September 4, 2003

1

September 4, 2003
2
Inter-Regional Telecommunication Company
VolgaTelecom

• Territory 665,000 sq.km
• Population 21 million
• Population density 31.6 people per sq. km
• Urban population 70
• GDP per Capita US2,270
• Disposable income US105 per month
• VolgaTelecom offers
• Traditional telecommunication services
• Local (city and rural) telephony
• DLD, ILD
• Document transmission (fax)
• Broadcasting
• New telecommunication services
• Internet and data transmission
• ISDN
• IP-telephony

Fixed line penetration in Volga
Urban penetration 2003 - 24.7
Average cost of fixed line telecom services as
of disposable income
3
JSC VolgaTelecom was created by merging 11
regional operators of Volga macro-region on 30
November 2002
Improvements in Marketing
The ability to offer a full range of telecom
services in the Volga macro-region
Increase of investment attractiveness
The ability to undertake large scale network
modernization and development of new services
investment projects, due to more favorable
conditions for raising funds
Cost cutting
Increasing efficiency of cost management via the
introduction of a single accounting policy,
unified investment and marketing strategy,
separate cost accounting, and better corporate
governance and strategy
Improvements in corporate governance
transparency
IAS financial results, improvements in IR- and
PR, increasing management efficiency. The work on
increasing Corporate Governance Rating
currently rated as 5.8 by Standard and Poors
Increase in Market Cap.
Since the merger was completed and the stocks
begin trading on RTS (end of March, 2003) the
market cap. of the consolidated company
increased by more than 40
4
VolgaTelecom the combined company today is
The largest fixed line network in Volga macro
region
The largest fixed line operator (89 market
share) and Internet - provider (70 market share)
The parent company (100 consolidation) of N.
Novgorod Cellular Communications- the number one
mobile operator in Nizhny Novgorod and the
seventh largest in Russia
Modern telecommunication technologies
Stable growth of revenues, and room for more
efficient cost management
Effective management technologies
5
Charter capital
Major shareholders
Charter capital US51,590,245 or 327,952,994
shares Nominal value per share US 0.16
common shares 245,969,590 75
Preferred Shares 81,983,404 25
Including common shares underlying
ADRs 9,231,838 (2.8 )
6
VolgaTelecom Share Price dynamics
VolgaTelecom Historical Market Cap.
The consolidation of regional operators in Volga
region is finalized
The announcement of the swap ratios
Dividend History, USD
Volga Telecom Dividend Policy

• 2002 dividend yields - 4 for prefs and 1 for
  commons
• We will pay 10 of net profit for common shares
  and 10 for preferred shares going forward

- USD85 mln Market Cap is capitalization of
NizhegorodSvyazinform prior to consolidation -
calculated based on share prices as of 03.09.2003
7
VolgaTelecom 2002 IAS Financial Results RAS
Comparison
8
Revenues Breakdown

• The increase in revenues will be a result of
• - An increase in local monthly tariffs by 25-30
• - DLD and ILD tariff rebalancing
• Growth in demand for phone installations (in
  2003 we expect subscriber additions of 221,000)
• - Growth in DLD and ILD traffic (yearly growth in
  traffic is 20)
• An increasing share of revenues from new
  services in total revenues (including mobile,
  internet, IP-Telephony, Intellectual network)

9
Operating costs

• Room to increase profitability via
• - Optimization of personal numbers
• An increase in the level of digitalization
• will allow us to decrease maintenance costs
• A decrease in SGA expenses due to ongoing
  corporate restructuring

10
Long- distance traffic trends
Th. minutes
1 917 417
1 640 278
1 355 076
E
Unsatisfied application for installation of
phone sets
The basic telephone sets
Th.
Th.
913.8
221.7
200.3
764.7
166.5
545.7
E
E
11
Network expansion
E
12
Affiliated and dependent enterprises of
telecommunications branches at least partially
owned by OJSC VolgaTelecom (holds more than
10 of the ownership capital)
VolgaTelecom mobile exposure
13
Nizhnii Novgorod Mobile
Number of cellular subscribers, th
GS?900\1800 Standard
50 of the mobile market in Nizhniy Novgorod
region
One of largest mobile operators in Russia ( 7th
place according to ACM Consulting)
E
I
Revenue, th
ARPU, SAC,
E
E
14
The company is building its future relaying on
Development of means of communications within the
overall plan of technical upgrade of the network
Increase of the installed capacity of the
network 2002 4 237 000 numbers 2003 4 455
000 numbers Increase utilization level of the
network 2002 91,5 2003 92,1. Increase
network digitalization 2002 40,8 2003 46,2
through installation of the new lines 2002 400
thousand 2003 420 thousand. Increase
digitalization level of the intra-regional
network through building fiber optic lines, RRL,
SDH.
15
The company is building its future relaying on
Development of new profitable services
Development of the mobile business. The mobile
assets are been evaluated currently and we are
considering re-organisation of the business
including possibility of creating a united Volga
region mobile operator. Enlarging the Internet
related services (access, dedicated channels,
xDSL), with the aim of increasing market share
through the complex of marketing events.
Creation of the inter-regional multiservice
network using the existing networks of the
regional subsidiaries. Creation and development
of the intelligent networks (already working in
Nizhniy Novgorod). Focus will be on informational
services and the IP-telephony.
16
The company is building its future relaying on
Realizing Marketing Potential
Marketing plans and actions are carried through
the framework of united marketing concept of the
company. Preserving leadership in the local and
long-distance communications market in the Volga
region Increasing the share in the profitable
segments of the market through packaging services
for the business-users in the whole Volga
region Improving the quality of services for the
mass market. Personalized services to the
business-users. The company already operates
service-centers and VIP-centers developing
complex packaged services in the traditional
fixed-line and new hi-tech areas.
17
The company is building its future relaying on
Increasing the investment attractiveness

• Joint PR and IR programs aimed at increasing the
  informational transparency of the company
• Improvement of the free float and liquidity of
  shares. Listing of shares at different bourses
• Increase of the credit ratings (rated currently
  B, with Stable forecast) and corporate
  governance ratings (5,8 points )
• (according to Standard and Poors)
• Introduction of the norms/codex of corporate
  governance

18
The company is building its future relaying on
Investment Policies
Introduction of investment planning. Focus on
priority tasks and directions (upgrade of the
telephone lines, introduction of new
services). Lowering the cost of investments
through common purchasing schemes.
Personnel Policies
Optimization of headcount through corporate
restructuring and modernization of the telephone
lines Creating a pool of reliable personnel
cadre through upgrading the professional level of
employees