· Domestic long-distance traffic rose 3.4%[1] year on year. Outgoing international traffic grew by 9.2% and incoming international traffic increased 31.2%.

· EBITDA[2]  decreased to RUR 11,045.3 million compared to RUR 14,587.7 in 2005, representing an EBITDA margin of 18.4%, due to significantly higher payments to operators under the new interaction system.

· Net profit was RUR 7,185.1 million for 2006 compared to RUR 9,027.9 million in 2005.

Moscow – April 5, 2007 – Rostelecom (NYSE: ROS; RTS, MICEX: RTKM, RTKMP), Russia’s national long-distance telecommunications operator, today announced audited 2006 full year results in accordance with Russian accounting legislation (RAS).

”Rostelecom’s 2006 financial and operational performance demonstrates the soundness of the Company’s strategy in the new market environment, as we continue to strengthen our competitive position in each business segment,” Rostelecom’s CEO Dmitry Yerokhin commented. “We delivered healthy increases in domestic and outgoing international long-distance traffic from Russian customers, incoming traffic from international operators as well as revenues from leased line and intelligent network services.

In 2007, management’s key objective is to ensure the Company’s continued success under the new Russian telecommunications market model. Our near-term priorities are to reinforce Rostelecom’s leading position in the traditional long-distance voice market and to remain at the forefront in developing the most advanced service offerings for Russian customers.”

In total, Rostelecom’s revenues for 2006 amounted to RUR 60,033.1million - a year-on-year increase of 49.0%.  The increase is primarily attributable to higher DLD and outgoing ILD revenues as a result of the transition to the new system of interaction with Russian operators and subscribers for the provision of domestic and international long-distance services, which came into effect on January 1, 2006.

Domestic long-distance (DLD) traffic increased by 3.4% in 2006 to 9,662.3 million minutes. 2006 full year DLD revenues grew by 76.6% and totaled RUR 31,817.2million. 

Outgoing international long-distance (ILD) traffic rose 9.2% to 1,932.7 million minutes.  ILD revenues from Russian operators and subscribers increased by 42.5% over 2005 and totaled RUR 13,198.4 million. 

2006 incoming ILD traffic totaled 1,932.7 million minutes - a year-on-year increase of 31.2%. Rostelecom increased its share of incoming international traffic, underscoring the strength of the Company’s market position. Revenues from international operators for incoming ILD traffic transit and termination rose 8.4% year on year to RUR 4,424.4 million. 

Revenue from other business segments increased by 18.6% compared to 2005 to RUR 10,593.0 million, reflecting the growth of new products and services.  Rostelecom delivered solid increases in revenues from leased lines, intelligent network services and customer equipment servicing. 2006 revenues from leased line services grew 17.7% year on year and amounted to RUR 7,116.0.

Rostelecom’s operating expenses for the accounting period amounted to RUR 52,246.9 million.  The 84.4% increase compared to 2005 was driven mainly by higher payments to Russian operators which increased by a factor of 3 times primarily as a result of the new interaction system.

Depreciation for the full year 2006 amounted to RUR 3,259.1 million. The 24.1% increase over the last year is a result of significant additions of property, plant and equipment in 2005.

As a result of higher operating costs, EBITDA for 2006 totaled RUR 11,045.3 million down 24.3% year on year, representing an EBITDA margin of 18.4%.

2006 full year operating profit amounted to RUR 7,786.2 million, down 34.9% compared to 2005.

The result from other activities for 2006 totaled RUR 2,108.8 million compared to RUR 199.0 million a year ago. The increase is mainly driven by a revaluation of the Company’s financial investments - Rostelecom recorded a RUR 2,376.8 million net revaluation gain in 2006 compared to RUR 258.6 million net revaluation gain for the previous year.

Rostelecom’s 2006 full year net profit totaled RUR 7,185.1 million compared to RUR 9,027.9 million a year ago.