• Revenue for the first nine months of 2008 amounted to RUB 46,414.0 million – a similar level compared to the first nine months of 2007;
• Outgoing international traffic grew by 6.7% and incoming international traffic increased by 7.1%*;
• Revenues from data transmission and telematic services surged by 3.4 times year on year to RUB 2,019.5 million;
• OIBDA** rose by 9.3% to RUB 12,067.0 million, representing an OIBDA margin of 26.0%; 
• Net profit for the first nine months of 2007 amounted to RUB 6,929.5 million compared to RUB 8,844.8 million a year ago.

Moscow – November 10, 2008 – Rostelecom (NYSE: ROS; RTS, MICEX: RTKM, RTKMP), Russia’s national telecommunications operator, today announced its unaudited results for the first nine months of 2008 in accordance with the Russian Accounting Standards (RAS).

Rostelecom’s 2008 revenue for the first nine months of 2008 amounted to RUB 46,414.0 million – a similar level compared to the same period last year.

Domestic long-distance (DLD) traffic for the first nine months of 2008 grew by 0.2% year on year to 7,514.2 million minutes. First nine months 2008 DLD revenues decreased by 5.0% and totaled RUB 21,942.4 million.

Under the changes in the fixed-line market structure, among other things attributable to the migration of DLD traffic from fixed-line to mobile networks, to provide end-customers with competitive tariffs the Company follows flexible pricing policy which results in maintaining DLD traffic volume along with the decrease in DLD revenues.

Outgoing international long-distance (ILD) traffic rose 6.7% year on year to 1,511.1 million minutes. ILD revenues from Russian operators and subscribers amounted to RUB 9,055.8 million, representing a decrease of 4.1% year on year. The decrease in revenues was primarily due to the changes in the OILD traffic mix.

First nine months 2008 incoming ILD traffic totaled 2,407.6 million minutes – a year-on-year increase of 7.1%. Rostelecom increased its share of the incoming international traffic, as the Company continued to leverage its strong market position. Revenues from international operators for incoming ILD traffic transit and termination rose 5.9% year on year to RUB 4,455.9 million.

Data transmission services continue to substantially increase the share of the Company’s total revenues compared to the traditional services provided by Rostelecom.

Revenue from other business segments increased by 11.8% year on year to RUB 10,959.9 million, reflecting the growth of value-added and new products and services. Rostelecom delivered increases in revenues from data transmission and telematic services, leased lines, intelligent network services as well as customer equipment servicing among others.

For the first nine months of 2008, revenues from data transmission and telematic services saw a substantial increase of 3.4 times compared to the same period last year, amounting to RUB 2,019.5 million, while revenues from intelligent network services rose to RUB 924.1 million representing a year-on-year increase of 21.7%.  Revenues from leased line services grew 1.1 % year on year to RUB 5,889.7.

Rostelecom’s operating expenses for the accounting period amounted to RUB 37,561.4 million – a year-on-year decrease of 2.1%. 

Depreciation for the first nine months of 2008 amounted to RUB 3,214.4 million. The increase of 12.7% compared to the same period last year is a result of property, plant and equipment additions during 2007.

OIBDA for the first nine months of 2008 grew by 9.3% year on year to RUB 12,067.0 million, representing an OIBDA margin of 26.0%. The increase compared to the same period last year was mainly attributable to the decrease in the Company’s operating expenses – among other things, due to the elimination of a compensation surcharge as of January 1, 2008.

First nine months 2008 operating profit amounted to RUB 8,852.6 million, up 8.1% year on year.

Other gains and losses for the first three quarters of 2008 totaled RUB 412.1 million compared to RUB 3,524.8 million a year ago.

Rostelecom’s net profit for the first nine months of 2008 totaled RUB 6,929.5 million compared to RUB 8,844.8 million a year ago as a result of a reduction in the number of financial investments to be revaluated because of the sale of a number of financial investments in the first quarter of 2008, along with foreign exchange loss in the accounting period.

*All traffic data provided in the press release is preliminary. In addition, this press release contains verified incoming international traffic data for the first nine months of 2007 – as disclosed in the Rostelecom FY 2007 IFRS results release.

**OIBDA is calculated as total revenues less operating expenses excluding depreciation.