Krasnodar, 6th April 2007:  Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reports that on 5th April 2007 Moody’s Investors Service Rating Agency upgraded to “B1” the corporate family rating of Southern Telecommunications Company following a detailed review of the group’s operating performance as well as a re-assessment of ratings under Moody’s Government Related Issuer (GRI) rating methodology. The outlook of the rating is stable. At the same time, Moodys Interfax Rating Agency upgraded the Company’s long-term national scale credit rating to ?2.ru.

The ratings reflect the Company’s incumbent leadership position in the SFD fixed-line telecommunications market, supported by UTK’s historical ownership of the relevant infrastructure, remaining low fixed-line penetration, providing for growth perspectives, and significant pent-up demand for new value-added services in the region, proven dedication of the management to de-leveraging of the company, reduced reliance on short-term debt associated with re-financing risks, and the Company’s efforts to commensurate investment with internal cash flow generation.

Moody’s notes, that the management of the company demonstrates substantial experience and understanding of the local telecommunications market and focus on internal reporting transparency.