Today, on June 11, 2003 Far East Telecom held its annual general shareholders meeting in the city of Vladivostok.  The shareholders meeting addressed a total of nine issues. 

Shareholders approved the annual financial statement and the accounting report, which includes the profit and loss statement, as well as distribution of profits and losses based on 2002 results.

The meeting also approved the amount of 2002 dividends to be paid out to shareholders.  According to this decision RUR 0.31 is to be paid out on common shares from June 1, 2003 until December 31, 2003.  In addition, RUR 0.58 will be paid out on preferred shares in cash form from June 13, 2003 until August 10, 2003.

The board of directors of the company was also elected.  Eleven appointments were made to the board, as follows:

Vladimir Vladimirovich Dudchenko, head of the research department of the Moscow representative office of NCH, Inc.;

Igor Viktorovich Zabolotny, director general of Far East Telecom;

Alexander Vladimirovich Lopatin, deputy director general of Svyazinvest;

Tatyana Nikolaevna Novak, head of the corporate governance department of Svyazinvest;

Evgeny Valerevich Yurchenko, deputy director general of Svyazinvest;

Nadezhda Valentinovna Filippova, executive director - head of Svyazinvest Human Resources department;

Yury Vladimirovich Nikiforov, head of investment department of Far East Telecom;

Maxim Sergeyevich Plyushev, chief expert of corporate governance department of Svyazinvest;

Igor Nikolaevich Repin, Association for Protection of Investors Rights, NAUFOR expert, Moscow;

Yuri Alexeyevich Tabushnikov, director general of Radio Telecom Frequency Center of Far East Federal District;

Mikhail Yuryevich Kobishanov, head of the information and research department of Atria Advisors Ltd.

Alexander Lopatin, deputy director general of Svyazinvest, was appointed chairman of the board of directors.

Ernst & Young was approved as the Company's 2003 auditor.

In addition, a resolution was passed to raise the amount of Far East Telecom's charter capital by increasing the par value of common shares from RUR 10 to RUR 20, and type A shares from RUR 10 to RUR 20 by way of the following sources:

Additional capital of the Company, by reevaluating fixed assets for a total of RUR 307,874,000.

Retained earnings from previous years for a total of RUR 959,629,000.

The method for placing shares was determined - by swapping with a higher nominal value for shares of the same grade (type) previously issued.

Comments 

Addressing the Company's 2002 performance the deputy director general of Svyazinvest and the chairman of the Board of Directors of OJSC Far East Telecom Alexander Lopatin said: "We are extremely upbeat about the efficiency indicators of the company's performance".  Its performance in 1Q 2003 was especially goods, all the more because growth in revenue was driven by tariff increases.  This points, above all, to a high degree of professionalism on the part of management.  Everything that the management of Far East Telecom has done is correct, aggressive and effective.  This is why we (Svyazinvest) are supportive of all the proposals and initiatives of the company and feel confident that Far East is heading in the right direction.

According to Alexander Lopatin, 2002 marked the completion of restructuring and reorganization, as well as the creation of a unified telecom company.  At present, Far East is in the process of unifying its business, which means that it is starting to function like a single mechanism, as shown by the unified decision-making process, and unified procedures for accounting, record-keeping, customer service operations and PR. "The plan is that by the end of the year Far East Telecom will have become de jure and de facto a single company" - said Alexander Lopatin. 

The director general of Far East Telecom, Igor Zabolotny, also pointed out that on the whole he was satisfied with the Company's 2002 performance.  As for the future, Far East Telecom has plans to purchase Primtelefon, and already owns 50% of this company's charter capital. Our main shareholder, Svyazinvest, is currently in the process of negotiations with the American party.  Deputy director general of Svyazinvest and chairman of the board of directors Far East Telecom Alexander Lopatin went on to say that negotiations had also been launched with other shareholders of Far East Telecom's subsidiaries with respect to the acquisition and formation of a unified Far East cellular operator.  He said that a final decision on this issue would be taken following the next regular Board of Directors meeting.