vladimir rybakin genreal director december 2002

1

Prospects and objectives

Vladimir RybakinGenreal Director

December 2002

2

Moscow

Consolidated company of Urals region

Territory 1 949,5 thous. sq. kmPopulation 15 443,9 thosandNatural resources 65% of Russian oil, 90% of gas, gold, diamonds

Industrial output in 2001 USD37,4 bln. (18,5% of industrial output of RF)

Average annual USD rate of exchange as of 2001 - RUR29,2

September 30, 2002 highlights the completion of merger of Urals region telecoms and

JSC UralsvyazinformPerm regionSverdlovsk regionChelyabinsk region Kurgan regionTyumen regionKhanty-Mansi Autonomous DistrictYamalo-Nenetski Autonomous District

As of September 1, 2002 • Lines – 3,167 mln• Subscribers – 2,931 mln• Emloyees – 35.7 thous.

Perm

Khanty-Mansyisk

Yamal

EkaterinburgTyumen

Chelyabinsk Kurgan

Kazakhstan

Kara Sea

3

• Joint Shareholders Meeting (December 17, 2002);

• Registration of changes to Articles of Association (January 2003);

• Disclosure of consolidated financial report under Russian accounting standards (April 2003);

• Auditor’s opinion under Russian and international accounting standards (June 2003).

Merger completion schedule

4

Shaping and meeting customers’ needs in telecommunication and information

services, integration into the Global Information Community of 21st century

Mission

5

Shareholder’s equityas of December 1, 2002

USD Rate of exchange – RUR 31,84

Book Capital USD 151 mln Number of shares 40 134 723 306 Share of preferred stock 19,5%Number of stockholders 23 379Market capitalization USD 460 mln

Svyazinvest41,38%

(51,42% of voting shares)

Individual shareholders49,95%

(38,91% of voting shares)

ADR4,03%

(3,91% of voting shares)

Federal Property Fund4,64%

(5,76% of voting shares)

6

2001 9M2002.

Population Businesses Population Businesses

International/Domestic Long-Distance telephony

92 % 89 % 92 % 89%

Local Telephony 86 % 57 % 86 % 57 %

Internet 57 % 56 % 57 % 57 %

Mobile Telephony GSM900/1800

30 % 30 % 57 % 57 %

Paging 29 % 31 % 31 % 30 %

Market position of consolidated Uralsvyazinformin Urals region

7

Installed capacity by regional branchesas of 01.01.2002

655

871

716

273

326

97

173

585

803

649

242

293

85

160

0

100

200

300

400

500

600

700

800

900

1000

Perm Ekaterinburg Chelyabinsk Tyumen Khanty-mansyisk Salekhard Kurgan

Th

ou

sa

nd

lin

es

Installed capacity In use

Overall capacity:• Installed – 3 112 thous. lines• Equipped – 2 817 thous. lines

8

Digitalizationas of December 1, 2002

54

34,6

43,7

20,2

52,6

93,9

70

60

18

4,6

18,5

68

95,06

0

10

20

30

40

50

60

70

80

90

100

Perm Ekaterinburg Chelyabinsk Kurgan Tyumen Khanty-Mansyisk Salekhard

%

Switching systems Intrazone lines

9

Fixed-line penetration(lines per 100 inhabitants)

26,7

19,8621,6

26,12

19,5

34,31

17,8

9,2 8,6

11,9

6,38,6

12,410,1

0

5

10

15

20

25

30

35

40

Perm Ekaterinburg Chelyabinsk Tyumen Khanty-Mansyisk

Salekhard Kurgan

URBAN RURAL

Total:

• Urban – 21,66

• Rural – 10,24

Waiting list (as of december 1, 2002) – 581 645

95 387 209 722 129 108 58 059 49 288 7 399 32 682

10

Overall CAPEX

2584

5509

74417702

4876

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2001 2002E 2003E 2004E 2005E

RU

R m

ln

11

Investment Sources

47%

36%

42%

35%

51%

53%

3%

15%

15%

53%

33%

49%

7%

11%

1%

13%

36%

2001

2002E

2003E

2004E

2005E

Depreciation Profit Credits Bonds Shares

12

Investment Priorities

• Capacity extension and network upgrade:– digital switches;– optical access netwoks;– intrazone digital transport networks;– wireless loop;

• Mobile telephony of GSM-900/1800 standard;• Packet switching network:

– multiservice network build-up;– Internet;

• Intelligent network;• Cable TV.

13

Capital investment schedule

Capacity extension 2001

Introduced 2002E 2003E 2004E 2005E Introduced in 2002 – 2005

Fixed-line network, thous. lines 3 112 330 360 380 360 1 430

Mobile network, thous. lines 261 172 270 280 276 998

Intrazone/trunk fiber optical links, thous. km

1,4 1,0 1,8 2,5 2,1 7,4

Intrazone/trunk radio microwave links, thous. km

2,0 0,5 1,3 1,8 1,3 4,9

14

Domestic and international long-distance traffic

1,3

1,6

1,9

2,3

2,7

0

1

2

3

2001 2002E 2003E 2004E 2005E

bln

. m

inu

tes

15

Financial results

14,6

18,9

27,0

30,8

10,8 10,9

13,1

16,8

19,1

3,6 3,7

5,6

10,211,7

14,4

0

5

10

15

20

25

30

35

2002 plan 2002E 2003E 2004E 2005E 2006E

RU

R b

ln

Revenues

Expenses

Operating profit

16

31%

31%

32%

33%

35% 30%

35%

41%

50%

53%

24%

23%

16%

9%

6%

6%

5%

4%

3%

1%

5%

4%

7%

7%

9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2001

2002E

2003E

2004E

2005E

Urban Telephone Network МТС Mobile Telephony New Services (DSL Network, IN) Other (Data transmission)

Revenue structure

17

Expenditure structure

42%

45%

35%

40%

44%

30%

30%

24%

28%

30%

16%

11%

13%

17%

14%

12%

12%

13%

28%

16%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1999

2000

2001

2002E

2003E

Operating expenses Wages Depreciation Taxes & deductions

18

EBITDA and Net Profit

0,61,1

1,6

5,5

6,8

2,53,2

5,8

11,3

14,1

0

2

4

6

8

10

12

14

16

2002 plan 2002E 2003E 2004E 2005E

RU

R b

ln

Net profit EBITDA

19

Debt

192201

166

124

5341 37

28 24

214

0

50

100

150

200

250

01.01.2002 01.01.03E 01.01.04E 01.01.05E 01.01.06E

US

D, m

ln

Liability as of beginning of the year in foreign currency

USD exchange rate as of 01.01.02 - RUR30,14 ; 01.01.03 - RUR32,86; 01.01.04 - RUR33,54; 01.01.05 - RUR37,06; 01.01.06 - RUR37,34

20

Number of lines per 1 employee

74,283,6

93,0

149,6

83,8

125,0

0

20

40

60

80

100

120

140

160

2001 2002E 2003E 2004E 2005E

Lin

es

Plan Estimated

21

Digitalization

49%

62%66%

70%

19%

90%

57% 55%

37%

27%

0%

20%

40%

60%

80%

100%

2001 2002E 2003E 2004E 2005E

Switching Systems Intrazone Lines

22

Wire-line penetration(telephones per 100 inhabitants)

18,219,3

20,9

23,2

25,3

0

5

10

15

20

25

30

2001 2002E 2003E 2004E 2005E

• Waiting list as of January 1, 2002 – 581 645• Number of locations not covered with wire-line services – 2 916 • Including those with population under 50 – 1 760

23

TBB introduction plan for 2002 - 2003

• Sverdlovsk region

• Chelyabinsk region

• Kurgan region

• Khanty-Mansyisky autonomous district

• Yamalo-Nenetski autonomous district

Time-based billing

TBB is introduced in:

• Perm region - 87,5% of installed capacity

• Tyumen region - 75,0% of installed capacity

24

Multi-Service Network General Structure

Optical AccessNetwork

Content-Providers

PSTN

InternetManagementSub-Systems

ServiceSelectionGateway

IP Backbone

Corportion AOffice 1 Corportion B

Office 2

Corportion BOffice 2

Corportion AOffice 1

Corporate VirtualPrivate Networks

High- speedInternetAccess

Small office

InternetAccess Virtual

PrivateNetwork

OLT

Exchange

25

2,4 - 64 kbpsnx64 kbps

Optical access network

ОПТС

10/100 ВТ

ADSL

COAX

POTS /ISDN

OLT

ONU 6ONU 4

ONU 3

ONU 2

ONU 5

ONU 1

PC

TV

ISDN

IPnetwok

VODServer

Cable TV

Cable TV/Internet

УПАТС

Е1

VPN

STB

Video ondemand

ADSL

Optical access network build-up

26

max 1000N

ОК

С №

7

V5.2, EDSS1

EDSS1, CAS

ОПТС

SSP

ST

M-1

/4

Local RTN

Local RTN

LocalRTN

City boundaries

Intrazone Network

Local ATS

ONU

ONU ONU

ONU

Accessnetwork

BS

Local hub configuration

27

Digital transport network development

Salekhard

Perm

Khanty-Mansyisk

Chelyabinsk

Kurgan

Tyumen

Ekaterinburg

Existing lines

Planned lines

28

Thousand subscribers as

of 01.12.02

«Uralsvyazinform» 131,4

«South-Urals Cellular Phone» 128,5

«Eramk RMS» 71,5

TOTAL 331,4

Екатеринбург

Perm

Khanty-Mansyisk

Chelyabinsk

Kurgan

Salekhard

Ekaterinburg

Tyumen

GSM-900/1800 NetworkAs of 01.12.2002

29

GSM900/1800 Network Development

261

433

703

983

1259

2022

2325

31

0

200

400

600

800

1000

1200

1400

2001 2002E 2003E 2004E 2005E

0

5

10

15

20

25

30

35

installed capacity ARPU

30

Subscribers

«Uralsvyazinform» Perm Division 14 354

«UralWestCom» 20 889

«Kurgan Cellular Phone» 400

Total 35 643

Екатеринбург

Tyumen

Perm

Ekaterinburg

Khanty-Mansyisk

ChelyabinskKurgan

Salekhard

NMT – 450 Networkas of 01.12.2002

Prospects – transition to digital standard

31

Intelligent Network setup in Urals Region

Max. Virtual network capacity is 12 mln. numbers

PSTN PSTN PSTN PSTN PSTNPSTNEkaterinburg Tumen Chelyabinsk Kurgan Yamal Khanty-Mansiysk

Perm SMP

SCPSSPToll Exchange

INAP - RSSP

Toll Exch.

SSP

Toll Exch.

SSP

Toll Exch.

SSP

Toll

Exch.

SSP

Toll

Exch.

SSP

Toll Exch.

Uralsvyazinform

Services

Freephone; Premium access; Account card access; Pre-paid card access; Televote; Pre-paid access to Internet; Pre-paid access to mobile network; Personal number service; Virtual private networks.

INAP - R INAP - R INAP - R INAP - R INAP - R

32

Market capitalization of Uralsvyazinform

0%

50%

100%

150%

200%

250%

300%

350%

07.0

1.20

01

22.0

1.20

01

06.0

2.20

01

21.0

2.20

01

08.0

3.20

01

23.0

3.20

01

07.0

4.20

01

22.0

4.20

01

07.0

5.20

01

22.0

5.20

01

06.0

6.20

01

21.0

6.20

01

06.0

7.20

01

21.0

7.20

01

05.0

8.20

01

20.0

8.20

01

04.0

9.20

01

19.0

9.20

01

04.1

0.20

01

19.1

0.20

01

03.1

1.20

01

18.1

1.20

01

03.1

2.20

01

18.1

2.20

01

02.0

1.20

02

17.0

1.20

02

01.0

2.20

02

16.0

2.20

02

03.0

3.20

02

18.0

3.20

02

02.0

4.20

02

17.0

4.20

02

02.0

5.20

02

17.0

5.20

02

01.0

6.20

02

16.0

6.20

02

01.0

7.20

02

16.0

7.20

02

31.0

7.20

02

15.0

8.20

02

30.0

8.20

02

14.0

9.20

02

29.0

9.20

02

14.1

0.20

02

29.1

0.20

02

13.1

1.20

02

Market Cap RTS Index АКМ Telecoms Index

MAP affirms reorganization

Shares of merging companies are swapped

33

• IAS accounting since 1995

• Annual international audit since 1995

• Level 1 ADR Program

• Fitch credit rating at “B”

• Standard & Poor’s credit rating at “B-”

• Corporate governance score of Standard & Poor’s at «6,0»Prospects

• Additional share issuance

• Level 3 ADR program

• Shares are traded at:

- RTS, MICEX

- Berlin, Frankfurt Stock Exchange

- USA Over-the-counter market

Investor Relations

34

2003 Objectives

• Relationship Agreement between regional authorities and Uralsvyazinform

• Streamlinig the budgeting process and investment planning;

• Implementation of ISO 9000 quality standards;• Realization of “Electronic Russia” fedreal project• Introduction of new services;• Implementation of time-bases billing;• Optimization of management structure and personnel

quantity

35

Uralsvyazinform has a solid potential to accomplish the national objective to

develop up-to-date telecommunications infrastructure within Urals federal district

36

Contacts:

ph.: +7 3422 341 200

fax: +7 3422 343 336

e-mail: investor@usi.ru

www.uralsviazinform.ru

www.uralsviazinform.com

Ticker symbols:

Russian Trading System - URSI

ADR - UVYZY