Krasnodar, 16 March 2006 – 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, reports that on 15th March 2006 the Company paid out in full the first coupon income under UTK series 04 non-convertible interest-bearing  documentary pay-to-bearer bonds (UTK-04?b., RU000A0GK2W9).

The first coupon interest rate shall be set according to the Decision on the Bond Issue approved by the Company’s Board of Directors (Minutes N 11 dated 18 October 2005). The first coupon interest rate of 10.5% per annum was approved by Order N 393 of UTK’s Director General dated 14 December 2005. Total amount of the first coupon yield to be paid under all UTK series 04 bonds made 130,900,000 rubles. The coupon income under one bond amounted to 26.18 rubles. The cut-off date of the register of the holders of UTK series 04 bonds for the first coupon income payment was 7th March 2006. Payment agent of series 04 bond issue is NP "NDC".

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. During the competition held  on the starting day of the bond placement the first coupon interest rate was set at 10.5% per annum, with effective yield to maturity at 10.5%. 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 5th to 16th 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 can be viewed here.