Due to the completion of restructuring process of Uralsvyazinform’s subsidiaries as of on June 30, 2005 including mobile (ZAO “Ermak RMS”, OOO “South Urals Cellular Phone”, ZAO “Tyumenruscom”) and data transmission (OOO “Uralscom”, ZAO “VSNET”) subsidiaries in the form of consolidation to the parent company, the financial statements of Uralsvyazinform prepared under Russian Accounting Standards comprise property, liabilities and operational results of the consolidated subsidiaries starting with July 1, 2005.

• Revenues increased by 16% over 1Q 2005. Further subscriber additions, both in fixed-line and GSM, increased local rates (monthly subscription fees for local services), revenue gains from new services (broadband internet, intelligent networks, cable TV) were the main growth drivers.
• OIBDA was up 27% on 1Q 2005. As of 1Q 2006, OIBDA margin was 40%. Operating margin increased to 28%.
• At the end of 1Q 2006, overall subscriber base totaled 7.4 million, including 3.8 mln in GSM.
• On March 21, 2006 the company placed its 07th series bond issue worth RUR 3 bln with maturity in 6 years. The first coupon rate is 8.40% pa.

* Here and henceforth currency conversions are based on average exchange rates: 1Q 2006 – RUR28.1, 1Q 2005 RUR 27.9
**including subsidiaries

In commenting the 1st quarter’s results Anatoly Ufimkin, CEO noted that: “Over the first quarter of the year the positive impact from business consolidation has continued. Despite the loss of 70% revenues in the long distance segment as a result of legislative reform, we showed good performance in revenues and net profit. Essentially, it is an impressive growth in mobile and Internet segments that helped us deliver the results. Since the beginning of the year the company has been active in the mass broadband market with its DSL offer, as a result the revenues coming from data transmission services more than doubled. With an exceptional potential that our Internet business has, we are aiming to develop this success into the rest of the year".