania” CJSC was approved by the Board of Directors of "UTK" PJSC on March 4, 2004 (Minutes ? 34) in the context of the Company’s policy on subsidiary business and non-profile assets management aimed at increase of financial investments efficiency. This decision agrees with the development strategy of Svyazinvest holding. Reduction of non-profile and inefficient assets will enable UTK OJSC to further focus its efforts and financial resources on the Company’s position in the growing market for new telecommunication services.

Profile of “Sotovaya Svyaz-Alania” CJSC: The principal and sole activity of the company is provision of wireless services in the NMT-450 standard in Severnaya Osetia-Alania Republic. The company is a regional operator of the Federal cellular network “SOTEL”. Total number of subscribers at the end of 2003 reached 4 600. 2003 revenues were RUR 20 mln (a decrease for the year of 32%) with a net profit of RUR 0.085 mln.