For North-West Telecom, t he 15% stake in Telecominvest was a long-term portfolio investment with the core purpose of gaining from dividend earnings. However, the minority shareholding did not offer NWT

In additional effect of the said interest in Telecominvest was growing market value of the holding, which is in fact completely determined by the growth rate of the value of its main asset, i.e. 31.3% interest in Megafon JSC. Judging by estimates of the current status and growth potential of the mobile communications market, the value of Megafon JSC has now reached a level attractive for selling.

In order to sell the holding, 5 quotations from interested buyers, leading players on the Russian telecommunication market, were considered. The quotation from Renaissance Capital as represented by AF Telecom Holding LLC was the best in terms of price.

The price of the transaction was US$ 410,000,000, which is much higher than the estimated market value of the Telecominvest shareholding as shown in the report of independent assessor CJSC Otsenka-Consulting.

The transaction is expected to be closed in three months.

Proceeds from the sale of the shareholding will be spent on a number of promising projects so as to increasing the value of North-West Telecom by enhancing the company’s position in the market segments of the broadband access, small-size and medium-size enterpises, and key corporate clients.

Brief information on Telecominvest JSC

Telecominvest JSC is one of Russia’s largest telecommunication holdings. It was established in 1994 by St. Petersburg’s telecommunication companies PTN JSC and OJSC SPb MMT for management of their affiliates and subsidiaries.

Its main assets are: JSC Megafon (31.3%), CJSC Web Plus (100%), and CJSC Peter Service (100%).

By the end of 2006, the financial results of Telecominvest JSC according to the Russian Accounting Standards were: sales proceeds, RUR 168.6 million; EBITDA, RUR 4,796 million; and net income, RUR 4,203 million.