Krasnodar, February, 2006– Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; OTC USA: STJSY), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, today announced its 2005 preliminary financial results in accordance with Russian accounting standards (RAS).

"UTK" PJSC is expected to generate 2005 revenue of RUR 18,133 million, a 8.2%-increase over a year-ago period. The Company’s policy on costs control allowed it to reduce operating costs. As a result, 2005 operating income is expected to grow by 23.2 % (versus the planned 17.6%) to RUR 4,180.7 million. 2005 EBITDA is expected to increase by 12.1% over 2004 to RUR 4,807.7 million.

KEY FINANCIAL HIGHLIGHTS, RUR mln:

Due to active development of new technologies and new marketing initiatives, 2005 revenues from value-added services [1] are expected to grow by 68.2% to RUR 1,482.8 million. VAS share in total telecom revenues is expected to increase by 2.9 percentage points to 8.3%. xDSL Internet revenues are to be four times more.

Revenues from local telecommunication services increased 19.1% to RUR 7,594.6 million due to increase in UTK’s subscriber base by 88.5 ths subscribers and local tariffs growth (from September 2005). The estimated 2005 revenues from long-distance telecommunication services show a 4.9%-decline due to DLD tariffs reduction in some tariff zones effective since September 2005 as well as to decrease in volume of outgoing long-distance traffic (DLD traffic is down 6% to 1,758 mln minutes; ILD traffic is down 1.6% to 112 mln minutes).

In 2005 "UTK" PJSC continued optimization of the staff size in order to increase business efficiency. As a result average number of employees decreased by 4.7% to 38.5 thousand people.  Number of lines per employee rose by 10.8 %  to 102.8 lines per employee.

REVENUES AND OPERATING COSTS, RUR mln:

According to preliminary estimates, 2005 capital expenditures decreased by 71.3% over a year-ago to RUR 3,522.7 mln (versus 12,262 mln rubles in 2004). In 2005  185.5 thousand telephone lines were put into operation in UTK’s network. Digitization rate of UTK local network rose 4.2 percentage points year-on-year and totaled 61.4%. In 2005 number of ?DSL subscribers increased by 23.2 ths from 8,5 ths to 31.7 ths users. Number of  installed xDSL ports reached 44.7 ths.

MAIN OPERATIONAL HIGHLIGHTS:

Commenting on the 2005 preliminary results, Georgy Romsky, UTK CEO, stated: “Due to execution of the Company’s business – plan for 2005, focused on maximal use of internal reserves, there are improvements in financial and economic performance of "UTK" PJSC in comparison with 2004. 2005 operating profit exceeded the planned parameter by 5.6%. Revenues from new value-added services grew by 68.2% thus enabling the Company to retain its leading positions in the value-added market of the Southern federal district”.

[1] Value-added services rendered by "UTK" PJSC include: construction of VPNs (virtual private networks) on the basis of MPLS and other technologies; services of data transmission; Internet access services (hardwired IP-connection, dial-up access, xDSL- and Ethernet to the home - based broadband access, wireless access on the basis of Wi-Fi technology); termination of IP traffic; digital TV services.