Exhibit 99

APPROVED BY

the Information Disclosure Committee of

Management Board, OJSC Rostelecom

Minutes No. 2 dated November 16, 2009

QUARTERLY REPORT

Open Joint Stock Company
Long-Distance and International Telecommunications
Rostelecom

Issuer Code:

3rd Quarter, 2009

Issuer’s Legal Address: 15 Dostoevskogo st., St. Petersburg, 191002

Information contained in this quarterly report is subject to disclosure in accordance with Russian Federation securities legislation

General Director,
OJSC Rostelecom		A.Yu. Kolpakov
Date: November 16, 2009	(signature)	(Name and initials)

Chief Accountant,		R.A. Frolov
OJSC Rostelecom	(signature)	(Name and initials)
Date: November 16, 2009	(Seal)

Contact person: Denis M. Sakharov, Senior Specialist, Corporate Department

Phone: +7 (499) 972-8283

Facsimile: +7 (499) 972-8222

E-mail: rtkm@rostelecom.ru

Web-site: http://www.rt.ru/centr-invest/financial/fsfr/rep.php - provides information contained herein

TABLE OF CONTENTS

LEGEND OF TERMS	5

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	6

INTRODUCTION	7

1.		BRIEF INFORMATION ABOUT MEMBERS OF THE ISSUER’S MANAGEMENT BODIES, ITS BANK
ACCOUNTS, AUDITOR, APPRAISER, FINANCIAL CONSULTANT, AND OTHER SIGNATORIES TO THIS QUARTERLY REPORT						8

	1.1.			MEMBERS OF THE ISSUER’S GOVERNING BODIES		8
	1.2.			THE ISSUER’S BANK ACCOUNTS		9
	1.3.			THE ISSUER’S AUDITOR(S)		9
	1.4.			THE ISSUER’S APPRAISER		10
	1.5.			THE ISSUER’S CONSULTANTS		10
	1.6.			OTHER SIGNATORIES TO THIS QUARTERLY REPORT		10

2.		THE ISSUER’S FINANCIAL AND ECONOMIC FUNDAMENTALS				11

	2.1.			THE ISSUER’S FINANCIAL AND ECONOMIC INDICATORS		11
	2.2.			THE ISSUER’S MARKET CAPITALIZATION		12
	2.3.			THE ISSUER’S LIABILITIES		12
		2.3.1.			Accounts Payable	12
		2.3.2.			The Issuer’s Credit History	13
		2.3.3.			The Issuer’s Liabilities Resulting from Security Provided to Third Parties	14
		2.3.4.			Other Liabilities of the Issuer	14
	2.4.			THE PURPOSES AND USE OF PROCEEDS GENERATED BY SECURITIES PLACEMENTS		14
	2.5.			RISKS ASSOCIATED WITH PURCHASE OF SECURITIES TO BE PLACED (OR OUTSTANDING
	SECURITIES)					15
		2.5.1.			Industry Risks	15
		2.5.2.			Country and Regional Risks	17
		2.5.3.			Financial risks	17
		2.5.4.			Legal Risks	18
		2.5.5.			Risks Related to the Issuer’s Operations	18

3.		DETAILED INFORMATION ON THE ISSUER				20

	3.1.			THE ISSUER’S ESTABLISHMENT AND DEVELOPMENT		20
		3.1.1.			The Issuer’s Corporate Name	20
		3.1.2.			State Registration of the Issuer	21
		3.1.3.			The Issuer’s Establishment and Development	21
		3.1.4.			Contact Information	24
		3.1.5.			Taxpayer’s Identification Number (TIN)	24
		3.1.6.			The Issuer’s Branches and Representative Offices	24
	3.2.		ISSUER’S PRINCIPAL OPERATIONS			25
		3.2.1.			Issuer’s Field of Business	25
		3.2.2.			Issuer’s Principal Operations	25
		3.2.3.			Materials, products (raw materials) and the Issuer’s suppliers	27
		3.2.4.			Target Markets for the Issuer’s Products (Works, Services)	27
		3.2.5.			Licenses Held by the Issuer	28
		3.2.6.			Issuer’s Joint Operations	31
		3.2.7.			Additional Requirements to Issuers That Are Joint-Stock Investment Funds or Insurance Organizations	31
		3.2.8.			Additional Requirements to Issuers That Are Extracting Companies	31
		3.2.9.			Additional Requirements to Issuers That Are Providers of Communications Services	31
	3.3.		THE ISSUER’S FUTURE PLANS			38
	3.4.		THE ISSUER’S PARTICIPATION IN INDUSTRIAL, BANKING AND FINANCIAL GROUPS, HOLDING
	COMPANIES, CONCERNS AND ASSOCIATIONS					40
	3.5.		THE ISSUER’S SUBSIDIARIES AND DEPENDENT COMPANIES			40
	3.6.		THE ISSUER’S FIXED ASSETS: COMPOSITION, STRUCTURE, VALUE, PLANNED PURCHASES,
	REPLACEMENT, RETIREMENT AND ANY ENCUMBRANCES					52
		3.6.1.			Fixed Assets	52

4.		THE ISSUER’S FINANCIAL AND BUSINESS OPERATIONS				53

	4.1.			THE ISSUER’S FINANCIAL AND BUSINESS RESULTS		53
		4.1.1.			Profit And Losses	53

		4.1.2.			Factors Influencing on the Amount of Issuer’s Revenue from Sale of Products, Works and Services and of
		Profit (Loss) From Its Core Business				54
	4.2.		THE ISSUER’S LIQUIDITY, SUFFICIENCY OF CAPITAL AND CURRENT ASSETS			55
	4.3.		THE ISSUER’S CAPITAL AND CURRENT ASSETS SIZE AND STRUCTURE			56
		4.3.1.			The Issuer’s Capital and Current Assets Size and Structure	56
		4.3.2.			The Issuer’s Financial Investments	57
		4.3.3.			The Issuer’s Intangible Assets	57
	4.4.		THE ISSUER’S R&D, LICENSES AND PATENTS, NEW DEVELOPMENT AND RESEARCH PROJECT
	POLICIES AND EXPENDITURES					57
	4.5.		TRENDS IN THE SPHERE OF THE ISSUER’S CORE BUSINESS			57
		4.5.1.			Trends in the Sphere of the Issuer’s Core Business	57
		4.5.2.			Issuer’s competitors	59

5.		MEMBERS OF THE ISSUER’S MANAGEMENT BODIES, ITS FINANCIAL AND BUSINESS OPERATIONS
AUDITING BODIES, AND BRIEF INFORMATION ABOUT THE ISSUER’S OFFICERS (EMPLOYEES)						61

	5.1.		THE ORGANIZATION AND AUTHORITY OF THE ISSUER’S MANAGEMENT BODIES			61
	5.2.		MEMBERS OF THE ISSUER’S MANAGEMENT BODIES			68
	5.3.		AMOUNT OF REMUNERATION, BENEFITS AND/OR COST REIMBURSEMENT AMOUNTS FOR EACH
	MANAGEMENT BODY OF THE ISSUER					81
	5.4.		ORGANIZATION AND SCOPE OF THE BODIES AUDITING THE ISSUER’S FINANCIAL AND
	OPERATING ACTIVITIES					81
	5.5.		MEMBERS OF THE BODIES AUDITING THE ISSUER’S FINANCIAL AND BUSINESS OPERATION			82
	5.6.		AMOUNT OF REMUNERATION, BENEFITS AND/OR COST REIMBURSEMENT AMOUNTS OF THE
	AUDITING BODIES OF THE ISSUER’S FINANCIAL AND OPERATING ACTIVITIES					94
	5.7.		NUMBER OF ISSUER’S EMPLOYEES, EMPLOYEE’S EDUCATION AND CATEGORY SUMMARY DATA,
	HEADCOUNT CHANGES					94
	5.8.		THE ISSUER’S OBLIGATIONS TO EMPLOYEES WITH RESPECT TO THEIR POTENTIAL
	PARTICIPATION IN THE ISSUER’S CHARTER (SHARE) CAPITAL (EQUITY FUND)					94

6.		THE ISSUER’S PARTICIPANTS (SHAREHOLDERS) AND INTERESTED-PARTY TRANSACTIONS				95

	6.1.		THE TOTAL NUMBER OF THE ISSUER’S SHAREHOLDERS (PARTICIPANTS)			95
	6.2.		THE ISSUER’S PARTICIPANTS (SHAREHOLDERS) OWNING AT LEAST 5% OF ITS CHARTER (SHARE)
	CAPITAL (EQUITY FUND) OR AT LEAST 5% OF ITS ORDINARY SHARES, AND THE PARTICIPANTS (SHAREHOLDERS) OF THOSE ENTITIES OWNING AT LEAST 20% OF THEIR CHARTER (SHARE) CAPITAL (EQUITY FUND) OR AT LEAST 20% OF THEIR ORDINARY SHARES					95
	6.3.		PORTIONS OF THE ISSUER’S CHARTER (SHARE) CAPITAL (EQUITY FUND) OWNED BY THE STATE
	OR A MUNICIPAL ENTITY OR THE EXISTENCE OF SPECIAL RIGHTS (THE GOLDEN SHARE)					96
	6.4.		RESTRICTIONS CONCERNING PARTICIPATION IN THE ISSUER’S CHARTER (SHARE) CAPITAL
	(EQUITY FUND)					96
	6.5.		CHANGES IN THE COMPOSITION AND PARTICIPATION INTERESTS OF THE ISSUER’S
	SHAREHOLDERS (PARTICIPANTS) HOLDING AT LEAST 5% OF ITS CHARTER (SHARE) CAPITAL (EQUITY FUND) OR AT LEAST 5% OF ITS ORDINARY SHARES					97
	6.6.		RELATED-PARTY TRANSACTIONS CONDUCTED BY THE ISSUER			99
	6.7.		ACCOUNTS RECEIVABLE			100

7.		THE ISSUER’S ACCOUNTING STATEMENTS AND OTHER FINANCIAL INFORMATION				101

	7.1.		THE ISSUER’S ANNUAL FINANCIAL STATEMENTS			101
	7.2.		THE ISSUER’S QUARTERLY FINANCIAL STATEMENTS FOR THE LATEST COMPLETE REPORTING
	QUARTER					101
	7.3.		THE ISSUER’S CONSOLIDATED ACCOUNTING STATEMENTS FOR THE LATEST COMPLETE
	FINANCIAL YEAR					101
	7.4.		ISSUER’S ACCOUNTING POLICY			101
	7.5.		TOTAL EXPORTS AND EXPORTS’ SHARE IN TOTAL SALES			101
	7.6.		ISSUER’S REAL ESTATE VALUE AND MATERIAL CHANGES IN THE ISSUER’S ASSETS SINCE THE
	ENDING DATE OF THE LATEST COMPLETE FINANCIAL YEAR					101
	7.7.		THE ISSUER’S INVOLVEMENT IN JUDICIAL PROCEEDINGS THAT MAY SIGNIFICANTLY AFFECT ITS
	FINANCIAL AND BUSINESS OPERATIONS					102

8.		ADDITIONAL INFORMATION ABOUT THE ISSUER AND PLACEMENT OF ITS ISSUED SECURITIES				109

	8.1.		ADDITIONAL INFORMATION ABOUT THE ISSUER			109
		8.1.1.		The Issuer’s Charter (Share) Capital (Equity Fund) Size and Structure		109
		8.1.2.		Changes in the Size of the Issuer’s Charter (Share) Capital (Equity Fund)		109
		8.1.3.		Formation and Uses of the Issuer’s Reserve Fund and Other Funds		109
		8.1.4.		The Procedure for Convening Meetings of the Issuer’s Top Management Body		110

	8.1.5.			Business Entities in Which the Issuer Owns At Least 5% of Their Charter (Share) Capital (Equity Fund) or At
	Least 5% of Their Ordinary Shares				111
	8.1.6.			Material Transactions Effected By The Issuer	113
	8.1.7.			The Issuer’s Credit Ratings	113
8.2.		THE ISSUER’S SHARES BY CATEGORY (CLASS)			113
8.3.		PRIOR ISSUES OF THE ISSUER’S SECURITIES OTHER THAN ITS SHARES			116
	8.3.1.			Issues of Which All Securities Have Been Redeemed (Cancelled)	116
	8.3.2.			Issues of Securities Currently in Circulation	116
	8.3.3.			Issues of Securities under Which the Issuer’s Obligations Have Not Been Fulfilled (Default)	116
8.4.		ENTITY (ENTITIES) THAT HAVE PROVIDED SECURITY FOR BONDS ISSUED			116
8.5.		ISSUED BOND OBLIGATION SECURITY TERMS			116
8.6.		ORGANIZATIONS THAT REGISTER THE RIGHTS TO SECURITIES ISSUED BY THE ISSUER			116
8.7.		LAWS GOVERNING CAPITAL IMPORTS AND EXPORTS THAT MAY AFFECT PAYMENT OF
DIVIDENDS, INTEREST, AND OTHER AMOUNTS PAYABLE TO NONRESIDENTS					116
8.8.		TAXATION OF INCOME GENERATED BY SECURITIES PLACED OR BEING PLACED BY THE ISSUER			117
8.9.		THE DECLARED (ACCRUED) AND PAID DIVIDENDS ON ISSUER’S SHARES AND STOCK INCOME			119
8.10.			OTHER INFORMATION		120
8.11.			INFORMATION ON SECURITIES REPRESENTED BY RUSSIAN DEPOSITARY RECEIPTS BEING
PLACED AND ISSUER OF SUCH SECURITIES					120
	8.11.1.			Information on Securities Being Placed	120
	8.11.2.			Information on Issuer of Securities Being Placed	120

LEGEND OF TERMS

The abbreviations of certain terms set forth below relate to the telecommunications industry and our activities, in particular, and appear throughout this document.

CCC: Customer Care Center

CSPs: Contracted Service Providers

DLD: Domestic long-distance

DWDM: Dense wavelength division multiplexing

FAC: Federal Agency on Communications

FAS: Federal Anti-Monopoly Service

FOL: Fiber-optic line

FFMS: Federal Financial Markets Service

FST: Federal Service on Tariffs

IFRS: International Financial Reporting Standards

ILD: International long-distance

IP: Internet-Protocol

IRC: Inter-regional company

ISDN: Integrated services digital network

Mincomsvyaz: Ministry of Communications and Mass Media

PSTN: Public switched telephone network

MPLS: Multi-Protocol Label Switching

RAS: Russian Accounting Standards

Rossvyazcomnadzor: Federal Service on Supervision in the Area of Communications and Mass Media

SDH: Synchronous Digital Hierarchy

VoIP: Voice over Internet Protocol

VPN: Virtual Private Network

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly report of Rostelecom (hereafter — Quarterly report) are forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby.

Those forward-looking statements include, but are not limited to:

· Management’s assessment of Rostelecom’s (hereafter — the Company) future operating and financial results as well as forecasts of the present value of future cash flows and related factors;

· the Company’s anticipated capital expenditures and plans to construct and modernize its network;

· the Company’s expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing;

· the Company’s plans with respect to improving its corporate governance practices;

· the Company’s expectations as to its position in the telecommunications market and the development of the market segments within which the Company operates;

· economic outlook and industry trends;

· the Company’s expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company’s activity;

· other statements regarding matters that are not historical facts.

Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:

· risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;

· risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies;

· risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company’s services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market;

· technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies;

· other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company’s Annual Report on Form 20-F for its most recently completed fiscal year and the Company’s other public filings with The U.S. Securities and Exchange Commission.

Many of these factors are beyond the Company’s ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.

INTRODUCTION

This Quarterly Report contains estimates and projections made by the Company’s executive bodies in respect of future events and/or actions, an outlook for the development of the Company’s principal activities, the Company’s performance, including its plans, and the probability of certain events or actions. Investors should not fully rely on estimates and projections made by the Company’s executive bodies, because the Company’s actual results may differ from the forecasts due to a number of reasons. Purchasing the Company’s securities involves risks described in this Quarterly Report.

Full Issuer’s name — Open Joint Stock Company Long-Distance and International Telecommunications “Rostelecom”.

Short Issuer’s name — OJSC Rostelecom (hereinafter referred to as “Rostelecom”, or the “Company”) is a legal entity organized under the laws and regulations of the Russian Federation on September 23, 1993.

The Company’s permanent Collective Executive Body — Management Board — is located at: 15 Dostoevskogo st., St. Petersburg, 191002.

The Company’s Sole Executive Body — General Director — is located at: 14 1st Tverskaya-Yamskaya st., Moscow, 125047.

phone number +7 (499) 972-8283;

facsimile number +7 (499) 972-8222;

e-mail: info@rostelecom.ru;

web-site: http://www.rt.ru/centr-invest/financial/fsfr/rep.php.

Rostelecom’s charter capital currently equals 2,428,819.4725 RUB.

Basic information on securities in circulation:

Type and category of securities: registered paperless ordinary shares.

The number of issued securities: 728,696,320 shares.

Nominal value of one security issued (RUB): 0.0025.

State registration number: 1-01-00124-A as of September 9, 2003.

Type and category of securities: registered paperless preferred shares.

The number of issued securities: 242,831,469 shares.

Nominal value of one security issued (RUB): 0.0025.

State registration number: 2-01-00124-A as of September 9, 2003.

1. BRIEF INFORMATION ABOUT MEMBERS OF THE ISSUER’S MANAGEMENT BODIES, ITS BANK ACCOUNTS, AUDITOR, APPRAISER, FINANCIAL CONSULTANT, AND OTHER SIGNATORIES TO THIS QUARTERLY REPORT

1.1. Members of the Issuer’s Governing Bodies

The Issuer’s governing bodies are:

· the General Meeting of Shareholders;

· the Board of Directors;

· the Company’s Sole Executive Body — General Director;

· the Company’s Collective Executive Body — Management Board.

The Company’s Board of Directors:

Chairman of the Board of Directors: Yevgeny Valeryevich Yurchenko, 1968

Members of the Board of Directors:

Vladimir Nikolaevich Bondarik, 1957

Sergei Ivanovich Kuznetsov, 1953

Mikhail Alexandrovich Leshchenko, 1975

Alexey Alexeevich Lokotkov, 1950

Konstantin Valeryevich Malofeev, 1974

Alexander Yuryevich Provotorov, 1974

Ivan Ivanovich Rodionov, 1953

Viktor Dmitrievich Savchenko, 1960

Yelena Vladimirovna Umnova, 1954

Maxim Yuryevich Tsyganov, 1972

The Company’s Sole Executive Body:

General Director: Anton Yuryevich Kolpakov, 1971

The Company’s Collective Executive Body:

Chairman of the Management Board: Anton Yuryevich Kolpakov, 1971

Members of the Management Board:

Andrei Yuryevich Baklykov, 1968

Vyacheslav Vladimirovich Volkov, 1973

Yevgeny Vladimirovich Gerasimov, 1965

Viktor Vladimirovich Iudin, 1967

Vladimir Konstantinovich Mironov, 1956

Galina Vasilievna Rysakova, 1967

Dmitry Vyacheslavovich Sigalov, 1973

Vladimir Vladimirovich Terekhov, 1958

Roman Alexandrovich Frolov, 1976

Anton Alexeevich Khozyainov, 1974

1.2. The Issuer’s Bank Accounts

(Truncated)

1.3. The Issuer’s Auditor(s)

Name: ZAO KPMG (RAS audit)

Postal address: 18 Krasnopresnenskaya Nab., Naberezhnaya Tower Complex, Block C, Moscow, Russia, 123317

Phone: (495) 937-4477

Fax: (495) 937-4400/99

E-mail: moscow@kpmg.ru.

Auditor’s License: ZAO KPMG

License No. E003330

Date of issue: January 17, 2008

Valid till: January 17, 2013

Issuing authority: Ministry of Finance of Russian Federation

ZAO KPMG is a company incorporated under the laws of the Russian Federation.

The Company prepares no consolidated financial statements in accordance with the Russian Accounting Standards (RAS) as it prepares consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS).

In accordance with its Charter, every year the Company retains an auditor who is not linked by property interests with the Company or its shareholders.

No factors affecting the auditor’s independence and no material interests of the auditor and/or its officers with the Company have been detected:

· the auditor has no interest in the Company’s share capital;

· the Company grants no loans to its auditor;

· the Company has no close business relations with its auditor, including participation in the Company’s products (services) promotion, participation in joint business activities etc.;

· the Company’s officers are not the auditor’s officers.

As of the end of the reporting period no tenders were held to retain an auditor. To retain an auditor that would most fully meet the Company’s requirements for audit of its financial and accounting statements for the year 2009, the Company analyzed proposals from several auditors using the following criteria.

· the Company’s auditor shall be an entity registered in accordance with Russian legislation;

· the auditor shall have a license to carry out audit activities in Russia;

· the auditor shall have an accreditation with the U.S. Securities and Exchange Commission;

· the auditor shall have experience in audits of telecommunications companies;

· the auditor shall have appropriate resources to perform the work within specified time-limits;

· the auditor shall have specialists within its auditing team that hold international certificates in the field of business accounting and finance (ACCA, CPA, CISA etc.).

Besides, the Company set additional requirements regarding the scope of services of audit companies and the time-limits for provision of such services.

Based on the proposals of the audit companies as well as the opinion of the Audit Committee, the Board of Directors of Rostelecom, proposed ZAO KPMG as the independent auditor of the Company for 2009. ZAO KPMG was approved as the Company’s auditor for 2009 by the General Meeting of Shareholders on May 30, 2009.

The Company’s consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) are audited by KPMG Limited, a member firm of KPMG International, a Swiss cooperative.

Postal address: 1 Le Marchant Street, St Peter Port, Guernsey GY1 4HP.

Phone: (495) 937-4477

Fax: (495) 937-4400/99

E-mail: moscow@kpmg.ru.

CJSC Ernst & Young Vneshaudit audited the Company’s financial statements prepared in accordance with RAS for 2002 through 2004 fiscal years. LLC Ernst & Young audited the Company’s financial statements prepared in accordance with RAS for 2005 through 2007 fiscal years. ZAO KPMG audited the Company’s financial statements prepared in accordance with RAS for 2008, KPMG Limited audited the Company’s consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) for 2008.

Name: Limited Liability Company Ernst & Young (LLC Ernst & Young)

Address: 77/1 Sadovnicheskaya nab., Moscow, Russia, 115035

Postal address: 77/1 Sadovnicheskaya nab., Moscow, Russia, 115035

Phone: (495) 705-9700

Fax: (495) 755-9701

E-mail: moscow@ru.ey.com.

Auditor’s License:

License No. E002138

Date of issue: September 30, 2002

Valid till: September 30, 2012

Issuing authority: Ministry of Finance of Russian Federation

Taking into account the opinion of the Audit Committee, the Board of Directors determined a fixed amount of the auditor’s compensation on the basis of hourly rates of auditors and actual time spent to perform the audit by the auditor’s staff as follows:

· for the audit of consolidated financial statements for the fiscal year ended December 31, 2008, including audit of financial statements according to RAS and IFRS, audit of subsidiaries’ financial statements and overview of Form 20-F - RUB 78,000,000;

· for the audit of consolidated financial statements for the fiscal year ended December 31, 2007, including audit of financial statements according to RAS and IFRS, audit of subsidiaries’ financial statements and overview of Form 20-F - U.S.$ 3,085,000;

· for the audit of consolidated financial statements for the fiscal year ended December 31, 2006, including audit of financial statements according to RAS and IFRS, audit of subsidiaries’ financial statements and overview of Form 20-F - U.S.$ 2,300,000;

· for the audit of consolidated financial statements for the fiscal year ended December 31, 2005, including audit of financial statements according to RAS and IFRS, audit of subsidiaries’ financial statements and overview of Form 20-F - U.S.$ 1,312,000;

· for the audit of consolidated financial statements for the fiscal year ended December 31, 2004, including audit of financial statements according to RAS and IFRS, audit of subsidiaries’ financial statements and overview of Form 20-F — U.S.$ 925,000;

No special audit assignments were performed from 2002 up to the expiration date of the agreement. There are no deferred or overdue payments for the auditor’s services.

1.4. The Issuer’s Appraiser

No appraiser(s) was(were) retained by the Company during the reporting period.

1.5. The Issuer’s Consultants

No financial consultants on securities market were retained by the Company to advise it on securities offerings.

1.6. Other Signatories to this Quarterly Report

There are no any other signatories to this Quarterly Report.

2. THE ISSUER’S FINANCIAL AND ECONOMIC FUNDAMENTALS

2.1. The Issuer’s Financial and Economic Indicators

Indicator		Q3 2009
Net assets value, thousand rubles		58,962,351
Liabilities to capital and reserves ratio, %		27
Short-term liabilities to capital and reserves ratio, %		19
Debt service coverage, %		38
Overdue debt level, %		15
Receivables turnover, times		1,60
Dividend to net profit, %		22
Labor productivity, thousand rubles/employee		736.85
Depreciation to revenues ratio, %		8

The analysis of the above indicators for Q3 2009 (compared to Q3 2008)

Net assets value increased by 2,636,959 thousand rubles (5%) owing to:

· Increase in assets by 3,419,806 thousand rubles (5%);

· Increase in liabilities by 782,847 thousand rubles (5%).

Liabilities to capital and reserve ratio increased by 0.4% owing to:

· Increase in capital and reserves by 2,667,829 thousand rubles (5%);

· Increase in liabilities by 782,847 thousand rubles (5%).

Short-term liabilities to capital and reserves ratio increased by 4% owing to:

· Increase in capital and reserves by 2,667,829 thousand rubles (5%);

· Increase in short-term liabilities (excluding deferred revenue) by 934,751 thousand rubles (9%).

Debt service ratio increased by 29% owing to:

· Increase in funds for debt service coverage by 304,794 thousand rubles (10%);

· Decrease in liabilities payable by 1,514,835 thousand rubles (-15%).

Overdue debt level decreased by 6% owing to:

· Increase in liabilities by 782,847 thousand rubles (5%);

· Decrease in overdue debt by 22,504 thousand rubles (-0.96%).

Receivables turnover increased by 0.3 (23%) owing to:

· Decrease in revenues by 968,001 thousand rubles (-6%);

· Decrease in receivables by 2,879,532 thousand rubles (-24%).

Labor productivity decreased by 2% owing to:

· Decrease in the average payroll number of employees by 920 people (-4%);

· Decrease in revenues by 969,001 thousand rubles (-6%).

Depreciation to revenues increased by 13% owing to:

· Increase in depreciation accrued by 61,610 thousand rubles (6%);

· Decrease in revenues by 968,001 thousand rubles (-6%).

The indicators calculation methodology

Indicator		Calculation Method
Net assets value, thousand rubles		In accordance with the procedure set by the Russian Federation Ministry of Finance and the Federal Financial Market Service
Liabilities to capital and reserves ratio, %		(End-of-period long-term liabilities + end-of-period short-term liabilities (excluding deferred revenue)) / (End-of-period capital and reserves) x 100
Short-term liabilities to capital and reserves ratio, %		(End-of-period short-term liabilities (excluding deferred revenue)) / (end-of-period capital and reserves) x 100
Debt service coverage, %		(Accounting period net profit + depreciation for the accounting period — Dividends) / (Liabilities payable (paid) during the accounting period + interest payable (paid) during the accounting period) x 100

Overdue debt level, %		(End-of-period debt overdue) / (End-of-period long-term liabilities + end-of-period short-term liabilities (excluding deferred revenue)) x 100
Receivables turnover, times		(Revenues) / (end-of-period receivables — end-of-period contributions payable by the participants (founders) to the charter capital)
Dividend to net profit, %		(Dividend on ordinary shares following the last financial year results) / (last financial year net profit — dividend on preferred shares following the last financial year results) x 100
Labor productivity, thousand rubles/employee		(Revenues) / (Average payroll number of employees (workers))
Depreciation to revenues ratio, %		(Depreciation) / (Revenues) x 100

2.2. The Issuer’s Market Capitalization

The Company’s ordinary and preferred shares are listed on MICEX Stock Exchange as A1 level securities. The Company’s capitalization herein is calculated on the basis of the market prices of ordinary and preferred shares provided by the MICEX Stock Exchange.

The diagram below shows Rostelecom’s market capitalization for the 5 most recent years and as of the end of the reporting period:

2.3. The Issuer’s Liabilities

2.3.1. Accounts Payable

Indicator		As of September 30, 2009
Total accounts payable, thousand rubles		14,919,224
including overdue, thousand rubles		2,330,337

Accounts Payable Details as of September 30, 2009

in thousand rubles

	Time of incurring
Type of accounts payable	Within 1 year	Over 1 year
Accounts payable to suppliers and contractors	5,796,534	0
including overdue	474,461	X
Accounts payable to personnel	190,552	—
including overdue	0	X
Accounts payable to the state budget and state non-budget funds	772,791	—
including overdue	144	X
Credits	569,415	1,526,475
including overdue	0	X
Loans, total	399	2,311,018
including overdue	0	X
including bonded loans	0	—
including overdue bonded loans	0	X
Other accounts payable	2,952,152	799,888
including overdue	1,855,732	X
Total	10,281,843	4,637,381
including overdue	2,330,337	X

Creditors accounting for at least 10% of the Company’s total payables (1,491,922 thousand rubles) as of the end of the reporting period:

Full name: Closed Joint Stock Company Westelcom.

Abbreviated name: CJSC Westelcom.

Amount payable: 2,311,417 thousand rubles.

Payables overdue: none as of September 30, 2009.

The Company’s interest in Westelcom’s charter capital: 100.00%.

The Company’s interest in Westelcom’s ordinary shares: 100.00%.

Westelcom’s interest in the Company’s charter capital: 0.00%.

Westelcom’s interest in the Company’s ordinary shares: 0.00%.

Full name: State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank).

Abbreviated name: Vnesheconombank.

Amount payable: 2,028,665 thousand rubles.

Payables overdue: none as of September 30, 2009.

The Company’s interest in Vnesheconombank’s charter capital: 0.00%.

The Company’s interest in Vnesheconombank’s ordinary shares: 0.00%.

Vnesheconombank’s interest in the Company’s charter capital: 22.50%.

Vnesheconombank’s interest in the Company’s ordinary shares: 30.00%.

Full name: The Russian Federation Federal Agency on Communications.

Abbreviated name: The FAC (Rossvyaz).

Amount payable: 1,659,051 thousand rubles.

Payables overdue: 1,546,429 thousand rubles as of September 30, 2009.

The Company’s interest in the FAC’s charter capital: not applicable.

The Company’s interest in the FAC’s ordinary shares: not applicable.

The FAC’s interest in the Company’s charter capital: 0.00%.

The FAC’s interest in the Company’s ordinary shares: 0.00%.

Full name: ANO Organizing Committee of the XXII Olympic Winter games and XI Paralympic Winter Games of 2014 in Sochi.

Abbreviated name: ANO Organizing Committee Sochi 2014.

Amount payable: 2,348,094 thousand rubles.

Payables overdue: none as of September 30, 2009.

The Company’s interest in ANO Organizing Committee Sochi 2014 charter capital: 0.00%.

The Company’s interest in ANO Organizing Committee Sochi 2014 ordinary shares: 0.00%.

ANO Organizing Committee Sochi 2014 interest in the Company’s charter capital: 0.00%.

ANO Organizing Committee Sochi 2014 interest in the Company’s ordinary shares: 0.00%.

2.3.2. The Issuer’s Credit History

Shown below are the Company’s liabilities with respect to agreements in force as of the end of the reporting period, and earlier, with the principal thereunder accounting for at least 5 (five) percent of total assets of the Company as of the end date of the reporting quarter preceding the date of the relevant agreement:

Liabilities	Creditor (lender)	Amount of principal	Repayment date	Overdue payments of principal and/or interest, days overdue
Reporting date: December 31, 2004
Loan	CJSC Westelcom (under an assignment agreement between OJSC RTC-Leasing and CJSC Westelcom)	2,311 million rubles	September 30, 2038	—
Reporting date: December 31, 2005

Loan	CJSC Westelcom (under an assignment agreement between OJSC RTC-Leasing and CJSC Westelcom)	2,311 million rubles	September 30, 2038	—
Loan	Vnesheconombank and Credit Suisse First Boston	2,878 million rubles	December 28, 2012
Reporting date: December 31, 2006
Loan	CJSC Westelcom (under an assignment agreement between OJSC RTC-Leasing and CJSC Westelcom)	2,311 million rubles.	September 30, 2038
Loan	Vnesheconombank and Credit Suisse First Boston	2,633 million rubles	December 28, 2012	—
Reporting date: December 31, 2007
Loan	CJSC Westelcom (under an assignment agreement between OJSC RTC-Leasing and CJSC Westelcom)	2,311 million rubles.	September 30, 2038
Loan	Vnesheconombank and Credit Suisse First Boston	2,406 million rubles	December 28, 2012	—
Reporting date: December 31, 2008
Loan	CJSC Westelcom (under an assignment agreement between OJSC RTC-Leasing and CJSC Westelcom)	2,311 million rubles.	September 30, 2038
Loan	Vnesheconombank and Credit Suisse First Boston	1,959 million rubles	December 28, 2012	—
Reporting date: September 30, 2009
Loan	CJSC Westelcom (under an assignment agreement between OJSC RTC-Leasing and CJSC Westelcom)	2,311 million rubles.	September 30, 2038
Loan	Vnesheconombank and Credit Suisse First Boston	2,006 million rubles	December 28, 2012	—

2.3.3. The Issuer’s Liabilities Resulting from Security Provided to Third Parties

The Company’s collateral undertakings to the third parties as of the end of the reporting period:

· the contract of guarantee with respect to the credit agreement of CJSC Zebra Telecom No. 850-08-1-0 dated December 9, 2008 in amount of RUB 40,000 thousand;

· the contract of guarantee with respect to the credit line agreement of CJSC Zebra Telecom No. 849-08-3-0 dated December 25, 2008 in amount of RUB 30,000 thousand.

The Company has no other liabilities resulting from any collateral provided to third parties, including pledge or guarantee, over the reporting quarter.

2.3.4. Other Liabilities of the Issuer

As of the end of the reporting period, the Company entered in no agreements and had no other liabilities not reflected in its RAS financial statements that may significantly affect the Company’s financial position, its liquidity, financial sources and conditions of their use, operating results, and expenses.

2.4. The Purposes and Use of Proceeds Generated by Securities Placements

During the reporting period Rostelecom made no securities placements and obtained no money or receivables resulted from such placements.

2.5. Risks Associated with Purchase of Securities to be Placed (or Outstanding Securities)

Rostelecom’s business activities are subject to various risks that may adversely affect the achievement of its objectives.

In order to manage risk, the Company is developing a risk-oriented business management approach designed to ensure efficient decision-making by the Company’s management and to effectively identify opportunities for achieving Rostelecom’s goals and objectives.

As part of the risk management system, Rostelecom conducts regular risk assessment and monitoring of any subsequent measures taken to minimize negative consequences. The Company also conducts risk analysis in the normal course of business, including at Internal Control Committee meetings.

The Company also carries out crisis assessment as part of its risk management program. Rostelecom continuously monitors the respective risks and takes preventive and corrective measures aimed at reducing their potential impact. In addition, the Company has worked out a set of anti-crisis measures which are to be implemented in the case of a significant deterioration in the Company’s basic indicators as a result of a crisis. Listed below are the most prominent risks which can affect the Company’s activities. However, the Company does not exclude the existence of other risks, including risks of which Company is currently unaware or which the Company currently considers non-essential.

2.5.1. Industry Risks

As a result of increasing competition, including the emergence of new operators and change of principles for the provision of DLD and ILD telecommunication services, the Company’s market share and, consequently, revenue from services rendered may decrease.

As of the end of the reporting period, more than 30 operators have obtained licenses to render DLD and ILD telecommunications services. Seven of these operators have already arranged and constructed their own networks technically enabling them to transmit DLD and ILD traffic and have also obtained carrier selection prefixes for the provision of DLD and ILD services.

The introduction of hot choice throughout Russia will further intensify the competition, as this service enables end users to choose long-distance telecommunications operator by dialing an additional prefix when initiating a call. This service is already available in a number of Russian regions.

In addition, the rapid development of mobile telecommunication facilities provides mobile operators with access to end users of telephone services throughout Russia. Mobile operators have the technological capability to transmit DLD and ILD traffic through public switched telephone networks using both own networks and networks of fixed-line long-distance telecommunications operators.

The active development and promotion of IP-telephony services also increases competition in the Russian DLD and ILD market. IP-telephony technology has a more advantageous cost structure compared to traditional operators. Moreover, fast growing broadband Internet access in Russia makes IP-telephony services more attractive compared to fixed-line and mobile communications.

The fact that the Company has no direct access to end users through “last mile facilities” may hinder the development of new services for end users, which may negatively affect the Company’s market share and the results of operations.

Rostelecom must construct “last mile facilities” or lease them from IRCs and other operators, which involves a high expenditure of time and investment resources. Lease agreements with IRCs, as related party agreements, shall be previously approved by the Board of Directors as required by applicable law. Integration with companies owning the “last mile facilities” is not always effective due to the inadequate quality and functional capabilities of their networks. Consequently, untimely or undue organization of the “last mile facilities” by the Company may lead to a loss of clients preferring other operators.

The risk exposure is most likely in the regions with high growth potential, as it may limit Rostelecom’s market share gains in new services offered to end users and consequently negatively affect the results of operations.

Providing DLD and ILD telecommunications services on behalf of the Company, agents may not serve end users in a diligent manner, which may result in a loss of the Company’s current and potential customers, and could result in a reduction in revenue for Rostelecom.

In addition to direct customer servicing the Company relies on certain agents to render DLD and ILD services on its behalf under Service Provision Agreements. However, there is no guarantee that the agents will perform these tasks in a diligent and timely manner.

Additionally, service provision through agents may negatively affect the Company’s ability to introduce flexible tariffs due to the limited billing capacities of these agents, and, consequently, result in loss of existing and potential clients and decrease revenue.

As a general rule, Rostelecom improves the quality and effectiveness of its clients’ direct service, including billing and collection activities, customer loyalty programs etc. However, in the case of an unplanned increase of the number of clients serviced directly by the Company resulting from the initiative of its agents, the Company may be unable to provide clients with telecommunications services in a diligent and timely manner and or prepare reliable financial reports.

In providing DLD and ILD telecommunications services, the Company may face difficulties when collecting information on intraregional operators and local operators and their subscribers. This may adversely affect the billing of end users and collection of revenue for services rendered.

Under Rostelecom’s Service Provision Agreements, the intraregional operators acting as the Company’s agents must provide the Company with information on the numbering capacity of the intraregional and local operators interconnected to them and on subscribers. Otherwise, they must not provide intraregional and local operators with traffic transmission through Rostelecom’s telecommunications network. However, in certain cases, interconnected operators fail to comply with these provisions, and currently there is no assurance that such failures will not occur in the future.

Moreover, under current legislation, intraregional and local operators are not permitted to provide individual subscriber information to third parties, including to long-distance operators, without the prior written consent of a subscriber.

The state regulation of the Company’s tariffs and inter-operator settlement rates may hinder its ability to set competitive and economically effective tariffs for DLD services that may adversely affect the Company’s results of operations and efforts to retain existing customers or attract new customers.

As the Company is included in the Register of natural monopolies, its activities are regulated by the Federal Service on Tariffs, or the FST, in accordance with the Federal Law on Natural Monopolies, or the Natural Monopolies Law. Presently the FST regulates the Company’s tariffs for DLD services rendered throughout Russia, as well as tariffs for local and intraregional telecommunications services rendered in Moscow.

Call origination and termination expenses constitute about a half of the Company’s revenue from long-distance telecommunications services in monetary terms. The fact that IRCs set the origination and termination tariffs at the highest level permitted by the law limits the Company’s ability to effectively regulate its tariffs.

The use of the Company’s telecommunications network may be suspended as a result of its untimely or incomplete registration as required by recent changes in the communication legislation.

Pursuant to Federal Law No.14-FZ dated February 9, 2007, “On Amendments to the Federal Law “On Communication”, telecommunications operators shall use only duly registered communication networks for providing communication services. Telecommunications networks built before the day when the above-mentioned Federal Law came into force (February 14, 2008) shall be registered no later than January 1, 2010. The majority of the Company’s telecommunications network falls under the above criteria.

Given the fact that the registration procedure provides for the development of a communication network system project and its assessment involves significant temporal and financial expenditure, there is a risk of untimely or incomplete registration of the Company’s network. The use of the telecommunications network without registration is not allowed. Therefore realization of this risk can lead to significant financial losses in case of suspension of the use of the Company’s telecommunications network. Additionally, this risk can lead to serious problems related to the Company’s reputation, generating negative publicity as a result of suspension in provision of services to the customers. Nowadays a new bill was introduced amending the Law

On Communication and replacing the mandatory networks registration by notice about networks commissioning. However, the implementation of these amendments to the Company remains vague until the bill is enacted.

2.5.2. Country and Regional Risks

Political instability could materially adversely affect the Company’s business results, growth prospects and the value of shares.

Since the 1990s Russia has pursued significant political transformations. As a result of sweeping reforms and the failure of some of these reforms, the Russian political system remains vulnerable to dissent by the population. In a number of cases there may be an escalation of political, economic and social tension in relations with the neighboring countries.

Changes in the RF Government, large-scale political rearrangements or disagreements between different authorities of the RF Government may also hamper implementation of economic and administrative reforms. Conflicts between central and regional state authorities and other conflicts could lead to political, governmental and social instability, which could have a material adverse effect on Rostelecom’s business results, prospects of operation and the value of shares.

2.5.3. Financial risks

The Company is exposed to the risk of fluctuations of exchange rates and the assets and liabilities denominated in foreign currencies as well as settlements in foreign currencies may be revalued, generating losses.

A significant portion of the Company’s revenue, costs and liabilities, including capital expenditures and borrowings, is denominated in foreign currencies, while most of the operating revenues are denominated in rubles. In 2008, the ruble exchange rate went down by 17% against the US dollar and by 13% against the euro. During Q1 2009, the ruble further devalued against the US dollar and against the euro. Despite the fact that the ruble appreciated against the US dollar and the euro during Q2 and Q3 2009, during the first 9 months of 2009 the ruble depreciated by 2.1% against the US dollar and by 5.8% against the euro. If in future the ruble weakens against foreign currencies, the Company’s expenses may significantly grow in ruble terms, which will adversely affect the Company’s profitability and results of operation. Additionally, fluctuations in the exchange-value of the ruble may lead to losses related to reappraisal of the foreign currency assets and the Company’s liabilities, which may affect the Company’s financial results.

Inflation could increase the costs and decrease operating margins.

Russia’s economy is still characterized by a relatively high inflation rate. In 2008, the inflation was 13.3%, 1.4% up year on year. In Q1 2009 the inflation was 5.4%, 6 months and 9 months 2009 inflation amounted to 7.4% and 8%, respectively. However, the predicted inflation rate in Russia for 2009 remains rather high.

While a part of the Company’s expenses is subject to inflation, rising prices may increase the nominal value of the Company’s costs. Additionally, increasing competition between telecommunications operators as well as tariff regulation by state authorities may limit the Company’s ability to increase tariffs for services to reach the required profitability of operations.

Changes in interest rates on the financial market may negatively impact the Company’s performance and results of operations.

Presently, Rostelecom is paying off loans with floating interest rates. Rising interest rates will increase the Company’s expenses associated with debt repayment and securing of new loans, and therefore, negatively impact the Company’s financial results and raise the costs of projects financed by leverage.

Additionally, the unfavorable situation on the financial and monetary markets may lead to losses associated with ineffective asset management and liabilities with fixed and floating interest rates, as well as different maturity dates.

If the Company’s customers and other counterparties fail to repay liabilities in full or in a timely manner, the Company may incur additional costs to cover cash shortages or to collect accounts receivable.

Rostelecom has faced in the past and is still facing payment delays from some organizations, individuals, state bodies and international operators. To cover cash shortages resulting from late settlements with the

counterparties Rostelecom may have to secure loan or credit, and pay interest on those borrowings.

In addition, the Company allocates available cash into bank deposits, promissory notes and other financial instruments. In the context of an unstable financial system in Russia, especially during the global financial crisis, there may be a risk of failure to return the deposits or of failure to retire the certificates of deposit, and the risk of an issuer’s failure to meet the liabilities related to the debt instruments also exists.

Insufficient liquidity may limit the Company’s ability to meet commitments and dispose of assets.

The Company executes payment on its liabilities in a timely and diligent manner. However, Rostelecom may be exposed to liquidity risk; in particular, it may incur difficulties in covering its debts due to shortages of cash and due to disposal of liquid and other assets at a substantial discount.

In December 2008, the international rating agency Standard and Poor’s upgraded the credit rating of Rostelecom from “BB-” to “BB” with “stable” outlook. At present, by Standard & Poor’s estimate, Rostelecom has achieved a stable liquidity position owing to low debt ratio, high liquidity ratios, positive free operating cash flow and moderate capital expenditures.

The Company’s business operations could be significantly disrupted if Rostelecom’s major shareholder undergoes a change in control or revises its strategy.

At present the owner of 50.67% of ordinary shares of Rostelecom is OJSC Svyazinvest, 75% of the shares (minus 1 share) of which belong to the Russian Federation represented by the Federal Agency for State Property Management. On October 20, 2009, the Board of OJSC Svyazinvest approved the holding reorganization in form of merger of IRCs into Rostelecom. In light of this Rostelecom may undergo legal, financial and technological risks associated with the reorganization and following integration of IRCs into Rostelecom.

2.5.4. Legal Risks

Risks associated with Russia’s legal system may result in a lack of clear interpretation of Rostelecom’s business, limit the Company’s rights and negatively affect its operations and financial results.

Russia is still developing the legal framework required to support a market economy. Moreover, a number of fundamental Russian laws came into effect relatively recently, and their consistent implementation are yet to be developed. Russian law often relies on the implementation of bylaws, which are often delayed, resulting in material shortcomings in the practical application of the relevant provisions. As a result regulating authorities may impose sanctions on Rostelecom in respect of compliance with particular laws, rules and regulations.

These risks and uncertainties relate both to common civil laws and regulations, as well as to special branch legislation, including currency control, taxation, public companies, securities and other acts.

If the demand for certain new products and telecommunications services the Company has recently introduced or is developing and promoting does not increase, the Company’s ability to achieve further revenue growth from these services will be limited.

The current financial crisis and limited liquidity negatively affect the solvency of retail customers and corporations and, consequently, the demand for traditional and new telecommunications services.

Presently, the Company’s revenue is primarily generated by traditional services, such as DLD and ILD telecommunications and leased line services. Also Rostelecom has introduced or is developing now new products and services, including intelligent network services, VPN, Internet access and Data Center services.

Therefore, reduced demand for these services would have a substantial adverse effect on the Company’s financial results.

If the Federal Tax Service of Russia succeeds in pursuing tax claims against Rostelecom for the fiscal years 2004-2006, the Company will have to cover significant tax claims that will adversely affect its results of operations.

As a result of a comprehensive tax inspection covering the fiscal years 2004-2006 conducted in December 2007, in February 2008 the Federal Tax Service of the Russian Federation assessed RUB 1,812,427 thousand

of additional taxes, including fines and penalties. The Company filed an appeal to the higher tax authority and an application to the Arbitrazh Court of the city of Moscow to declare invalid the assessment in amount of RUB 1,810,019,529.54. In November 2008, the Arbitrazh Court of the city of Moscow declared the assessment in amount of RUB 1,803,094,529 thousand invalid, so reducing the fine to RUB 6,925,000.

The Appellate Court and the Federal Arbitrazh Court of Moscow District did not change the Arbitrazh Court decision. To date the tax authorities did not file an appeal to the Supreme Arbitrazh Court and the deadline for filing such appeal expired in September 2009. However, the tax authorities may file an appeal to the Supreme Arbitrazh Court in the future.

If the court decisions made in June and September 2009 are changed in favour of the tax authorities, Rostelecom will suffer substantial expenses, in particular RUB 139,093,120.47 that was already set off against VAT payment in Q3 2009.

In November 2008 the Company filed a claim to the Arbitrazh Court of the city of Moscow to recover the interest for untimely refund of overpaid VAT tax in amount of RUB 139,093,120.47. The Court ruled in favour of Rostelecom and in September 2009 the tax authorities set off this sum against VAT tax payable in Q3 2009. However, the tax authorities may file a cassation appeal in the future, which may result in a loss in amount of RUB 139,093,120.47 for the Company.

3. DETAILED INFORMATION ON THE ISSUER

3.1. The Issuer’s Establishment and Development

3.1.1. The Issuer’s Corporate Name

Previous name:

Full name: Joint-Stock Company Open-Type Long-Distance and International Telecommunications “Rostelecom”.

Abbreviated name: OTJSC Rostelecom.

Validity period: from September 23, 1993 to August 26, 1997.

Current name:

Full name: Open Joint-Stock Company Long-Distance and International Telecommunications “Rostelecom”

Abbreviated name: OJSC Rostelecom.

Validity period: from August 26, 1997 till present.

Grounds for change: bringing of constitutional documents of the Company in conformity with changes in the legislation on joint-stock companies.

The Company owns trademark and/or service mark certificate No. 125190, covering the following products and/or services:

class 35 — export and import operations;

class 36 — real property leasing, intermediary services, capital investment, financing, lending operations;

class 37 — construction and repair operations;

class 38 — telecommunications.

Country: Russian Federation.

The trademark was registered with the State Register of Trademarks and Service Marks on April 10, 1995 (certificate №125190).

The validity period of the certificate was extended till March 15, 2014.

Following the acquisition of OJSC MMT, the Company acquired an exclusive certificate for using its trademark (service mark): class 38 activities — domestic and international long-distance telephone communications.

Registered with the USSR State Register of Trademarks on March 6, 1985.

Notification of April 21, 2004 No. 42/10-spr-31236 the validity period of the trademark (certificate #77120) was extended till October 29, 2014.

The Company has a certificate for using trademark №353896 on the territory of Russia giving right to render the following services: 41 — entertainment, 43 — catering, 44 — resorts and sanatoriums.

Registered with the Russian Federation State Register of Trademarks on June 27, 2008. Valid through December 7, 2016.

3.1.2. State Registration of the Issuer

Date of state registration: 23.09.1993.

State registration certificate number: 021.833.

State registering body: State institution The Moscow Registration Chamber.

The primary state registration number of legal person: 1027700198767.

Date of registration: 09.09.2002.

Name of registering body: Russia’s Ministry of Taxes and Levies, Moscow Department.

3.1.3. The Issuer’s Establishment and Development

The Company carries out its operation activities since the date of state registration on September 23, 1993, till present. The Company was established for an uncertain period of operation.

Until 1990, provision of communications services was the responsibility of the USSR Ministry of Communications. In June 1990, the USSR Ministry of Communications set up Sovtelecom, a state-owned joint-stock company that was granted the right to operate the telecommunications network of the USSR. Sovtelecom was registered by the Moscow City Council on September 19, 1990, in accordance with the USSR Law on Enterprises in the USSR. Following the Soviet Union’s collapse in December 1991, the composition of Sovtelecom’s shareholders changed. On February 24, 1992, the Company was re-registered as Joint Stock Company of Closed Type Intertelecom. Intertelecom became Russia’s telecommunications operator and the owner of all the telecommunications operator assets in the Russian Federation.

On December 22, 1992, the Government of the Russian Federation (hereinafter, the Russian Government, or the Government) issued a Resolution on Privatization of Communications Enterprises (Resolution No. 1003), launching the privatization of Russia’s communications sector. The guidelines for the privatization of Russia’s long-distance and international communications operators were set forth in Order No. 1302-r of the Russian Federation State Committee for State Property Management (hereinafter “GKI”) dated December 30, 1992 (hereinafter, “Order No. 1302-r”). In accordance with Order No. 1302-r, Russia’s state long-distance and international communications enterprises were pooled into a single state enterprise, State Enterprise Rostelecom. Order No. 1302-r also provided for that enterprise to be privatized and reorganized into a joint-stock company for an unlimited period of time and for telecommunications assets that were the state-owned share of Intertelecom’s charter capital to be contributed to the charter capital of the Joint Stock Company of the Open Type Rostelecom. Moreover, Order No. 1302-r specified that the controlling interest in Rostelecom would be retained by the GKI for three years. The three-year period was extended in September 1996. The extension expired in April 1997.

The state registration of the Joint Stock Company of Open Type Rostelecom was effected on September 23, 1993, in accordance with GKI Order No. 1507-r dated August 27, 1993 (hereinafter, the Privatization Order). The Privatization Order approved the Rostelecom privatization plan and asset valuation certificate. According to the Privatization Order, the GKI retained Rostelecom’s ordinary shares totaling 38% of its charter capital (consisting of the total par value of all its ordinary and preferred shared placed), corresponding to 51% of its voting shares. About 22.9% of the Company’s charter capital (including Class B

preferred shares convertible to ordinary shares at the time of selling) was sold at public voucher and cash auctions held in April and July 1994, from July to September 1995, and in January 1996.

In 1993-1994, another 14.1% of Rostelecom’s charter capital was sold to Rostelecom employees and executives in a private offering following the procedure provided for under the Regulations for a Private Offering of Shares in the Course of Rostelecom’s Privatization, which was approved by a meeting of SE Rostelecom employee representatives on September 20, 1993 (hereinafter, the Private Offering Regulations). The allocation of Rostelecom’s shares among its employees and executives set forth in the Private Offering Regulations was in line with the fundamental principles of the then effective privatization laws, the 1992 Russian Federation State Program for Privatizing State-Owned and Municipal Enterprises in the Russian Federation (hereinafter, the 1992 Program) and the Regulations for Private Offerings of Shares in the Course of Privatization of State-Owned and Municipal Enterprises, as approved by Russian Federation State Committee for State Property Management Order No. 308-r dated July 27, 1992 (hereinafter, Order No. 308-r).

In connection with the results of the voucher auction in April 1994, the Russian Federal Property Fund (RFPF) announced a mandatory split of Rostelecom shares at a ratio of 80 to 1, whereby the par value of each share was reduced from 1,000 rubles to 12.5 rubles. Following the specialized cash auction held in July to September 1995, the RFPF announced a second mandatory split of Rostelecom shares, by a factor of 5, reducing the Rostelecom share par value from 12.5 rubles to 2.5 rubles each. The two share splits were approved by the Rostelecom’s shareholders in January and November 1995, respectively. The relevant version of Rostelecom’s Charter was approved by its shareholders on July 18, 1997 and registered by the Moscow Registration Chamber on August 26, 1997. On June 27, 1997, the Charter was amended to reflect the denomination of the Russian ruble.

On January 6, 1994, the Russian Federation Ministry of Communications issued License No. 777 to Rostelecom for providing long-distance and international telecommunications services throughout Russian territory. License No. 777 officially reaffirmed Rostelecom’s status as the established operator of long-distance and international telecommunications public networks with the right to perform settlements with foreign communications administrations and the international organizations in accordance with international telecommunications operating regulations.

At present, the Company offers the services of long-distance and international telecommunications throughout Russian territory on the ground of License No. 29777 issued by the Ministry of Communications as of December 11, 2003.

In November 1994, the Russian Government approved the decision to set up an Open Joint Stock Company Svyazinvest (hereinafter, OJSC Svyazinvest) — a telecommunication holding company. Initially, the Government transferred to Svyazinvest 38% of all the ordinary and preferred shares of 85 regional telecommunications operators, or 51% of their voting shares. Besides, as per Russian Federation Presidential Decree No. 427 dated April 28, 1997 and Russian Federation Government Resolution No. 618 dated May 23, 1997, 38% of Rostelecom shares held by the GKI were transferred to Svyazinvest. At the same time, the Government announced that 49% of Svyazinvest shares were to be auctioned off in order to attract additional investment and competent managers into Russia’s telecommunications sector. The Government announced that the auction would be conducted in two phases. During phase I, 25%+1 shares were sold to Mustcom Limited, a Cyprus-registered investment consortium.

On February 27, 1997, Rostelecom’s ordinary and preferred shares then being in free circulation were listed as level-one securities and began to be traded at the Moscow Interbank Currency Exchange (MICEX). On October 27, 1997, Rostelecom’s ordinary and preferred shares then being in free circulation were listed as level-one and level-two securities, respectively, and began to be traded at the Russian Trading System (RTS) Stock Exchange.

On February 17, 1998, Rostelecom’s ordinary shares passed the New York Stock Exchange listing procedure and were admitted for trading as level-two American Depositary Receipts (one ADR representing six ordinary shares of Rostelecom) and began to be traded quite actively at NYSE and other international stock exchanges.

In June 1999, the General Meetings of Shareholders of OJSC Rostelecom and OJSC MMT (Mezhdugorodny i Mezhdunarodny Telefon) decided to reorganize the companies by merging MMT into Rostelecom. Following the completion of the merger, a new version of the Company’s Charter was adopted on August 28,

2000 to reflect all the changes with respect to the Company’s reorganization and legal succession to all the rights and obligations of OJSC MMT that merged into it.

To accommodate the reorganization, the Decision on issue of Rostelecom’s shares was adopted by Rostelecom’s Board of Directors (Board Meeting Minutes No. 2 dated July 7, 1999), based on the decision adopted by the General Meeting of the Company’s Shareholders on June 26, 1999 (Meeting Minutes No. 1 dated July 1, 1999) and the Merger Agreement between the Company and OJSC MMT dated July 17, 1999. The Company’s additional ordinary shares were placed by way of conversion of the MMT’s ordinary shares into ordinary shares of Rostelecom, and the Company’s preferred shares were placed by way of conversion of the MMT’s preferred shares into them.

Following the completion of the additional share placement procedures, on October 16, 2000 the Federal Commission for the Securities Market of the Russian Federation (hereafter — the FCSM) registered the report on the results of the issue of ordinary registered paperless shares of Rostelecom (registration number: 1-02-00124-A of August 16, 1999) and of Class A preferred registered shares (registration number: 2-02-00124-A of August 16, 1999) of Rostelecom).

On September 9, 2003, as per Order No. 03-1915/r of the Federal Commission for the Securities Market of the Russian Federation Rostelecom’s shares were consolidated as follows:

· the state registration numbers previously assigned to the issues of Rostelecom’s ordinary registered paperless shares — 73-1”P”-1947 of November 10, 1993 and 1-02-00124-A of August 16, 1999 — were canceled. These issues were given a new state registration number: 1-01-00124-A of September 9, 2003;

· the state registration numbers previously assigned to the issues of Rostelecom’s preferred registered paperless shares — 73-1”P”-1947 of November 10, 1993 and 2-02-00124-A of August 16, 1999 — were canceled. These issues were given a new state registration number: 2-01-00124-A of September 9, 2003.

On July 11, 2003, Rostelecom ordinary shares were listed as level-one securities and began to be traded at the St. Petersburg Stock Exchange.

As a result of changes in the procedures of securities trading at the St. Petersburg Stock Exchange Rostelecom ordinary shares were delisted from it on November 24, 2004.

On November 23, 2004, ordinary and preferred shares of OJSC Rostelecom began to be traded at OJSC Stock Exchange RTS without listing procedure. In March 2005 the Company’s ordinary and preferred shares were included on the basis of listing agreement into the Quotation list A1 with OJSC Stock Exchange RTS. On August 2005 preferred shares of OJSC Rostelecom were excluded from the Quotation list A1 of OJSC Stock Exchange RTS and moved to the section “Securities admitted for trading, but not included in Quotation lists”. In July 2006 the Company’s ordinary shares were excluded from the Quotation list A1 of OJSC Stock exchange RTS and moved to the Quotation list A2.

On December 31, 2004, an agreement was concluded with Stock Exchange CJSC MICEX, on the basis of which the ordinary and preferred shares of OJSC Rostelecom are listed in the Quotation list A of level one.

In 2007 ordinary and preferred shares of OJSC Rostelecom were delisted from NP Stock Exchange RTS and listed on OJSC Stock Exchange RTS as A1 and A2 securities respectively. On April 27, 2009, the Company’s ordinary shares were removed from A1 listing and started trading in the OTC market.

At present, Rostelecom’s outstanding share capital amounts to 2,428,819.4725 RUB and consists of 728,696,320 ordinary registered paperless shares and of 242,831,469 Class A preferred registered shares with a face-value of 0.0025 RUB each. The Charter of the Company (version No. 8) permits an additional issue of 905,330,221 ordinary shares and of 531 Class A preferred shares with a face-value of 0.0025 RUB (authorized shares). According to the Company’s Charter the Board of Directors of OJSC Rostelecom is authorized for additional public offerings of ordinary shares in case if the number of allocated shares does not exceed 25% of the outstanding shares.

According to OJSC Rostelecom Charter, the primary goal of the Company is to create a profit.

3.1.4. Contact Information

Open Joint Stock Company Long-Distance and International Telecommunications Rostelecom is a legal entity organized under the laws of the Russian Federation, with a registered office at: 15 Dostoevskogo st., St. Petersburg, 191002, Russia.

The Company’s Headquarters:

Address: 14 1st Tverskaya-Yamskaya St., Moscow, 125047

Phone: +7 (499) 972-8283

Fax: +7 (499) 972-8222

E-mail: info@rostelecom.ru

Web site: http://www.rt.ru

Public and Investor Relations Department:

Address: 14 1st Tverskaya-Yamskaya St., Moscow, 125047

Phone: +7 (499) 973-9920

Fax: +7 (499) 972-8222

E-mail: rostelecom@rostelecom.ru

Web site: http://www.rt.ru/en/centr-invest/

Corporate Secretary and Corporate Department:

Address: 14 1st Tverskaya-Yamskaya St., Moscow, 125047

Phone: +7 (499) 973-9921

Fax: +7 (499) 972-8222

E-mail: rtkm@rostelecom.ru

Web site: http://www.rt.ru/en/centr-invest/

3.1.5. Taxpayer’s Identification Number (TIN)

7707049388

3.1.6. The Issuer’s Branches and Representative Offices

The Company has the following branches:

North-Western Branch

Opened: on September 23, 1993.

Location: Russia, 3-5 Bolshaya Morskaya St., office 2N, letter A, St. Petersburg, 191002, Russia.

Mailing address: 3-5 Bolshaya Morskaya St., office 2N, letter A, St. Petersburg, 191002, Russia.

Head of Branch: Yevgeny Vladimirovich Gerasimov.

Power of attorney expires: on October 10, 2011 inclusive.

Volga Region Branch

Opened: on September 23, 1993.

Location: Russia, 292 Sadovaya St., Samara, 443001, Russia.

Mailing address: 292 Sadovaya St., Samara, 443001, Russia.

Head of Branch: Igor Vladmirovich Rybnikov.

Power of attorney expires: on September 29, 2011 inclusive.

Siberian Branch

Opened: on September 23, 1993.

Location: 33 2nd Soyuza Molodezhi St., Novosibirsk, 630122, Russia.

Mailing address: 33 Vtoraya Soyuza Molodezhi St., Novosibirsk, 630122, Russia.

Head of Branch: Anatoly Ivanovich Parfenov.

Power of attorney expires: on October 25, 2009.

Southern Branch

Opened: on September 23, 1993.

Location: 152 Pushkinskaya St., Rostov-on-Don 344006, Russia.

Mailing address: 152 Pushkinskaya St., Rostov-on-Don, 344006, Russia.

Head of Branch: Alexander Leonidovich Afanasyev.

Power of attorney expires: on October 25, 2009.

Urals Region Branch

Opened: on September 23, 1993.

Location: 4a, Asbestovsky Pereulok St., Yekaterinburg, 620067, Russia.

Mailing address: 4a, Asbestovsky Pereulok St., Yekaterinburg, 620067, Russia.

Head of Branch: Gennady Viktorovich Chernavtsev.

Power of attorney expires: on September 29, 2011 inclusive.

Far-Eastern Branch

Opened: on September 23, 1993.

Location: 23 Pushkina St., Khabarovsk, 680000, Russia.

Mailing address: 23 Pushkina St., Khabarovsk, 680000, Russia.

Head of Branch: Ivan Ivanovich Zima.

Power of attorney expires: on February 1, 2010.

Central Region Branch

Opened: on January 1, 2002.

Location: 17 3rd Khoroshevskaya St., bldg 1, Moscow, 123298, Russia.

Mailing address: 17 3rd Khoroshevskaya St., bldg 1, Moscow, 123298, Russia.

Head of Branch: Vyacheslav Yuryevich Smit.

Power of attorney expires: on July 22, 2011 inclusive.

Training Center (UPTs RT)

Opened: on April 26, 1995.

Location: Village Bekasovo, Naro-Fominsk District, Moscow Oblast, 143380, Russia.

Mailing address: Village Bekasovo, Naro-Fominsk District, Moscow Oblast, 143380, Russia.

Head of Branch: Olga Viktorovna Zaytseva.

Power of attorney expires: on October 30, 2009.

Mezhdugorodny i Mezhdunarodny Telefon (MMT)

Opened: on September 23, 1993.

Location: 30 Goncharnaya St., Moscow, 115172, Russia.

Mailing address: 30 Goncharnaya St., Moscow, 115172, Russia.

Acting Head of Branch: Anton Vyacheslavovich Godovikov.

Power of attorney expires: on July 8, 2011.

The Company has the following representative offices:

Representative Office in Geneva, Switzerland

Opened: on May 14, 1999.

Location: Le Chateau Banquet, rue de Lausanne 94 — 1202 Geneve\Suisse.

Mailing address: Le Chateau Banquet, rue de Lausanne 94 — 1202 Geneve\Suisse.

Head of the Representative Office: Alexander Ivanovich Kushtuev.

Power of attorney expires: on October 23, 2009.

3.2. Issuer’s Principal Operations

3.2.1. Issuer’s Field of Business

The Company’s main activity code according to the OKVED classification (the National Classification of Economic Activities) is: 64.2 Telecommunications.

3.2.2. Issuer’s Principal Operations

Rostelecom is one of Russia’s leading telecommunications providers. The Company owns and operates an advanced telecommunications network, spanning 150,000 km and enabling a wide range of services. The

reach of Rostelecom’s network and the Company’s high quality services solidify its position as Russia’s national telecommunications operator.

To date, Rostelecom’s business has centered on providing international and domestic long-distance telephone services (“ILD” and “DLD”) to its broad base of customers. Now, along with its traditional telephony services, Rostelecom provides high-tech telecommunications services, including intelligent network services, audio- and videoconferencing, high speed Internet access, deployment of virtual private networks (VPN) among others. The Company’s clientele includes retail customers, corporate customers (from small businesses to multinational companies), as well as state organizations and government agencies.

Given the increasing competition in the company’s traditional services, Rostelecom is actively diversifying and expanding the scope of its business by developing its newer innovative services. The Company’s Corporate Strategy for 2009-2013 adopted by the Board of Directors in 2008 is aimed at transforming Rostelecom into a leading single-source operator providing a wide range of telecommunications and information services to individuals, corporate customers and telecommunications operators in Russia and abroad.

The Company’s key advantage is its network. Rostelecom has a powerful trunk network connecting regional communications operators and mobile operators on a single national telecommunications platform. This network is also linked to the networks of the major international operators, making it possible for Rostelecom’s customers to communicate with anyone, anywhere in the world.

In the era of globalization and given the significant advances in information technology, particular focus is placed on the Company’s international access and its ability to connect Russia with the rest of the world using the latest technology. Rostelecom has established direct international connections with over 150 network operators in 70 countries and cooperates with more than 600 fixed-line and mobile operators, internet and contend providers. The Company offers traffic transit and termination services to international operators and provides international leased line services that can accommodate any capacity level. As the leading fixed-line telecommunications operator in the Russian Federation, Rostelecom is a permanent member of the International Telecommunication Union (ITU), a member of the Telecommunications Operators Board of the Regional Commonwealth (RCC) and a member of a number of other international organizations.

The Company’s revenue trend is set out in the table below.

Indicator		Q3 2009
Revenue for the reporting period, thousand RUB		14,858,528
Revenue from the operating activities (telecommunications services), thousand RUB		14,629,097
Operating revenue margin, %		98
Operating revenue change y-o-y, %		-7

During the reporting period the Company’s revenue from operating activities went down 7% as a result of decreased traffic from end users due to long-distance market liberalization.

Main services rendered by the Company are DLD and ILD traffic transit and leased line services.

DLD traffic		Q3 2009
Revenue, thousand rubles		6,182,210
% of total revenue		42

Note: DLD traffic volume is preliminary estimated at 2,199,623 thousand minutes.

ILD traffic		Q3 2009
Revenue, thousand rubles		4,554,041
% of total revenue		31

Note: ILD traffic volume is preliminary estimated at 1,341,467 thousand minutes.

Leased line services		Q3 2009
Revenue, thousand rubles		1,826,395
% of total revenue		12

General cost structure of the Issuer:

	Q3 2009
Cost items	DLD traffic	ILD traffic	Leased line services
Raw materials	1	0	2
Components and semi-finished products purchased, %	0	0	0
Contracted production services, %	77	82	26
Fuel, %	0	0	1
Electricity, %	0	0	2
Wages and salaries, %	9	6	26
Loan interest, %	0	0	0
Rents, %	1	0	1
Social fund deductions, %	1	1	5
Fixed asset depreciation, %	4	3	25
Tax-deductible costs, %	0	0	0
Other costs, %	7	7	13
Amortization of intangible assets, %	0	0	0
Innovation remuneration, %	0	0	0
Mandatory insurance premiums, %	0	0	0
Entertainment costs, %	0	0	0
Other costs, %	7	6	13
Total production and selling costs, %	100	100	100
For reference: Products (works, services) sales revenue to production costs ratio, %		120

Calculations set forth in this section of the quarterly report have been made in accordance with the Russian Accounting Standards (RAS).

3.2.3. Materials, products (raw materials) and the Issuer’s suppliers

The Company’s main business activity is provision of telecommunication services. Therefore no raw materials are required.

As of September 30, 2009, the Company has the following suppliers (pursuant to the agreements in force as of the end of Q3 2009) accounting for at least 10% of total supplies of basic process equipment:

Full official name: Juniper

Location: USA

Share in the overall deliveries volume: 14%

Full official name: HUAWEI TECH. INVESTMENT CO., LTD

Location: China

Share in the overall deliveries volume: 18%

The share of imported basic process equipment was 79%. As Rostelecom’s principal suppliers are major telecommunications equipment manufacturers competing in the world market and providing comparable equipment, so Rostelecom can rely on purchasing equipment from those suppliers. Besides, the equipment supply contracts include the suppliers’ obligation to manufacture and provide maintenance support for a long period of time.

3.2.4. Target Markets for the Issuer’s Products (Works, Services)

In 2009, the Company focuses on providing a complete range of telecommunications services in order to position itself as a single-source operator.

To secure its leading market position, Rostelecom is focusing on its competitive advantages, offering high-quality universal services in order to attract and retain a broad range of customers.

The Company is improving its backbone telecommunications network giving users nationwide access to Rostelecom’s services while also meeting the growing demand for modern and high quality telecommunications products.

Major markets where the Company operates are the following:

· individuals market;

· corporate clients market;

· operators market.

Individuals Market

DLD and ILD telecommunications remain the Company’s core services. 9 months 2009 proceeds from providing DLD and ILD telecommunications services to end users amounted to RUB 24,055.4 million (exclusive of VAT) and constituted 53% of Rostelecom’s total revenue.

The Company was committed to the implementation of commercial offerings to meet its customers’ need for modern telecommunications products. Concurrently, Rostelecom focused on optimizing tariffs, while increasing the quality and efficiency of its telecommunications services.

In particular, on February 1, 2008, Rostelecom lowered tariffs for subscribers on the public communications network within the territory of the Russian Federation. Phone calls to other cities during daytime hours became up to 30% cheaper, depending on the region and destination. The reduction of tariffs added to the Company’s competitive advantages within the domestic long-distance telecommunications service market in Russia, enabling it to attract and retain customers.

Additionally, in October 2008 the new tariff plan “Veter Peremen” (“Wind of Change”) was introduced for all individuals who chose Rostelecom as their permanent DLD telecommunications operator. This plan was designed for customers wishing to make cheaper calls with guaranteed quality and a regular dial plan. This offer is aimed at ensuring mutually beneficial long-term relationships between Rostelecom and its customers.

In March 2009 Rostelecom introduced the new tariff plan “Mezhdunarodniy” (“International”) specially designed for customers wishing to save on international phone calls. The customers will enjoy up to 40% discount depending on call time.

Corporate Clients Market

The Company provided a comprehensive offer for corporate clients: a package of services consisting, in addition to traditional DLD and ILD telephony services, of services geared toward the setup and provisioning of high-speed Internet access, the setup of virtual private networks (hereinafter referred to as the “IP VPN”), as well as access to Rostelecom’s intelligent platform services, including those provided by its subsidiaries.

Rostelecom continued developing its network of Customer Care Centers in all regions of Russia. The Company’s 89 Customer Care Centers served as a one-stop shop, enabling subscribers to settle service issues easily and quickly, get advice from highly qualified experts on services and operator tariffs, obtain billing information and details of their DLD and ILD connections, pay invoices and execute contracts.

Operators Market:

In 2009, Rostelecom continues to cooperate with Russian regional telecommunications operators to render efficient DLD and ILD telecommunications services to its customers.

Rostelecom connects intraregional and local operators to the infrastructure of its backbone network in all regions, forming an integrated national telecommunication network. This enables the Company to provide customers ranging from private individuals to large corporations with DLD and ILD telecommunications services from any location in the country. When subscribers make DLD or ILD calls, the regional operators provide the initiation and termination services on the intraregional and local level. If and when services are carried out by an agent, Rostelecom pays that agent’s remuneration.

3.2.5. Licenses Held by the Issuer

The Company holds the following licenses:

License number: GS-2-781-02-1026-0-7707049388-030211-2

Issue date: November 26, 2008

Expiry date: November 26, 2013

Issued by: The Ministry of Regional Development

Activity: designing of buildings and facilities, except for seasonal and auxiliary structures

License number: GS-2-781-02-1027-0-7707049388-030198-2

Issue date: December 9, 2008

Expiry date: December 9, 2013

Issued by: The Ministry of Regional Development

Activity: construction of buildings and facilities, except for seasonal and auxiliary structures

License number: 61465

Issue date: September 5, 2008

Expiry date: September 5, 2013

Issued by: The Federal Service on Supervision in the Area of Communications and Mass Media

Activity: telegraph communication services

License number: 59339

Issue date: May 7, 2008

Expiry date: May 7, 2011

Issued by: The Federal Service on Supervision in the Area of Mass media, Communications and Protection of Cultural Heritage

Activity: TV and radio broadcasting

License number: 59334, 59342, 59343, 59344, 59346

Issue date: May 7, 2008

Expiry date: June 21, 2011

Issued by: The Federal Service on Supervision in the Area of Mass media, Communications and Protection of Cultural Heritage

Activity: TV and radio broadcasting

License number: 59341

Issue date: May 7, 2008

Expiry date: June 26, 2011

Issued by: The Federal Service on Supervision in the Area of Mass media, Communications and Protection of Cultural Heritage

Activity: TV and radio broadcasting

License number: 59333, 59335, 59336, 59337, 59338, 59340, 59345, 59347, 59348, 59349, 59350, 59351

Issue date: May 7, 2008

Expiry date: March 30, 2013

Issued by: The Federal Service on Supervision in the Area of Mass media, Communications and Protection of Cultural Heritage

Activity: TV and radio broadcasting

License number: 49540

Issue date: May 15, 2007

Expiry date: May 15, 2012

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: data services for transmission of voice information

License number: 48653

Issue date: May 15, 2007

Expiry date: May 15, 2012

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: data services (other than transmission of voice information)

License number: 48652

Issue date: May 15, 2007

Expiry date: May 15, 2012

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: telematic services

License number: 45945

Issue date: November 17, 2006

Expiry date: November 17, 2011

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: cable casting

License number: 44219

Issue date: September 21, 2006

Expiry date: September 21, 2011

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: local telephone communications via payphones

License number: 36740

Issue date: November 1, 2005

Expiry date: November 1, 2010

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: local telephone communications via payphones

License number: 36739

Issue date: November 1, 2005

Expiry date: November 1, 2010

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: local telephone communications via public call offices

License number: 36738

Issue date: November 1, 2005

Expiry date: November 1, 2010

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: local telephone communications (except via payphones and public call offices)

License number: 32898

Issue date: July 15, 2005

Expiry date: July 15, 2010

Issued by: The Federal Service on Supervision in the Area of Communications

Activity: intraregional telephone communications

License number: 29778

Issue date: December 11, 2003

Expiry date: December 11, 2013

Issued by: The Russian Federation Ministry of Communications

Activity: leased line services

License number: 29777

Issue date: December 11, 2003

Expiry date: December 11, 2013

Issued by: The Russian Federation Ministry of Communications

Activity: long-distance and international communications

License number: 0813

Issue date: May 4, 2009

Expiry date: May 4, 2014

Issued by: The Federal Service for Technical and Export Control of Russia

Activity: technical protection of confidential information

License number: 7153 X

Issue date: May 6, 2009

Expiry date: May 6, 2014

Issued by: The Center for Licensing, Certification and Protection of State Secret of the Federal Security Service of Russia

Activity: technical maintenance of cryptographic hardware

License number: 7154 P

Issue date: May 6, 2009

Expiry date: May 6, 2014

Issued by: The Center for Licensing, Certification and Protection of State Secret of the Federal Security Service of Russia

Activity: distribution of cryptographic hardware

License number: 7155 Y

Issue date: May 6, 2009

Expiry date: May 6, 2014

Issued by: The Center for Licensing, Certification and Protection of State Secret of the Federal Security Service of Russia

Activity: rendering services in the area of information encryption

The Company has no grounds to expect that its licenses will not be timely extended, will be withheld or cancelled.

The detailed data on communications licenses is presented in item 3.2.9 (Additional requirements to issuers that are providers of communications services), sub-item “Communications Licenses” of the present report.

3.2.6. Issuer’s Joint Operations

During the reporting period the Company did not conduct any joint activities with other organizations (as defined in Article 1041 of the Russian Federation Civil Code).

3.2.7. Additional Requirements to Issuers That Are Joint-Stock Investment Funds or Insurance Organizations

Not applicable.

3.2.8. Additional Requirements to Issuers That Are Extracting Companies

Not applicable.

3.2.9. Additional Requirements to Issuers That Are Providers of Communications Services

a) Communications licenses

License number: 61465

Activity: telegraph communication services

Expiry date: September 5, 2013

License terms: the Licensee is authorized to provide public network telegraph communications services in the territory of the Russian Federation, as set forth here below:

· long-distance and international telegraphic traffic transfer and handling services;

· AT/telex network services;

· non-category telegram transmission services.

Telegraph communications services shall be provided using the Licensee’s public communication network and allocated telegraph communications network.

License number: 59339

Activity: TV and radio broadcasting

Expiry date: May 7, 2011

License terms: the Licensee must provide users with:

a) receiving of broadcast programs;

b) program broadcasting.

License number: 59334, 59342, 59343, 59344, 59346

Activity: TV and radio broadcasting

Expiry date: June 21, 2011

License terms: the Licensee must provide users with:

a) receiving of broadcast programs;

b) program broadcasting.

License number: 59341

Activity: TV and radio broadcasting

Expiry date: June 26, 2011

License terms: the Licensee must provide users with:

a) receiving of broadcast programs;

b) program broadcasting.

License number: 59333, 59335, 59336, 59337, 59338, 59340, 59345, 59347, 59348, 59349, 59350, 59351

Activity: TV and radio broadcasting

Expiry date: March 30, 2013

License terms: the Licensee must provide users with:

a) receiving of broadcast programs;

b) program broadcasting.

License number: 49540

Activity: data services for transmission of voice information

Expiry date: May 15, 2012

License terms: the Licensee is authorized to provide subscribers and (or) users with:

a) access to the Licensee’s telecommunications network;

b) connections via its network for transmission of voice information;

c) access to data services for transmission of voice information rendered by other operators whose networks are interconnected with the Licensee’s network.

License number: 48653

Activity: data services (other than transmission of voice information)

Expiry date: May 15, 2012

License terms: the Licensee is authorized to provide subscribers and (or) users with:

a) access to the Licensee’s telecommunications network;

b) connections via its network for data services other than transmission of voice information;

c) access to data services rendered by other operators whose networks are interconnected with the Licensee’s network.

License number: 48652

Activity: telematic services

Expiry date: May 15, 2012

License terms: the Licensee is authorized to provide subscribers and (or) users with:

a) transmission of facsimile messages;

b) transmission of email messages; access to information provided by worldwide and regional information and telecommunication networks, including Internet.

License number: 45945

Activity: cable casting services

Expiry date: November 17, 2011

License terms: the Licensee is authorized to provide subscribers with:

a) access to the Licensee’s telecommunications network;

b) transmission of radio and television programs via cables to end users.

License number: 44219

Activity: local telephone communications via payphones

Expiry date: September 21, 2011

License terms: the Licensee is authorized to provide users with:

a) local voice calls;

b) access to telematic communication services and intraregional, domestic and international long-distance telephone services, as well as data services other than voice information transmission;

c) access to information and inquiry services;

d) 24-hour free-of-charge emergency calls.

License number: 36740

Activity: local telephone communications via payphones

Expiry date: November 1, 2010

License terms: the Licensee is authorized to provide users with:

a) local voice calls over the fixed telecommunication network;

b) access to PSTN services except mobile telecommunications services;

c) access to information and inquiry services;

d) 24-hour free-of-charge emergency calls.

License number: 36739

Activity: local telecommunications services via public call offices

Expiry date: November 1, 2010

License terms: the Licensee is authorized to provide users with:

a) local voice calls over the fixed telecommunication network;

b) access to PSTN services except mobile telecommunications services;

c) access to information and inquiry services;

d) 24-hour free-of-charge emergency calls.

License number: 36738

Activity: local telecommunications services, except telecommunications services via payphones and public call offices

Expiry date: November 1, 2010

License terms: the Licensee is authorized to provide subscribers with:

a) access to the Licensee’s telecommunications network;

b) subscriber’s line in permanent use;

c) local telephone calls over the fixed telecommunications network using data terminal equipment with number assignment from the number plan of Licensee’s local telecommunications network:

· transmission of voice information;

· transmission of facsimile messages;

· data transmission;

d) access to PSTN services except mobile telecommunications services;

e) access to information and inquiry services;

f) 24-hour free-of-charge emergency calls.

License number: 32898

Activity: intraregional telephone communications

Expiry date: July 15, 2010

License terms: the Licensee is authorized to provide subscribers and (or) users with:

a) intraregional telephone calls over the fixed telecommunications network using data terminal equipment for:

· transmission of voice information;

· transmission of facsimile messages;

· data transmission;

b) access to PSTN services except local and mobile telecommunications services;

c) access to information and inquiry services.

License number: 29778

Activity: leased line services

Expiry date: December 11, 2013

License terms: the Licensee is authorized to provide users with local, DLD and ILD physical circuits, communication channels and paths for transmitting telecommunications signals over the territory of Russia. The licensee’s total voice frequency channels’ capacity (main digital channels), including digital lines, should be not less than 100,000 units.

License number: 29777

Activity: domestic and international long-distance telecommunications services

Expiry date: December 11, 2013

License terms: the Licensee is authorized to provide subscribers and/or users throughout Russia with the following services:

a) DLD communication via fixed-line telephone network for the purposes of:

· transmission of voice information;

· transmission of facsimile messages;

· data transmission;

b) ILD communication via fixed-line telephone network for the purposes of:

· transmission of voice information;

· transmission of facsimile messages;

· data transmission;

c) access to information and inquiry services.

No factors have been detected that may detract from the Company’s fulfillment of its liabilities on issued licenses.

The Company has no grounds to expect its licenses not to be timely extended or to be withheld or cancelled.

b) Telecommunications Networks

Rostelecom provides domestic and international long-distance telecommunications services via its cable systems, radio relay communication lines and satellite channels. The trunk network’s resources guarantee the transmission of all types of information. Rostelecom’s digital network, which is based on the synchronous digital hierarchy (SDH, that is, a European FOL standard used for long-distance data transmission) and dense wavelength division multiplexing (DWDM) technology, covers almost the entire Russian Federation territory.

Primary telecommunications network

Rostelecom’s primary telecommunications network consists of trunk lines interconnected via its domestic long-distance and international exchanges, and IP/MPLS exchanges with networks of intraregional fixed-line and mobile operators, as well as via international and IP/MPLS exchanges with networks of foreign operators.

As of the end of the reporting period, the Company’s digital network was comprised of 51,065 km, including 36,369 km of fiber-optic lines (FOLs) and 15,339 km of digital radio relay lines. The main components of the network are the powerful Moscow — Novorossiisk, Moscow — St. Petersburg, and Moscow — Khabarovsk FOLs, as well as digital radio relay lines Moscow — Saint-Petersburg, Moscow — Khabarovsk, Perm - Yekaterinburg, Tyumen — Surgut, Samara — Orenburg and a satellite communication network, which includes three nodal ground stations in Moscow, Novosibirsk, and Khabarovsk, and nine peripheral ground stations in Barnaul, Kirov, Gorno-Altaisk, Kyzyl, Minusinsk, Yakutsk, Novokuznetsk, Yuzhno-Sakhalinsk, and Salekhard.

The Company has built international FOLs, which provide access to Finland, Denmark, Turkey, Italy, Bulgaria, Japan, Korea, China, Estonia, Kazakhstan, Ukraine, Georgia and Belarus. The largest international operators can now send their traffic through Russia. As it equips itself with new digital cables, the Company is phasing out its analog telecommunications lines from service. From the year 2001 to the end of the reporting period, 93.4 thousand km of analog telecommunication cables were phased out.

The table below presents a list of the trunk lines comprising Rostelecom’s primary network as of the end of the reporting period:

Line		Type of line		Length (km)		Transmission speed (Mbps)		Number of channels
Moscow–Khabarovsk		Digital radio relay		7,992		6 x 155		11,340

Line	Type of line	Length (km)	Transmission speed (Mbps)	Number of channels
Samara–Novosibirsk	Fiber optic	2,782	9,953 x 2	241,920
Moscow–Yekaterinburg	Fiber optic	2,400	2,488	30,240
Moscow–St. Petersburg	Fiber optic	1,163	9,953 x 2	362,880
Nakhodka–Naoetsu–Pusan	Submarine fiber optic	1,762	565	15,120
Nakhodka–Khabarovsk	Fiber optic	897	2 x 622	15,120
Kingisepp–Albertslund	Submarine fiber optic	1,274*	2 x 565	15,120
Kingisepp–St. Petersburg	Suspended fiber optic	191	2 x 622	15,120
St. Petersburg–Kingisepp–Moscow	Digital radio relay	923	3 x 140	5,760
Novorossiisk–Istanbul–Palermo–Karolina Bugas	Submarine fiber optic	3,564 (664*)	565	15,120
St. Petersburg–Finland	Fiber optic	197**	622	7,560
Kingisepp–Tallinn	Fiber optic	26**	2,488	30,240
Moscow–Novorossiisk	Fiber optic	1,653	2 x 9,953+2,488	272,160
Novorossiisk–Varna– Carolina Bugas	Submarine fiber optic	1,224.7	2,488	30,240
Novorossiisk–Sochi–Poti	Submarine fiber optic	425	2,488	30,240
Khabarovsk–Harbin (PRC)	Fiber optic	150**	2,488+1 x 9,953	151,200
Perm–Yekaterinburg	Digital radio relay	565	2 x 155	3,780
Perm–Yekaterinburg	Fiber optic	382	3 x 9,953	362,880
Apastovo–Shigony	Fiber optic	220	9,953	120,960
Ivanovka–Vladivostok	Fiber optic	61	622	7,560
St. Petersburg–Lyuban–Luga	Fiber optic	289	2,488	30,240
Zadonsk–Lipetsk–Tambov	Fiber optic	270	622	7,560
Apastovo–Kazan	Fiber optic	132	622	7,560
Russia–Kazakhstan (eastern part of the border)	Fiber optic	220**	622	7,560
Vladimir–Vologda, with branches to Ivanovo, Kostroma, and Yaroslavl	Fiber optic	665	622	7,560
An overlay digital network in the Moscow Oblast	Fiber optic	709	2 x 622	15,120
Tula–Kaluga	Fiber optic	212	2,488	30,240
Kaluga–Belgorod to the Ukrainian border, with branches to Bryansk, Kursk, and Belgorod	Fiber optic	974**	2,488	30,240
Moscow–Minsk, with a branch to Smolensk	Fiber optic	480**	9,953	120,960
Tyumen–Surgut	Digital radio relay	709	5 x 155	9,450
Samara–Orenburg	Digital radio relay	386	155(2 x 155)	1 890
Apastovo–Malaya Purga, with branches to Kazan, Naberezhniye Chelny, Izhevsk, and Yoshkar-Ola	Fiber optic	661	2,488	30,240
Novosibirsk–Khabarovsk	Fiber optic	5,480	2,488	30,240
Novorozhdestvenskaya–Stavropol–Makhachkala	Fiber optic	270	2,488	30,240
Novorozhdestvenskaya - Stavropol–Kropotkin–Pyatigorsk–Budyonnovsk, with branches to Mineralniye Vody, Kislovodsk	Fiber optic	458	2,488	30,240
Krasnodar – Novorozhdestvenskaya	Fiber optic	149	2,488	30,240
Budyonnovsk–Kizlyar–Makhachkala, with branches to Cherkessk, Nalchik, Nazran, and Vladikavkaz	Fiber optic	901	2,488	30,240
Aksai–Lugansk	Fiber optic	36**	622	7,560
Samara–Saratov–Volgograd	Fiber optic	928	2,488 x 2	60,480
Perm–Izhevsk	Fiber optic	657	2,488	30,240
Volgograd–Rostov-on-Don	Fiber optic	516	2,488	30,240
Volgograd–Elista–Budyonnovsk	Fiber optic	560	2,488	30,240
Kizlyar–Grozny	Fiber optic	140	9,953	120,960
Lyuban–Issad	Fiber optic	140	2,488	30,240
Issad–Petrozavodsk	Fiber optic	319	2,488	30,240
Russia–Kazakhstan (western part)	Fiber optic	455**	2,488	30,240
Yoshkar-Ola–Kirov	Fiber optic	465	2,488	30,240
Moscow Ring	Fiber optic	64,1	9,953	120,960
Baltic Cable System	Fiber optic	1,280	6 x 2,488 + 4 x 2,488	1,935,360
Moscow – Samara	Fiber optic	1,021	5 x 9,953	604,800
Russia - Azerbaidjan	Fiber optic	201**	622	7,560

Line	Type of line	Length (km)	Transmission speed (Mbps)	Number of channels
Kaliningrad – Gvardeisk – Sovetsk – state border to Lithuania	Fiber optic	131**	2,488	30,240
Gatikha – D. Konstantinovo – Civilsk – Apastovo with attachments to N. Novgorod and Cheboksary	Fiber optic	924	2 x 9,953	241,920
Novosibirsk–Khabarovsk	Fiber optic	5,480	2 x 9,953	241,920
Ufa – Orenburg	Fiber optic	824	9,953	120,960
Lightening of dark fibers of fiber-optic line from Kingisepp to Kotka	Submarine fiber optic	234	9,953	120,960
Geographic diversity of primary trunk network in Moscow Oblast	Fiber optic	840	9,953	120,960
Russia – China (Blagoveshchensk-Haihe)	Fiber optic	21	2,488	30,240
Chelyabinsk-Tyumen	Fiber optic	536	9,953	120,960
Nazran – Grozny	Fiber optic	55	9,953	120,960
Khabarovsk – Vladivostok	Fiber optic	1,500***	9,953	120,960
Tyumen – Omsk	Fiber optic	660	9,953	120,960
Omsk – Novosibirsk	Fiber optic	712	9,953	120,960
Tyumen – Surgut	Fiber optic	930****	2,488	30,240
Kirov – Syktyvkar	Digital radio relay	390	3 x 155	5,670
Skovorodinop – Tynda – Yakutsk	Fiber optic + digital radio relay	167 + 867 (1.034)	2,488	30,240
Moscow – Smolensk – Gusino – Belarus	Fiber optic	558	2 x 9,953	241,920
Vologda – Issad	Fiber optic	515	3 x 9,953	362,880
Russia – Japan	Submarine fiber optic	2 x 402	3+3 x 9,953	2 x 362,880
Astrakhan - Kizlyar	Fiber optic	418	9,953	120,960
Ring system Chelyabinsk – Khabarovsk	Fiber optic	2,251	9,953	120,960
Petrozavodsk – Murmansk	Fiber optic	1,078	9,953	120,960
Anatolskoe – Nyagan	Digital radio relay	643	1x155	1,890

* length of section owned by Rostelecom

** distance to national border

*** reconstruction of existing lines

**** leased fiber-optic lines

Secondary telecommunications network

Rostelecom’s international digital network is formed on the basis of 2 separated centers of STP signalizing and 11 international exchanges, located in Moscow (3 exchanges), Lyuban (2 exchanges), Rostov, Khabarovsk, Yekaterinburg, Kaliningrad, Samara, and Novosibirsk.

As of the end of the reporting period, the capacity of international exchanges totals 214.4 thousand lines.

The long-distance digital telecommunications network of the Company comprises 16 domestic long-distance exchanges, 6 combined exchanges (domestic and intraregional), and 4 separated centers of STP signalizing.

All digital domestic long-distance and international exchanges are interconnected with the digital telecommunications network. From 2003 to the end of the reporting period the Company expanded and improved existing and constructed new telecommunications facilities. As a result the total capacity of these facilities increased by 389,150 lines.

At present the Company provides ISDN services in the regions with digital trunk exchanges complete with SS-7 common signaling system and where such services are demanded. There is an open access for subscribers of 77 RF regions to inter-city and international services ISDN connection. The Company operates an open multimedia telecommunications network, which include subscriber audio and video terminations in 75 cities of Russia and 13 stations for shared access. Subscribers connected to Rostelecom’s open multimedia communication network can participate in and organize videoconferences, both bilateral and multilateral, discuss and jointly edit text and graphics documents, and receive and send files, as well as various forms of audio and video information.

To provide audio- and videoconferencing services based on IP and ISDN technology and to improve organization and planning of audio- and videoconferences the Company utilizes a multipoint control unit

MCU MGC-100 Polycom that supports up to 20 videoconferences simultaneously. The largest number of members that can participate in an audioconference amounts to 96, in a videoconference — to 48 (ISDN, 384 Kbit/s), 36 (IP, 768 Kbit/s).

Based on the Intelligent platform Tellin produced by Huawei Technologies installed in Moscow, the Company continues providing the services such as Freephone, Televoting, and Call with Premium Rate for clients of all regions of Russia and a range of commercial telecommunications operators.

As a national operator of Russia Rostelecom offers the following services:

· access both to domestic and international long-distance communication lines throughout Russia;

· signal verification and passage via SS-7 signaling system, allowing coordination of the operation of all types of digital networks based on the digital transit network;

· multimedia communications (videoconferencing);

· ISDN network and intelligent network services;

· leasing lines of different throughput capacity, VPN, Internet access both for operators and corporate clients;

· transit via the Company’s network;

· Data Center services.

As of the end of the reporting period, the Company’s telecommunications network comprises 755.1 thousand lines. The share of digital switching nodes and centers is 100%.

The Company completed construction of data transmission network based on Multiprotocol Label Switching (IP/MPLS) technology. This network includes 8 reference nodes installed on domestic long-distance exchanges; 4 nodes in Moscow, two of which is a reference ones; 151 regional nodes located in large cities, and 5 nodes located abroad in Stockholm, Hong Kong, Frankfurt, London and Amsterdam. The Company put into operation Data Centers in Moscow (2 Data Centers), Novosibirsk, Yekaterinburg and Khabarovsk.

In order to provide leasing of NX64 Kbit/sec digital channels Rostelecom has constructed networks of long-distance and international channels based on the equipment of flexible multiplexers:

· a network on the basis of Luchezar (Martis DXX) equipment consisting of 162 nodes located in 125 cities;

· a network on the basis of MainStreet equipment consisting of 6 nodes located at 5 cities.

Submarine Cables

Within the program of extending and modernizing its international telecommunications capacity, Rostelecom uses state-of-the-art submarine cables for organization of telecommunications channels between Russia and other countries. The Company is the end party and owner of the basic capacities in six international fiber-optic cable systems: Denmark—Russia 1 (DK—R1), Russia—Japan—Korea (R—J—K), Italy—Turkey—Ukraine—Russia (ITUR), Georgia — Russia (G—R), Black Sea Fiber-optic cable system (BS FOCS), and Russia—Japan in which Rostelecom owns approximately 50%, 33%, 30%, 67%, 9.4%, and 50% respectively. The rest of these cable systems is owned by various international operators.

In order to ensure access to these systems and set up direct high-quality international telecommunications links to remote parts of the world, Rostelecom participates in construction of many international cable systems and acquires capacities in them.

As of the end of the reporting period, the Company has interests in or the inalienable right to 19 cable systems, including such global cable system projects as Fiber Line Round the Globe (Great Britain—Middle East—Japan), the Asia-Pacific Cable System, the Canadian Transatlantic System, the Trans-Pacific Cable System (Japan—USA), the Southeast Asia—Middle East—Western Europe System, and the Trans-Atlantic System.

Satellite Telecommunication

The satellite telecommunications network of Rostelecom relies on 16 ground node stations The Company leases the capacity of satellites Express from Federal State Unitary Enterprise Kosmicheskaya Svyaz and Yamal from OJSC Gazkom. The Company determined the composition and location of the ground satellite telecommunication stations based on the needs of the secondary network, as well as for gaining access to the digital trunk network.

Additionally the Company rents satellite channels from the following satellite operators: Zond Holding, FSUE Kosmicheskaya Svyaz, SatComLine, Svyazkontaktinform, and Yamaltelecom.

Cooperation between Rostelecom and Mobile Operators

Cooperation between the Company and Russian mobile operators is aimed at expanding the range of high-quality telecommunications services, including national and international roaming. As of the end of the reporting period, Rostelecom is routing the international roaming for 531 cellular networks in 180 countries.

3.3. The Issuer’s Future Plans

The Company’s Corporate Strategy provisions for its transformation into a single-source operator. In 2009 Rostelecom will focus on diversifying and expanding its business lines, as well as developing competitive advantages to enable the Company to cement a leading position in various sectors of the Russian telecommunications market.

Corporate Customers

Rostelecom expects a number of factors to contribute to its ability to retain its leading position in the telecommunications sector and remain the operator of choice for corporate customers. These include the powerful and reliable nationwide telecommunications network, advanced services, extensive market experience and high level of professionalism.

By continually strengthening its competitive advantages, Rostelecom plans to preserve its leading market position in the traditional segments of DLD and ILD telecommunications services. In addition, the active promotion of data transmission and intelligent network services will help diversify the business, and make Rostelecom a single-source telecommunications operator.

High Quality DLD and ILD Telecommunications

The Company plans to maintain its leading market position in the DLD and ILD Telecommunications segment by providing a wide range of tariff plans that satisfy the needs of large national and international corporations all the way down to the smallest-sized firms.

Among the Company’s priorities is the continued development of direct services offered to corporate clients and securing contracts based on the pre-selection of Rostelecom as the DLD and ILD telecommunications operator. Direct contracts will ensure greater interaction with the clients and increase servicing and communications efficiency, while also allowing clients to take advantage of special offers.

Entire Range of Telecommunications Services from a Single Operator

Another priority is to further develop sales of ‘bundled’ telecommunications services designed to fully meet the needs of its corporate client base. This offering will allow Rostelecom’s clients to receive an entire range of modern telecommunications products and services from a single operator, which will support customer confidence and service efficiency.

Depending on the size and scope of the corporate customer, the bundled service may include both traditional DLD and ILD telecommunications services along with Internet access services. It will also be possible to set up virtual private networks, video conferencing, intelligent network services, among other services. Bundled services offered by the Company in cooperation with other operators gives customers in all regions with high quality service which helps ensure peace of mind.

Development and Promotion of New Services

In order to match the growing demand for modern telecommunications services by Russian corporations, Rostelecom plans to continue aggressively market its existing services while continuing to develop state-of-the-art services rendered via the Company’s intelligent network, such as virtual private networks and Internet access services. In 2009, the Company plans to offer its Contact Center and Data Center services to its clients, as well as introduce a new business model of the intelligent network services — the “Call with Premium Rate” and “Televoting”.

Development of Customer Services

Rostelecom plans to further develop its sales and customer support network in cooperation with other operators and agents in order to provide high-quality customer service and access to a wider range of telecommunications services.

Moreover, the Company plans to give customers the ability to manage their own services, increasing the efficiency of sales and promotion of telecommunications services and securing customer loyalty. Client services, such as the Personal Cabinet and the Client Control Line, will allow customers to receive up-to-date information on calls placed and received, retrieve account balance information, allow them to add/delete services and enable them to give feedback on service quality.

The further development of the integrated contact center, where all categories of customer calls will be processed, will enable high quality remote assistance and will considerably reduce processing time on customers’ calls. As part of improving the overall customer experience, the Company also plans to develop an online consulting service staffed by highly qualified experts, a mechanism for billing notification and online forms for monitoring customer satisfaction.

Individual Subscribers

Despite the emergence of new DLD and ILD telecommunications service providers, Rostelecom retains its leading position and remains the preferred operator for individual subscribers all over Russia. The Company provides its clients with high quality and reliable telecommunications, guaranteeing high standards of service and living up to its motto, “Always Online”.

The Company’s short-term plans include rendering new telecommunications products to its individual clients and implementing further customer service improvements.

Convenient DLD and ILD Telecommunications

To retain the leading position in the DLD and ILD telecommunications market, the Company plans to increase its client base while also executing pre-selection contracts.

Rostelecom also plans to further develop its tariff options, allowing the customer the flexibility to choose suitable tariffs depending on DLD and ILD call times and destinations. Entering into a pre-select contract with Rostelecom, the client will receive excellent service and the opportunity to participate in bonus programs and special offers.

Promotion of New Telecommunications Services

Rostelecom plans to actively promote its new intelligent network services to individual subscribers. Its Freephone and Universal access number give customers the opportunity to use a convenient web interface for ordering and managing services..

Development of Customer Services

In order to more easily reach end users and to improve access to the Company’s services, Rostelecom will continue to develop and expand the geographic reach of its sales and customer service network and add additional agents.

In order to create a more efficient customer service function, the Company plans to actively promote services like the Personal Cabinet, which is available both via telephone and web interface. Rostelecom will also increase the number of payment outlets for telecommunications services and develop new payment methods.

In 2009, the Company will work to increase brand awareness and maintain its reputation as a modern reliable telecommunications operator, while keeping the market informed of new customer service initiatives.

Operators Market

Its nationwide powerful fiber-optic telecommunications network gives Rostelecom an undeniable competitive advantage and makes it the leading partner choice for operators in the Russian telecommunications market. Operators and service providers who select Rostelecom as a business partner

can take advantage of the Company’s high-quality IP/MPLS network with connections to the largest Russian and foreign operators in the Russian Federation, CIS, Europe and Asia, with guaranteed high service quality.

To strengthen its position on the operators’ market, the Company plans to work more efficiently with Russian operators, expand cooperation with foreign telecommunications services providers and promote Rostelecom’s brand on the international telecommunications market.

National “Operator for Operators”

Rostelecom will continue to develop partnerships with fixed-line and mobile telecommunications operators, providing them with traffic transit services and interconnection to the Rostelecom network with access points in all regions of Russia and to more than 150 international operators. The Company’s flexible tariff plans are an additional attractive feature for potential partners.

As a single-source telecommunications operator, Rostelecom plans to start selling bundled services to telecommunications services providers. The Company also plans to leverage its high throughput capacity and high-speed network to enhance its position on the leased line market. Furthermore, Rostelecom intends to actively promote backbone Internet traffic transmission and other innovative services as part of the multiservice network for Russian operators.

The Company plans to connect large hosting and content providers to its data transmission network, develop special product offers for broadband Internet operators and increase the number of direct interconnections with the largest operators in the key regions of the Russian Federation.

Cooperation with International Operators

To ensure growth in incoming ILD traffic, the Company will provide high quality traffic transit and termination services, introduce flexible tariff plans and expand the geographic reach of services for new and existing partners.

Rostelecom plans to enhance its position on the international market by entering into new interconnection agreements with operators and expanding the foreign infrastructure on its network and cross-border links to CIS, Europe, Asia countries The Company will maintain its strong position among CIS operators by establishing additional points of presence and opening sales offices in CIS countries.

The Company plans to support Transit Europe-Asia services by creating new tariff offers in 2009 and opening sales offices in Europe and Asia.

Offering New Telecommunications Services

Rostelecom puts a great deal of effort into the development of hi-tech products and services for telecommunications operators. In particular, the Company intends to promote new services in its Data Centers which include data protection, remote administration, data back-up and recovery. Also Rostelecom plans to single out Premium and Wholesale levels for voice traffic transit and to introduce VoIP Traffic Transmission service.

The Company is focused on expanding peer-to-peer relations with international operators in order to improve the quality of Internet access and Internet traffic transmission services. To strengthen its position in the data transmission market, the Company plans to establish interconnections with the IP/MPLS networks of foreign operators in order to provide international IP VPN services.

The Company is not planning to change its core activity.

3.4. The Issuer’s Participation in Industrial, Banking and Financial Groups, Holding Companies, Concerns and Associations

As of the end of the reporting period, the Company did not participate in any industrial, banking and financial groups, holdings, concerns and associations.

3.5. The Issuer’s Subsidiaries and Dependent Companies

Abbreviated name: CJSC MTs NTT.

Full name: Closed Joint Stock Company Moscow Center for New Telecommunications Technologies.

Location: 46 Arbat St., bldg. 1, Moscow, 121002, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 100.00%.

The Company’s interest in the outstanding ordinary shares of the organization: 100.00%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: provision of DLD and ILD services and data transmission services to end users.

Value for the Company: gaining traffic from corporate clients to be passed through the Company’s facilities.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Anton Alexeevich Khozyainov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vyacheslav Vladimirovich Volkov.

Year of Birth: 1973.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00% .

Full name: Andrei Leonidovich Petrov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vadim Mikhailovich Yakovlev.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body not provided for by the Charter.

Sole executive body:

Full name: Andrei Leonidovich Petrov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC WESTELCOM.

Full name: Closed Joint Stock Company WESTELCOM.

Location: 7 Butlerova St.,Moscow, 117485, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 100.00%.

The Company’s interest in the outstanding ordinary shares of the organization: 100.00%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: financing and provision of services associated with acquisition and expansion of telecommunications networks and systems using up-to-date technologies for digital telecommunications and data transit.

Value for the Company: financing and provision of services associated with acquisition and expansion of telecommunications networks and systems using up-to-date technologies for digital telecommunications and data transit.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Vadim Mikhailovich Yakovlev.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Olga Viktorovna Sidorenkova.

Year of Birth: 1978.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Yevgeny Alexandrovich Ustinov.

Year of Birth: 1984.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Alexei Anatolyevich Umnov.

Year of Birth: 1978.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body not provided for by the Charter.

Sole executive body:

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: LLC Malakhit Rest House.

Full name: Limited Liability Company Malakhit Rest House.

Location: 15 Shcherbaka St., Yalta, 334200, Autonomous Republic of Crimea, Ukraine.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 100.00%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: provision of comprehensive year-round therapy and recreation services.

Value for the Company: rendering therapy and recreation services.

Composition of Board of Directors: not provided for by the Charter.

Collective executive body: not provided for by the Charter.

Sole executive body:

Full name: Olga Yefimovna Rykolenko.

Year of Birth: 1956.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC Zebra Telecom.

Full name: Closed Joint Stock Company Zebra Telecom.

Location: 24 Trubnaya St., bldg. 3, Moscow, 103051, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 99.99%.

The Company’s interest in the outstanding ordinary shares of the organization: 99.99%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: telecommunications services.

Value for the Company: provision of IP telephony, Internet access using pre-paid cards, intelligent services.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Anton Yuryevich Kolpakov.

Year of Birth: 1971.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Sergei Viktorovich Kudrin.

Year of Birth: 1969.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Anton Alexeevich Khozyainov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vyacheslav Vladimirovich Volkov.

Year of Birth: 1973.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body not provided for by the Charter.

Sole executive body:

Full name: Sergei Viktorovich Kudrin.

Year of Birth: 1969.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC SK Costars.

Full name: Closed Joint Stock Company Insurance Company Costars

Location: 42 Leninsky Prospekt St., Moscow, 117119, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 86.67%.

The Company’s interest in the outstanding ordinary shares of the organization: 86.67%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: insurance.

Value for the Company: insurance of employees.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Anatoly Georgievich Nazeikin.

Year of Birth: 1946.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Galina Vasilienva Rysakova.

Year of Birth: 1967.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Yevgeny Alexandrovich Ustinov.

Year of Birth: 1984.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Dmitry Alexandrovich Ageev.

Year of Birth: 1972.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: not provided for by the Charter.

Sole executive body:

Full name: Yevgeny Alexandrovich Ustinov.

Year of Birth: 1984.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC GLOBUS-TELECOM.

Full name: Closed Joint Stock Company GLOBUS-TELECOM.

Location: 38 Obraztsova St., Moscow, 127018, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 94.92%.

The Company’s interest in the outstanding ordinary shares of the organization: 94.92%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: leased communication lines and equipment services.

Value for the Company: provision of telecommunications services to government bodies of the Russian Federation and corporate clients.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Viktor Vladimirovich Iudin.

Year of Birth: 1967.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vadim Mikhaylovich Yakovlev.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Anton Alexeevich Khozyainov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Andrei Alexandrovich Sevostyanov.

Year of Birth: 1958.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Sergei Valeryevich Semenov.

Year of Birth: 1959.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Mark Nikolaevich Tzybrenko.

Year of Birth: 1977.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: not provided by the Charter.

Sole executive body:

Full name: Sergey Valeryevich Semenov.

Year of Birth: 1959.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC INCOM.

Full name: Closed Joint Stock Company INCOM.

Location: 27/26, Bldg 3 Zubovsky Blvd., Moscow, 119021, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 54.38%.

The Company’s interest in the outstanding ordinary shares of the organization: 54.38%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: provision of telecommunications services via public call offices, leasing out facilities.

Value for the Company: non-material.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Margarita Vladimirovna Savotina.

Year of Birth: 1978.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Valery Petrovich Ryzhy.

Year of Birth: 1978.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Olga Viktorovna Sidorenkova.

Year of Birth: 1978.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Yevgeny Alexandrovich Ustinov.

Year of Birth: 1984.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: not provided for by the Charter.

Sole executive body:

Full name: Valery Petrovich Ryzhy.

Year of Birth: 1978.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC GlobalTel.

Full name: Closed Joint Stock Company Globalstar Space Telecommunications.

Location: 25 Dubovaya Roshcha St., Moscow, 127427, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the Company in view of majority interest in the charter capital can determine decisions of the organization.

The Company’s interest in the charter capital of the organization: 51.00%.

The Company’s interest in the outstanding ordinary shares of the organization: 51.00%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: provision of Globalstar satellite mobile communications network services.

Value for the Company: providing satellite telecommunications services.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Anton Yuryevich Kolpakov.

Year of Birth: 1971.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Yevgeny Yuryevich Sekerin.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Gennady Ivanovich Solovsky.

Year of Birth: 1956.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanislavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Andrei Lvovich Kozlov.

Year of Birth: 1970.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Anton Alexeevich Khozyainov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vadim Mikhailovich Yakovlev.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: not provided for by the Charter.

Sole executive body:

Full name: Andrei Lvovich Kozlov.

Year of Birth: 1970.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: OJSC CC Business Network.

Full name: Open Joint Stock Central Company Business Network.

Location: 1, Bldg 2 Marshala Vasilevskogo St., Moscow, 123098, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the organization is dependent to Company in view that the Company’s interest exceeds 20% of the charter capital.

The Company’s interest in the charter capital of the organization: 43.50%.

The Company’s interest in the outstanding ordinary shares of the organization: 43.50%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: provision of R&D services, production, implementing and maintenance of technical systems for communication protection and signalizing of unauthorized access.

Value for the Company: non-material.

Board of Directors, Collective executive body and Sole executive body: not formed due to lack of the company’s activities.

Abbreviated name: OJSC MMTS 9.

Full name: Open Joint Stock Company Moscow Long-Distance Exchange No. 9.

Location: 7 Butlerova St., Moscow, 117485, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the organization is dependent to Company in view that the Company’s interest exceeds 20% of the charter capital.

The Company’s interest in the charter capital of the organization: 36.86%.

The Company’s interest in the outstanding ordinary shares of the organization: 49.14%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: leasing out facilities, provision of communications services.

Value for the Company: leasing out facilities for equipment placement.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Tamara Alexandrovna Moiseeva.

Year of Birth: 1956.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Anton Alexeevich Khozyainov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Andrei Gennagyevich Kurochkin.

Year of Birth: 1970.

Interest of above person in issuer’s charter capital: 0.00037%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Viktoriya Gennedyenva Chernousova.

Year of Birth: 1983.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vladimir Vladimirovich Terekhov.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: Management Board.

Chairman of the Management Board:

Full name: Yury Timofeevich Kukushkin.

Year of Birth: 1956.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Svetlana Viktorovna Pasko.

Year of Birth: 1969.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vyadut Mukmenovich Ibragimov.

Year of Birth: 1951.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Dinara Shamilevna Zabiyan.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Yelena Vladimirovna Churikova.

Year of Birth: 1954.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Sole executive body:

Full name: Yury Timofeevich Kukushkin.

Year of Birth: 1956.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: OJSC RTComm.RU.

Full name: Open Joint Stock Company RTComm.RU.

Location: 2nd Zvenigorodskaya St., 13, bldg. 43, Moscow, 123022, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the organization is dependent to Company in view that the Company’s interest exceeds 20% of the charter capital.

The Company’s interest in the charter capital of the organization: 99.51%.

The Company’s interest in the outstanding ordinary shares of the organization: 99.51%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: Internet access services.

Value for the Company: gaining Internet access services.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Anton Yuryevich Kolpakov.

Year of Birth: 1971.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Viktor Dmitrievich Savchenko.

Year of Birth: 1960.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Nadezhda Valentinovna Filippova.

Year of Birth: 1953.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Bogdan Ivanovich Golubitsky.

Year of Birth: 1979.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vyacheslav Vladimirovich Volkov.

Year of Birth: 1973.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Anton Alexeevich Khozyainov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vadim Mikhailovich Yakovlev.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: not provided for by the Charter.

Sole executive body:

Full name: Valery Petrovich Lokhin.

Year of Birth: 1959.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: LLC TverTelecom.

Full name: Limited Liability Company TverTelecom.

Location: 170000, the city of Tver, Novotorzhskaya st., bldg. 24.

The reason for determining the organization as subsidiary or dependent company: the organization is dependent to Company in view that the Company’s interest exceeds 20% of the charter capital.

The Company’s interest in the charter capital of the organization: 26.00%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: telecommunications services.

Value for Rostelecom: non-material.

As of the end of the reporting period, the Board of Directors was not elected.

Abbreviated name: CJSC RUSTEL.

Full name: Closed Joint Stock Company RUSTEL.

Location: 6 Degtyarny Pereulok St., bldg. 2, Moscow, 101999, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the organization is dependent to Company in view that the Company’s interest exceeds 20% of the charter capital.

The Company’s interest in the charter capital of the organization: 25.00%.

The Company’s interest in the outstanding ordinary shares of the organization: 25.00%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: satellite communications.

Value for the Company: non-material.

As of the end of the reporting period, the Board of Directors was not elected.

Bankruptcy Manager: Alexander Vasilyevich Amelyakin.

Year of Birth: 1949.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Abbreviated name: CJSC NTTs COMSET.

Full name: Closed Joint Stock Company COMSET Research and Technology Center.

Location: 7 1st Parkovaya St., Moscow, 105037, Russian Federation.

The reason for determining the organization as subsidiary or dependent company: the organization is dependent to Company in view that the Company’s interest exceeds 20% of the charter capital.

The Company’s interest in the charter capital of the organization: 22.18%.

The Company’s interest in the outstanding ordinary shares of the organization: 22.18%.

The organization’s interest in the charter capital of the Company: 0.00%.

The organization’s interest in the outstanding ordinary shares of the Company: 0.00%.

Operating activity: scientific and technological research; design, survey and development; education and training.

Value for the Company: non-material.

Composition of Board of Directors:

Chairman of Board of Directors:

Full name: Alexander Sergeevich Adzhemov.

Year of Birth: 1955.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Vadim Mikhailovich Yakovlev.

Year of Birth: 1968.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Oleg Stanoslavovich Shedenkov.

Year of Birth: 1975.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Alexey Pavlovich Baranov.

Year of Birth: 1974.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Dmitry Anatolyevich Yermoshkin.

Year of Birth: 1965.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Sergei Prokofievich Soloviev.

Year of Birth: 1946.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Alexei Borisovich Vasilyev.

Year of Birth: 1963.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Andrei Kimovich Levakov.

Year of Birth: 1966.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Full name: Ludmila Alexandrovna Konkova.

Year of Birth: 1953.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

Collective executive body: not provided for by the Charter.

Sole executive body:

Full name: Alexei Borisovich Vasilyev.

Year of Birth: 1963.

Interest of above person in issuer’s charter capital: 0.00%.

Interest of above person in issuer’s total number of ordinary shares: 0.00%.

3.6. The Issuer’s Fixed Assets: Composition, Structure, Value, Planned Purchases, Replacement, Retirement and Any Encumbrances

3.6.1. Fixed Assets

Acquisition (replacement) cost and depreciation of the Company’s fixed assets are set out in the table below.

No.	Fixed asset category	Acquisition (replacement) cost, thousand rubles	Accrued depreciation, thousand rubles
Reporting period: Q3 2009
1	Land plots and nature facilities	19,338	0
2	Buildings and structures	20,651,499	11,120,784
3	Housing	166,011	2,176
4	Plant and equipment	48,348,721	33,586,239
5	Vehicles	763,257	544,657
6	Other tangible fixed assets	325,475	227,064
7	Low value fixed assets	1	0
	Total, thousand rubles	70,274,302	45,480,919

Revaluation of fixed assets and long-term leased fixed assets was not conducted during the last 5 (five) fiscal years.

There is no information about historical value of the fixed assets before the revaluation on January 1, 1996.

Depreciation methods by groups of fixed assets:

1. Land plots and nature management facilities —not depreciated.

2. Buildings and structures — straight line depreciation.

3. Housing — straight line depreciation (depreciation is accrued on a separate off-balance account).

4. Plant and equipment — straight line depreciation.

5. Vehicles — straight line depreciation.

6. Other tangible fixed assets — straight line depreciation.

7. Low value fixed assets — writing-off to the cost of production as they are issued to operations.

The revaluation of fixed assets held on January 1, 1996, was conducted in accordance with the fixed capital depreciation ratios as set by the Russian Federation State Committee for Statistics.

As of the end of the reporting period, the Company had no plans involving the retirement, acquisition and/or replacement of fixed assets, the value of which is equal to or over 10% of the aggregate value of the Company’s fixed assets, as well as any encumbrances placed upon them.

Pledged fixed assets of the Company’s are presented in the table below.

Holder of pledge		Secured loan amount		Residual value of pledged property as of 9/30/2009		Estimated value of pledged property		Loan issued on		Maturity date
Vnesheconombank		$100 million		RUB 1,337,321 thousand		RUB 3,078,272 thousand		December 28, 2005		December 28, 2012

4. THE ISSUER’S FINANCIAL AND BUSINESS OPERATIONS

4.1. The Issuer’s Financial and Business Results

4.1.1. Profit And Losses

Indicator		Q3 2009
Revenue, thousand rubles		14,858,528
Gross profit, thousand rubles		2,444,219
Net profit (undistributed profit (uncovered loss)), thousand rubles		2,189,250
Return on equity, %		4
Return on assets, %		3
Net profit margin, %		15
Operating profit margin, %		16
Capital turnover, %		0.24
Uncovered loss as of reporting date, thousand rubles		—
Ratio of uncovered loss as of reporting date and balance sheet total value, %		—

The calculations provided herein were conducted in accordance with Russian Accounting Standards (RAS).

Analysis of the Company’s profitability based on the dynamics of the given above indicators for Q3 2009 compared to Q3 2008:

The Company’s revenue decreased by 968,001 thousand rubles (-6%), gross profit decreased by 93,418 thousand rubles (-4%), net profit increased by 243,184 thousand rubles (12%).

Return on equity increased by 7% due to:

· increase in net profit by 243,184 thousand rubles (12%);

· increase in equity by 2,632,034 thousand rubles (5%).

Return on assets increased by 8% due to:

· increase in net profit by 243,184 thousand rubles (12%);

· increase in quarterly average book value of assets as of the beginning and the end of the reporting period by 3,024,616 thousand rubles (4%).

Net profit margin increased by 20% due to:

· increase in net profit by 243,184 thousand rubles (12%);

· decrease in revenue by 968,001 thousand rubles (-6%).

Operating profit margin increased by 3% due to:

· decrease in revenue by 968,001 thousand rubles (-6%);

· decrease in cost of goods sold by 874,583 thousand rubles (-7%).

Capital turnover ratio decreased by 0.03 (-10%) due to:

· decrease in revenue by 968,001 thousand rubles (-6%);

· increase in quarterly average book value of assets as of the beginning and the end of the reporting period by 3,024,616 thousand rubles (4%).

· increase of the average value of current liabilities as of the beginning and the end of reporting period by 432,178 thousand rubles (4%).

The indicators calculation methodology:

Indicator		Calculation methodology
Revenue, thousand rubles		Total revenue from sale of goods, products, work, services
Gross profit, thousand rubles		Revenue — cost of goods, products, work, services sold (less commercial and management costs)
Net profit (undistributed profit (loss)), thousand rubles		Net profit (loss) for the reporting period
Return on equity, %		(Net profit) / (capital and reserves — special purpose financing and proceeds + deferred income — own shares redeemed from shareholders) x 100
Return on assets, %		(Net profit) / (average book value of assets for the reporting period) x 100
Net profit margin, %		(Net profit) / (revenue) x 100
Operating profit margin, %		(Profit from sales) /(revenue) x 100
Capital turnover ratio		(Revenue) /(average book value of fixed assets as of the beginning and the end of reporting period — average value of current (short-term) liabilities as of the beginning and the end of reporting period)
Uncovered loss as of reporting date, thousand rubles		Uncovered loss of past years + uncovered loss of the reporting year
Ratio of uncovered loss as of reporting date and balance sheet total value		Uncovered loss as of the reporting date / average book value of assets as of the beginning and the end of the reporting period

4.1.2. Factors Influencing on the Amount of Issuer’s Revenue from Sale of Products, Works and Services and of Profit (Loss) From Its Core Business

Rostelecom’s revenue for the first nine months of 2009 totaled RUB 45,405.8 million representing a decrease of 2.2% year on year, which is mainly due to a reduction in revenues from a number of traditional segments. However, through the continued diversification of its business, the Company substantially increased the revenue from data services. During the reporting period under review, the share of new services (data and intelligent network services) amounted to 10.0% of Rostelecom’s total revenue.

Domestic long-distance (DLD) traffic for the reporting period decreased 7.5% year on year to 6,957.9 million minutes. DLD & interconnection revenues for the reporting period totaled RUB 19,447.4 million, representing a year on year decrease of 11.4%.

Outgoing international long-distance (OILD) traffic saw a decrease of 14.1% year on year to 1,297.3 million minutes. ILD revenues from Russian operators and end-customers amounted to RUB 8,614.0 million, a decrease of 4.9% compared to the first nine months of 2008.

The decrease in DLD and OILD traffic and revenue is primarily attributable to the global macro-economic environment, the growing competition in the long-distance market as well as the continued migration of long-distance end-customer traffic from fixed-line to mobile networks. In addition, in order to provide clients (end-customers /residential & corporate/ and Russian operators) with competitive tariffs the Company follows a flexible pricing policy which also impacted the DLD and outgoing ILD revenues.

During the period under review, incoming ILD traffic terminated in Russia decreased by 1.4% year on year while transit traffic from international operators saw an increase of 40.7%. In total, incoming ILD traffic amounted to 2,635.0 million minutes representing a year on year increase of 9.4%. Revenues from international operators for incoming ILD traffic transit and termination rose 10.5% year on year to RUB 4,925.3 million.

Revenue for the reporting period from other business segments grew by 11.5% year on year to RUB 12,419.1 million. The Company delivered a 1.5 fold increase year on year in revenues from new services, including data and intelligent network, to RUB 4,529.2 million. Revenues from data transmission and telematic services increased by 86.1% year on year and totaled RUB 3,757.8 million.

Revenues from leased-line services decreased by 6.3% year on year to RUB 5,518.3 million. This decrease is mainly attributable to the fact that Russian operators (mobile and inter-regional) are nearing completion in constructing their own networks, thus reducing their demand in channels. In addition, this presented the operators with the opportunity to provide channels for rent thus resulting in increased competition in the Russian leased line market.

Rostelecom’s operating expenses for the reporting period amounted to RUB 39,390.2 million representing a year on year increase of 4.9%. Among other factors, this increase was mainly due to the higher payments made to international operators as a result of the Russian Rouble devaluation and growth in international transit traffic. Additionally, there was also an increase in payments to regional operators for rented channels (last miles) on the back of increased sales of Internet and VPN services.

Depreciation for the period under review, amounted to RUB 3,344.0 million. The 4.0% increase compared to the same period last year is a result of property, plant and equipment additions during 2008.

Operating Income before Depreciation and Amortization (OIBDA) amounted to RUB 9,359.6 million which is a year on year decrease of 22.4%. OIBDA margin amounted to 20.6% compared to 26.0% in the corresponding period last year.

First nine months 2009 operating profit decreased by 32.0% year on year to RUB 6,015.6 million.

Other gains and losses for the first nine months of 2009 totaled a net loss of RUB 300.0 million compared to a net gain of RUB 412.1 million a year ago. There are a number of factors that this loss is attributable to, firstly, provision for allowances contrary to their recovery in the period of first three quarters of 2008 as well as the loss from the sale of investments compared to a RUB 445 million net gain (including the sale of Golden Telecom’s shares) in the corresponding period of 2008. Additionally, the foreign exchange loss in the accounting period also impacted the overall results.

As a result, Rostelecom’s first nine months 2009 net profit amounted to RUB 4,553.6 million, down 34.3% year on year.

4.2. The Issuer’s Liquidity, Sufficiency of Capital and Current Assets

Indicator		Q3 2009
Own current assets, thousand rubles		16,197,210
Permanent assets index, %		0.73
Current liquidity ratio, %		2.82
Quick liquidity ratio, %		2.76
Financial independence (autonomy) ratio, %		0.79

The Company’s liquidity analysis based on the dynamics of the given above indicators for Q3 2009 compared to Q3 2008:

Own current assets decreased by 2,295,044 thousand rubles (-12%) due to:

· increase in capital and reserves (less special purpose financing and including deferred income) by 2,632,034 thousand rubles (5%);

· increase in non-current assets by 4,927,078 thousand rubles (13%).

Permanent assets index increased by 8% due to:

· increase in capital and reserves (less special purpose financing and including deferred income) by 2,632,034 thousand rubles (5%);

· increase in non-current assets by 4,927,078 thousand rubles (13%);

· increase in long-term accounts receivable by 7,272 thousand rubles (26%).

Current liquidity ratio decreased by (-12%) due to:

· decrease in current assets by 1,514,544 thousand rubles (-4.5%);

· decrease in current liabilities (less deferred income) by 934,751 thousand rubles (9%).

Quick liquidity ratio decreased by (-12%) due to:

· decrease in assets realized at short notice (quick assets) by 1,197,326 thousand rubles (-3.7%);

· increase in current liabilities (less deferred income) by 934,751 thousand rubles (9%).

Financial independence (autonomy) ratio decreased by (-0.1%) due to:

· increase in capital and reserves (less special purpose financing and including deferred income) by 2,632,034 thousand rubles (5%);

· increase in assets by 3,419,806 thousand rubles (5%).

The indicators calculation methodology:

Indicators		Calculation methodology
Own current assets, thousand rubles		Capital and reserves (less own shares redeemed from shareholders ) — special purpose financing and receipts + deferred income — non-current assets
Permanent assets index		(Non-current assets + long-term receivables) / (capital and reserves (less own shares redeemed from shareholders) — special purpose financing and receipts + deferred income)
Current liquidity ratio		(Current assets — long-term receivables) /short-term liabilities (less deferred income)
Quick liquidity ratio		(Current assets — inventories — value added tax on valuables acquired — long-term receivables) / short-term liabilities (less deferred income)
Financial independence (autonomy) ratio		Capital and reserves (less own shares redeemed from shareholders) — special purpose financing and receipts + deferred income / non-current assets + current assets

4.3. The Issuer’s Capital and Current Assets Size and Structure

4.3.1. The Issuer’s Capital and Current Assets Size and Structure

The structure and the amount of Rostelecom’s capital (in thousand rubles):

Indicator		Q3 2009
The Charter Capital*		2,429
Total value of bought out stock		—
Reserve Capital		364
Additional capital, total		6,060,000
Including:
Asset value increase under revaluation		5,757,150
Issue revenue		302,850
Retained earnings		52,846,030
Total capital		58,908,823

*The amount of capital is set out in accordance with the Company’s foundation documents.

Pursuant to the Company’s practices, the Company mainly finances current assets from its own sources without borrowing funds. The Company does not have information on factors that may entail prompt changes in the policy of current assets financing and cannot assess the probability of their emergence.

The structure and the amount of the Company’s current assets (in thousand rubles) are shown below:

Indicator		Q3 2009
Inventories		485,304
Value-added tax on acquired assets		184,961
Accounts receivable (payment expected more than 12 months after the reporting date)		35,460
Accounts receivable (payment expected within 12 months of the reporting date)		9,254,603
Short-term financial investments		15,123,472
Monetary assets		7,183,892
Other current assets		745
Total amount of current assets		32,268,437

The analysis of the dynamics of the given above indicators for Q3 2009 compared to Q3 2008:

As of September 30, 2009, the amount of the Company’s current assets totaled 32,268,437 thousand rubles, 1,507,272 thousand rubles (-4.5%) down as compared to the amount of current assets as of September 30, 2008, due to the following factors:

· decrease in cash and receivables due within 12 months after the reporting date by 8,298,331 thousand rubles (-34%);

· increase in short-term financial investments by 7,100,647 thousand rubles (89%);

· decrease in other current assets by 309,588 thousand rubles (-30%).

4.3.2. The Issuer’s Financial Investments

Financial investments amounting to more than 10% of total financial investments as of the end of the reporting period: none.

The Company made the provisions for financial assets depreciation as follows (in thousand rubles):

No	Type of provision	Q3 2009
1.	The provision for securities depreciation, including:	134,969
1.1.	securities of subsidiaries	134,100
1.2.	securities of associates	247
1.3.	securities of other companies	622
2.	The provision for loan depreciation	484,657
	Total	619,626

The calculations contained in this section of the quarterly report were made in compliance with the Russian Accounting Standards “Financial investments accounting” RAS 19/02 approved by the Order of Ministry of Finance No.126n dated December 10, 2002.

4.3.3. The Issuer’s Intangible Assets

The book value of Rostelecom’s intangible assets and the value of intangible assets amortization accrued total as follows (in thousand rubles):

No	Item	Full cost	Size of accrued amortization
Reporting date: September 30, 2009
1	The owner’s exclusive right to the trademark and the service mark, the name of the place of goods’ origin.	468	72
Total:		468	72

The calculations contained in this section of the quarterly report were made in compliance with the Russian Accounting Standards “Intangible assets accounting” RAS 14/2007 approved by the Order of Ministry of Finance No. 153n dated December 27, 2007.

4.4. The Issuer’s R&D, Licenses and Patents, New Development and Research Project Policies and Expenditures

The Company does not carry out research on its own. All new developments that are employed to improve the services provided by the Company and cut its costs are carried out by specialized research organizations.

The licenses owned by the Company are given in item 3.2.9. Additional Requirements to Issuers That Are Providers of Communications Services, sub-item Communications Licenses.

Currently, Rostelecom holds the titles to the trademarks which priority was registered by the Russian Agency for Patents and Trademarks and the USSR State Committee for Inventions and Discoveries on April 10, 1995 and March 6, 1985, respectively, whereupon certificates No. 125190 and No. 77120 were issued to Rostelecom. Also Rostelecom holds the title to the trademark registered with the Russian Federation State Register of Trademarks on December 7, 2006, whereupon certificate No. 353896 was issued.

Currently, there are minimum risks related to the expiry of licenses, held by the Company owing to the extension of operation licenses expiry date till 2013 and trademark licenses expiry date till 2014. The trademark No. 353896 expires on December 7, 2016.

4.5. Trends in the Sphere of the Issuer’s Core Business

4.5.1. Trends in the Sphere of the Issuer’s Core Business

The telecommunications industry is one of the economy’s major industries that support the functioning and coordinated operation of all national and commercial systems. That is why the Russian government considers the development of the national information and telecommunications infrastructure as one of the main prerequisite to boost economic growth, business activity, and to raise the country’s prestige in the international community.

The Ministry of Communications and Mass Media, or Mincomsvyaz, estimates the 6 months 2009 revenue of the Russian telecommunications companies at RUB 575.4 billion, a 8% increase year-on-year. In particular, 6 months 2009 revenue from local telecommunications services amounted to RUB 71 billion, a 7% increase year on year. 6 months 2009 revenue from DLD and ILD telecommunications services went down by 8% and amounted to RUB 57.7 billion. 6 months 2009 revenue of mobile operators stood at RUB 266.5 billion, indicating a 6% year-on-year increase. Proceeds from data transmission services reached RUB 64.7 billion in 6 months 2009, showing a 28% increase year on year.

As of the end of the reporting period, there were 45.5 million installed fixed-line telephones, 0.3% up year on year. The number of fixed-line telephones owned by individuals remained virtually unchanged and stood at 33.9 million.

The number of mobile telephone users grew by 17.4% year on-year and amounted to 214.6 million subscribers as of the end of the reporting period.

The industry structure

The Russian telecommunications industry has a multilevel structure due to a large number of services as well as to different geographical and territorial conditions.

1. Classification by services

The mobile segment is the largest one in the Russian telecommunications industry as well as in other emerging markets. During the 6 months 2009 period the breakdown by services was as follows:

*including payphone services;

**including intra-regional telecommunication services.

2. Classification by region

6 months 2009 revenue of operators located in the Central Federal District with 37 million people or 26% of population of Russia totaled 43.1% of the telecommunications market. Moscow telecommunications market remained the largest one in Russia and comprised approximately 78% of the Central Federal District market.

Aggregate revenue of operators located in other districts with population over 104.7 million people amounted to 56.9%. In the reporting quarter the breakdown by region was as follows:

Analysts forecast that rapid growth of regional telecommunications markets will minimize disproportion in regional structure of telecommunications industry in Russia

State regulation of the industry

The existing structure of executive authorities governing telecommunications industry includes six regulatory bodies — the Ministry of Communications and Mass Media, the Federal Service on Supervision in the Area of Communications and Mass Media (the Rossvyazcomnadzor), the Federal Information Technologies Agency, the Federal Agency on Communications (the FAC), the Federal Anti-Monopoly Service (the FAS), and the Federal Service on Tariffs (the FST).

In accordance with the Russian President’s Decree dated March 12, 2007, the Federal Service on Supervision of Legal Compliance in the Areas of Mass media and Protection of Cultural Heritage (Rosokhrankultura) and the Federal Service on Supervision in the Area of Communications (Rossvyaznadzor) were reorganized into the Federal Service on Supervision in the Area of Mass media, Communications and Protection of Cultural Heritage (Rossyazokhrankultura). In accordance with the Government Decree No. 354 dated June 6, 2007 Rossyazokhrankultura was an authorized federal executive body, responsible for allocation and registration of radio frequencies and radio frequency channels for radio-electronic equipment. Under the Russian President’s Decree No. 724 dated May 12, 2008, Rossyazokhrankultura was reorganized into the Federal Service on Supervision in the Area of Communications and Mass Media (the Rossvyazcomnadzor).

Current legislation grants certain powers to the state in regulating natural monopolies in the telecommunications sector. The Law on Natural Monopolies provides a legal basis for state regulation over telecommunications service providers, tariff setting and other operations.

Presently the FST regulates the Company’s tariffs for domestic long-distance services rendered throughout Russia, as well as tariffs for local and intraregional telecommunications services rendered in Moscow. Inter- operator settlement rates, including rates for call origination, termination and transit, charged by significant operators are regulated by the FAC.

4.5.2. Issuer’s competitors

As a result of telecommunications market liberalization, more than 30 operators, besides OJSC Rostelecom, obtained licences to render domestic and international long-distance telecommunications services in Russia. As of the end of the reporting period, OJSC Multiregional TransitTelecom, Golden Telecom Inc. (owned by OJSC Vimpelcom), CJSC TransTelecom, LLC Equant (Orange Business Services trademark), CJSC Synterra, OJSC Arktel and OJSC Comstar-UTS provided domestic long-distance and international telecommunications services besides Rostelecom. OJSC MTS and OJSC Megafon completed construction of their long-distance telecommunications networks and are awaiting carrier selection prefixes.

Some operators continue to provide long-distance telecommunications services based on telephone cards and ip-telephony notwithstanding the new rules of long-distance telecommunications services provision effective since January 1, 2006, and thus decrease the Company’s market share. There is no certainty that the transition period to new regulatory framework for long-distance telecommunications services provision will be short. Additionally there are several companies in Russia providing ip-telephony services. Growth of cellular telecommunications services penetration also decreases the Company’s market share and increases volume of long-distance traffic to mobile operators.

The Company recognizes as its competitors the following operators:

OJSC Multiregional TransitTelecom (MTT)

The operator was established in 1994 to interconnect the telecommunications networks of mobile and fixed operators. The major portion of its revenue is generated by mobile traffic transit. At present MTT is owned by Promsvyazcapital Group that acquired 50% of MTT from AFC Systema and 25% from Danmax. It is highly likely, that Promsvyazcapital Group purchases the remaining 25% of MTT from Eventis Telecom in the near future. Since March 2006 MTT has been providing long-distance telecommunications services throughout Russia.

Sovintel LLC (Golden Telecom, Inc. trademark) owned by OJSC Vimpelcom

Golden Telecom, Inc., Russian alternative telecommunications operator, provides services of telephony, data transfer and Internet access to corporate clients and individuals via its networks in a number of cities, including Moscow, St. Petersburg, Pskov, Nizhny Novgorod, Samara, Kaliningrad, and Krasnoyarsk. In 2005 Golden Telecom obtained a control stake in CJSC Rascom, the operator that owns fiber optic telecommunications network of great importance Moscow — St. Petersburg — Finland. In December 2006 the

company obtained carrier selection prefixes necessary for provision of long-distance telecommunications services, which it started rendering in January 2007. Golden Telecom is primarily aimed at corporate clients.

On January 18, 2008, a U.S. registered company Lillian Acquisition, Inc., a subsidiary of Vimplecom, made a public offer to purchase 100% of outstanding Golden Telecom’s shares. In February 2008, Rostelecom sold its 10.97% stake in Golden Telecom (4,417,055 shares with nominal value of USD 0.01) to Lillian Acquisition for USD 463,790,775. Presently OJSC Vimpelcom indirectly owns 100% equity of Golden Telecom through Lillian Acquisition. Golden Telecom provides services under Beeline Business brand.

CJSC TransTelecom

TransTelecom owns and operates its trunk digital telecommunications network that covers most of regions of Russia. TransTelecom renders domestic long-distance leased lines services, services of virtual private networks, Internet access, maintains the telecommunications network of OJSC Russian Railways and constructs telecommunications facilities for this network. OJSC TransTelecom has interconnections with largest foreign telecommunications operators and offers Europe-Asia leased line services. In June 2007, TransTelecom obtained carrier selection prefixes and in September 2007 started rendering long-distance telecommunications services to end users, mainly to corporate clients. In 2008 TransTelecom started rendering Internet access services to individuals.

CJSC Equant (Orange Business Services)

Since October 10, 2006, Equant, the subsidiary of France Telecom, has started rendering services under a new brand name “Orange Business Services”. The company provides telecommunications services and solutions mainly to corporate clients. Its telecommunications network is interconnected to public switched telephone network and to foreign data transfer networks via satellite and fiber optic telecommunications channels. In November 2007, Equant obtained carrier selection prefixes and on January 1, 2008, started rendering long-distance telecommunications services corporate clients.

CJSC Synterra

Synterra is part of Synterra Group, which comprises several telecommunications companies operating since 1992, and controlled by PromSvyazCapital Group. It has licenses to provide local, intraregional, DLD and ILD telephone services, data transmission and telematic services, as well as leased line services. Synterra owns a trunk network totaling 65 thousand km. Since the 2nd quarter 2008 it provides DLD and ILD telecommunications services to corporate clients.

5. MEMBERS OF THE ISSUER’S MANAGEMENT BODIES, ITS FINANCIAL AND BUSINESS OPERATIONS AUDITING BODIES, AND BRIEF INFORMATION ABOUT THE ISSUER’S OFFICERS (EMPLOYEES)

5.1. The Organization and Authority of the Issuer’s Management Bodies

The issuer’s management bodies are: the General Meeting of Shareholders, the Board of Directors, the General Director and the Management Board.

Under the Company’s Charter, the following issues are within the competence of the General Meeting of Shareholders:

1. introduction of amendments and additions to the Charter with the exception of cases stipulated in Clause 4.3. of the Charter, or approval of a restated version of the Charter of the Company, which is adopted by not less than three quarters of the votes of shareholders holding voting shares of the Company and participating in the meeting, with the exception of cases stipulated in Clause 31.3 of the Charter;

2. the Company’s reorganization, the decision on which shall be adopted by not less than three quarters of the voting shares of the Company participating in the meeting;

3. the Company’s liquidation, appointment of the Liquidation Commission, approval of the interim and final liquidation balance sheets, the decisions on which shall be adopted by shareholders holding voting shares not less than three quarters of the Company’s voting shares participating in the meeting;

4. election of members to the Board of Directors, the decision on which is adopted by cumulative voting. Premature termination of powers of the members of the Board of Directors, the decision on which shall be adopted by a simple majority of the shareholders holding voting shares of the Company participating in the meeting;

5. determination of amount, nominal value, category (class) of authorized shares, the decision on which shall be adopted by not less than three quarters of the shareholders holding voting shares of the Company participating in the meeting;

6. decrease of the Charter Capital of the Company:

a) by acquiring a part of the shares to reduce their total number or by canceling the shares acquired or redeemed by the Company and not sold by the Company within one year following such acquisition or redemption, in which case the decision shall be adopted by a simple majority of votes of the shareholders holding voting shares and participating in the meeting;

b) by decreasing the nominal value of the shares of the Company, in which case the decision shall be adopted by a three-quarters majority of votes of the shareholders holding voting shares and participating in the meeting.

c) in a situation where, based on the findings of an audit, the amount of the net assets of the Company falls below the amount of its Charter Capital, in which case the decision shall be adopted by a simple majority of votes of the shareholders holding voting shares and participating in the General Shareholders’ Meeting, except that when such reduction is made at the proposal of the Board of Directors to an amount below the amount of the net assets of the Company, such decision shall be adopted by a three-quarters majority of votes of the shareholders holding voting shares and participating in the meeting.

7. election of members to the Audit Commission and premature termination of their powers, the decision on which shall be adopted by a simple majority of the shareholders holding voting shares of the Company participating in the meeting;

8. approval of the external auditor of the Company, the decision on which shall be adopted by a simple majority of the voting shares of the Company participating in the meeting;

9. approval of the annual reports of the Company; annual accounting statements, including the profit and loss statements of the Company; distribution of profit, including the payment (declaration) of dividends, approval of the amount, form and term of dividends payable in each category and class of shares, approval of losses upon the results of a financial year, the decisions on which shall be adopted

by a simple majority of the Shareholders holding voting shares of the Company participating in the meeting;

10. approval of the Regulations on the Board of Directors, Regulations on the Audit Commission, Regulations on the General Director, Regulations on the General Shareholders’ Meeting, as well as of amendments and additions to such Regulations, the decisions on which shall be adopted by a simple majority of the shareholders holding voting shares of the Company participating in the meeting;

11. determination of the procedure for holding a General Shareholders’ Meeting drawn up in the form of the Regulations on the General Shareholders’ Meeting, introduction of amendments and additions to such Regulations, the decision on which shall be adopted by a simple majority of the shareholders holding voting shares of the Company participating in the meeting;

12. increase of the Charter Capital of the Company through increase of the nominal value of shares, the decision on which shall be adopted by a simple majority of shareholders;

13. increase of the charter capital of the Company through placement of additional ordinary shares by way of public subscription in the event the number of additionally placed ordinary shares exceeds twenty-five (25) percent of the ordinary shares previously placed by the Company; such decision shall be adopted by at least three-quarters of votes of the shareholders holding the Company’s voting shares and participating in the meeting;

14. increase of the charter capital of the Company through placement of additional Company shares by way of closed subscription; such decision shall be adopted by at least three-quarters of votes of the shareholders holding the Company’s voting shares and participating in the meeting;

15. placement by the Company of bonds convertible into shares and of other securities convertible into shares in the event such bonds (other securities) are placed by way of closed subscription or public subscription provided that, in the event of public subscription, bonds convertible into Company shares (other issue securities) may be converted into ordinary shares of the Company totaling more than twenty-five (25) percent of the previously placed ordinary shares; such decision shall be approved by at least three-quarters of votes of the shareholders holding the Company’s voting shares and participating in the meeting;

16. splitting and consolidation of the Company’s shares, the decision on which shall be adopted by a simple majority of the Shareholders holding voting shares of the Company participating in the meeting;

17. approval of transactions in cases and through the procedures stipulated in Clause 32 of the Charter;

18. approval of major transactions in cases and through the procedure stipulated in Clause 31 of the Charter;

19. decision on participation in holding companies, financial and industrial groups, associations and other affiliations of commercial organizations, which shall be adopted by a simple majority of the shareholders holding voting shares of the Company participating in the meeting;

20. reimbursement, at the Company’s expense, of expenses in connection with the preparation and holding of an extraordinary General Shareholders’ Meeting in the event that, in violation of the requirements of the applicable laws of the Russian Federation, the Board of Directors has failed to adopt the decision on convening the extraordinary General Shareholders’ Meeting and such meeting has been convened by third persons, the decision on which is to be adopted by a simple majority of the Shareholders holding voting shares of the Company participating in the meeting;

21. decisions on other matters referenced by the law On Joint Stock Companies, to the competence of a General Shareholders’ Meeting.

The General Shareholders’ Meeting shall be entitled to adopt decisions on the matters stipulated in Clauses 14.2.2, 14.2.6.b), 14.2.10, 14.2.12, 14.2.13, 14.2.14, 14.2.15, 14.2.16, 14.2.17, 14.2.18, 14.2.19, and 14.2.20, of the Charter, if proposed by the Board of Directors only.

The General Shareholders’ Meeting shall also be competent to decide on other issues which are regarded by the law “On Joint Stock Companies”, as within the competence of a General Shareholders’ Meeting.

The General Shareholders’ Meeting is not entitled to consider and adopt decisions on matters not referred by the law On Joint Stock Companies to its competence.

The General Shareholders’ Meeting shall not be entitled to adopt decisions on items not included in the meeting agenda, nor shall it be entitled to amend the agenda.

The powers of the Board of Directors under the Company’s Charter:

The competence of the Board of Directors of the Company shall include decision-making on matters of the overall management of the Company’s operations, except in matters cited in the Charter, which are relegated to the competence of the General Shareholders’ Meeting.

The following issues shall be within the competence of the Board of Directors:

1. determination of the priority aspects of the Company’s activities, including the approval of the Company’s budgets, business plans and development strategies and programs, as well as consideration of other issues which are to be resolved by the Board of Directors pursuant to the aforementioned documents;

2. convening of the annual and extraordinary General Shareholders’ Meetings of the Company, except in instances provided for under Section 55.8 of the Law of the Russian Federation “On Joint Stock Companies”;

3. approval of the agenda of the General Shareholders’ Meeting;

4. determination of the date for the preparation of the list of persons entitled to take part in the General Shareholders’ Meeting and other issues relegated to the competence of the Board of Directors of the Company pursuant to the law of the Russian Federation and this Charter, and related to the preparation and conduct of the General Shareholders’ Meeting;

5. submission of the matters provided for under Clause 14.3 of the Charter to the General Shareholders’ Meeting for decision;

6. increase of the Company’s charter capital by having the Company place additional shares, within the limits of the number and categories of authorized shares, as determined in the Charter;

7. determination of the market value of property under applicable law of the Russian Federation and the Charter;

8. decision-making pertaining to the acquisition of shares placed by the Company, namely bonds and other securities;

a) determination of the price of acquisition of bonds placed by the Company, or procedures for the determination thereof;

9. determination of the tenure of office and numerical membership of the Management Board of the Company and appointment and early termination of the powers of its members, as proposed by the General Director;

10. recommendations pertaining to the amount of the remuneration and compensation payable to the members of the Audit Commission and ratification of the agreement with the external auditor including the determination of the amount to be paid for audit services;

11. recommendations pertaining to the distribution of profits, including the amount of dividends on the Company shares and procedure for their payment, as well as the Company’s losses as of the end of a financial year, approval of the Company’s dividend policy;

12. decision-making pertaining to the use of the reserves and other funds of the Company;

13. approval of the Company’s internal documents governing the matters within the competence of the Board of Directors of the Company, in accordance with the laws of the Russian Federation and the Charter, except the documents for which approval is relegated to the competence of the General Shareholders’ Meeting;

a) approval of the Company’s Headquarters structure;

14. establishment and liquidation of branches; establishment and closing of the Company’s representative offices, approval (declaration of ineffective) of the regulations on the Company’s Branch (representative office), introduction of amendments and additions thereto;

15. decision-making pertaining to the Company’s participation in other organizations in the form of:

· establishment by incorporation;

· joining as a member;

· termination of participation, with the exception of winding up of an organization wherein the Company has a participatory interest;

· change of participatory interest amount, nominal value of participatory interest, change in the number of shares or nominal value of shares held by the Company, except where such changes occur as a consequence of a resolution of the competent body of the organization wherein the Company has a participatory interest, or as a result of a court decision;

a) determination of the position of the Company when voting on matters lying within the scope of competence of general shareholder meetings of commercial organizations wherein the Company has a participatory interest where such voting results in termination of participation of the Company in such organizations, change of participatory interest amount, nominal value of participatory interest, change in the number of shares or nominal value of shares held by the Company;

16. decision-making pertaining to the approval of major transactions in the instance provided for under Article 31 of the Charter;

17. decision-making pertaining to the approval of the transactions in the instance provided for under Article 32 of the Charter;

18. appointment of the General Director of the Company, determination of his/her term of office, and early dismissal and termination of the contract with the General Director;

19. approval of decisions to issue securities, prospectuses for securities and reports on the results of the acquisition of the Company shares subject to redemption, reports on the results of share redemption, reports on the results of the call to shareholders to redeem their shares;

20. approval of the registrar and the terms of the agreement on maintaining the Company’s shareholder register; decision-making on the termination of such an agreement with the registrar;

21. decision-making pertaining to the reimbursement to the members of the Company’s Management Board and other officers for losses incurred by them in connection with the performance of their official duties and/or the exercise of the powers of the Company as its representative as a result of claims, complaints, demands or amounts of liability against the members of the Company’s Management Board or other officers from any third parties, including the government and municipal agencies;

22. decision-making pertaining to the concluding of D&O liability insurance agreements to cover the liability of members of the Board of Directors of the Company and its officers for losses inflicted on third parties by the Company’s officers in the performance of their official duties and/or exercise of the powers of the Company’s representatives;

23. consideration of the opinions of the Audit Commission and the external auditor of the Company;

24. approval of the material terms of the agreements entered into with the General Director, Deputies General Director, Chief Accountant, members of the Management Board (fulfillment of obligations by the members of the management Board);

25. consideration of matters in accordance with the Board of Directors responsibility pursuant to the terms of the agreements with the General Director Deputies General Director, Chief Accountant, members of the Management Board (fulfillment of obligations by the members of the management Board);

a) preliminary approval of nominees to be appointed as Deputies General Director, Chief Accountant, Directors of Branches, heads of representative offices and the dismissal of the above persons on the Company’s initiative;

26. decision-making pertaining to the placement by the Company of bonds, and other issued securities where, under the terms of the placement of such shares and other issued securities, they are not convertible into Company shares;

a) decision-making pertaining to determination of procedures for the setting of interest (coupon rate) on the bonds of the Company;

b) decision-making pertaining to early redemption, at the option of the Company, of the bonds issued by the Company, where the decision authorizing the issue of such bonds provides for such early redemption;

27. decision-making pertaining to the placement, by the Company, of bonds convertible into shares and of other issued securities convertible into shares where such bonds (other issue securities) are placed by way of public subscription and may be converted into the Company’s ordinary shares, amounting to 25 (twenty five) or less percent of the Company’s previously placed ordinary shares;

28. decision-making pertaining to the introduction of amendments and additions to the Charter related to the establishment and liquidation of branches, to the establishment and closing of representative offices of the Company;

29. election (re-election) of the Chairman and Vice-Chairman of the Board of Directors;

30. appointment and dismissal of the Corporate Secretary of the Company and determination of the amount of his/her remuneration, approval of Regulations on Corporate Secretary and Corporate Secretary’s Department, approval of the terms and conditions of the Corporate Secretary’s employment contract;

31. increase of the charter capital of the Company by way of the Company’s placement of additional shares by public subscription, within the limits of the number of authorized shares, if the number of additionally placed shares is twenty-five (25) or less percent of the ordinary shares previously placed by the Company;

32. determining the procedure for interacting with organizations in which the Company participates, approval of the Company’s managing policy with respect to its subsidiaries and associated companies, including the passing of decisions on matters within the competence of the general meetings of participants of subsidiaries (the highest governing bodies of organizations having other legal or organizational forms) in which the Company is the sole participant;

33. preliminary approval of the simultaneous holding by the person performing the functions of the Company’s individual executive body or members of the Company’s Management Board of positions in the governing bodies of other organizations;

34. permission to the person performing the functions of the Company’s individual executive body to be simultaneously employed by other employer;

35. establishment of standing or ad hoc committees (for consideration of certain issues) of the Board of Directors and approval of their regulations;

36. approval of the internal document on the disclosure of information about the Company;

37. decision-making pertaining to the payment of premium to the members of the Company’s Management Board pursuant to the document to be approved by the Board of Directors;

38. approval of the Regulations on the Company’s structural subdivision exercising internal control functions; pre-approval of candidates to the position of its head and his/her firing; and consideration of other matters to be decided by the Board of Directors pursuant to the Regulations on the said subdivision;

39. approval of the internal document (documents) on internal control over financial and operational activity of the Company, as well as risk management system within the Company;

a) preliminary approval of appointment of the person responsible for organization and maintenance of risk management in the Company and dismissal of such person at the initiative of the Company, approval of the terms and conditions of the labor agreement executed with such person, and consideration of matters which, pursuant to such labor agreement, shall be resolved by the Board of Directors;

40. approval of the material terms of the employment contract (supplementary agreements) made by the Company with the head of the Company’s structural subdivision exercising internal control functions;

41. approval of the material terms of the employment contract entered into the Company with the Company’s Branches Directors and heads of the Representative Offices.

a) consideration of the matters decisions on which shall be made by the Board of Directors pursuant to the terms of the agreements entered into with the Company’s Branches Directors and heads of the Representative Offices;

42. approval of the internal documents aimed to the Company’s compliance with applicable legislation and listing rules of the stock exchanges on which the Company’s shares and derivative securities are listed;

43. pre-approval of the engagement by the Audit Commission of the contracted external specialists and determination of the payment and other material terms of its contracts;

44. other matters relegated to the competence of the Board of Directors under this Charter and the Federal Law “On Joint Stock Companies”.

Rostelecom’s current activities are managed by the Sole executive body of Company (the General Director) and the Collective executive body (the Management Board).

The competence of the Company’s executive bodies shall include day-to-day management of Rostelecom’s activities except issues referred by the Charter to the competence of the General meeting of shareholders and the Board of Directors.

The powers of the General Director under the Company’s Charter:

The General Director acts, without a power of attorney, on behalf of the Company for the following:

1. representing the Company in the Russian Federation and abroad;

2. presiding at the General Shareholders’ Meeting in accordance with the Regulations on the General Shareholders’ Meeting unless otherwise determined by the Board of Directors;

3. arranging for execution of the resolutions of the General Shareholders’ Meeting and the Board of Directors;

4. supervising the Directorate General (Headquarters) of the Company, approving the Regulations on the Directorate General (the central apparatus of corporate management of the Company) and determining the structure and numerical composition of the Directorate General of the Company and the amounts, procedures and forms of remuneration on the basis of the internal document approved by the Management Board and governing the general provisions for labor motivation;

5. exercising overall supervision of the operation of the Company’s branches;

6. hiring, transferring and dismissing the Company employees, including branch directors and employees, and exercising other rights and performing other obligations of the Company as the employer in labor relations in the manner provided for under applicable laws and the Charter;

7. approving and endorsing the Company’s internal regulations except those to be approved, in accordance with Clauses 14.2.11 and 23.3.13 of the Charter, by the General Shareholders’ Meeting and the Board of Directors;

8. issuing orders, directives and instructions that are binding on all the Company’s employees;

9. approving the List of the Company Employees, including employees of the Company’s branches, the authority to appoint (dismiss) whom may not be delegated by the General Director to third parties;

10. performing any transactions on behalf of the Company within the limits determined under the Federal Law of the Russian Federation “On Joint Stock Companies” and the Charter;

11. the right to affix the first signature to financial documents;

12. issuing powers of attorney on behalf of the Company, including powers subject to delegation;

13. opening bank accounts for the Company;

14. approving the set, character and order of protection of information that can be designated “commercial secrets”; issuing orders and instructions on compliance with the requirements to protect such commercial secrets;

15. approving the internal control procedures;

16. exercising other powers in accordance with applicable law and this Charter.

The following issues of day-to-day business fall within the competence of the Management Board under the Company’s Charter:

1. determination of the Company’s technical, financial, economic and tariff policy;

2. preparation of proposals on the main aspects of the Company’s operation, including the draft budgets, business plans, development strategies and programs of the Company;

3. arrangement of monitoring the Company’s financial and business operations;

4. determination of the Company’s personnel and social policy;

5. preparation of materials and draft resolutions on matters to be considered by the General Shareholders’ Meeting and the Board of Directors, including preparation of proposals on the conclusion of transactions to be approved by the General Shareholders’ Meeting and the Board of Directors of the Company, on the Company’s participation in other organizations, etc.;

6. organizational and technical support of the operations of the Company’s bodies;

7. approval of internal documents governing matters falling within the competence of the Management Board of the Company except for internal documents delegated to the competence of the General Shareholders’ Meeting and the Board of Directors;

8. analysis of performance results of the Company’s structural subdivisions, branches and other separate subdivisions and issuance of compulsory instructions on improvement of their performance;

9. discussion of organizational matters related to the Company’s branches and representative offices and of other matters, in accordance with the Regulations on the Management Board;

10. determination of the Company’s planning and budgeting methodology;

11. determination of the Company’s security policy;

12. approval of the internal document governing the general provisions on labor motivation, as well as consideration and decision-making on the execution of collective bargaining agreements and arrangements;

13. determination of the accounting policy; monitoring of the improvement of book-keeping and accounting procedures in accordance with the Russian Accounting Standards and International Financial Reporting Standards as well as management accounting;

14. establishment of standing or ad hoc committees (for consideration of certain matters related to the preparation of Management Board resolutions) under the Management Board which are not independent bodies of the Company; approval of regulations thereon;

15. preparation of the internal document setting internal control procedures over financial and operational activity of the Company to be approved by the Board of Directors, and;

16. preparation of the internal document setting risk management procedures to be approved by the Board of Directors.

The Management Board of the Company may also decide on other matters pertaining to the management of the Company’s current operations, based on instructions from the Board of Directors, or as proposed by the Committees of the Board of Directors or the General Director of the Company, except decisions on matters delegated to the competence of the General Shareholders’ Meeting or the Board of Directors of the Company.

At the General Shareholders’ Meeting upon results of 2008 held on May 30, 2009, a new version of the Company’s Charter No. 10 was approved. State registration of the Charter No. 10 was executed on June 29, 2009.

Also the Regulations on the Board of Directors (ver. No. 8) was approved at the meeting.

The text of the Charter (ver. No. 10), the Regulations on the General Shareholders’ Meeting (ver. No. 3), the Regulations on the Board of Directors (ver. No. 8) and Amendments No.1 to the Regulations on the Management Board (ver. No. 4) were attached to the Q2 2009 report as Exhibits No.2, 3, 4, 5 respectively.

In addition the Company’s business principles are set out in the Corporate Governance Code (ver. No. 1), adopted by the Board of Directors on December 27, 2007.

The Charter and other internal documents of the Company are available by the link: www.rt.ru/en/centr-invest/.

5.2. Members of the Issuer’s Management Bodies

As of the end of the reporting period, the Board of Directors of the Company comprised:

Yevgeny ValeryevichYurchenko, Chairman of the Board of Directors.

Year of Birth: 1968.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2004 – *200*5	OJSC Svyazinvest	Deputy General Director, Member of the Management Board
2004 – *200*5	CJSC RTK-Invest	Chairman of the Board of Directors
2004 – *200*5	*OJSC RTComm.RU, OJSC Svyaz-Bank,* CJSC Registrator-Svyaz	Member of the Board of Directors
2004 – *200*5	*Non-Government Pension Fund Telecom-Soyuz*	Member of the Fund Board
2005 – 2007	OJSC Comstar — United Telesystems	Deputy General Director for Investments and Regional Development
2005 – 2007	OJSC Tyumenneftegazsvyaz, CJSC Konversiya-Svyaz, LLC TK Overta	Chairman of the Board of Directors
2007 – 2009	Sberbank	Manager of Central-Chernozem branch
2009 – current	OJSC Svyazinvest	General Director, Chairman of the Management Board
2009 – *current*	OJSC Rostelecom, OJSC North-West Telecom, OJSC VolgaTelecom, OJSC Southern Telecommunication Company, OJSC Uralsvyazinform, OJSC CenterTelecom, OJSC Sibirtelecom, OJSC Dalsvyaz, OJSC Central Telegraph	Chairman of the Board of Directors
2009 – *current*	OJSC MGTS	Member of the Board of Directors
2009 – *current*	*Non-Government Pension Fund Telecom-Soyuz*	Member of the Fund Board

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Any administrative proceedings alleging infringements in the spheres of finance, taxes and levies, securities market, or criminal proceedings alleging violations in the sphere of economics or against the government: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Vladimir Nikolaevich Bondarik.

Year of Birth: 1957.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
*2004 – 2005*	*LLC Sensor Systems*	*General Director*
*2005 – 2008*	*LLC Roilcom*	*Deputy General Director, Managing Director, General Director*
*2009 – current*	*OJSC Svyazinvest*	*Deputy General Director*
*2009 – current*	*Ministry of Communications and Mass Media of Russia*	*Adviser to Minister on a voluntary basis*
*2009 – current*	OJSC Rostelecom	Member of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Sergei Ivanovich Kuznetsov.

Year of Birth: 1953.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
*2001 – 2004*	CJSC Telmos, OJSC RTComm.RU, CJSC Globalstar – Space Telecommunications	*Member of the Board of Directors*
2001 – *2004*	NP Center for Studies of Telecommunications Development Issues	*Member of the Partnership Board*
*2002 – 2004*	*OJSC Rostelecom*	*Member of the Board of Directors*
*2003 – 2005*	*OJSC Svyaz-Bank*	*Member of the Board of Directors*
*2004 – 2004*	*OJSC North-West Telecom*	*Chairman of the Management Board*
*2004 – 2006*	*OJSC Svyazinvest*	*First Deputy General Director, Member of the Management Board*
*2004 – 2006*	*OJSC Telecominvest*	*Member of the Board of Directors*
*2005 – 2006*	OJSC Southern Telecommunication Company, OJSC Central Telegraph, OJSC Sibirtelecom, OJSC Ulalsvyazinform, OJSC Dalsvyaz	Chairman of the Board of Directors
*2005 – 2006*	*OJSC VolgaTelecom*	*Member of the Board of Directors*
*2005 –* *2009*	*OJSC CenterTelecom, OJSC Rostelecom*	*Member of the Board of Directors*
*2006 – 2009*	*OJSC VolgaTelecom*	Chairman of the Board of Directors
*2006 – 2009*	*OJSC Sibirtelecom*	*Member of the Board of Directors*
*2009 – 2009*	*OJSC Rostelecom*	Chairman of the Board of Directors
*2007 – current*	*CJSC BaltAvtoPoisk*	Chairman of the Board of Directors
*2007 – current*	*Russian Union of Industrialists and Entrepreneurs*	*member of the Independent Directors’ National Register*
*2009 – current*	*OJSC Rostelecom*	*Member of the Board of Directors*

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Mikhail Alexandrovich Leshchenko.

Year of Birth: 1975.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
*2002 – 2005*	Commercial Bank Moskovsky Delovoy Mir (OJSC) (OJSC MDM-Bank)	Deputy Head of Division – Head of Investment Banking Department
*2005 – 2005*	Marshall Capital Partners	Deputy General Director
*2006 – 2006*	Marshall Capital	Deputy General Director
*2007 – 2008*	Marshall Consulting	Deputy General Director
*2008 – 2009*	*Ministry of Communications and Mass Media of Russia*	Adviser to Minister
2009 – current	OJSC Rostelecom, OJSC North-West Telecom, OJSC VolgaTelecom, OJSC Southern Telecommunication Company, OJSC Uralsvyazinform, OJSC CenterTelecom, OJSC Sibirtelecom, OJSC Dalsvyaz, OJSC Central Telegraph, OJSC Giprosvyaz, OJSC Svyaz-Bank, OJSC Svayzinvest	Member of the Board of Directors
2009 – current	OJSC Svyazinvest	Deputy General Director

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Alexey Alexeevich Lokotkov.

Year of Birth: 1950.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2000 – 2006	OJSC CenterTelecom	First Deputy General Director – Finance Director
2007 – 2008	OJSC Soyuz-Telefonstroy	First Deputy General Director
2008 – current	OJSC Svyazinvest	Deputy General Director

Period	Organization	Office
2009 – current	OJSC Rostelecom, OJSC Giprosvyaz, OJSC Southern Telecommunication Company, OJSC Sibirtelecom, OJSC CenterTelecom, OJSC Recreation Complex Orbita	Member of the Board of Directors
2009 – current	OJSC Dagsvyazinform, OJSC Svyazintek	Chairman of the Board of Directors

Stockholdings in the Company: 0.000017%.

Interest in the total amount of Company’s ordinary shares: 0.0000033%.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Konstantin Valeryevich Malofeev.

Year of Birth: 1974.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2003 – 2005	Commercial Bank Moskovsky Delovoy Mir (OJSC) (OJSC MDM-Bank)	Head of Corporate Finance Division of Investment Banking Department
2005 – 2005	Marshall Capital Partners	General Director, Adviser to General Director
2006 – 2008	Marshall Capital	Adviser to General Director
2007 – current	OJSC Nutrinvestholding	Member of the Board of Directors
2007 – current	Autonomous noncommercial educational organization Prelate Vasily the Great Gymnasium	Chairman of the Supervisory Board
2009 – current	MarCap Advisors Limited	Managing Partner
2009 – current	OJSC Rostelecom, OJSC Svayzinvest	Member of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Alexander Yuryevich Provotorov.

Year of Birth: 1974.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2003 – 2005	Sputnik Investment Limited	Deputy Head of Consultancy and Investment Department
2005 – 2005	Marshall Capital Partners	Deputy General Director
2006 – 2008	Marshall Capital	General Director
2009 – 2009	MarCap Advisors Limited	Senior Managing Director
2009 – current	OJSC Svyazinvest	First Deputy General Director
2009 – current	OJSC Rostelecom, OJSC MGTS, OJSC CenterTelecom, OJSC Uralsvyazinform, OJSC Central Telegraph, OJSC North-West Telecom, CJSC NCC (Nizhegorodskaya Sotovaya Svyaz), OJSC Rosinformcominvest	Member of the Board of Directors
2009 – current	OJSC Giprosvyaz	Chairman of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Ivan Ivanovich Rodionov.

Year of Birth: 1953.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
1997 – 2006	AIG-Brunswick Capital Management	Managing Director
2004 – 2006	AIG-Interros RCF Advisor	Managing Director
2005 – 2007	OJSC MGTS	Member of the Board of Directors
2005 – 2009	OJSC EnergoMashinostroitelny Alliance	Chairman of the Board of Directors
2000 – current	OJSC IBS Group Holding	Member of the Board of Directors
2001 – current	OJSC North-West Telecom	Member of the Board of Directors
2003 – current	State University Higher School of Economics	Professor of Department of Economics and Finances of the Firm
2004 – current	OJSC FosAgro	Chairman of the Board of Directors
2006 – current	Russian State University for the Humanities	Professor of Department of Finances and Credit
2009 – current	OJSC Svyazinvest, OJSC Rostelecom, OJSC IK Rusinvest	Member of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Viktor Dmitrievich Savchenko.

Year of Birth: 1960.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2001 – 2006	OJSC Svyazinvest	Director of Legal Department
2003 – 2005	OJSC VolgaTelecom	Member of the Board of Directors
2003 – 2006	OJSC Central Telegraph	Member of the Management Board
2004 – 2005	OOO South-Urals Cellular Telephone	Member of the Board of Directors
2005 – 2006	OJSC Svyazinvest, OJSC CenterTelecom	Member of the Management Board
2005 – 2006	OJSC Svyazintek	Member of the Board of Directors
2006 – 2006	OJSC Svyazinvest	Managing Director – Director of Legal Department
2006 – 2009	OJSC Svyazinvest	Managing Director – Director of Corporate Governance and Legal Department
2006 – 2009	OJSC CenterTelecom	Member of the Board of Directors
2002 – current	OJSC MGTS	Member of the Board of Directors
2006 – current	OJSC VolgaTelecom	Member of the Board of Directors
2008 – current	OJSC RTComm.ru	Member of the Board of Directors
2009 – current	OJSC Svyazinvest	Deputy General Director, Member of the Management Board
2009 – current	OJSC Rostelecom, OJSC Dagsvyazinform	Member of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Yelena Vladimirovna Umnova.

Year of Birth: 1954.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2003 – 2005	OJSC Svyazinvest	Director of Finance Department
2005 – 2007	OJSC Comstar – United Telesystems	Head of Business Integration and Subsidiaries Management Department, Deputy Director for Corporate Governance, Director of Governance Department

Period	Organization	Office
2007 – 2008	OJSC Etalon Factory	Finance Director
2008 – 2009.	Sberbank, Tambov branch	Deputy Managing Director
2009 – current	OJSC Svyazinvest	Deputy General Director
2009 – current	OJSC Rostelecom, OJSC Giprosvyaz, OJSC CenterTelecom, OJSC North-West Telecom, OJSC Southern Telecommunication Company, OJSC Uralsvyazinform, OJSC Dalsvyaz	Member of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Maxim Yuryevich Tsyganov.

Year of Birth: 1972.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2002 – 2006	CJSC LenRosInvest	General Director
2003 – 2005	LLC Web-Invest.ru	Director of the branch
2003 – 2007	KIT Finance Investment Bank (OJSC) (before September 1, 2005 – OJSC Web-Invest Bank)	Member of the Board of Directors
2004 – 2004	CJSC LINKS Invest	Member of the Board of Directors
2004 – 2007	OJSC Magistral Finance Leasing Company	Member of the Board of Directors
2005 – 2008	Branch of KIT Finance Investment bank (OJSC) (before September 1, 2005 – OJSC Web-Invest Bank)	Managing Director
2006 – 2007	KIT Finance (LLC)	General Director
2007 – 2008	KIT Finance Investment bank (OJSC)	Managing Director, Member of the Management Board
2007 – 2008	KIT Fortis Investment Consulting (LLC), KIT Fortis Investments (OJSC)	Member of the Board of Directors
2008 – 2008	KIT Finance Investment bank (OJSC)	Deputy General Director
2008 – 2009	KIT Finance (LLC)	President
2006 – current	KIT Finance Europe	Member of the Board of Directors
2007 – current	OJSC CenterTelecom, OJSC Rostelecom, NPF Promagrofond, Self-regulatory organization National Securities Market Association (SRO NSMA)	Member of the Board of Directors
2008 – current	KIT Finance Investment bank (OJSC)	Adviser to General Director
2008 – current	KIT Finance (LLC)	Member of the Board of Directors
2009 – current	KIT Finance IB (LLC)	General Director

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

As of the end of the reporting period, the Management Board of the Company comprised:

Anton Yuryevich Kolpakov, Chairman of Management Board.

Year of birth: 1971.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2005 – 2006	CJSC Akos	Member of the Management Board
2005 – 2007	OJSC Dalsvyaz	Deputy General Director – Director for Business Development, Member of the Management Board
2007 – 2008	NP Center for Studies of Telecommunications Development Issues	*Member of the Partnership Board*
2006 – current	CJSC Akos	Chairman of the Board of Directors
2007 – 2009	OJSC Dalsvyaz	General Director, Chairman of the Management Board
2009 – current	OJSC Rostelecom	General Director
2009 – current	*CJSC GlobalTel, CJSC Zebra Telecom, OJSC RTComm.RU*	Chairman of the Board of Directors

Stockholdings in the Company: none.

Interest in the total amount of Company’s ordinary shares: none.

Amount of issuer’s shares that can be acquired by such person under the warrants provided by the issuer: not applicable.

Stockholdings in subsidiaries/associated companies: none.

Interest in the total amount of subsidiaries/associated companies’ ordinary shares: none.

Amount of subsidiaries’/associated companies’ shares that can be acquired by such person under the warrants provided by these subsidiaries and /or associated companies: not applicable.

Relations to any other members of the Company’s management bodies and/or bodies auditing the Company’s financial and business operations: none.

Acting as officer in companies against which bankruptcy proceedings were instituted and/or the proper bankruptcy procedure provided by the RF legislation was applied: not applicable.

Andrei Yuryevich Baklykov

Year of birth: 1968.

Education: higher.

Positions for the last 5 years:

Period	Organization	Office
2003 – 2005	OJSC Rostelecom	Deputy Director for Information Technologies
2005 – 2006	OJSC Rostelecom	Director for Information Technologies
2008 – 2009	*OJSC RTComm.RU*	Member of the Board of Directors
2006 – current	OJSC Rostelecom	Director of Information Technologies

Period	Organization	Office
		Department
2007 – current

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

INTRODUCTION

1. BRIEF INFORMATION ABOUT MEMBERS OF THE ISSUER’S MANAGEMENT BODIES, ITS BANK ACCOUNTS, AUDITOR, APPRAISER, FINANCIAL CONSULTANT, AND OTHER SIGNATORIES TO THIS QUARTERLY REPORT

1.1. Members of the Issuer’s Governing Bodies

1.2. The Issuer’s Bank Accounts

1.3. The Issuer’s Auditor(s)

1.4. The Issuer’s Appraiser

1.5. The Issuer’s Consultants

1.6. Other Signatories to this Quarterly Report

2. THE ISSUER’S FINANCIAL AND ECONOMIC FUNDAMENTALS

2.1. The Issuer’s Financial and Economic Indicators

2.2. The Issuer’s Market Capitalization

2.3. The Issuer’s Liabilities

2.3.1. Accounts Payable

2.3.2. The Issuer’s Credit History

2.3.3. The Issuer’s Liabilities Resulting from Security Provided to Third Parties

2.3.4. Other Liabilities of the Issuer

2.4. The Purposes and Use of Proceeds Generated by Securities Placements

2.5. Risks Associated with Purchase of Securities to be Placed (or Outstanding Securities)

2.5.1. Industry Risks

2.5.2. Country and Regional Risks

2.5.3. Financial risks

2.5.4. Legal Risks

2.5.5. Risks Related to the Issuer’s Operations

3. DETAILED INFORMATION ON THE ISSUER

3.1. The Issuer’s Establishment and Development

3.1.1. The Issuer’s Corporate Name

3.1.2. State Registration of the Issuer

3.1.3. The Issuer’s Establishment and Development

3.1.4. Contact Information

3.1.5. Taxpayer’s Identification Number (TIN)

3.1.6. The Issuer’s Branches and Representative Offices

3.2. Issuer’s Principal Operations

3.2.1. Issuer’s Field of Business

3.2.2. Issuer’s Principal Operations

3.2.3. Materials, products (raw materials) and the Issuer’s suppliers

3.2.4. Target Markets for the Issuer’s Products (Works, Services)

3.2.5. Licenses Held by the Issuer

3.2.6. Issuer’s Joint Operations

3.2.7. Additional Requirements to Issuers That Are Joint-Stock Investment Funds or Insurance Organizations

3.2.8. Additional Requirements to Issuers That Are Extracting Companies

3.2.9. Additional Requirements to Issuers That Are Providers of Communications Services

3.3. The Issuer’s Future Plans

3.4. The Issuer’s Participation in Industrial, Banking and Financial Groups, Holding Companies, Concerns and Associations

3.5. The Issuer’s Subsidiaries and Dependent Companies

3.6. The Issuer’s Fixed Assets: Composition, Structure, Value, Planned Purchases, Replacement, Retirement and Any Encumbrances

3.6.1. Fixed Assets

4. THE ISSUER’S FINANCIAL AND BUSINESS OPERATIONS

4.1. The Issuer’s Financial and Business Results

4.1.1. Profit And Losses

4.1.2. Factors Influencing on the Amount of Issuer’s Revenue from Sale of Products, Works and Services and of Profit (Loss) From Its Core Business

4.2. The Issuer’s Liquidity, Sufficiency of Capital and Current Assets

4.3. The Issuer’s Capital and Current Assets Size and Structure

4.3.1. The Issuer’s Capital and Current Assets Size and Structure

4.3.2. The Issuer’s Financial Investments

4.3.3. The Issuer’s Intangible Assets

4.4. The Issuer’s R&D, Licenses and Patents, New Development and Research Project Policies and Expenditures

4.5. Trends in the Sphere of the Issuer’s Core Business

4.5.1. Trends in the Sphere of the Issuer’s Core Business

4.5.2. Issuer’s competitors

5. MEMBERS OF THE ISSUER’S MANAGEMENT BODIES, ITS FINANCIAL AND BUSINESS OPERATIONS AUDITING BODIES, AND BRIEF INFORMATION ABOUT THE ISSUER’S OFFICERS (EMPLOYEES)

5.1. The Organization and Authority of the Issuer’s Management Bodies

5.2. Members of the Issuer’s Management Bodies

OPEN JOINT STOCK CO LONG DISTANCE & INTERNAT COMM ROSTELECOM 6-K