TTK’s New Development Strategy Yields Strong Initial Results

MOSCOW - Company TTK today announced the preliminary results of its new development strategy for 2008-2015, showing significant growth in new market segments within this new framework. The strategy will see TTK develop retail and broadband Internet access, local and long distance call telephony, as well as other retail telecommunication services across Russian regions and aims to increase TTK’s regional fixed communications market share to 17 percent, or more than 2 million households, by 2015.

In November 2008, TTK’s regional branches began to supply broadband services for retail customers, with 22 pilot cities live. By the end of the first quarter of 2009, the company was delivering service to more than 25,000 retail customers across 5,000 multi-apartment blocks in over 40 cities. TTK plans to provide broadband services to more than 75,000 retail customers and 6,500 business clients by the end of 2009, and current ARPU stands at $19 per month.

In addition to broadband services, TTK provides long distance calling (LDC) services to corporate clients. During initial implementation, TTK provided broadband services to 3,500 SMBs and 25,000 individual users, as well as LDC services to more than 6,000 corporate clients-an increase rate of 15 percent per month. The volume of voice traffic is also rising and now amounts to 110 million minutes each month.

LDC generated 2 billion rubles in revenue for the company in the past year, and this is expected to double by year’s end. TTK is experiencing a particular rise in registered LDC service consumption from the banking and oil & gas industries as well as in the SMB space, so penetration here is expected to grow too.

TTK launched its new strategy in mid 2008. To set the stage for this growth, the initial phase included the development of versatile internal procedures, uniform business processes and technical and technological solutions. The existing retail access networks of TTK’s regional branches were generally designed to provide broadband services via DSL. The newly launched networks will be built exclusively with the use of optical technologies - FTTB (Fibre-to-the-Building) and xPON (various kinds of passive optical networks). In addition, TTK plans to acquire several regional telecommunication companies which own optical metropolitan infrastructure to allow for the provision of both broadband and telephony to customers.

To complete the foundation of this new strategy, TTK has assembled specialised management teams for new business and for the each of TTK’s regional branches and target cities where it plans to provide broadband services using existing and acquired access networks.

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: TTK

Press contacts: James Hafseth, Fleishman-Hillard, james.hafseth at fleishmaneurope.com, +44(0)207-306-9000; Andrea Sommer, Fleishman Hillard, andrea.sommer at fleishmaneurope.com, +44(0)207-395-7016