Krasnodar, Russia, January 26, 2005 – Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; OTC USA: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reports that its Board of Directors has approved the Provisions on the Dividend Policy of Public Joint –Stock Company "Southern Telecommunications Company" (Minutes ? 22 ?f January 21, 2005).

Being guided by high standards of corporate governance, "UTK" PJSC is working for introduction and improvement of the mechanisms of observance of the rights and lawful interests of its shareholders and potential investors. Approval of the Provisions on Dividend Policy will enhance the Company’s ability to achieve its objectives.

The Provisions on UTK’s Dividend Policy determine terms and procedures of dividend payment, regulate the procedure of calculating the size of dividend on shares of any categories and types, dividend payment organization, including time, place and form of payment, the procedure of taking decision to declare the annual dividend, dividend payment restrictions and sequence of taking the decision on dividend payment.

The approved Provisions determine the minimal portion of 10% of the Company’s net profit to be distributed as dividend on ordinary shares.

The amount to be paid as dividend on preferred shares shall be 10% of the Company’s net profit according to the results of the last fiscal year. If the total amount of dividend paid by the Company on each ordinary share in a certain year exceeds the amount to be paid as dividend on each preferred share, then the preferred dividend shall be increased to the amount of the ordinary dividend.

Dividends shall be paid after taking the corresponding Decision by the General Shareholders Meeting    upon the recommendations of the Company’s Board of Directors.

Dividend payment shall be corrected by the amount of applicable taxes and other lawful deductions.