The legal basis for introducing the new tariffs is the decision adopted by the Board of the RF Ministry of Antitrust Policy and Support of Entrepreneur-ship on 25 September 2002.

The residential subscriber fee will amount to 110 rubles a month as of 1 November 2002. The last tariff raise for this subscriber category took place on 1 January 2002.

The subscriber fee for the state-budgeted customers will constitute 125 rubles a month as of 1 November 2002. The previous state-budgeted customers subscriber fee was 100 rubles a month. The increase of the state-budgeted customers subscriber fee was introduced within the framework of the reduction of cross subsidy and approximation of the tariffs for the state-budgeted and business organizations in order to transfer these economic entities to a single tariff category, pursuant to Decision of the Government of the Russian Federation of 11 October 2001 No 715 "On the Improvement of Mechanism of the State Regulation of Telecommunications Services Tariffs".

The operating costs per one subscriber number in the first half year of 2002 exceeded 100 rubles a month. The telephone density in Moscow is 50.4 phones per 100 residents, which conforms to the respective European level and exceeds nearly by three times the same average indices in the whole of the country. The now-applicable subscriber fee tariff covers 80% of the operator expenditures. Taking into consideration the inflation, which is presently 12-15% per annum, the new tariffs will, as before, not cover in full the costs of the services, and do not include the investment component.

PJSC MGTS will retain all the current allowances and easy terms for the specific categories of Moscow citizens who are participants in the Great Patriotic War, pensioners, disabled, etc (1,4 million people altogether), as defined by the Federal and Moscow-city legislations. The Company will continue financing the compensatory payments at the expense of its own.