Krasnodar, March 23, 2005 – JSC “Southern Telecommunications” Company, or UTK (RTS: KUBN, KUBNP; OTC USA: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, today announced its 2004 preliminary financial results in accordance with Russian accounting standards.

In 2004 UTK, is expected to generate revenues of RUR16.75 billion, a 24%-increase over last year. The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to increase 24.7% to RUR4.27 billion. UTK’s policy to control costs allowed the company to reduce costs by 4.2 rubles for every 100 rubles spent in the second quarter of 2004, as compared to the first quarter. As a result, the company’s operating income in 2004 is expected to grow 11% to RUR3.39 billion. Due to rapid deployment of new technologies, UTK’s revenues from value-added services in 2004 will rise 179.5% to RUR 0.96 billion, which represents 5.9% of the Company’s total telecom revenues. The Company’s value-added-services share of total tariff revenues is expected to increase from 4.0% to 5.9%. UTK’s net income figure in 2004 is expected to have a positive value.

In 2004 UTK’s investment activity was based on a significant unsatisfied demand for telecom services in the region and marketing efforts to rapidly build the Company’s positions in the fixed-line regional market. The fixed-line market is rather specific: as a rule, the first telecom operator, which built its network and connected subscribers in a city or regional center, becomes a monopolist in delivering telecom services. It was important for UTK to outrun its competitors in 2003 and 2004 and be the first to expand and modernize its telephone exchanges and network infrastructure. Other Company goals included connecting the greatest possible number of subscribers and increasing the digitization level as a necessary condition to deploy new, higher-margin services and to improve business efficiency. It is crucial for a fixed-line operator to have priority access to end-users, who are considered potential consumers of all available services provided by the company.

At present, UTK’s management is focused on developing new technologies, based on marketing research of "superimposed" networks, to provide the Company’s customers with higher-margin services of data transmission, intelligent platforms, and additional services of digital telephone exchanges.

In 2004, UTK’s capital expenditure was RUR 12.39 billion, up 11.9% over 2003, and fixed assets put into operation was RUR 10.49 billion. Also in 2004, UTK placed 584,100 lines in operation, a 9.7% increase over 2003. The installed capacity of the Company’s local telephone network grew 6.4% reaching 4.086 million lines at the beginning of 2005, of those 3.956 million were equipped. The digitization level of UTK’s local network is up 1.2 times over 2003; at the beginning of 2005, it is expected to reach 59.7%. High rates of telecom infrastructure construction and development allowed the company to install the largest number of basic telephone sets among Russia telecoms: 362,500 subscribers were added in 2004, up 22.1%. The total number of subscriber lines in use reached 3.93 million lines at the end of the reporting year.

Development of intrazonal communication lines permits the Company to increase the volume and quality of transmitted traffic, to increase revenues from the passthrough of the connected operators’ traffic, and to reduce the expenses on leasing channels. In 2004, UTK increased its length of long-distance telephone channels by 3.28 million channels per kilometer, as well as increasing the length of fiber optic lines in its intrazonal networks by 1,426 kilometers.