On April 12, 2004, Interfax rating agency and Moody’s Investors Service assigned a Baa3 national scale long-term credit rating and a RUS-3 national scale short-term rating to South Telecommunications Company. Moreover, the Baa3 domestic scale ratings were also assigned to STC's two bond issues worth Rub 1.5 bln each with maturities in September 2006 and February 2007, respectively.

The Baa3 national scale long-term rating by Interfax rating agency reflects average creditworthiness compared to other borrowers. The RUS-3 domestic scale short-term rating by Interfax rating agency reflects the average creditworthiness compared to other domestic borrowers.

The rating assigned to South Telecommunications Company reflects the company’s stable positions on the telecommunications market in the South Federal District, shows that the company has firmed its positions in a dynamically developing and profitable value-added services segment, is successfully refurbishing its telecom networks and has secured backing from the state. Factors preventing the telecom company from obtaining higher ratings, include the following: state-regulated tariffs, an aggressive investment policy and competition from other local telecom operators.