Krasnodar, December 21, 2004: Southern Telecommunications Company (“UTK”) (RTS: KUBN; OTC: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District reported that in 2004 the Company's share of the regional market for local telephony increased from 92.0% to 93.2%. Its share in the Southern Russian market for fixed-line long-distance telephony increased from 79.1 % to 80.0% and in the regional value-added services market - from 36.0% to 39.0%.

The Company expects the following 2004 performance results:

• 580.8 ths lines are to be put into operation, a 9.1% increase over 2003;
• installed capacity of the local telephone network is to grow by 6.7% to 4,098.4 ths lines, equipped capacity – to 3,955.5 ths lines;
• length of DLD trunk lines is to grow by 1,824 thousand ch/km;
• length of fiber optic in intra-zonal networks is to be increased by 1 444 km;
• digitization level of the local telecommunication network is to reach 58.2%.

UTK also expects the following improvements in 2004 financial results:

• 2004 consolidated revenues are to grow by 23.4% to RUR 16,660 mln;
• 2004 EBITDA is to be increased by 16.6% to RUR 3, 990.9 mln;
• operating profit is to make RUR 3,311.8 mln, a 8.5 % growth over a year-ago;
• 2004 revenues from value-added services are to grow by 69.7% to RUR 926.4 mln.

In accordance with the decisions of the Board of Directors and Management Board of Svyazinvest holding – the principal shareholder of "UTK" PJSC – the Company’s management has developed an urgent program aimed at improvements in the financial performance. In particular, the Company plans to cut down its investments by 3.1 times over 2004 to RUR 4,030 mln.

The Company expects the realization of the program to result in:

• a 8.4% growth in 2005 revenues to RUR 18, 036.8 mln;
• a 30% increase in 2005 EBITDA to RUR 5, 198.3 mln;
• a 18.7% increase in operating profit to RUR 3,935.1 mln;
• reduction of costs per 100 rubles of revenues from core activity by 1.9 roubles to RUR 78.2 ensuring a 2.6% prevalence of growth rate of revenues over costs;
• growth of operating profit margin up to 21.8 %.

The important aspect of the Company’s strategy for 2005 is an increased focus on economic efficiency of new higher-margin telecommunication services.