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Golden Telecom

February 8, 2007

Golden Telecom announces closing of Fortland Limited transaction

Moscow, Russia (February 8, 2007). Golden Telecom, Inc. (“Golden Telecom” or the “Company”) (NASDAQ: “GLDN”), a leading facilities-based provider of integrated telecommunications and Internet services in major population centers throughout Russia and other countries of the Commonwealth of Independent States (“CIS”),  announced today that it closed the transaction to acquire a 65% interest in Fortland Limited (“Fortland”).The purchase price of the acquisition is approximately $51.0 million with the first installment of $38.6 million to be paid by April 5, 2007.

Fortlandowns 100% of Kolangon-Optim LLC (“Kolangon”).  Kolangon holds licenses to offer digital television services in several of the largest cities of Russia and is expected to target other major Russian cities. These licenses will be used by the Company to provide customers with various services, including a greater number of digital television channels, higher quality picture and the opportunity for Pay-per-view programming, all using the Digital Video Broadcast (“DVB”) standard in MPEG-4 coding. 

DVB is the most promising television format currently existing and one which is rapidly growing in Europe.  DVB is also the most cost-effective TV broadcasting technology and has a number of promising competitive features, including:

  • A high quality digital video display with stereo sound;
  • A greater number of television channels;
  • Support for free-to-air TV and pay TV services;
  • Interactivity;
  • Competitive rates for customers compared to analog TV rates;
  • Ease of installation and use for analog and digital TV users through plug-and-play DVB consoles.

In addition, DVB signals can be received by mobile and smart phones, personal computers, laptops, and PDAs. DVB is supported by major television manufacturers, including Sony, Panasonic, and Philips, making DVB access readily available.

The combination of access to DVB technology with the Company’s wide geographical presence across Russia, will further the Company’s penetration into a potential market of 11 million households in 22 major Russian cities with a population of 35 million. The Fortlandacquisition will enable the delivery of a Triple Play service package, including high speed Internet access, digital television with about 50 channels, and VoIP.

Golden Telecom plans to begin deployment of DVB transmitters in the first half of the yearand start broadcasting in the fourth quarter of 2007. Simultaneously, the Company will negotiate with TV channels and largest content providers possibility of securing access to premium content to be broadcasted digitally.

Commenting on this deal, Jean-Pierre Vandromme, Golden Telecom’s Chief Executive Officer, noted: “This acquisition constitutes a perfect fit into Golden Telecom’s broadband expansion strategy in Russian telecoms and will position us as a strong player in the media market. We will enhance our Triple Play service offering by adding a high quality TV element to our existing broadband Internet and voice products in Moscow, St. Petersburg, and regions of Russia and will provide access to a mass market of Russian consumers. The acquisition will alsoenable Golden Telecom to benefit from the plans of the Russian Ministry of Information Technologies and Communications to replace analog televisions in Russia with digital televisions in approximately 10 years, as in other European countries, promoting DVB as the national standard.Currently, the television penetration level in Russia is approximately 98.6%, which makes Russia the largest TV market in Europe.”




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