On 14 February 2007, the Thirteenth Arbitration Court of Appeal agreed with the legal position of OJSC North West Telecom and decided to annul the decision of 26 October 2007 by the St Petersburg and Leningrad Regional Court of Arbitration. The decision and order of 22 May 2007 by the St Petersburg and Leningrad Regional Office of the Federal Antimonopoly Service (OFAS) were declared invalid.

On 22 May 2007, OFAS decided to interpret actions of the OJSC North West Telecom as a breach of Article 1, Clause 10 of the Federal Law "On the protection of competition" caused by OJSC NWT's abuse of its dominant position in the market of local telecommunication. With its order No.10/2398-52 of 4 June 2007, OFAS prescribed for OJSC North West Telecom to amend the local call initialisation tariff for other operators, including the companies providing dial-up Internet access services.

Since the new settlement procedure between the OJSC North West Telecom and telecommunication operators was introduced in full compliance with Russian legislation,* the Company decided to appeal against the OFAS order in a court of law.

In October 2007, the first instance court dismissed the claim of OJSC North West Telecom. On 14 February 2008, the Thirteenth Arbitration Court of Appeal satisfied the appeal by OJSC North West Telecom . The decision is another confirmation of the fact that OJSC North West Telecom conducts its business in full compliance with the law and is always ready to provide a competent defence of its position.

The decision by the Thirteenth Arbitration Court of Appeal comes into force immediately; an appeal against the decision can be submitted to the cassation instance court of arbitration within two months.

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* Introduction of the new settlement procedure between the OJSC North West Telecom and telecommunication operators was caused by the changes to the regulatory and legal framework of the "Telecommunication" industry and the introduction (as of 1 July 2006) of the ceiling prices for connection and traffic transfer services, including the service of local call initialisation, to be followed by operators of considerable importance within the public network (order No. 51 of 19 June 2006 by the RF Telecommunication Inspectorate).

OJSC North West Telecom performed all the calculations of and substantiations for the ceiling prices for the connection and traffic transfer services in accordance with the Method of Calculating the Economically Substantiated Costs and Standard Profit of the Connection and Traffic Transfer Services and of the Universal Telecommunication Services, as approved by the order of the RF Ministry for Information Technologies and Telecommunication (No. 66 of 24 May 2006).