South Telecommunications Systems (STC) [RTS: KUBN, KUBNP; OTC USA: STJSY)], which is the largest telecom operator in the Southern Federal District of Russia, hereby announces that the Board of Directors of the company adopted a decision (see Minutes # 9 dated September 15, 2004) to set the beginning date of placement of its series 03 non-convertible interest-bearing nominal pay-to-bearer bond with mandatory centralized custody as October 6, 2004. 

The issue will be placed via public subscription on the stock section of MICEX.  The initial and subsequent placement price is fixed at 100% of part value.  The final date of placement for the series 03 issue will be the earliest of the following dates: a) the 10^th working day from the beginning date of placement; b) the final placement date of the issue. 

The total amount of the issue is RUR 3.5 bln with par value of RUR 1,000 per bond. The term to maturity is set at 1,830 days (5 years) from the date of placement.  Yield on the first coupon will be fixed at the time of the auction on the date of placement. Yields on the second and third coupons will be equal to the first yield. Yields on the fourth, fifth and sixth coupons will be established no later than 10 working days prior to the date of the third coupon payout.  Yields on the seventh, eighth, ninth and tenth coupons will be established no later than 10 working days prior to the date of the sixth coupon payout.  

The issue was registered on August 17, 2004 and the total number of bonds is 3.5 mln. 

Proceeds from the issue will be used by STC to finance its 2004 capex program and refinance its obligations

The arranger, underwriter and payment agent of the 03 bond issue is Rosbank (Investment Banking Services Department +7 (095) 234 09 47, MAfonsky@rosbank.ru). KKF will act as the financial consultant.  NDTs will act as the depositary which handles centralized custody of the issue. 

For complete details on the registration and issue prospectus of STC’s series 03 issue, see the company’s website at  www.stcompany.ruin the section entitled “Shareholders”.