Highlights:

·                     International traffic was up 13.3% compared to the same period last year, while outgoing international     was up 10.4%;

·                     Revenue increased by 10.4%** and stood at Rub 9.9 bn

·                     Gross profit achieved an increase of 72% year-on-year and reached Rub 4.07 bn;

·                     Net profit reached Rub 1.5 bn, which represents a 53% year-on-year increase. 

International traffic rose 13.3% and stood at 3.3 billion minutes.  Growth in revenues from long-distance telecom services reached 43.4%, while revenue generated by regional operators increased by 92.3%.   

Outgoing international traffic rose by 10.4% to 580.8 million minutes, while Rostelecom's revenues derived from telecom services provided to Russian clients rose by 1.2% compared to the same period last year.  

Growth of international traffic was mainly hindered by a decline in outgoing international traffic from customers in Moscow.  

At the same time, sustained growth was achieved in international traffic from operators: 28% compared to the same period last year.  Rostelecom also achieved a 22% growth in revenues from international settlements.  

Based on 1H 2002 results the company generated a net income of Rub 9.9 mn, which is up 10.4% compared to the year-earlier period.  

Rostelecom's operating expense for the first six months of 2002 decreased by 11.5% and stood at Rub 5.8 bn.  Amortization deductions were down 17%, while EBITDA rose 21.5% and reached Rub 6.6 bn. 

Net sales income rose by 72% and stood at Rub 4.07 bn. 

*minus VAT

**All comparisons are not adjusted for inflation. 

As a result of the company's more conservative approach to bad debt provisions, Rostelecom's RAS accounting reports show provisions in excess of Rub 500 mn.  

This factor, together with Rostelecom's negative forex differences on the yen-denominated loans, caused a slowdown in the growth of net profit.  Thus, net profit on the results of the first six months of 2002 increased by 53% compared to the year-earlier period and stood at Rub 1.6 bn.