Krasnodar, February 16, South Telecommunication Company (STC) [(RTS: KUBN, KUBNP; OTC USA: STJSY)], South Telecom Company, the largest fixed-line operator in the South Federal District of Russia, hereby announces that the term has expired for exercising the option on its series-02 bond (STC-02., ISIN RU000A0AUU?0). During the deadline for exercising put options under the series-02 bond, which was fixed as February 3 – 9 under a decision concerning the issue, bondholders exercised options for a total of 1,175,016 bonds.  On the fifth business day after notification STC executed the buyback in line with the Rules for Conducting Securities Trading, issued by the RF Federal Securities Commission. As a result, from February 10-16, 2005 bondholders exercised put options for a total of 1,092,657 bonds.  The company accepted all applications under the option.  Rosbank acted as STC’s buyback agent for the transaction.

STC’s 02-series bond issue is for a total of Rub 1.5 bln with maturity of 3 years (1092 days), semi-annual coupon periods and an annual buyback option.  The annual coupon rate on coupons 1 and 2 was 9.25% (November 2, 2004 on MICEX), and is 12% on 3-4 coupons.  The coupon rate for coupons 5-6 is to be set no later than 10 business days prior to the redemption date of the fourth coupon.  The state registration number is 4-06-00062-?dated November 28, 2003.  The arranger, underwriter and payment agent of the issue is ABK Investment Company. Additional information on the issue can be obtained from this company.

Further information on STC’s bonded loan is also available on the operator’s corporate website at www.stcompany.ru.