“Upgrading and development of the rural communications networks by using CDMA technology”

1. “Upgrading and development of the rural communications networks by using CDMA technology”

2. General information about the breakthrough project Pursuant to the Decree of the President of the Republic of Kazakhstan as of 10.07.03 №1149 On state program of development of rural territories for 2004-2010, JSC Kazakhtelecom carries on the works aimed at implementing social project in rural settlements. Brief description of the project: The breakthrough project is making provision for rapid and efficient development of rural telecommunication network with the use of wireless technology CDMA450. The CDMA standard is a digital standard that uses the bandwidth of 450MHz and the Code Division Multiple Access technology. The coverage rate of a single CDMA base station in rural area makes up 25-35 km. One CDMA base station is capable of servicing up to 1000 subscribers. The key characteristics of the CDMA standard that make it more attractive for all categories of subscribers are the following ones: • broad area of servicing the base stations; • high quality of voice communication; • high level of voice immunity

3. General information about the breakthrough project This investment project consists of two stages of implementation: The first stage of the project (2007-2009) makes provision for implementing the following: • Coverage of about 800 rural settlements; • Connection of 226 186 subscribers of the radio access network The second stage of the project (2010–2013) makes provision for extension of the СDMA450 network to up to 900 base stations with a view to increasing telephone density in rural area to up to 19,5 telephone lines per 100 inhabitants. The degree to which the project will impact the economy of the country:

4. Approvement of project implementation necessity Benefits from the project implementation: lower costs for building of network; a larger size of a cell compared to the cell sizes in other bands that enables to considerably reduce the number of base stations for providing the radio coverage of extensive domains; The possibility of providing the rural subscribers with the data communication and Internet services at up to 153,6 Kb/s speed; reduction of operating costs for the rural communication maintenance; capability of a prompt and inexpensive modernization of the CDMA network to3G standard network. Indicators of economic efficiency of the 1st stage of the project: 4

5. Investment plan of the project implementation The total investments volume for implementation of the project amounts to 25,7 billion tenge including 2,0 billion tenge from the state budget: The investments volume on the first stage (2007–2009): 12,0 billion tenge including 2,0 billion tenge from the state budget. The investments volume on the second project implementation stage (2010 – 2013): 13,7 billion tenge, less costs for construction of infrastructure and transport network. As of 01.10.2008 , 2,272 billion tenge was used including 0,979 billion tenge of the state investments. 5

6. The current status of the project implementation At the end of 2007, 163rural exchanges were upgraded and in 395rural settlements telephones were installed. 178 320 digital numbers were commissioned. As a result, digitization of rural network increased to75,24%. In the beginning of 2008 design estimates were worked out for the infrastructure construction (antenna-mast erections, power supplying devices, fitting of premises) for implementation of the 2nd stage of the project. In 2008 the works on the project have been proceeded. It is being planned to construct 545,9 km of the areal lines of eight fibre-optic communication lines; install 200 base stations and 61 186 CDMA terminals till the end of the year. Over the past period of 2008,the following works have been fulfilled: 5 areal fibre-optic communication lines out of 8 have been built; 543,41 km (99%) of polyethylene pipe has been laid and140,31 km (26%) of fibre-optic cable has been blown out. Currently, out of 200 base stations 36 have been installed and first 1000 subscribers in Akmolinsk Oblast, Kostanaisky Oblast and South-Kazakhstan Oblast have been interconnected. Till the end of 2008,it is being planned to complete the works on connection of more than200 settlementsto the radio access network with the capacity of about 90 000 subscribers. In 2009 the completion of the first project implementation stage and installation of 117 base stations and 165 000 CDMA terminals is being planned. 6

7. State support of the project implementation In order to connect rural settlements to the Internet the AIC (the Agency for informartization and communication) in cooperation with the Foreign Ministry solves the issue on the release of additional frequencies with bandwidth 2МHZ in range 452-466 МHz. The financing issue has also been under consideration. Moreover, the ministries and agencies agree upon the issue on introduction of addendums to the Order of the Government of Republic of Kazakhstan # 932, dd. August 21, 2002 aimed at the change of registration rate of subscriber terminals CDMA-450 from 10 MCI (minimum calculation index) to 0 МCIwithin the framework of the program «30 corporate leaders of Kazakhstan».

8. Contact information Address JSC Kazakhtelecom Astana city, Republic of Kazakhstan Sary-arka district 31, Abai avenue Contact persons: Mr. Askar Kuanyshevich Zhumagaliyev– Chairman of the Management Board of JSC Kazakhtelecom tel.: +7 (7172) 587 704 Mrs. Svetlana Edislavovna Vinogradova– Project manager tel: +7 (727) 264 57 37 fax: + (727) 258 32 07 mobile.: +7 777 230 65 92 email: Svetlana.vinogradova@telecom.kz