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Moscow City Telephone

February 25, 2003

Public Joint Stock Company Moscow City Telephone Network (MGTS) has restored interconnection of all the Forty Thousand (40 000) subscribers at Telephone Exchanges 281, 284, 288, and 971 affected through the outbreak of fire on 14-15 February 2003.

The last interconnection was accomplished on 24 February inst. at 3 p.m. Thus, PJSC MGTS managed to restore the operation of the entire technological equipment installed in the building. However, a number of subscribers may face some incoming traffic limitations for a little while. The subscriber lines testing and adjustment are presently continued at all the above-cited Telephone Exchanges.

"We express thanks to all our subscribers who showed patience and understanding at the time of the calamity overtook this Company. I also wish to stress that the PJSC MGTS technicians that worked for 10 days round the clock at the site of the breakdown did their utmost to restore communications most promptly. The fire has been our most serious trial over the last decades, and it is my strong conviction that the Company has emerged from the ordeal triumphantly", Mr. Vladimir S. Lagutin, the Company's General Director, stated.

According to PJSC MGTS experts, the damage caused by the fire is estimated at Two Hundred and Twenty-Seven Million (227 000 000) rubles. While the insurance compensation to be paid by the "ROSNO" insurance company will make up, amenably to preliminary examination, about Twenty-Three (23) Million rubles. This amount includes the cost of the destroyed and damaged equipment and that of the work to have the affected part of the building repaired.

Notwithstanding the tight corner situation, the Moscow City Telephone Network Public Joint Stock Company intends to retain its declared revenues growth rate and secure the implementation of its business plan for 2003.

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