Russia’s Biggest Internet Player Moves Into Expansion Mode

[Moscow, RUSSIA] Golden Telecom (GTI), which provides integrated communications
services in the Commonwealth of Independent States (CIS), is investing about $50 million in Internet
projects in Russia this year, the head of the company’s Internet
services division said.

“GTI has almost completed this year’s financing
targets for the acquisition of Russian Internet companies on the
basis of which the Russia-On-Line portal was created,” Clifford Gauntlett
said. “The company’s acquisitions have made it possible to creat the
necessary core of the portal and now GTI will bolster its potential,” he
said.

“The company could make further investments in the Russian Internet this year
if the need arises, given the rapidly developing and changing market,” he added.

GTI is a leading facilities-based provider of integrated
telecommunications and Internet services throughout Russia and other
countries of the CIS. It operates through several
affiliated companies under the Golden Telecom trademark. GTI offers
competitive local exchange carrier services using its local access
overlay networks in Moscow, Kiev and St. Petersburg.

GTI operates digital voice and data networks in more than 90 cities
throughout Russia and the CIS. At present, the company provides a
complete range of voice and data services in 15 cities of Russia.
Additionally, a complete range of data services is provided in other
cities and regions of Russia, such as Kazan, Krasnoyarsk, St, Petersburg,
Kaliningrad, Murmansk, Yakutsk. The company exceeds competitors in its
CIS coverage for data services.

After the acquisition of STM 16 (2,4 Gbit) international channel from
Moscow to Stockholm, Golden Telecom owns the largest international
connectivity in the CIS countries — exceeding 1.5 times of all existing
international channels of competitors.

GTI’s second quarter results were $26.9 million, up 16 percent from the same
quarter last year, and up 11 percent compared to last quarter. The increase
was primarily due to an increase in data and Internet, and long distance revenues,
which were partially offset by a decline in CLEC and mobile services
revenues.

Virginia-based Global TeleSystems holds approximately 63 percent of
GTI’s outstanding shares.