The new tariffs for PJSC MGTS services will be introduced pursuant to the decision of the Board of the RF Antitrust Policy and Entrepreneurship Support Ministry dated 16 April 2003. The tariffs are put up in the context of an RF Ministry of Telecommunications integrated policy of leveling tariffs for communications services and reducing cross subsidy within the industry.

The subscriber fee will grow from 1 June 2003 up to 126 RUR and from 1 August - up to 140 RUR a month. As provided by the Russian Federation Antitrust Policy and Entrepreneurship Support Ministry order of 12 October 2001 No 1070 "On the Sales Tax", each PJSC MGTS service furnished to the public at large is charged a 5% tax of its cost if paid off in cash or by various banker electronic payment media.

As at the end of 2002, the PJSC MGTS current costs towards providing local telephone interconnections to the population exceeded the revenues by 22%. The new tariffs will enable the Company to bring such current costs excess down to 8%, necessitating, at the same time, to finance capital investments through its revenues generated from the telecommunications services provided to businesses and commercial institutions. In that way, PJSC MGTS remains a socially oriented entity, retaining in all reality cross subsidy elements in its operation for the transitory period of the country's economic development.

All supplementary financial resources to be obtained by PJSC MGTS as result of raising its basic services tariffs will be allocated to elevating viability of the Company's telecommunications equipment, and to its investment projects. In 2003, PJSC MGTS is at preparatory work for the Network general reconstruction and upgrading, envisaging an annual replacement of at least 150 000 telephone numbers. This phase also provides for "dissharing" telephone numbers operating in a shared line mode. The new telephone exchanges activation plan for 2003 will be implemented in entirety.

Public Joint Stock Company Moscow City Telephone Network (MGTS) retains all fringe benefits for specific categories of citizens, namely, Great Patriotic (World War II) veterans, disabled, retirees, etc., as stipulated by the Federal and Moscow local Governments.