In the past year, PJSC MGTS affirmed its leading position in the capital's telecommunications services market. At present, the Company exercises control over some 80% of Moscow's local wire communications market, including a part thereof dominated through its subsidiaries.

Notwithstanding significant changes in the RF telecommunications business format owing to the restructuring being carried out by PJSC SVIAZINVEST, the MGTS Public Joint Stock Company remains the biggest and most efficient domestic local telephone communications operator. In 2002, the Company succeeded in attaining a qualitatively new level of financial results, Vladimir A. Lagutin, PJSC MGTS General Director, stressed. In particular, the last year's net profit of the Company grew considerably, and according to a tentative forecast, would reach 1 100 000 000 rubles against 366 000 000 rubles in 2001. Likewise, there was a significant improvement, by 28%, in the Company's proceeds that exceeded 10 billion rubles in 2002.

PJSC MGTS intends to retain the positive dynamics of the financial and business activity figures in 2003. As anticipated by PJSC MGTS finance analysts, the Company's net profit will increase by one third, making up 1.42 billion rubles. The estimated growth of the sales volume will amount to 21%.

The distinctive increase in all PJSC MGTS financial indicators is associated with a fundamentally new business strategy being pursued by the Network's leadership, which is geared towards raising both the quality of the customer servicing, investment attractiveness, and ensuring information transparency of the Company. This required a drastic re-examination by PJSC MGTS of its management principles. In the last years, consecutive work for reducing cross subsidies, increasing the Company capitalization, and for upgrading services providing technologies have been the major fields of PJSC MGTS financial policies. Besides, restructuring of the subsidiary companies' business, just commenced by PJSC MGTS, the carrying out of which proceeds in three directions (data transmission, wire and wireless communications services), has had its own part to play.

The Public Joint Stock Company Moscow City Telephone Network is actively promoting its presence in the equity market. In 2002, in the process of augmenting its Charter Capital through conversion, the Company effected the issuance of common and preferred shares that are presently represented within the Russian Trade System, at the Moscow Interbank Currency Exchange, and the New York Stock Exchange in the form of ADRs (American Depository Receipts). In2000 and 2001, PJSC MGTS issued two (2) ruble loans on debentures with an aggregate par value of 1.6 billion rubles. The Company has presently withdrawn the 2000 loan from circulation. The second issue is among the first five emissions most highly traded at the domestic debt paper market.

On 11 February, the Company will start the placement of the third coupon bond issue with a two-year period of circulation with a total amount of 1 billion rubles, since the latest years have proven the efficiency of loans on debentures as an instrument of external financing and as a method of the Company's liabilities management. As distinct from the previous issuances, offer is not provided for in the case of new bonds to come forward. The joint stock commercial the "Trust and Investment Bank" is the principal arranger and underwriter of the new issue, while joint stock commercial bank the "Moscow Bank for Reconstruction and Development" is the other arranger and paying agent thereof.