Krasnodar, August 18, 2004: South Telecommunications Company (STC) (RTS: KUBN, KUBNP; OTC USA: STJSY), the biggest fixed-line telecom operator in the South Federal District, has announced registration of its 03 series non-convertible interest-bearing documentary pay-to-bearer bonds, subject to centralized custody under state issue registration #4-07-00062-?, with the Federal Financial Markets Service of Russia on August 17, 2004.

The series-03 bond issue is worth Rub 3.5 bln, with maturity of 1,830 days and par value of Rub 1,000 each. The yield of the first coupon will be assigned on the date of the primary bond issue. 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 6^th coupon is paid out.

STC's 03-issue makes it possible for the issuer to buy bonds upon request of its clients and sell them on the market before maturity. For this reason, there are two periods when investors may place buy orders. For this reason, the 5^th business day (544^th day from the primary bond issue) from the date of payment of the 3^rd coupon yield has been set as the date of purchase of the bonds, buy orders for which were placed during the 1^st bond-purchase period. The 5^th business day (1093^rd day from the primary bond issue) from the date of payment of the 6^th coupon yield has been set as the purchase date of the bonds, buy orders for which were placed during the 2^nd bond-purchase period.

The primary placement of South Telecommunications Company’s bonds is projected for the first half of October 2004. The placement price of the bonds on the first and subsequent days will be set at 100% of par value. On the second day of the placement the buyer will also pay out the cumulative coupon yield calculated from the date of the primary bond issue. The final 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. Proceeds raised from the issue will be allocated to fund its 2004 capex program and refinance its obligations.

Rosbank acted 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 NDTs is the custodial institution responsible for the centralized storage of the issue.