NORTH-WEST

TELECOM

NORTH-WEST

TELECOM

Investment Week St. Petersburg November 2003

OPEN JOINT-STOCK COMPANY

A.V. ShalaginDeputy General ManagerEconomics and Finance Director

North-Western Federal District North-Western Federal District

Ñàí êò-Ï åòåðáóðã è Ë ÎÑàí êò-Ï åòåðáóðã è Ë Î

Àðõàí ãåëüñê

Âî ëî ãäàÂî ëî ãäà

Êàëèí èí ãðàäÊàëèí èí ãðàä

Ì óðì à í ñêÌ óðì àí ñê

Í àðÿí -Ì àðÍ àðÿí -Ì àð

Ï åòðî çàâî äñêÏ åòðî çàâî äñê

Ï ñêî âÏ ñêî â

Ñû êòû âêàðÑû êòû âêàð

Â.Í î âãî ðî äÂ.Í î âãî ðî ä

Area

1.7MIO sq. km

9.8% of RF

Area

1.7MIO sq. km

9.8% of RF

Population

14.3 MIO people

9.9% of RF

Population

14.3 MIO people

9.9% of RF

City population

82%

City population

82%

Income

3800 roubles/month/person

Income

3800 roubles/month/person

CORPORATE REORGANIZATION IN 2001-2002 CORPORATE REORGANIZATION IN 2001-2002

OJSC North-West Telecom

OJSC Artelecom

OJSC Artelecom

OJSC Murman Electrosvyaz OJSC Murman Electrosvyaz

OJSC Cherepovets-electrosvyaz

OJSC Cherepovets-electrosvyaz

OJSC Novgorodtelecom

OJSC Novgorodtelecom

OJSC Electrosvyazof Vologda Oblast OJSC Electrosvyazof Vologda Oblast

OJSC Electrosvyaz of the Republic of

Karelia

OJSC Electrosvyaz of the Republic of

Karelia

OJSC Electrosvyazof Kaliningrad

Oblast

OJSC Electrosvyazof Kaliningrad

Oblast

OJSC Electrosvyazof Pskov Oblast

OJSC Electrosvyazof Pskov Oblast

OJSC PTN OJSC PTN

OJSC SPb Telegraph OJSC SPb

Telegraph

OJSC SPb MMT

OJSC SPb MMT

REORGANIZATION PLANNED FOR 2004 REORGANIZATION PLANNED FOR 2004

ОАО «Северо-ЗападныйТелеком»

OJSC Lensvyaz

OJSC Lensvyaz

OJSC Svyaz of the Republic

of Komi

OJSC Svyaz of the Republic

of Komi

OJSC North-West Telecom

Main Main telecommunications telecommunications

operator in the operator in the North-West of RFNorth-West of RF

DYNAMICS OF INDUSTRY INDICES DYNAMICS OF INDUSTRY INDICES

419419 490490Receipts per employee, thousand roubles/year

336336

117117109109

125125Lines per employee, units

2002 2003(planned )

2004(forecasted )

Annual growth

20-25%0

4

8

12

16

2001 2002 2003 2004Years Years

Rece

ipts

, b

illio

n r

ou

ble

s R

ece

ipts

, b

illio

n r

ou

ble

s

13,613,6

8,18,110,110,1

12,212,2

DYNAMICS OF RECEIPTSDYNAMICS OF RECEIPTS

forecasted

planned

STRUCTURE OF RECEIPTS STRUCTURE OF RECEIPTS

LONG-DISTANCE AND INTERNATIONAL

COMMUNICATION

LONG-DISTANCE AND INTERNATIONAL

COMMUNICATION

44%44% 47,8%47,8%

4%4%4,2%4,2%

LOCAL COMMUNICATION

LOCAL COMMUNICATION

ISDN, INTELLIGENT DATA NETWORKS,

INTERNET

ISDN, INTELLIGENT DATA NETWORKS,

INTERNET

OTHER OTHER

DYNAMICS OF PROFIT, billion roubles DYNAMICS OF PROFIT, billion roubles

2002 2003(planned )

2004(forecasted )

2,62,6

0,30,3

2,82,8

0,80,8

3,33,3

1,11,1Net profit Net profit

Profit from sales Profit from sales

CAPITAL INVESTMENT, billion roubles

CAPITAL INVESTMENT, billion roubles

2002 2003(planned )

2004(forecasted)

1,71,71,71,7 3,03,03,03,04,04,04,04,0

COMPANY’S POSITION AMONG INTER-REGIONAL COMPANIES COMPANY’S POSITION AMONG INTER-REGIONAL COMPANIES

*according to the data of OJSC Svyazinvest for the 1st half of 2003

0,730,73Financial stability ratio Financial stability ratio 1

0,110,11Absolute liquidity ratio Absolute liquidity ratio 1

1,191,19Current liquidity ratio Current liquidity ratio 2

250,2150,21Profit from sales per employee (thousand roubles)

Profit from sales per employee (thousand roubles)

INDEX INDEX VALUE VALUE POSITION POSITION

OJSC NWT’S SHARE OF THE SERVICES MARKET

OJSC NWT’S SHARE OF THE SERVICES MARKET

DATA TRANSMISSION SERVICES AND INTERNET 14%DATA TRANSMISSION SERVICES AND INTERNET 14%

DATA TRANSMISSION AND LEASE OF COMMUNICATION CHANNELS 57%DATA TRANSMISSION AND LEASE OF COMMUNICATION CHANNELS 57%

LOCAL TELEPHONE COMMUNICATION 59%LOCAL TELEPHONE COMMUNICATION 59%

LONG-DISTANCE AND INTERNATIONAL COMMUNICATION 62%LONG-DISTANCE AND INTERNATIONAL COMMUNICATION 62%

INCREASING THE INVESTMENT ATTRACTIVENESS IN 2002-2003

INCREASING THE INVESTMENT ATTRACTIVENESS IN 2002-2003

July 2003 – the first holders of 1July 2003 – the first holders of 1stst level ADR are registered. level ADR are registered. ADR are issued against 2,313,000 deposited ADR are issued against 2,313,000 deposited

shares (0.3% of all common shares)shares (0.3% of all common shares)

July 2003 – the first holders of 1July 2003 – the first holders of 1stst level ADR are registered. level ADR are registered. ADR are issued against 2,313,000 deposited ADR are issued against 2,313,000 deposited

shares (0.3% of all common shares)shares (0.3% of all common shares)

The financial reports prepared according The financial reports prepared according to the international standards are disclosed to the publicto the international standards are disclosed to the public

The financial reports prepared according The financial reports prepared according to the international standards are disclosed to the publicto the international standards are disclosed to the public

Four committees are formed in the Board of Directors:Four committees are formed in the Board of Directors:Remuneration and Reporting CommitteeRemuneration and Reporting Committee

Corporate Management CommitteeCorporate Management CommitteeBudget CommitteeBudget Committee

Corporate Finance and Investment CommitteeCorporate Finance and Investment Committee

Four committees are formed in the Board of Directors:Four committees are formed in the Board of Directors:Remuneration and Reporting CommitteeRemuneration and Reporting Committee

Corporate Management CommitteeCorporate Management CommitteeBudget CommitteeBudget Committee

Corporate Finance and Investment CommitteeCorporate Finance and Investment Committee

22ndnd place in the competition held place in the competition held by RTS in 2002 – The Best Corporate Site by RTS in 2002 – The Best Corporate Site

22ndnd place in the competition held place in the competition held by RTS in 2002 – The Best Corporate Site by RTS in 2002 – The Best Corporate Site

MEASURES TO INCREASE THE INVESTMENT ATTRACTIVENESS

MEASURES TO INCREASE THE INVESTMENT ATTRACTIVENESS

A long-term programme of increasing

the capitalization and connections with investors

A long-term programme of increasing

the capitalization and connections with investors

Preparing and adopting the Corporate

Behaviour Code

Preparing and adopting the Corporate

Behaviour Code

Undergoing the shares listing

at the western stock exchange

(2nd level ADR) )

Undergoing the shares listing

at the western stock exchange

(2nd level ADR) )

Reducing the time

of preparing and disclosing financial reports complying with international

standards

Reducing the time

of preparing and disclosing financial reports complying with international

standards

RATING DYNAMICS IN 2002-2003 RATING DYNAMICS IN 2002-2003

5,6 5,95,6 5,9

CCC/stable

B-/stableCCC/stable

B-/stable

Corporate management ratingCorporate management rating

International credit ratingInternational credit rating

Credit rating according to the Credit rating according to the national scale national scale

ru-BB-

ru-BBBru-BB-

ru-BBB

STANDARD & POOR’S

BONDED LOANS BONDED LOANS

• minimizing the value of borrowed capital• reducing the percentage of currency liabilities • ensuring investment funding • increasing the time for attracting resources in roubles

• minimizing the value of borrowed capital• reducing the percentage of currency liabilities • ensuring investment funding • increasing the time for attracting resources in roubles

Goals of issue :Goals of issue :

Areas of use :Areas of use :

Debt refinancing Debt refinancing Investment project financing

Investment project financing

PARAMETERS 1st issue 2nd issue Face value volume of the issue, MIO roubles

300 1500

Number of bonds, thousand pcs. 300 1500

Circulation period, years 2 4

Floatation method Public subscription

Periods of presenting bonds for retirement

3 months ,

3 months ,

6 months

in 2 years

Date of retirement

09.04.2004

8.10.2006 – 30% of the face value

8.03.2007 – 30% of the face value

8.10.2007 – 40% of the face value

KEY PARAMETERS OF LOANS KEY PARAMETERS OF LOANS

1st issue 1st issue

300300

57057020,8%20,8%20,8%20,8% 15001500

2nd issue 2nd issue 26402640

14,4%14,4%14,4%14,4%

- issue volume, MIO roubles .- issue volume, MIO roubles .

- demand volume, MIO roubles - demand volume, MIO roubles

- profitability , %- profitability , %

COMPARISON OF LOAN PARAMETERS COMPARISON OF LOAN PARAMETERS

STRUCTURE OF BOND REPAYMENT STRUCTURE OF BOND REPAYMENT

10%

12%

14%

16%

18%

20%

22%

Jul.02

Oct.02

Jan.02

Apr.03

Jul.03

Oct.03

Jan.04

Apr.04

Jul. 04

Oct. 04

Jan. 05

Apr. 05

Jul. 05

Oct. 05

Jan.06

Apr. 06

Jul. 06

Oct. 06

Jan.07

Apr. 07

Jul. 07

Oct. 07

Co

up

on

ra

tes

, % p

er

an

nu

m

0

100

200

300

400

500

600

700

Re

pa

ym

en

ts, M

IO r

ou

ble

s .

coupons of the first issue coupons of the first issue

coupons of the second issue coupons of the second issue

Stage-by-stage retirement of the second issue

Stage-by-stage retirement of the second issue

The coupon rate will be determined by the Board of

Directors

The coupon rate will be determined by the Board of

Directors

Retirement of the first issue

Retirement of the first issue

COMPARISON OF LOAN INDICES OF INTER-REGIONAL COMPANIES COMPARISON OF LOAN INDICES OF INTER-REGIONAL COMPANIES

12

12,5

13

13,5

14

14,5

15,0

14.01.2004

01.08.2004

17.02.2005

05.09.2005

24.03.2006

10.10.2006

28.04.2007

14.11.2007

01.06.2008

Pro

fita

bilit

y b

y t

he m

om

en

t of

reti

rem

en

t ,

%P

rofi

tab

ilit

y b

y t

he m

om

en

t of

reti

rem

en

t ,

%

Tsentrtelecom 3

Tsentrtelecom 2 MGTS 3

RTK Leasing Tsentrtelecom 2

Volgatelecom YuTK

Uralsvyazinform 3

Sibirtelecom

Volumes of loans Volumes of loans

Reduction of profitability of the 1st issue bonds

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

Retirement date Retirement date May 2002 October . 2003

NWT 2

Dalsvyaz

THANK YOU FOR YOUR

ATTENTION !

THANK YOU FOR YOUR

ATTENTION !