Moscow, December 8, 2004 - CenterTelecom (RTS: ESMO, ESMOP; OTC: CRMUY) informs that Fitch Ratings announced having assigned CenterTelecom 'B-' long-term unsecured credit rating in foreign currency, "Negative" outlook. The company received 'B' short-term credit rating in foreign currency.

The rating accounts for the fact that CenterTelecom has higher relative indebtedness than other telecommunication companies in Russia. For instance, net debt to EBITDA is expected at the 3.5x level at the end of 2004, which is much higher than that at the end of 2003 (2.1x). The agency believes that the company is subject to quite high refinancing risks. Despite the improvement of the situation after the issuance of bonds for RUR 5.6 billion in August 2004, CenterTelecom short-term debt financial position remains unstable.

Fitch Ratings agency points out that the ratings reflect CenterTelecom leading position in the fixed communications market in Central Federal District of Russia. As a traditional communications operator, the company operates the PSTN and has such strategic advantages as significant territorial coverage and extensive client base which has been shrinking, especially in the most profitable segment of corporate and VIP client services. However, the recently implemented active marketing policy in the VIP segment should help the company preserve its share in this sector. In general, Fitch believes that CenterTelecom is subject to quite significant risks coupled with the realization of its intermediate business plans.

The organization structure of the company remains fragmented and obviously requires rationalization, although CenterTelecom has already engaged the strategy of integrating its branches and has merged three regional divisions into one branch.

More detailed information on CenterTelecom rating is available at Fitch Ratings site.

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CenterTelecom is a leading fixed communications company providing the entire range of telecommunication services in the Central Federal District where over 20 % of the population of Russia resides. CenterTelecom offers the full range of telecommunication services, including telephony service, the Internet, IP telephony, data communications, CATV, wired and VHF broadcasting. The company actively develops modern multiservice and SDH networks as well as new radio access systems. The Company trades on RTS (ESMO, ESMOP), Moscow Interbank Currency Exchange (CTEL, CTELP) and has ADR Level 1 common stock program (CRMUY).