Krasnodar, December 15, 2005: Southern Telecommunications Company (“UTK”) [(RTS: KUBN, KUBNP; OTC USA: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reports today that on December 14, 2005  the placement auction for setting the interest rate for the first coupon of UTK 04-series non-convertible interest-bearing  documentary pay-to-bearer bonds with mandatory centralized custody (state registration number 4-08-00062-A) was held on the MICEX Stock Section.

During the placement auction the first coupon interest rate was set at 10.50%, with effective yield to maturity at 10.6%. Majority of bids offered by investors at the auction included coupon rates in the range of 10.2%-10.5% per annum. As the total amount of offered bids approximated the amount of the bond placement, the Company’s management took a decision not to increase the coupon rate. A total of 69 bids worth Rub 4.38 bln were satisfied by the Issuer at the auction. During the first two days of the bond placement the bonds were sold for a total sum of RUR 5 bln including for RUR 4.64 bln during the first day of the bond placement. Total first coupon income to be paid under UTK series 04 bonds amounts to RUR 130,900 thousand, the first coupon income to be paid under each UTK series 04 bond amounts to RUR 26.18.

CJSC Investment Company AVK acts as the arranger of the bond issue while OJSC AKB Svyazbank, CJSC AKB Promsvyazbank,  OOO Deutsche Bank, OJSC “Bank of Moscow” are the issue’s co-arrangers. Underwriters are IG Renaissamce Capital, CJSC NOMOS-BANK while co-underwriters include OJSC Bank ZENIT, OJSC IK RUSS-INVEST, OOO KB Moskommertsbank.

Information about the bond issue:

The Bond issue is for a total of RUR 5 bln, face value of each bond of the issue is RUR 1,000. The Bond issue provides for 16 coupon periods of 91 days each. The first coupon interest rate will be set during the competition to be held  of the starting day of the bond placement. The interest rates on the second, third and  fourth coupons are equal to the first coupon interest rate. The interest rate on the coupons from 5^th to 16^th is fixed by the Issuer at 10.0% per annum. The coupon yield is accrued on the unredeemed part of a bond’s nominal value.

Under the terms of the Decision of the bond issue, it is assumed that the face value of each 04-series bond will be redeemed consistently by installments within the following deadlines: on the fourth coupon payment date each bond is to be redeemed partly at 10% of its face value; on the sixth coupon payment date each bond is to be redeemed partly at 15% of its face value; on the eighth coupon payment date each bond is to be redeemed partly at 10% of its face value; on the tenth coupon payment date each bond is to be redeemed partly at 15% of its face value; on the fourteenth coupon payment date each bond is to be redeemed partly at 25% of its face value;  on the sixteenth coupon payment date each bond is to be redeemed at the remaining 25% of its face value.

CJSC “AVK Investment Company” acts as the Financial Consultant of 04-series bond issue. NP «NDC» acts as the Payment Agent and Depositary providing for the centralized custody of the Bond issue. Underwriter of the issue is LLC “UTK-Finance”.

Additional information on UTK 04-series bond issue (Decision on the Bond Issue, Offering Circular,Informational Memorandum) can be viewed here.