Growth outlook for Svyazinvest on completion of its restructuring

1. Growth outlook for Svyazinvest on completion of its restructuring September2003 ValeriyN. Yashin, General director JSCSvyaznivest

2. Controlling stake State 75% - 1 share Mustcom 25% + 1 share Blocking stake Svyazinvest Rostelecom MGTS Others 7 mega-regionals Svyazinvest holds leading positions in the Russian fixed-line market • History • Svyazinvest Creation – 18 September, 1995 • Sale of the stake to Mustcom – July 1997 • Sector consolidation – 72 companies were merged into 7 mega-regionals in 2000-02 Shareholder Structure (voting shares)

3. Svyazinvest has consolidated its regional subsidiaries into seven mega-regional fixed telephony operators Center Telecom Lines in service: 5.7mn M.Cap. $620mn Uralsvyazinform Lines in service: 3.2mn M.Cap. $932mn Northwest Telecom Lines in service: 3.4 mn M.Cap. $303 mn South Telecom Lines in service: 3.3mn M.Cap. $338mn Volga Telecom Lines in service: 3.9mn M.Cap. $647mn Siberia Telecom Lines in service: 3.5mn M.Cap. $444mn Far East Telecom Lines in service: 1.1mn M.Cap. $126mn

4. In 2003 Svyazinvest companies continued to demonstrate sustainable growth and rising financial and operating indicators bnRUR 14 12.9 12 10.0 9.3 10 8.7 7.5 8 6.9 6.8 6.4 5.8 5.7 5.6 6 5.1 4.8 4.7 4.1 4.2 4 3.0 1.9 2.4 2.5 2.4 1.9 1.5 1.3 1.2 1.2 1.6 1.5 1.5 2 1.3 0.4 0.5 0 Rostelecom Uralsvyazinform Northwest Telecom Siberia Telecom Center Telecom Volga Telecom South Telecom Far East Telecom Revenue 1H 2002 Revenue 1H 2003 Profit 1H 2002 Profit 1H 2003 Holding company, total

5. Increased traffic driving growth of Svyazinvest companies bnmin 6.4 7 Tbyte 500 429 5.4 6 400 4.6 5 300 4 3.2 222 3 200 1.8 2 100 0.6 0.5 0.5 1 0 0 1H 2002 1H 2003 1H 2001 1H 2002 1H 2003 Domestic long-distance traffic Data traffic through Internet International traffic Internet dial-up connections

6. Svyazinvest: 2002 Results Completion of the Holding’s formal (legal) reorganization Telecommunication companies’ profitability and profits up due to increases in service volumes and tariffs Budget and investment planning systems introduced, cost management scheme launched ABC accounting implemented in test mode ALIS volumes increased, targets set in the “Concept for the Development of the telecommunication sector in Russia” achieved Pilot Project for the Intellectual Network in Russia launched

7. The reorganization had a positive effect on Svyazinvest’s capitalization The reorganization resulted in Svyazinvest’s capitalization more than doubllng from US$ 1,100 mn at the beginning of the reorganization in January 2001 to US$ 2,700 mn after the companies’ merger 3.5 X 3.1 ROCs’ capitalization 3.0 Change in ROCs’ capitalization as compared to the RTS index and communication companies that did not take part in the reorganization 2.5 X 2.3 MGTS’s capitalization 2.0 X 1.7 AKM-Svyaz index 1.5 1.0 X 0.7 NASDAQ index 0.5 0.0 04.01.01 04.06.01 04.11.01 04.04.02 04.09.02 04.02.03 04.07.03

8. Tariff reform 1. In Russia, tariffs still remains low compared to European telecommunication companies … Lietuvos 7.7 Telekomas CeskyTelecom 9.6 Matav Average rate USDper month 9.9 (Hungary) TPSA (Poland) 8.4 Svyazinvest 4.0 average 0 4 8 12 4. … our stance in negotiations with the Anti-Monopoly Ministry Svyazinvest average tariff, USD$ per month 9 Factual(01.08.2003) 4.0 6 Plan 3.4 3 0 2002 2003 2004 2005 2006 2. … rental fee growth generally outpaces inflation… Growth of the rates for local telephone communication services in 2003 (as of 01.08.2003) 3. … legal basis for raising tariffs*… *Decree of the Government of the Russian Federation No.715 of October 11, 2001 ‘On Improving the Mechanism for Government Regulation of Communication Services Rates’ 8

9. Investments 1800 1200 600 0 Siberia Telecom Telecom Center Telecom Northwest South Telecom Volga Telecom Uralsvyazinform Far East Telecom * As of January 1, 2003 1. Reduced investment costs … 2. … leads to relatively low cost of installing a new fixed line … • Centralizing equipment purchases, leading to economies of scale • Reducing equipment prices given falling demand and stagnation in the global telecommunications sector $200 - 400 per line Large equipment discounts 3. …high demand Number of applications for phone installation, ‘000* • The main sources of investment are own funds, as well as credit resources and debt capital. • Entry into equity capital markets through an IPO is not planned. 9

10. Business restructuring Based on example of Volga Telecom 60 effects 50 costs $ mn 40 30 20 10 0 1st year 2nd year 3d year 4th year 5th year • According to conservative estimates, the effect of Volga Telecom’s restructuring is approximately US$ 71 mn over 5 years. 2002 2003 2004 2005 Development and approval of master plans for Svyazinvest and pilot ROCs (Volga and Urals) Development of master plans for 5 other ROCs Implementation of restructuring plan at Volga and Urals Implementation of restructuring plan at other ROCs Centralized projects and general coordination of the restructuring 1. Increased market orientation and introduction of target operational architecture … 2. … estimated results … • The Master Plan consists of 8 programs • including 53 projects: • Corporate managementstrategy • Control over changes • Efficient economic service • Restructuring purchases • IT-infrastructure • Organizational structure and personnel management • Control of network • Development of commercial opportunities 3. …restructuring schedule. The key measures will be complicated within 2003-2004 • Developing business process automation and expanding use of digital technologies. • Reducing personnel costs. • Increasing in the share of value-added services. 10

11. Svyazinvest companies are increasing their market share of value-added and unregulated services 1. Cellular business • Mega-regional companies account for a large cellular market share, namely: • Volga: nearly 480,000 subscribers and about 60% of theregional market; • Urals: nearly 503,000 subscribers and about 68% of theregional market; • Siberia: nearly 211,000 subscribers and about 70% of theregional market; • Far East: nearly 71,000 subscribers and about 77% of theregional market. 2. Multiservice networks • Multiservice networks ensure reliable transmission of any multimedia data, including high-speed Internet, IP-telephony, telemetry, digital TV. In the first half of 2003 the following networks were built: • Center Telecom - Moscow region; • South Telecom - Rostov-on-Don, the Rostov region and Stavropol krai; • Siberia Telecom - Novosibirsk and the Novosibirsk region. 3. Data transmission and value-added services • In the first half of 2003 • Internetdial-up connections rose by 62.1% against the first half of 2002; • Data traffic through Internet grew by 74.5% against the first half of 2002; • IP-telephony traffic soared by 164.3% against the first half of 2002.

12. Corporate restructuring goals, 2003-2005 • Introduction • of target operational • structure of mega-regionals 2. Measures to enhance mega-regionals’ integration and to increase their efficiency 3. Improvements in strategic management system 4. Maintenance of effective scheme to manage change

13. Major tasks for 2003 Corporate restructuring, including a united technical strategy, medium-term development strategy for the merged companies Cost-saving measures, continued growth of revenues above costs Increasing profitability of the mega-regionals Decreasing payables through restructuring credit lines with major suppliers Improving the basis for tariff calculation Optimizing DLD tariffs and introducing time-based billing

14. Svyazinvest target performance indicators for 2003 • Gross income per employee– RUR 399,000 (up 120.9% from 2002) • Gross income per line – RUR 4,700 (up 109.3% from 2002) • Number of lines per employee– 84 (up 109.1%from 2002) • Installation of new telephone capacity– 3.0 mnlines (2.6 mn lines in 2002) • Increase in subscriber's main stations will be 1.7 mn (against 1.34 mn lines in 2002) • Expenses as a proportion of gross income were 71.8% (73.7% in 2002) bn RUR 140.6 120.3 100.9 88.7 13.0 10.8 2002 2003 2002 2003 2002 2003 1 2 3 4 5 6 Gross income Expenses relating to ordinary services Sales revenues

15. Thank you!Any statement made or opinion expressed in the presentation by Svyazinvest, including any slides shown, are those of Svyazinvest only and not Brunswick UBS. Brunswick UBS was not involved in the preparation of these materials and Brunswick UBS assumes no responsibility for that presentation. September 2003