Krasnodar, 10 October 2008: Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reports that Standard & Poors Governance Services raised its corporate governance score (CGS) on Southern Telecommunications Company to CGS-5 from CGS-4+. At the same time, Standard & Poors raised its Russia national scale CGS on the Company to CGS-5.2 from CGS-4.9.

According to Standard & Poor’s, the increase in the scores are supported by several improvements in governance practice, including earlier disclosure of IFRS financial statements compared to 2007 and strengthening of the internal audit.

According to Standard & Poor’s analysts, the Company’s transparency is generally good, and proactive investor relations policies are in place. UTK employs an internationally acknowledged auditor chosen via an open tender. Other UTK’s corporate governance strengths include four external directors on the Board, three of which are not exposed to significant conflicts of interests. The Board has substantial authority and is active. This is supported by four Board committees, all of which include external directors. The Company has strong shareholder meeting procedures, and a wide measure of rights enjoyed by minority shareholders under Russian law.

The overall CGS on "Southern Telecommunications Company" PJSC is the result of four component scores on the global and Russia national scales:

• Ownership structure and external influences - 4+/4.8
• Shareholder rights and stakeholder relations - 6+/6.6
• Transparency, disclosure, and audit - 5+/5.9
• Board structure and effectiveness - 4+/4.8