As a result of the merger, OJSC North-West Telecom now has nine branches operating in nine regions of North-West Russia: Artelecom in the Arkhangelsk region, Elektrosvyaz in the Vologda region, Elektrosvyaz in the Kaliningrad region, Elektrosvyaz in the Republic of Karelia, Murmanelektrosvyaz in the Murmansk region, Novgorodtelecom in the Novgorod region, Petersburg Telephone Network in Saint-Petersburg, Elektrosvyaz in the Pskov region, and Cherepovetselektrosvyaz in the Cherepovetsk region.

An entry on terminating the activities of the acquired companies made by the Unified State Register of Legal Entities has concluded the formalities on the current stage of the merging process. Technically the merging procedures were accomplished within a day during which shares of the acquired companies were converted into the shares of OJSC North-West Telecom.

The reorganized company’s shares will be available for trading on exchanges and over-the-counter (OTC) after the state registration of issue placement reports by the Russian Federal Commission for the Securities Market (FCSM). These reports will be prepared and submitted to the FCSM in the near future. The final step in the merging process will be a Joint Shareholders Meeting of the reorganized company, which is to approve changes and amendments to the North-West Telecom’s Charter and to elect new managing bodies. It is expected that this stage will be completed by February 2003 and after the registration of changes to OJSC North-West Telecom’s Charter the merger will be considered finalized.

“The reorganization is a necessary step to improve the Company’s competitiveness and expand the scope of services provided,” said Alexander Sysoyev, General Director of North-West Telecom. We believe that the actual merger at the operational level, the creation of a common corporate environment and conformity of opinions in the management board and company’s staff are the most important conditions for the successful operation of the combined company. We have already started to create these conditions. In general, I believe that enlargement of operations and reinforcement of internal resources resulting from the merger will considerably strengthen the Company’s positions on the Russian telecommunications market.”

Additional information:

The Extraordinary General Meeting of Shareholders (EGMS) of OJSC Petersburg Telephone Network that took place in Saint-Petersburg on November 28, 2001, made a decision to acquire 8 regional wireline operators in North-West Russia. 97.8% of shareholders at the Meeting voted in favor of that decision. Shareholders approved Merger agreements and the name for the combined company: OJSC North-West Telecom. Shareholders of regional companies had approved merging to OJSC Saint-Petersburg Telephone Network earlier with votes ranging from 90.1% to 99.5% in favor.

The EGMS of OJSC Saint-Petersburg Telephone Network was the last in a sequence of Extraordinary Shareholders Meetings of North-west Russia regional wire operators, which took place from November 19 to November 26, 2001.

On June 25, 2002, the General Shareholders Meeting of OJSC North-West Telecom approved the Company’s new Charter reflecting the creation of 8 new branches of the Company. Total number of shares issued in the merging process is as shown below:

·          262,896,773 common shares, each has par value of RUR 1 giving a total of RUR 262,896,773

·          87,646,542 class A preferred shares, each has par value of RUR 1 giving a total of RUR 87,646,542