The financial statement consolidates property, obligations and financial results of OAO "Uralsvyazinform" and its 13 subsidiaries, the largest of which are ZAO "Ermak RMS", OOO "South Urals Cellular Phone", ZAO "Tyumenruscom", OOO "Perminform", ZAO "VSNET".

Revenue growth totaled 24.3% as compared to 2002, mainly due to the following:

• Increase in revenues from mobile services by 34.6 %. Net additions as of 2003 totaled 700 thous. As of Jan 1, 2004 the mobile subscriber base totaled 1.1 mln (1.5 mln as of July 1, 2004).
• Fixed-line revenues grew by 23.6 %. Fixed-line net additions over the year - 212 thous.
• Long-distance segment saw 17.4 % rise. DLD traffic hike - by 21.3 %, ILD traffic hike - by 13.2 %.
• New services (Internet, broadband, ISS, ISDN, etc.) demonstrated 2.9 fold increase in revenues versus 2002.
• Revenues from operators (interconnection services) saw 46.4% rise.
• EBITDA grew by 26.2% versus 2002 driving EBITDA margin to 27.7%.
• 23.8% of revenues came from mobile services.
• Capex increased by 93.0% versus 2002 and totaled RUR7.7 bln.

Vladimir Rybakin, CEO commented 2003 results: "It was the first year for Uralsvyazinform operating as a unified interregional telecommunication carrier in Urals. On the whole we've completed setting up management team and optimizing management system. We've also learnt how to operate as one large business unit.

Pooling brainpower and financial resourses allowed us to accelerate the pace of growth and to strengthen our market position. 2003 IAS revenues reached RUR22 bln reflecting 24 % growth. Cost control and outrunning pace of HVA services drove to 36 % EBITDA rise (excluding allowance for bad debts) .

Our strategy stays the same - investing into cutting-edge technologies. The company increased the total volume of investments into network development in 2003 by 93 % up to RUR7.7 bln. It made possible to introduce 4.5 thous. km of up-to-date intrazone lines, as well as to install 380 thous. fixed lines and over 700 thous. mobile GSM lines. Digitalization of switches reached 61%.

Our priorities for 2004 are as follows:

• Capacity extension of fixed-line networks/ exchange facilities with the capacity over 323 thous. lines will be put into operation;
• Extension of coverage area and GSM-900/1800 network capacity, switches with the capacity of 1,420 thous. lines and 562 base stations are to be installed;
• Commercial launch of GSM-900/1800 services on the territory of Sverdlovsk region;
• Deployment of 4.2 thous. km of intrazone DLD fiber-optical and radio microwave lines;
• Launching test zone of Next Generation network (NGN) in Ekaterinburg;
• Promotion of cable TV services;
• It is expected to complete consolidating Uralsvyazinform mobile exposure through introduction of a unified brand for mobile services.

We understand that those challenges require maximum efforts from all members of our team. At the same time the company dynamics, intellectual potential and investment opportunities make us sure our plans will be successfully fulfilled".

To proceed with finacial and operational overview please download Press release (PDF).

Complete version of 2003 IAS consolidated financial statements of Uralsvyazinform with commentary may be found on the company corporate web-site in Financials section.

For additional information, please contact IR department on tel. (007 3422) 136-598 or e-mail: investor@usi.ru.
The most recent company information is also available on corporate web-site at www.uralsviazinform.com or URSI_RU page in Bloomberg system.