South Telecommunications Company (STC), the largest fixed line telecom operator in the southern federal district of Russia, hereby announces that as of December 16, 2004 the company has ceased its participation in Mobilcom by liquidating Mobilcom.  STC was the owner of 35 common shares worth RUR 7,000, which constituted 35% of the charter capital of Mobilcom.

The decision for STC to pull out of Mobilcom by liquidating Mobilcom was adopted by the Board of Directors on July 20, 2004 (Minutes # 3) as part of the company’s policy of subsidiary and non-core assets management and on the basis of economic analysis of the company’s activity.  On July 28, 2004 an EGM was held at which the shareholders of Mobilcom unanimously adopted a voluntary decision to liquidate the company.  This decision is also in line with the business development strategy of Svyazinvest holding.  A reduction in non-core and unprofitable assets will help STC focus its efforts and financial resources on rolling out successful telecom services.

Thumbnail sketch of Mobilcom: Main activity – provision of paging services in the Republic of Northern Ossetia – Alaniya.  In 2003 the company’s subscriber base decreased by 57% and stood at 457 subscribers.  During the first four months of 2004 the number of subscribers dropped again by 33%.  Paging services have ceased to enjoy demand as a result of competition from federal cellular telecom operators.  As a result, the company’s activity became unprofitable with a loss of RUR 58,500 posted in 2003.  The company’s net assets at the end of 2003 stood at RUR 171,100, which is RUR 45,522 less than in 2002.