Krasnodar, 28^th September, 2006– Southern Telecommunications Company [(RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern Federal District, today reported its unaudited consolidated financial results for the first half of 2006in accordance with International Financial Reporting Standards (IFRS).

No audit, examination or any other relevant activities will be performed in respect of the financial statements. At the same time the Company believes that taking into account UTK’s experience in IFRS reporting users can rely on these financial statements.

The interim financial statements of the Company consist of the accounting balance sheet, the P&L statement and explanatory notes to the financial statements. These financial statements do not contain all disclosures required by IFRS for interim reports. However, the scope of these statements is sufficient to gain a clear view of the Company’s financial standing and its operating results.

                                                                               KEY FINANCIAL HIGHLIGHTS, RUR mln: 

* * EBITDA  includes Earnings Before Interest, Taxes, Depreciation and Amortization

The Company’s IFRS revenue for the first half of 2006 amounted toRUR 8,551 mln. The main revenue components were earnings from local voice (representing a 43.19%-increase to RUR 3,693 mln), revenues from national telecom operators (representing a 21.27%-increase to RUR 1,819 mln) and earnings from intra-zonal calls (representing a 11.4%-increase to RUR 974 mln). Revenues from new telecom services grew by 13.6% to RUR 709 mln.

                                                                                          Revenue structure(RUR mln)

1H 2006 operating expenses amounted to RUR 7,395 mln. Expenses on wages, salaries and other employee benefits and payroll taxes, depreciation charges, payments to other telecom operators for traffic transit services as well as other operating expenses accounted for major part of operating expenses.

                                                                                  Operating expenses structure (RUR mln)

1H 2006 net income in accordance with IFRS amounted to RUR 333 million. Last year the Company  reported the net loss of RUR 387 million in its statutory financial statements for the first half of 2005.

Interest expenses amounted to RUR 924  million in the reporting period versus RUR 1,516 mln during the first six months of 2005. 1H2006 EBITDA increased 20.91% year on year to RUR 2,966 million representing an EBITDA margin of 34.68 % (vs. 27.32% for the first six months of 2005).

The full version of UTK’sunaudited consolidated financial statements for the first six months of 2006 under IFRSand explanatory notes to the financial statements can be viewed at the Company’s corporate web-sitewww.stcompany.ruin the section«Investor Relations/Financial reports».