Krasnodar, October 7, 2004: Southern Telecommunications Company (“UTK”) (RTS: KUBN; OTC: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reports that on 6 October, 2004 placement of "UTK" PJSC series 03 non-convertible interest-bearing documentary pay-to-bearer bonds with mandatory centralized custody (the issue state registration number - 4-07-00062-? dated as of 17 August, 2004) was performed on the MICEX Stock market section. The bond issue was placed in full.

During the auction determining the interest rate of the first-third coupons 137 orders valued at RUR 4,454,711thousand with interest rates from 11.0% to 13.0% per annum were submitted. The majority of orders (for the amount over RUR 4.0 billion) included the coupon interest rate of about 12.4% per annum. According to the bidding results, UTK management fixed the interest rate on the first-third coupons at 12.3% per annum and effective profitability vs. 1.5-year offer - at 12.68%. As a result, total first coupon income to be paid under UTK series 03 bonds amounts to RUR 215,845 thousand, first coupon income to be paid under each UTK series 03 bond amounts to RUR 61.67.

Total par value of UTK series 03 bond issue is RUR 3.5 billion, the term to maturity is 5 years with offers for the redemption – 1.5 and 3 years from the date of placement. Face value of each bond is 1000 rubles. The first coupon rate expressed as annual interest rate is to be established at the MICEX bidding on the starting date of the bond placement. The interest rate on the second and third coupons will be equal to the first coupon rate. The interest rate on the fourth, fifth and sixth coupons is to be fixed by the Issuer not later than 10 business days prior to the date of the third coupon payment. The interest rate on the seventh, eighth, ninth and tenth coupons is to be fixed by the Issuer not later than 10 business days prior to date of the sixth coupon payment.

Organizer, Underwriter and Payment agent of series 03 bond issue is Open Joint –Stock Company AKB "Rosbank". Co–organizer of the bond issue is AKB “Promsvyazbank”. Co-underwriters of the issue are "Aton" Ltd., Bank "Zenit", OJSC "Web-Invest Bank", “BK Region” Ltd., “ING Bank (Evrazia)”, “International Moscow bank” CJSC, “Promishlenno-stroitelniy bank” OJSC, AB "Gazprombank", KB "Moskommertsbank", IK “Russ-Invest”.