OJSC Svyazinvest

Information Department

119121 Moscow, 55 Plyushikha St. building.2,
tel.: (095) 727-0418, fax: (095) 727-0475; e-mail: pr@svyazinvest.ru

May 28, 2003                                           Moscow

On May 28 Central Telecom, Volga  Telecom and Southern Telecom Company held board of directors meetings, at which resolutions were passed to proceed with introducing a comprehensive corporate management system (ERP) running on Oracle E-Business Suite software and which approved agreements according to which Open Technologies, Oracle's official partner on the Russian market, was assigned the position of chief systems integrator for the above-mentioned project within Svyazinvest and its Mega-Regional Telecom Companies (MRC).  Open Technologies will be responsible for developing and implementing the project, coordinating the execution work by the various parties, working out a uniform implementation method, and a quality control system for the work carried out.  Accenture, which has extensive experience in projects of the kind, has been named general consultant. 

The Oracle E-Business Suite software package is planned to be phased in at Svyazinvest, all seven MRCs and their branches following approval by the various boards of directors of the MRCs.  Siberia Telecom and Far East Telecom are scheduled to hold board meetings to discuss this issue on May 29, 2003, and Uralsvyazinform's board meeting will be on May 30, 2003 and North Western Telecom's on June 3, 2003.

ERP is to be phased in as a stage in the holding's corporate restructuring and is designed to enhance transparency of the business activities of the mega-regional companies.  These efforts play an important role in gaining the trust of investors and shareholders, in attracting investment resources, and are also major pre-requisites for the mega-regional companies to be able to gain access to international capital markets.

The corporate management system was chosen in two stages.  At the first stage, work was done to evaluate the qualification requirements of the various systems.  This work was assigned to a leading Russian consulting firm, Yunikon.  During this stage the international experience of Accenture company was also considered with respect to the implementation of this kind of system.  As a result, the Oracle E-Business Suite system was chosen as the software solution. At the second stage of the project, business proposals about forming a partnership with Oracle were examined.  Then a separate cost estimate was performed from January through March 2003 on the Russian market of Oracle solution providers, information technology and telecom consultants in order to identify the general systems integrator.

Svyazinvest has long recognized the pressing need to phase in a uniform corporate management system in order to solve the task of building an advanced corporate information system which is capable of providing comprehensive management of corporate-wide finances, logistics and operations, as well as economic analysis tasks so as to expedite the process of gathering and collating data, business planning and budgeting, and human resource management. The Oracle E-Business Suite system is built on a single software platform and when implemented can be used not only as an effective instrument for accountants, business finance planners, human resource specialists, and clients, but also to track funds spent on goods and services, eliminate double expenditure and avoid information errors when information is exchanged between various offices of the holding.

Other areas of corporate business to be automated include finance planning functions, tax and management reports, tracking payables and receivables, the status of fixed assets, a cash flow control system, management of investment projects and various financial instruments, a fully functional human resources management system (staff list, payroll, training) and cost center management.

In addition, the Oracle E-Business Suite system will make it possible for Svyazinvest holding to phase in a uniform and comprehensive system to monitor business processes at all levels of the holding's organizational structure. After the main stage of Oracle's system is phased in, Svyazinvest will become one of the most powerful high-tech companies in Russia. 

Svyazinvest holding consists of seven mega-regional telecom companies - Central Telecom, North Western Telecom, Volga Telecom, Southern Telecom, Uralsvyazinform, Siberia Telecom, Far East Telecom, national long-distance and international operator Rostelecom, six telecom operators which did not take part in the nationwide merger process, and telecom industry institute Giprosvyaz. Companies are licensed to provide local, long-distance and international telecom services, as well as data transmission, Internet, ISDN, wireless subscriber access and cellular communication involving GSM, NMT-450 and DAMPS standards. Svyazinvest has a total staff numbering over 364,000.

In 2002 Svyazinvest completed the process of merging 72 regional telecom operators into seven mega-regional companies.  At present the top priority of top managers at Svyazinvest holding is focused on implementing a corporate restructuring program aimed at created a management system at the mega-regional companies which is capable of providing efficient operations and dynamic development for the consolidated telecom operators. A pivotal element of the corporate restructuring process involves implementing projects associated with introducing state-of-the-art information systems in the mega-regional companies.

Accentureis a leading international consulting company specializing in the area of management consulting and introducing information management systems.  The company is renowned both for its strategic development solutions, based on its profound understanding of market development trends and technologies, and for its pragmatic approach towards implementing these solutions, which enables its client companies to turn their boldest ideas into real results, while enhancing their performance, cutting costs and lifting investment appeal.

The company already has extensive experience in doing business with Svyazinvest.  In particular, Accenture acts as Svyazinvest's consultant on a corporate restructuring project.  Accenture won a tender for this project, which included major consulting companies operating in the Russian Federation.

From summer 2002 until spring 2003 the company has been developing a master plan for the restructuring of Svyazinvest holding.  So far Accenture has completed work on planning the restructuring for two mega-regional telecom companies, Volga Telecom and Uralsvayzinform. The company's consultants have also participated in launching the ERP system for Chelyabinsksvyazinform.

Open Technologies is a Russian company which has carried out over 300 projects, including complicated integration projects for such companies as the Central Bank of Russia, RAO UES of Russia, Lukoil, Gazprom and Vimpelcom.  The company has partnership relations with over 20 leading global players, including Oracel, Sun, HP, Siemens, Huawei and IBM.  Open Technologies is strategically geared towards developing large corporate information systems.

Open Technologies is a solution provider for Oracle and runs four regional branches (this year two others are planned to be opened). According to a resolution passed by the Board of Investment Policy of Svyazinvest, Open Technologies has been placed on the list of companies eligible for preparing and implementing projects for telecom companies.

Oracle Corporation is one of the leading suppliers of corporate software solutions (detailed information on the company can be found on its official website at www.oracle.com/ru ).  According to data by IDC (www.idc.com) in 2002 Oracle corporation was ranked second on the global market for ERP systems. Oracle's major clients include: RTKomm.ru, Vimpelcom, Kazkhtelecom, Equant, T&T, Belgacom, British Telecom, France Telecom, Orange, KPN, Nortel, Telenor, Telia, Vodaphone, Cesky Mobil, Eesti Mobiiltelefon, Latvijas Mobilais Telefons, Lietuvos Telekomas, MOBIL ROM S.A., ROMTELECOM, Westel Mobile Telecommunications Rt, ??????ING Bank, Lloyds TSB, Abn-Amro, Toyota, Posco, Alcoa, Honeywell, McDonalds, Visa, General Electric, etc.