• Revenue for the first quarter of 2008 increased by 1.0% to RUB 15,355.7 million.
• Domestic long-distance traffic rose 2.1%* year on year. Outgoing international traffic decreased by 3.9 %.
• Incoming international traffic increased 13.0%.
• OIBDA** rose by 18.8% to RUB 4,645.9 million, representing an OIBDA margin of 30.3%. 
• First quarter 2008 net profit amounted to RUB 2,755.5 million compared to RUB 2,899.3 million a year ago.

Moscow – May 6, 2008 – Rostelecom (NYSE: ROS; RTS, MICEX: RTKM, RTKMP), Russia’s national long-distance telecommunications operator, today announced its unaudited first quarter 2008 results in accordance with Russian Accounting Standards (RAS).

Rostelecom’s first quarter 2008 revenues amounted to RUB 15,355.7 million - a year-on-year increase of 1.0%. 

Domestic long-distance (DLD) traffic for the first three months 2008 grew by 2.1% to 2,544.8 million minutes. First quarter 2008 DLD revenues decreased by 1.3% and totaled RUB 7,590.1 million. The primary cause of the slight decrease in revenues was the implementation of lower price cap tariffs as mandated by the regulatory authorities.

Outgoing international long-distance (ILD) traffic decreased by 3.9% to 444.7 million minutes. ILD revenues from Russian operators and subscribers amounted to RUB 2,900.7 million, down 6.8% year on year. The decrease in revenues was primarily attributable to increased competition and the changes in traffic mix.

First quarter 2008 incoming ILD traffic totaled 749.4 million minutes which represents a year-on-year increase of 13.0%. Rostelecom increased its share of incoming international traffic, as the Company continued to leverage its strong market position. Revenues from international operators for incoming ILD traffic transit and termination rose 9.5% year on year to RUB 1,328.6 million.

Revenue from other business segments increased by 11.0% year on year to RUB 3,536.3 million, reflecting the growth of value-added and new products and services. Rostelecom delivered increases in revenues from leased lines, intelligent network services, data transmission and telematic services as well as customer equipment servicing among others. For the first three months of 2008, revenues from leased line services grew 4.1% year on year to RUB 2,053.5. Revenues from data transmission and telematic services saw a substantial increase of 4.4 times compared to Q1 2007, amounting to RUB 486.6 million, while revenues from intelligent network services rose to RUB 321.4 million representing a year-on-year increase of 43.9%. 

Rostelecom’s operating expenses for the first quarter 2008 amounted to RUB 11,781.7 million – a year-on-year decrease of 3.6%. 

Depreciation for the first three months of 2008 amounted to RUB 1,071.9 million.  The increase of 15.7% compared to the same period last year is a result of property, plant and equipment additions during 2007.

OIBDA for the first quarter 2008 grew 18.8% year on year to RUB 4,645.9 million, representing an OIBDA margin of 30.3%.  The increase compared to the same period last year was mainly attributable to the decrease in the Company’s operating expenses due to the elimination, as of January 1, 2008, of a compensation surcharge.

First quarter 2008 operating profit amounted to RUB 3,574.0 million, up 19.8% year on year.

Other gains and losses for the first three months of 2008 totaled RUB 87.9 million compared to RUB 902.9 million a year ago. The decrease was mainly driven by the sale of a number of financial investments, a reduction in the number of financial investments to be revaluated, along with foreign exchange loss in the first quarter 2008.

Rostelecom’s net profit for the first quarter 2008 decreased by 5.0% and totaled RUB 2,755.5 million.