Krasnodar, August 29, 2005 – Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal telecommunications provider for Russia’s Southern Federal District, today announced its results of work with accounts receivable for the first half of 2005. 

Level of accounts receivable with regard to gross revenue decreased over the 1^st half of 2004 by 24.4% from RUR 2,249.6 million to RUR 1,999.7 million. Level of accounts receivable for provided telecom services by client segment showed a decrease with respect to tariff revenues from almost all client segments except for commercial enterprises and non-compensated expenses incurred by the Company when providing telecom services at reduced tariff rates:

- individuals - by 9.5 %;

- budget-funded organizations - by 29.5%;

- enterprises of the agroindustrial sector – by 22.8%

In connection with the law on the monetization of benefits that had come into force from January 1, 2005 growth rates of non-compensated expenses decreased greatly. Amount of non-compensated expenses incurred by the Company when providing telecom services at reduced tariff rates made RUR 1.0 million in the 1^st half of 2005 (compensation ratio reached 90.2%) versus RUR 214.0 million of non-compensated expenses for the 1^st half of 2004.

UTK continues its active work aimed at preventing accounts receivable and repaying overdue debts. This work implies the following measures:

- timely notification of subscribers;

- introduction of advance payment system for subscribers;

- regular monitoring and analysis of accounts receivable;

- collection of receivables by pre-trial order;

- timely presentation of claims on debts overdue for more than 3 months (covering 100% of debts for telecom services provided at reduced tariff rates);

- permanent control over operations on compensation of the expenses incurred by the Company  in connection with provision of telecom services at reduced tariff rates and over actual execution of enforcement orders.

For any further information please contact:

UTK IR Team

phone + 7 861 253 20 30, fax + 7 861 253 19 69, e-mail: pmaleev@mail.stcompany.ru

UTK PR Team

phone + 7 861 259 56 99, fax + 7 861 259 56 99, e-mail: dali@mail.stcompany.ru