Krasnodar, 13th December 2006 – Southern Telecommunications Company (“UTK”) [(RTS: KUBN, KUBNP; ?ICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal telecommunications provider for Russia’s Southern Federal District, reports that on 13th December 2006 the Company redeemed the first part of the nominal value of UTK 04-series non-convertible interest-bearing  documentary pay-to-bearer bonds (UTK-04?b., RU000A0GK2W9) and paid out in full the fourth coupon income on the bonds of the issue.

The coupon interest rate shall be set according to the Decision on the Bond Issue approved by the Company’s Board of Directors (Minutes N 11 dated 18 October 2005). The fourth coupon interest rate of 10.5% per annum was approved by Order of UTK’s Director General N 393 dated 14 December 2005. Total amount of the fourth coupon yield payable under all UTK series 04 bonds made 130,900,000 rubles. The coupon income on one bond of the issue amounted to 26.18 rubles.

At the same time the Company redeemed in full the first part (10 percent) of the nominal value of UTK series 04 bonds to the amount of 500,000,000 rubles that made 100 rubles on one bond of the issue.

The cut-off date of the register of the holders of UTK series 04 bonds entitled to receive the fourth coupon income was 6th December 2006.

Payment agent of series 04 bond issue is NP "NDC".

Information about the bond issue:
The Bond issue is for a total of RUR 5 bln, face value of each bond of the issue is RUR 1,000. The Bond issue provides for 16 coupon periods of 91 days each. During the competition held  on the starting day of the bond placement the first coupon interest rate was set at 10.5% per annum, with effective yield to maturity at 10.5%. The interest rates on the second, third and  fourth coupons are equal to the first coupon interest rate. The interest rate on the coupons from 5th to 16th is fixed by the Issuer at 10.0% per annum. The coupon yield is accrued on the unredeemed part of a bond’s nominal value. Under the terms of the Decision of the bond issue, it is assumed that the face value of each 04-series bond will be redeemed consistently by installments within the following deadlines: on the fourth coupon payment date each bond is to be redeemed partly at 10% of its face value; on the sixth coupon payment date each bond is to be redeemed partly at 15% of its face value; on the eighth coupon payment date each bond is to be redeemed partly at 10% of its face value; on the tenth coupon payment date each bond is to be redeemed partly at 15% of its face value; on the fourteenth coupon payment date each bond is to be redeemed partly at 25% of its face value;  on the sixteenth coupon payment date each bond is to be redeemed at the remaining 25% of its face value. CJSC “AVK Investment Company” acts as the Financial Consultant of 04-series bond issue. NP «NDC» acts as the Payment Agent and Depositary providing for the centralized custody of the Bond issue. Underwriter of the issue is LLC “UTK-Finance”.