23/05/2006   PeterStar results for 2005

ZAO PeterStar (telecommunications company, Saint Petersburg) has summed up the results of its activities for 2005, which were approved on May 19 at the Directors Board meeting of the PeterStar Company.

Based on the results of the Company’s activities in 2005 the volume of consolidated revenue of the PeterStar Group of Companies increased 16% compared to the similar indicator for 2004 and came to USD91.6 million. In 2005 the net profit of the Company exceeded USD16.5 million. The growth of this indicator in comparison with the previous year made 34%. The Company revenue from the business telephony services furnished made USD43 million. In 2004 said figure was at the level of USD41 million. It should be noted that the trend has remained of increasing revenue from data and Internet access services: in 2005 – 31% of the total revenue (USD28.6 million) vs. 26% (or USD20.6 million) in 2004. In money terms the growth in said segment made in 2005 almost USD8 million or 39%. According to the 2005 results, the third place in the Company revenue structure is taken by telephony services provided under regulated tariffs to the residents of Vasileostrovski District of Saint Petersburg and to the subscribers of Pskov City Telephone Network, the latter being a 90% subsidiary of the Company. Revenue from these services increased 59% compared to 2004 and amounted to USD10.5 million. Auditor of the consolidated financial statements of the PeterStar Group for 2005 under the US GAAP standards is Ernst & Young.

Furthermore, one of the key events for the PeterStar Company in 2005 was the completion of a transaction of Emergent Telecom Ventures S.A. and First National Holding (FNH) on acquiring a 71% stake in ZAO PeterStar from Metromedia International Group, Inc. (MIG). The remaining 29% of the Company shares belong to OAO Telecominvest.

“During last three years the priority lines of PeterStar’s business consisted in expanding the geography of activity and opening affiliates in some cities of the Northwest Region of Russia. In 2005 the acquisition of Telecom Western Shipping Company – a telecom carrier – became an important step towards said lines, as well as establishing on its basis an affiliate in Kaliningrad.” – says Victor Koresh, General Director of ZAO PeterStar. Thus the PeterStar Company is at present developing its business in six cities of the Northwest Region of Russia – Veliki Novgorod, Vyborg, Kaliningrad, Murmansk, Pskov, Petrozavodsk, and Saint Petersburg. In particular in Pskov and Kaliningrad networks were modernized, Internet access services were launched, based on ADSL technology. In 2005 revenue from the regional companies and affiliates amounted to USD9 million.

“In 2005 we completed the process of integrating affiliates, introduced uniform standards of communication network construction and management, launched a number of new services, - comments Victor Koresh, General Director of ZAO PeterStar. - In the near future the Company is planning to develop new Internet access and data services: developing broadband wireless access networks WiMax and introducing an IPTV service (video transmission over IP networks). Both of these lines are implemented jointly with PeterStar’s partner – a national carrier ZAO Synterra. In 2006 ZAO PeterStar is also planning to reorganize its activity in line with the changes in the legal regulation standards, including those connected with the introduction from January 1, 2006 the new “Rules of Provision Local, Intrazonal, National, and International Telephone Communication Services”.

About Company:

ZAO PeterStar was founded in 1992. The PeterStar Company is one of the leaders on the telecommunication market of the Northwest Region. The Company specializes in the provision of integrated digital communication services – telephony, high-speed Internet access and data services.

The Company started its activity in Saint Petersburg and has achieved considerable results in its own development. To date PeterStar serves over 100 thousand telephone lines and 12 thousand corporate customers, being an absolute leader among alternative carriers of the city.

The Company occupies 60% of the business telephony market of Saint Petersburg. According to the iKS-Consulting Agency, PeterStar is ranked among leading Internet service providers of Saint Petersburg, occupying 21% of the market of Internet services.