Moscow, Nov. 11, 2003 Standard & Poor's Governance Services said today it raised its corporate governance score (CGS) on Russia-based fixed-line telecoms service provider OJSC Southern Telecommunications Company (STC) to 'CGS-5.6' from 'CGS-5.2'.

           The overall CGS on STC is a result of four component scores on a scale of 1 (low) to 10 (high):

-         Ownership structure and external influences — 5.8 (raised from 5.5)

-         Shareholder rights and stakeholder relations — 6.5 (raised from 6.3)

-         Transparency, disclosure, and audit — 5.8(raised from 4.7)

-         Board structure and effectiveness — 4.5 (raised from 4.4)

          The change in the ownership structure and external influences component score reflects the improvements in the standards of disclosure of equity interests, including the owners of nominee accounts.

          The modest upgrade of the shareholder rights and stakeholder relations component score is driven by  improved  shareholder meeting procedures, with information provided in Russian and English, and a slightly improved dividend payout procedure.

          The component score for transparency, disclosure, and audit has increased significantly, due largely to the full disclosure of IAS/U.S. GAAP financial statements, the improved quality of the company's web site, and better disclosure of related party transactions. Also, the disclosure of individual remuneration of directors and executives is a positive factor. The score is still constrained, however, by a lack of transparency regarding audit fees and fees paid to the auditor for consulting work contracted through an intermediate entity. The auditor's selection process lacks transparency as well.

          The score for the board structure and effectiveness componentof the analysis reflects the limited   representation of two independent and two other external directors and the absence of specialized independent board committees and other internal control mechanisms. Also, since much is decided via mailed ballots, ignoring the need for wider discussion, it is easier to push Svyazinvest's proposals through, including those lacking clear economic rationales and the approval of independent directors. Positive governance features include the increasingly transparent executive and director remuneration policy, though the structure of director remuneration packages is not aligned with the interests of shareholders.

          Full analytical report on the CGS of STC is available on corporate web-site www.stcompany.ru.