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Key Business Objectives. North-West Telecom. April 2005. NWT today. The leading integrated telecom provider in the North-Western Federal District. 10 regional branches 4, 5 mln. subscribers 34 ths employees Revenue 2004 530 MUSD Revenue 2005F 680 MUSD.

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Key business objectives

Key Business Objectives

North-West Telecom

April 2005


NWT today

The leading integrated telecom provider

in the North-Western Federal District

  • 10 regional branches

  • 4, 5 mln. subscribers

  • 34 ths employees

  • Revenue 2004530 MUSD

  • Revenue 2005F 680 MUSD

NWFD is a large market with significant investment potential

NWFD has the 3rd largest per capita income level among Russian regions

NWT is characterized by the highest telephone density (30 telephone sets/100 inhabitants) in Russia

2


International ratings

S&P Transparency Indexof North-West Telecomgrew to 62% from 44% in 2003

It is the 8th among 50 largest Russian companies

3


Preferred shares

2.4

2002

Share capital structure

PREFERRED SHARES

ORDINARY SHARES

Net profit distrubuted as dividends,

MUSD

+172%

+79%

11.7

4.3

2003

2004

% Net Profit 23% 16% 24%

(прогноз)

  • According to our estimations, foreign investors own 30% of ordinary shares

  • 4.4% of ordinary shares is converted into ADR 1st Level and are traded in the USA Over-The-Counter market (NWTEY), Berlin- & Frankfurt Stock Exchange

  • Free float is estimated as 23%

4


Share & Bond market

  • In 2004 NWT was the leader in capitalization growth among Russian Regional Telecom Operators

  • Price of ordinary shares increased by 29%

  • Price of preferred shares increased by 42%

  • Trade volume of ordinary shares grew by 93%

  • Trade volume of preferred shares grew by 113%

5


Share & Bond market

  • Capitalization of the company grew 2.5 times since merger in November 2001

6


Share & Bond market

  • According to the latest researches, upside potential of ordinary shares is 44%,

    preferred shares – 80%

7


Volume, MUSD

Yield

2002

10

20.8%

2003

50

14.4%

2005

110

9.58%

Share & Bond market

  • The 3rd corporate bond issue was placed on March 3rd, 2005.

  • The issue was 2.5 times oversubscribed.

  • Significant demand originated from foreign investors.

NWT Corporate bonds track record

8


Key business objectives

  • Develop share and corporate bond markets

  • Strengthen market position in corporate and Value

    Added Services (VAS)segments

  • Improve financial performance

  • Develop sound long-term corporate strategy

9


Developing share and

bond markets

  • Strategic Goals

  • Raise investment attractiveness & securities liquidity

  • Implement corporate governance approach fit to requirements of International

    Investment Banking professionals

  • Improve reputation management quality

  • Planned in 2005

  • Issue of Level I ADRs for preferred shares

  • Developing ADR trading on European stock markets (Frankfurt & Berlin Stock

    Exchanges)

10


Local access73 %

DLD & ILD65 %

Data transmission & channels leasing65 %

Documentary communication34 %

Strengthening market position

in corporate and VAS segments

Regional Market Share – 27%

by revenues

NWT has strong positions in both retail and infrastructure segments

Market shares in corporate (26%) and VAS (34%) segments are to be improved

11


Revenue from vas musd

Strengthening market position

in corporate and VAS segments

Revenue from VAS, MUSD

+38.7%

33.7

Internet access

Data transmission

Next Generation network services

Intellectual network services

+69.9%

24.3

14.3

2003

2004

2005

forecast

12


Improving financial

performance

Financial Highlights, RAS

MUSD

Financial statement (IAS) is available:

www.nwtelecom.ru(Language:English)> Economic and Finance >Financial statement (according to Ineternational Accounting standards), Balance sheets

http://www.nwtelecom.ru/pubsas/test--C7740C6ECBAA11D5AE4B0050045260BB/lang--eng/index.html


Average subscriber fee, USD

Long-distance traffic, mln. min

10

2500

8

6.9

2,015

5.7

2000

+21%

6

+27%

4.3

1,593

+33%

1,365

4

1500

+17%

2

2003

2004

2005

1000

forecast

2003

2004

2005

Improving financial performance

2004 Revenue growth drivers

Organic growth (24%)

forecast

Non-Organic growth (9%)

  • Consolidation of Lensvyaz and Svyaz Komi as of October 1, 2004

14

10


+27%

Improving financialperformance

Revenue Structure

2004

2005

(forecast)

676 MUSD

533 MUSD

676

MUSD

15


8%

Improving financial performance

Cost Structure

2004

2005

(forecast)

543

MUSD

502

MUSD

16


37,012

420

34,735

40,000

450

35,000

375

30,000

367

34,030

300

25,000

262

225

20,000

15,000

150

10,000

75

5,000

0

0

2003

2004

2005

forecast

Average number of personnel

Improving financialperformance

Personnel optimization

Personnel,people

Wage, USD

Key factors influencing number of personnel:

Improving organization structure

Implementation of business-units structure

Network modernization

Between 2001 and 2003 personnel was reduced by 13%

Average monthly wage

17


130 8

Improving financialperformance

130.8

CAPEX, MUSD

+ 29%

168.1

In 2005, subscriber base will increase by 149 ths numbers

Digitalization rate will raise from 48% to 52%

10 MUSD will be invested in VAS

2004

2005

(forecast)

18


305 musd

+25%

Improving financialperformance

305MUSD

Funding

In 2005 financial debt will increase by 70 MUSD to 305 MUSD

2005 funding program is aimed to refinance short-term debts and includes the following:

3rd corporate bond issue (issued on March 3rd ; volume 100 MUSD; maturity 6 years)

Long-term bank credits (75 MUSD)

246.4

MUSD

2004

2005

(forecast)

19


2004

2005

forecast

2003

Average

RTOs

2004

2003

2005

forecast

Average

RTOs

Improving financialperformance

Current ratio

Equity to total assets ratio

0.80

0.61

0.72

0.55

20


Developing sound

long-term corporate strategy

  • Strengthen achieved market positions & expand to new market segments

  • Improve company’s economic efficiency

  • Modernize network infrastructure

  • Introduce highly efficient management systems and procedures

Create a strong basis

for growth of company’s capitalization

21


North-West Telecom

Chairman of Board of Directors ………………..……. Valeriy Yashin

Chief Executive Officer ………………….…….……..Vladimir Akulich

Аuditor ……………………………………….………………….Ernst & Young

Registrar ………………………………………….………Registrator-Svyaz

ADR Depositary …………………………………………..………..JP Morgan

URL………………………..…………………….…….www.nwtelecom.ru

  • Contacts:

  • Gorokhovaya str.14/26, St.Petersburg, Russia

  • +7(812) 595-45-64

    [email protected]

22



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