OJSC South Telecommunications Company hereby announces that the company has been assigned a corporate governance rating of 5.2 (10 is the highest possible rating) by Standard & Poor's international credit rating agency. S&P also said that South Telecommunications Company has made great progress in the corporate governance sphere. South Telecommunications Company features a team of young managers committed to upgrading the company's image.  Nonetheless, STC also has a number of defects which are typical for Russian companies, which involve excessive concentration and influence of a single majority shareholder, combined with a lack of transparency and an undeveloped mechanism for exercising independent control. 

After nine other operators have merged with the core telecom company in the southern federal district, the company's corporate management structure will still undergo quite a few changes, and Standard & Poor's is looking forward to positive changes.  

The company's overall rating factors in various components, which are ranked on a scale of 1 to 10, including: 

·         ownership structure and influence of shareholders - 5.5;

·         Rights of  related financial parties and relations with them - 0.3

·         Financial transparency and disclosure of information - 4.7

·         Composition and work practise of the Board of Directors - 4.4 

The complete report on the corporate governance rating of South Telecommunications Company can be viewed in the section entitled "Rating", as well as https://www.governance.standardandpoors.com and  https://www.standardandpoors.ru.

At present the management of South Telecommunications Company is taking a number of actions aimed at improving its corporate governance record, which include drafting and submitting the Code of Corporate Governance for approval by the Board of Directors of the company.  For example, a new composition of the Board of Directors has been elected, of which three independent directors (of the total 11 seats of the BoD) have been appointed.  

As of the beginning of 2003 a large amount of new data has been posted on the company's corporate website at https://www.stcompany.ru and a presentation of the company's English website will soon be held.  The management feels confident that serious steps will be taken to bring the company in line with best global corporate governance practise within the near future, which in turn should raise trust on the part of investors and shareholders of South Telecommunications Company.