Krasnodar, September 16, 2004: South Telecommunications Company (UTK) (RTS: KUBN, KUBNP; OTC USA: STJSY), the biggest fixed-line telecom operator in the Southern Federal District, declares that its Board of Directors adopted the Decision on fixing the 6^th  of October 2004 as the date of primary placement of its 03 series non-convertible interest-bearing documentary pay-to-bearer bonds, subject to centralized custody (Minutes ? 9 of 15.09.04).

The bond placement will be performed in the form of public offering in the MICEX Stock Market Section. The placement price of the bonds on the first and subsequent days will be set at 100% of par value. The expiry placement date of the 03-issue will be the earliest of the following dates: a) 10^th  business day from the primary bond issue; b) purchase of the last bond of the issue.

The series-03 bond issue is worth Rub 3.5 bln, with maturity of 1,830 days (5 years) and par value of Rub 1,000 each. The yield of the first coupon will be determined during the auction to be held on the start date of the bond placement. The yield for 2^nd  and 3^rd  coupons will be the same as the first coupon, while yields for 4^th  , 5^th  and 6^th  coupons are to be set by the bond issuer no later than 10 business days before the 3^rd  coupon is paid out. Yields for 7^th , 8^th , 9^th  and 10^th  coupons will be set by the bond issuer no later than 10 business days before the 6th coupon is paid out.

Placement of 03 series non-convertible interest-bearing documentary pay-to-bearer bonds was registered by the Russia Federal Service on Financial markets on August 17, 2004. Number of issued bonds amounts to 3,5 million units.

Proceeds raised from the series-03 bond issue will be allocated to fund UTK 2004 capex program and refinance its obligations.

Rosbank acts as the Arranger, Underwriter and Payment agent of the 03-bond issue (Department of Investment Banking Services, +7 (095) 234 09 47, mafonsky@rosbank.ru). FFK is the financial consultant of the issue, while NP NDC is the depositary responsible for the centralized storage of the issue.