On June 30, 2006 the NWT Board of Directors approved the Company’s updated budget for 2006. The budget was updated due to the changes in the telecommunications market regulation, and due to the bids for universal communication services in Arkhangelsk Oblast and Kaliningrad Oblast won by NWT. (See the press release of 07.04.2006.)

As we know, the telecommunications market was liberalized as from January 1, 2006. Initially, the NWT budget for 2006 was approved by the Board of Directors before the new agreements signed by the Company with the long-distance operators Rostelecom JSC and MTT JSC, and before the Federal Telecommunications Service approved the compensation premium to the local and zonal cal initiation price. The updated budget improves the revenue forecast from RUR 18.6 billion to 18.8 billion, including a RUR 0.5 billion increase of earnings from call initiation and a reduction in earnings under the cooperation agreement with Rostelecom JSC by RUR 0.3 billion.

North-West Telecom increases the previously planned amount of the Company’s investments by RUR 600 million to RUR 4.4 billion. Of these, RUR 500 million will be invested in universal communication services projects in Arkhangelsk Oblast and Kaliningrad Oblast, while RUR 100 million is allocated to enable users to select the time-rate system of payments for local connections, and to enable time-rate metering of connected operators’ traffic in compliance with the requirements of the Federal Law on Communications.

The approved updated budget improves the EBITDA forecast from RUR 6.0 billion to 6.3 billion, with the net income forecast remaining unchanged at RUR 2.0 billion.

“The updated budget confirms the trend towards higher efficiency of North-West Telecom’s operations, which has enabled an enhancement of the Company’s annual investment program without affecting the financial stability performances”, notes Venera Khusnutdinova, Chief financial officer of JSC North-West Telecom.