TTK Earns 27.5 Billion Rubles (882 Million US Dollars) in 2008

LONDON - Leading Telecoms Backbone Operator’s Investment in Telecoms Infrastructure Pays Off

The Board of Directors of TTK’s principal shareholder ‘Russian Railways’ has reviewed and approved TTK’s reporting on its 2008 budget performance. According to International Financial Reporting Standards the consolidated income of TTK (which includes its head company and 18 subsidiaries) was 27.5 billion rubles - 14% higher than when compared to 2007 when TTK reported an income of 24 billion rubles. Telecommunications services was the principal source of the company’s income, accounting for 20.6 billion rubles compared to 16.9 billion in 2007.

Although TTK’s net income for 2008 was 1.9 billion rubles - less than the previous year’s of 2.5 billion rubles, this decrease can be attributed to the growth of expenses for TTK’s 7 year investment programme for broadband retail markets.

In 2008 TTK’s priority focus was on providing services to its shareholder - JSC “Russian Railways”. TTK’s digital backbone network provided a reliable, secure and efficient data exchange, offering high quality telecommunications services to both clients and its shareholder (Russian Railways).

TTK has demonstrated the growth of key commercial indicators in the past year, securing its key position in the Russian telecommunications market. The company has a 37% market share of national private lines and a 27% market share of the Russian international private lines market, whilst occupying 35% of the internet access market and 35% of the IP VPN market.

In 2008 TTK started to implement its long term development strategy for 2008-2015. The main objectives being to develop large scale broadband internet access in regions throughout Russia, to provide local and long distance telephony (LDC) for individuals and offer a variety of other telecommunications services for the retail market. Since May 2008 TTK has provided broadband access to 3,500 small-to-medium sized businesses (SMBs), to 25,000 households and connected over 6,000 corporate clients to LDC services.

Within the framework of this strategy TTK has developed and implemented unified internal procedures, business processes, technical and technological solutions and created a team of professional managers to run its retail operations. TTK has also drawn up detailed business projects for several dozen Russian towns. In 2008 TTK provided internet access services to SMB enterprises in 22 cities in Russia. By the end of 2009 TTK plans to secure technological access to more than 10,000 multi-apartment buildings, providing broadband services to more than 75,500 households and 6,500 SMBs.

In 2008 TTK reported active growth in LDC services sales to its corporate clients. By the end of the year, TTK was providing long distance call services to over 6,000 government organisations and corporations in Russia. The volume of voice traffic transmitted via TTK’s LDC network exceeded 70 million minutes in 2008. Voice services generated approximately 2 billion rubles. It is anticipated that this income will be twice as high this year, reaching approximately 4 billion rubles.

TTK has significantly strengthened its position among leading international providers. According to the Global Internet Geography Report, TTK was ranked 21 in a list of over 500 global operators.

In the summer of 2008, TTK and leading Japanese telecommunications operator, NTT Communications, began the commercial operation of the Hokkaido-Sakhalin Cable System (HSCS) between Nevelsk (Sakhalin) and Ishikari (Hokkaido). TTK’s fiber-optic network connects Japan and the Eurasian continent, offering a safe and reliable connection through this submarine cable system. For the cable system, TTK upgraded both Russian and international segments of the ‘Eurasia Highway’ (its trans-Russia transcontinental data delivery route). In order to continue making strides in the East-West transit market, TTK started forming the new telecommunications corridor from North to West.

Fortunately the global financial crisis of 2008 did not have too much of an impact on TTK’s development plans. The company’s financial stability was acknowledged by Fitch Ratings, which awarded TTK a long term eminent default rating, a short term eminent default rating “B” in foreign currency, a long-term “A” rating in the national scale with long term eminent default rating and national outlook ’stable’. TTK has employed an anti-crisis measurement plan, which will minimise any potential risks of negative influences by global economic processes.

Committed to social responsibility, TTK has continued its contribution to social projects, including “TTK’s Children Hearts” charity programme designed to help children with heart vascular diseases. TTK helped 105 children with congenital heart disease through this project in 2008. It has transferred approximately 7 million rubles with another 3.5 million rubles coming from personal donations from TTK’s staff. Since the programme launched two years ago TTK has helped a total of 189 children.

About TTK

Founded in 1997, CJSC TransTeleCom (TTK) operates and services one of the largest fibre-optic networks in Russia. Its ‘Eurasia Highway’ transcontinental data delivery backbone offers the geographically shortest route between the economies of Europe and the Far East. TTK is owned by the Russian Railways and its network is laid along the railways, spanning more than 55,000km at a network-wide bandwidth capability of 50Gbps. A total upgradeable capacity of 400Gbps, minimum latency of less than 200 milliseconds between PoPs in London and Hong Kong together with multi-ring topology makes it the choice for domestic and international operators seeking next-generation telecom services, security, resilience and network diversification. TTK runs seven points of presence in major European and Asian cities as well as more than 1,000 further PoPs throughout Russia and CIS. Its infrastructure includes 17 regional branches. Customers and partners include AT&T, the Beijing Olympics 2008, Sakhalin Energy, BT, NTT Communications, Orange Business Services and TeliaSonera. In 2008 S&P awarded TTK with a Corporate Governance Rating of 4+, and Fitch Ratings rated TTK an A(rus) national credit rating, outlook ‘Stable’. TTK’s consolidated income in 2008 was US$0.87 billion, with a profit of US$ 61 million. From 2008 TTK has actively explored both the business-to-business and business-to-consumer markets with its own national broadband programme.

For more information, please visit: www.ttk.ru/www/nsf/esite.nsf/docs/about.html

Source: TransTeleCom (TTK)

Press contacts: Caroline Roycroft, Fleishman Hillard, caroline.roycroft at fleishmaneurope.com, +44(0)207-395-7167; Andrea Sommer, Fleishman Hillard, andrea.sommer at fleishmaneurope.com, +44(0)207-395-7016