During September 2003, the PJSC MGTS leadership shaped the Company's development strategy for the coming year. Its major fields of activity are enhancement of the telephone network in Moscow, commencement of the last phase of the network general reconstruction and forming new patterns of the Company's working with customers.

Numbering capacity activation - 115 thousand numbers up to the end of 2004 and complete implementation of the 2003 numbering capacity plan (34 thousand numbers). Installation of telephones both in large-scale housing construction districts and in those where the public utility infrastructures are completely set. The Company will build 10-thousand numbering capacity automatic telephone exchanges and remote concentrators (small-capacity exchanges), i.e. applying the technologies well-established already and worked-through by MGTS specialists. Such volume of the numbering capacity activation will enable to have all the telephone installation applications met, including the requests to be lodged within the next year, and to create some surplus capacity.

The beginning of stepwise replacement of the analog telephone exchanges with digital ones (the last phase of the network general reconstruction) which is a time-consuming process requiring a large capital investment. Its length is largely dependent on the amount of finances the Company could attract.

During 2003, an elaborate work was done toward collecting and analyzing initial data, designing telecommunications facilities reconstruction projects, determining digital equipment deployment sites, arranging premises, and for securing technological process of outside plant switchover.

From the next year onward, PJSC MGTS contemplates converting from 200 to 350 thousand numbers annually (with the change of numbering scheme).

The following telephone offices subject to refurbishment are entered into the 2004 work schedule:

A healthy increase of the digital exchanges share will enable PJSC MGTS to start value-added services bulk selling to all user categories. With the growth of the non-regulated services share in the corporate revenue base, the Company's own investment opportunities will grow too. Furthermore, the replacement of the analog automatic telephone exchanges with digital ones will make it possible to resolve the shared service line subscriber problem.

To translate such plans into reality, it is necessary to modify the customer care system. New offers to all user categories and raising the subscriber servicing standards will be the major component elements of the corporate program being put together at present.

It is intended to formulate and boost into the market a variety of batch offers to all the categories of subscribers, which, along with the basic services, such as telephone installation and local communication provision, will incorporate value-added services based on digital exchanges and those deployed on broadband data network (primarily, high-speed access to Internet). The first such products promotion campaign is scheduled for New Year hols.

The program for raising the servicing standards envisages the opening of new subscriber reception halls (and in prospect - considerable increase of sales points). Before the end of the year, a subscriber reception hall will be opened at the Filyovskiy TN in Solntsevo (a subdistrict in Moscow). All subscriber reception halls will be tooled with up-to-date electronic queue systems which are easy-to-handle both by subscribers and telephone node personnel. One operator with no forwarding them to their colleagues will tackle all subscriber questions and problems. The same information processing technique will be applied in the case of subscriber requests conveyed to a node management by telephone. With this end in view, call-centers will be deployed before the end of the next year at all the telephone nodes of the MGTS Network. The call-center set up at the Miusskiy Telephone Node has been functioning for two years already, while the call-centers at the Filyovskiy, Tushinskiy, Sevastopolskiy, and Petrovskiy Telephone Nodes will have been put into operation by the end of 2003.

The PJSC MGTS management are quite convinced that the implementation of the projects will enable the Company to strengthen its business standing in the telecommunications market in Moscow and open up new avenues for its continued development.