Svyazinvest in 2002: restructuring continuing

1. Svyazinvest in 2002: restructuring continuing November 2002

2. Revenues, bln RUR New lines in service, th lines 42.8% 40.0% 27.6% 53.4% 2017 1405 186,0 101,1 3.0% 132,5 85,0 66,6 65,9 155 159 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 Total Rural Total Traditional New Capex, bln RUR 174.2% 241.9% 6,36 5,12 3,65 2,15 1Q01 1Q02 1Q01 1Q02 Fixed capital expenditure Capital expenditure Telecommunications is one of the most advanced sector of the Russian economy

3. Svyazinvest dominates Russia’s wireline telecoms North-West region Volga region Siberia region Central region Southern region Far East region Urals region 53% - Svyazinvest 13%< - foreign shareholders 34% - other shareholders 51% - Svyazinvest 14%< - foreign shareholders ~35% - other shareholders 51% - Svyazinvest 16%< - foreign shareholders 32% - other shareholders 51% - Svyazinvest 7%< - foreign shareholders 42% - other shareholders 51% - Svyazinvest 8%< - foreign shareholders 41% - other shareholders 51% - Svyazinvest 10%< - foreign shareholders 39% - other shareholders 51% - Svyazinvest 16% - foreign shareholders 33% - other shareholders • 29,7 mln lines in service • providing local and long-distance services to 93% of the Russian customers State 75% - 1 share Mustcom 25% + 1 share Rostelecom 51% - Svyazinvest 49% - other shareholders Svyazinvest JSC (established in 1995)

4. Svyazinvest has enjoyed strong financial and operating performances in 2001 2000 2001 Revenue per AL, th RUR 2.37 2.99 Revenues per employee, th RUR 156 210 AL per employee. 66 70 EBITDA per AL, th RUR 0.84 1.01 EBITDA per employee, th RUR 55 71 Return on sales, % 12.0 11.5 Return on assets, % 3.83 4.54 Return on capital, % 5.73 6.67 Svyazinvest financial highlights, 2000-F2002 (Rb mn)

5. 1H02 results show that this positive trend continues 1H 2002 Increase Revenues per employee, th RUR 146 33% EBITDA per employee, th RUR 40 14% AL per employee 75 9% Revenue per AL, th RUR 1,95 22% EBITDA per AL, th 0.53 4% Increase in capacity (2002 estimates), mln 2.4 26% Bln RUR

6. Estimated Svyazinvest’s capitalization is $1.43 bln Estimated capitalization of Svyazinvest is US$ 1.43 bln as per 18 October 2002

7. Svyazinvest has consolidated its regional subsidiaries into seven mega-regional operators of fixed telephony Central region CenterTelecom Lines in service: 5,4mln Ural Uralsvyazinform Lines in service: 2,9mln North-West region North-West Telecom Lines in service: 3,2 mln Far East Dalsvyaz Lines in service:1.0mln Southern region Southern Telecom Company Lines in service: 3,2mln Volga region VolgaTelecom Lines in service: 3.7mln Siberia Sibirtelecom Lines in service: 3.3mln

8. Urals, Far East, North-West and South swept shares recently: other mega-regionals to follow by the end of 2002 Far East North West Center Urals Share swap – 11/30/02 Registration of Share Placement Report with FCSM – 12/31/02(E) Volga Siberia South Share swap – Completed 10/31/02 Registration of Share Placement Report with FCSM – 11/30/02(E) Share swap – Completed 09/30/02 Registration of Share Placement Report with FCSM – 10/31/02(E) Share swap – Completed 09/30/02 Registration of Share Placement Report with FCSM – 10/31/02(E) Share swap – 11/30/02 Registration of Share Placement Report with FCSM – 12/31/02(E) Share swap – Completed 10/31/02 Registration of Share Placement Report with FCSM – 11/30/02(E) Share swap – 11/30/02 Registration of Share Placement Report with FCSM – 12/31/02(E)

9. Russian mega-regionals are large enough to compete with European peers … Lines in service, mln 1H2002

10. … but they are relatively cheap Average CEE telecoms’ MСap/ALis $703 vs Russian $63.

11. Although tariff level is growing constantly, … RUR

12. … it’s still very low comparatively to European telecoms Russian monthly tariff is about 3 times less than CEE average and 8.6 than in Western Europe. mega-regional average tariff is $2.9 per month

13. 34,24 32,52 27,89 18,52 17,63 14,24 Network development is the key goal of Svyazinvest Capex forecast, bln RUR New access lines, mln per year 3,20 3,00 2,40 1,72 1,19 1,07

14. Financial forecast of group Svyazinvest

15. Creating a methodology to calculate economically feasible costs • Creating a unified accounting policy and introducing separate accounting for revenues and expenses • Compiling financial statements in compliance with IAS • Budgeting • Cost-cutting program • Technical audit of regional telecom operators • Technical development principles of merged entities • Working out a general network development plan for the holding company until 2007 The finance and economic block in merged entities is designed to ensure an effective system of financial planning and control Technological integration of the networks of merged entities HR management program The marketing block is designed to give the merged entities a powerful marketing strategy Developing a methodology and carrying out: • assessment of key personnel, • recruiting qualified executives, • training key specialists. Creating a rotational policy and a result-oriented incentive system • Identifying a medium term marketing strategy for the mega-regional telecoms • Training and certifying the Company’s marketing staff Svyazinvest is increasing efficiency of mega-regionals within four blocks of corporate restructuring

16. In 2001 Svyazinvest implemented a number of projects aimed at creating an efficient system of business planning and control • Preparations for transition to reporting under IAS • Training and implementation of in-house IAS reporting • Quarterly IAS reporting since 2002 • A new budgeting methodology was worked out and launched • A uniform management accounting system was elaborated • Preparations to change the tariff regulation system • An economically feasible cost calculation methodology was worked out • Beginning from 2002 the holding company’s operators are planning a trial application of the methodology, and beginning from 2003 – to adopt a long run incremental costs method

17. Svyazinvest is currently working on: • Foreign currency loans reduction switching over rubble loans • New HR program • Guidelines for mega-regionals’ marketing strategy • General plan for network development of mega-regionals and Rostelecom, as integral parts of the telecommunications network of the Russian Federation for the period until 2007 • Separate accounting of revenues and expenses from different services

18. Long-term local and foreign currency credit ratings were assigned to all seven surviving entities during 2001-02 Credit ratings of surviving entities are only 1-2 points lower than that of the Russian Federation

19. Svyazinvest high performance figures led to a significant growth of its market capitalization Growth of capitalization in1H 2002 -75% 3-5-fold increase in capitalization should the restructuring be completed and telecoms tariffs in Russia reach the level of Eastern European tariffs.

20. 2000 2000 2000 2001 2001 2001 2002 2002 2002 All business efficiency indicators of the holding company are planned to increase in 2002 In 2002: Bn, RUR • Gross income per employee – RUR 310,000 (130% compared to 2001) • Operating profit per employee – RUR 85,000 (148%compared to 2001) • Number of lines per employee – 76 (109% compared to 2001) • Gross revenue per line – RUR 4,000 (119% compared to 2001) • Operating profit per line – RUR1,116,000 (136%compared to 2001) • Installation of new telephone capacity – 2.4 million lines (1.9 million lines in 2001) • A proportion of expenses in the gross income – 72% (down 3% as compared to 2001) 110,5 92,1 82,3 73,4 70,5 55,3 28,2 21,7 18,1 Gross income Operating expenses Sales revenue

21. Thank you! November 2002