Krasnodar, 17 October 2007 – Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; ?ICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA), the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reports that it executed in full the obligations under the put option of series-03 bond. "UTK" PJSC executed the buyback of 2,860,347 (two million eight hundred sixty thousand three hundred and forty seven) bonds presented by their holders for redemption at the price of 100 (one hundred) percent of their face value. Total amount of the bonds presented for redemption was valued at Rub 2,865,295,400.31 (two billion eight hundred sixty five million two hundred ninety five thousand four hundred 31/100) including the accrued coupon income of 1.73 rubles per one bond calculated as of 16 October 2007.

UTK’s issue of 03-series non-convertible interest-bearing documentary pay-to-bearer bonds is for a total of RUR 3.5 bln with maturity of 5 years (1830 days), semi-annual coupon periods (183 days) and a buyback option every year and a half. The interest rate of 12.3% per annum on the first, second and third coupons was fixed at the bond placement (October 6, 2004, MICEX). The coupon rate for coupons 4–6 was set at 10.9% per annum by the Company’s Board of Directors (Minutes ? 28 of 24 March 2006). The coupon rates for coupons 7–10 was set by the Order of the Company’s General Director of 20 September 2007. The interest rate of 9% per annum was assigned to the seventh coupon, the interest rate of 8.5% per annum was assigned to the eighth and ninth coupons, the interest rate of 8% per annum was assigned to the tenth coupon. The state registration number is 4-07-00062-? dated August 17, 2004, trading codes are UTK-03?b., ISIN RU000A0DD202. Arranger of series 03 bond issue is AKB Rosbank. Co–arranger of the bond issue is Promsvyazbank. Financial Consultant is FFK. UTKFinance Ltd. acts as UTK’s underwriter. Additional information on the issue can be obtained here.