Krasnodar, November 3, 2005: Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal telecommunications provider for Russia’s Southern Federal District, today announced its financial results for the nine months of 2005 in accordance with Russian Accounting Standards (RAS).

-  Revenuefor the first nine months of 2005 grew by 9.3% over the comparable period in 2004  to RUR 13.26 billion ( USD 470.7 million)¹. 3Q 2005 revenue increased by 4.8% over 2Q 2005 to RUR 4.59 billion (USD 160.9 million);

-  EBITDA² for the first nine months of 2005 increased 32.8% year on year to RUR 3.76 billion (USD 133.4 million) representing an EBITDA margin of 28.3% (up 5.0 percentage points). 3Q 2005 EBITDA was RUR 1.15 billion (USD 40.2 million.), a 10.7%-increase compared to the same period in 2004;

-  Revenue from value-added services³ increased 71.1% to RUR 1.02 billion (USD 36.4 million). The share of revenue from value-added services in total telecommunication services revenue increased by 2.8 percentage points over the comparable period in 2004 to 7.8% and by 0.4 percentage points over 2Q 2005 to 8.3%;

-  The number of subscribers grew by  69.3 thousand in the first nine months of 2005 including by 25.5 thousand – in 3Q 2005.

KEY FINANCIAL HIGHLIGHTS:

* employees on payroll

During the nine months of  2005 UTK generated a total revenue of RUR 13,259.7 million, an increase of 9.3% over the nine months of 2004. Revenue from telecommunications services  increased 10.8 % to RUR 13,074.0 million. Revenue structure showed a stable trend in revenue share growths from local telephony and value-added services. Based on 9M 2005 results revenue from local telecommunication services grew by 3.9 percentage points to 41.8%, from value-added services by 2.8 percentage points to 7.8% of the Company’s telecom revenue. Revenue from long-distance telecommunication services declined by 5.7 percentage points to 35.2%. The growth of the Company’s revenues from telecommunication services was due toa major increase in UTK’s subscriber base and the increase in local tariffs (from September 1, 2005).

Revenues from local telecommunication services increased 22.1% compared to the nine months of 2004 to RUR 5,461.0 million. During the nine months of  2005 69.3 thousand new subscribers were added to  the Company’s subscriber base, including 41.6 thousand  - in the urban telephone network (TN). As of September 30, 2005 the number of telephones operated by UTK amounted to 3,998 thousand.

Revenues from long-distance telecommunication servicesdeclined by 4.4% to RUR 4,724.7 million in the period. For the first nine months of 2005, UTK’soutgoing long-distance traffic totaled 1,402.7 million minutes (- 5.3%),  of which  DLD traffic accounted for  1,318.6 million minutes (- 5.6%)and ILD traffic – for 84.1 million minutes (- 1.3%).

UTK revenues from value-added services rose 71.1%to RUR 1,024.1 million for the nine months ended September 30, 2005. Revenues from Internet services grew by 71.3%, from VPN (virtual private networks) construction services by 42.8%, from IP telephonyservices -  by 2.9 times. Internetservicessales were supported by strong usage growth: Internet traffic for the reporting period rose 3.4 times to 109.9 Tbyte.

Revenues from the interconnected telecom operators(excluding revenues from value-added services) increased by 13.8% to RUR 1,454.5 million, including revenues from Rostelecom — by 3.8% to RUR 500.9 million. Other telecom services experienced a 19.9% decrease in revenues to RUR 409.7 million due to the termination of non-profitable services.

SEGMENTAL ANALYSIS OF REVENUES:

9M 2005 operating expensesincreased 1.9%to RUR 9,972.3 million. Based on 9M 2005 results, expenses on wages and salaries and other social payments to employees (37.6%), depreciation charges (16.9%) and payments to other telecom operators (19.1%) including to Rostelecom (15.4%) accounted for major part of operating expenses. The reporting period saw the following material changes: share of expenses on wages and salaries decreased by 1.2 percentage points to 30.3% for the nine months of 2005 and by 1.9 percentage points to 29.4% for 3Q 2005; share of expenses on social insurance decreased by 2.4 percentage points to 7.3%; share of material expenses declined by 1.3 percentage points to 7.4%

The growth of depreciationby 42.5% to RUR 1,690.2 million was attributable to a major increase in fixed assets put into operation at the end of 2004 and completion of certain investment projects in 2005.

A 2.1%-decline of wage and salary expenses to RUR 3,024.4 million was due to the Company’s average  headcount decrease by 3.8% over 9M 2004 to 37.9 thousand as a result of network digitization and continued corporate structure optimization.

 Expenses onsocial insurance decreased by23.5% to RUR 729.8 million due to tax rate reduction from 38% to 26%.

Material expensesdecreased by 13.8 % to RUR 733.6 million due to the growth of the digitization rate of the Company’s networks.

SEGMENTAL ANALYSIS OF EXPENSES:

Interest expenses increased by 19.2% compared to the nine months of 2004 to RUR 1,603.0 million. Certain financial measures to extend duration of UTK’s debt and reduce its value within the framework of the Company’s credit portfolio made it possible to cut down 3Q 2005 interest expenses by 26.5% versus 2Q 2005.

EBITDAfor 9M 2005 increased 32.8% to RUR 3,758.3 million. EBITDA margin was up 5 percentage points to 28.3%. Operating profit grew by 40.2% over  the same period last year to RUR 3,287.4 million. Operating margin was up 5.5 percentage points in the period reaching 24.8%. The increase in operating margin was related to a positive trend in revenue growths compared to the operating costs (by 7.4 percentage points).  As a result, value indicator per every 100 rubles of gross revenue decreased by 6.8% to 75 rubles.

The Company’s policy aimed at business efficiency growth allowed to improve the following business efficiency indicators: total revenue per one average line grew by 1.8% to 3.33 thousand rubles, total revenue per 1 employee increased by 13.7% to 349.9 thousand rubles, number of lines per 1 employee was up 11.7% to 105.1 lines.

For the first nine months of 2005, UTK`s capital expenditures decreased by 3.5 times to RUR 2,685.4 million compared to RUR 9,346.0 million for the nine months of 2004. Fixed assets put into service decreased by 60.6%  to RUR 3,001.5 million.

During the first nine months of 2005  148.5 thousand telephone lines were put into operation in UTK networks including 15 thousand lines to replace analog equipment. As a result, UTK`s total installedcapacityas of September 30, 2005 stood at 4,198.3  thousand lines.

Digitization rate of UTK local network rose 4.7 percentage points year-on-year and totaled 61%, of which the digitization rate in urban telephone networks was 65.8%.The digitization rate of the Company’s intrazonal network was 90.9% as of September 30, 2005, being the highest among Russian telecoms.

MAIN OPERATIONAL HIGHLIGHTS: