rts : espk micex : dlsv over-the-counter market usa : feeoy

Far East Telecommunications Company

The First Nine Months Financial Results

November, 2004

RTS: ESPK MICEX: DLSV

Over-the-Counter Market USA: FEEOY

Investor Relations

Safe Harbor

The forward-looking information , which is included in this presentation, are the statements, made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. The presentation contains information about the future events and financial results, estimated by the Company in the future. These statements involve a number of risks and uncertainties. Among the factors that could cause future results include: deterioration of economy; changes of the laws, which are currently in force; increase in dependence on “Rostelecom”,OJSC, concerning the questions of proportion establishment, according to which the payment for international and long-distance traffic is divided: changes in rate of currency exchange; changes in percentage rates; changes in prices for raw materials and services, used by the issuer; changes in political situation in the country; military conflicts and cases of emergency; impossibility to continue the license for carrying out activity. The more detailed description of risks and uncertainties of the company you can find in the quarterly accounts and annual reports of “DALSVYAZ”, OJSC. The majority of the mentioned factors are beyond the control or the possibility of prognostication on the Company’s behalf. Taking onto consideration all the above-mentioned information, the Company does not recommend to rely upon any forward-looking statements, included into this presentation. The Company does not commit itself to disclosing any changes to this presentation with the aim to show the events or circumstances, which took place after the date of this presentation, or with the aim o show the unforeseen events, with the exception of the cases when this disclosure is required in accordance to the Private Securities Litigation Reform Act of 1995.

All the financial results, included in this presentation, were accounted according to Russian Accounting Standards.

1

Welcome

2

Dear Shareholders, Investors and Analysts,

Thank you for your interest to the Public Joint Stock Company “Far East Telecommunications Co”. Let me tell you about its fiscal third quarter results.

In the third quarter we increased twice the revenue growth rate and made important decisions regarding increasing corporate governance quality.

The Board of Directors ratified the conditions and formed 4 committees, including the Corporate Governance Committee, Human Resources, Motivation and Compensation Committee, Audit Committee, and Strategic Management Committee.

The Board of Directors also made a decision to liquidate FETEC’s Jewish Autonomous Regional branch and to reorganize it into communications Hub of JAR. It will allow the company to decrease operational expenses by reduction of the administrative staff and fee (salary) fund.

Igor V. Zabolotny

Chief Executive Officer

Contents

3

Financial Summary

Financial Results of the 9 Months 2004

Financial Results Dynamics of the 9 Months 2004

FETEC at the Capital Markets

Dynamics of 2004 Quarter Results

Guidance for 2004

Financial Summary (9 months 2004)

4

The Leader of the Far East Telecommunications Market FETEC’s market share 59.5%

72% Internet market 87% Local telecommunications market 81% Long-distance telecommunications market 100% Mobile market in Magadan Region and 50% in Kamchatka Region.

Strong Growth Potential (compared 9 months 2003) Installed network capacity increased 13% Revenue increased to 31%;Net Income 2.6 times;

Increased Revenue from: mobile service - 72% (234 million rubles.)

other operators connection - 4 times (637 million rubles) new services (Internet, IP, ISDN) – 54% (355 million rubles) local service – 31% (2,2 billion rubles)

long-distance and international telecommunications – 12% (2,4 billion rubles)

Staff amount decreased to 316 people; Market Cap increased to $140 million or 15%;EBITDA increased 2,6 times.

Contents

5

Financial Summary


Detailed Financial Results the 9 Months 2004



Guidance for 2004

Net Income Increased 2.6 times up to the 1 billion rubles

9 months 2004

Income Statement

Thousand rubles

Revenue 4 828 115 Operational Expenses 3 984 530 Income 843 585 Net Income 402 162

EBITDA 804 000 EBITDA to Revenue 17%

Income statement

Thousand rubles

Revenue 6 338 702 Operational Expenses 5 391 815 Income 946 887 Net Income 1 062 224

EBITDA 2 100 000 EBITDA to Revenue 33%

9 months 2003

Growth

31% 35% 12%

164%

161%

124%

6

Growth of served telephones - 33 278 units. Growth of served telephones - 74 415 units.

Revenues by Service Shares

Revenues from telecommunications services,

thousand rubles.4 743 757 6 242 283

31,6%

9 months 2003 9 months 2004

7

New Services

Mobile Services

Connection of other operators

Others Services

6%

4%

10%

10%

38%

35,6%

35%

5%

3%

3%

10%

45%

Local services

New Services

Mobile services

Connection of other operators

Other services

Long-distance and international

Local services

Long-distance and international

8

Прочие расходы

Охрана

Информационные услуги

Консультационные услуги

Транспортные услуги

Расходы на подготовку кадров

Содержание и ремонт

Теплоэнергия

Материальныерасходы+электроэнергияРасходы по Ростелекому

Лизинговые платежи

Амортизация

Единый соц налог

Заработная плата


(Others)

(Guard Expanses)

(Rostelecom)

(Tangible expenses and power)

(Heat-and-Power energy)

(Maintains)

(Staff Education)

(Information)

(Consulting)

(Transport)

(Leasing payments)

(Amortization)

(Social taxes)

(Salary)

3 984 530

5 391 815

1 954 487

1 498 907

592 760

463 997

57 686

885 894

422 931

683 291

486 639

232 878

574 112

70 213

357 349

463 944

Operation Expenses, thousand rubles

Analysis of Expenses

Contents

9

Financial Summary


Detailed Financial Results of the 9 Months 2004



Guidance for 2004

10

Revenue to one line, thousand rubles.

Revenue to one worker, thousand rubles.


5.2

4,3


Profitability Ratios

260

343.5

10

EBITDA

11

804

2 083


EBITDA, million rubles.

Revenue from Local Services

Rural Local Services

City Local Services

Far East Telecom serves 7 regions of the Russian Far East Federal District. There are 80% people live in the cities.

The Far East telecommunications market is still far from satiation. The amount of orders (demand) to the installation of telephone service is 201 thousand people of 3Q 2004.

Local Services Revenues, million rubles.

12


1 697178

2202 223

13

Revenues from Long-Distance and International Services, million rubles.

Rent of the telecommunications equipment

International Service

Long-Distance Service

1 884

Revenues from Long-Distance and International Services

2 123

354

1 661

394

2 378


13

Revenues from New Services

Revenue shares are:

The Internet – 95.6%

IP –Telephony – 3.5%

ISDN (digital net with integrated services) – 0.9%

Revenue from New Services, million rubles.

14


231

355

Revenues from Mobile Services

Revenues from Mobile Services, million rubles. FETEC has mobile business GSM 900/1800 in Kamchatka Region and GSM 900 in Magadan Region.

The revenue from mobile service increased 72% in 3 quarter 2004, compared to 3 quarter 2003.

The third quarter the amount of subscribers of mobile service increased to 27.8 thousand or 2.8 times compared to 3 quarter 2003.

15


136

234

Revenues from the Connection of Other Operators

Revenues from connection of other operators, 2004, million rubles. FETEC improved structure of

relationship with a connected operators since 1 June 2003 by approving equal tariffs to all connected operator. This had positive influence to the connection of other operators revenue growth rate.

16

152

637


Subscribers Increasing

Amount of mobile subsidiaries, 2004, thousand people.

17

The amount of DSL – clients, 2004, thousand people.

The amount of subscribers of local service, 2004, thousand people.

Corporate clients

Personal Clients

9 months 2003 9 months 2004 9 months 2003 9 months 2004


1 1081 205

10

28

1.3

3,9

Increasing of the Installation and Net Digitalization

18

The amount of installed Automotive Phone Stations, 2004.

1 196

1 350


Contents

19

Financial Summary





Guidance for 2004

2004 Quarters Results Dynamics

20

2 030

2 094

2 215

Revenue, million rubles

I Q. II Q. III Q. I Q. II Q. III Q.

Operating Expenses, million rubles

1 757

1 871

1 763

I Q. II Q. III Q.

Income, million rubles

I Q. II Q. III Q.

273222

452

39

133

Net Income, million rubles

Including Income from the selling of share of

Primtelefon and DVSS-900 (mobile companies)

890

Contents

21

Financial Summary


Detailed Financial Results the 9 Months 2004



Guidance for 2004

FETEC shares at the RTS

QUOTES

November 15, 2004

Common shares Ticker: ESPK Face-value 20 rub. Shares outstanding 95 581 421 52 weeks max. price $1.45 52 weeks min. price $0.89 52 weeks WA price $1.11 The last price $1.23 Change +3.28% Trading volume 4 816 508 USD Dividends 0.40 rub.

Proffered shares Ticker: ESPKP Face-value 20 rub. Shares outstanding 31 168 901 52 weeks max. price $1.20 52 weeks min. price $0.76 52 weeks WA price $0.95 The last price $1.20 Trading volume 2 105 433 USD Dividends 0.73 rub.

Common shares, November 15, 2003 – November 15, 2004, USD.

ESPK

1.14

ESPK

22

ESPK

1,05

FETEC Shares at MICEX (out of list)

QUOTES

November 17, 2004

Common shares Ticker: DLSV Face-value 20 rub. Shares outstanding 95 581 421 52 weeks max. price 52 rub. 52 weeks min. price 26 rub. The last price 34.9 rub. Trading volume 12 146 650 rub. Dividends 0.40 rub.

Proffered shares Ticker: DLVP Face-value 20 rub. Shares outstanding 31 168 901 52 weeks max. price 38 rub. 52 weeks min. price 22 rub. The last price 38 rub. Trading volume 5 527 028 rub. Dividends 0.73 rub.

23

Common shares, November, 2003 – November 15, 2004

DLSV

FETEC plans to take listing at Moscow Inter Banks Currency Exchange until the end of fiscal 2004.

ADR of FETEC is traded on OTC

Dalsvyaz is implementing ADR program of 1 level (Pink Sheets) since 2002.

Transfer agent is

The trading is on Over the Counter Market.

1 ADR is equal 30 common shares of Dalsvyaz OJSC.

The amount of shares outstanding is 79 406 units.

52 weeks max. price is $ 27.5.

52 weeks min. price is $ 25.

The last price is $26.1

The company issued financial results accordingly IAS since 2002 – www.dsv.ru the IR section.

For more information visit www.adr.com

FEEOY

24

The trading history of FETEC ADR

25

FEEOY July – October, 2004

0

2000

4000

6000

8000

10000

12000

14000

16000

07.01

.04

07.12

.04

07.21

.04

07.30

.04

08.10

.200

4

08.19

.04

08.30

.04

09.09

.04

09.20

.04

09.29

.04

10.08

.04

10.19

.04

10.28

.04

23,52424,52525,52626,52727,528

Volume

Price

$

Market Capitalization

Feb.04.

30 September 2003 – 23 September 2004,

million USD.

115 116

133

147

157

145

133125

106

126

140

Sep.03. Okt.03. Nov.03. Dec.03. Jan.04. Apr.04. May04. Jun.04. Jul.04. Augг.04.

26

Sep.04.

Market cap as of September 30, 2004 increased to $140 million USD or 15% compared to September 23, 2003.120

The Increasing of International Ratings

The Rating of Corporate governance of Standard & Poors

The Credit Rating of Fitch Ratings

5.3

5.8

2003 2004

Fitch Ratings increased the long run and credit ratings of Dalsvyaz from B- forecast “stable” to “B” forecast “positive”.

The increasing of rating is because of: - strong position of Dalsvyaz at the Far East region; - accountability to the main shareholder Svyazinvest OJSC; - improvement of financial results.

The increasing of corporate governance rating to 5.8 is because of:

- continuous increasing of quality of corporate governance of the Company;

-the increasing of number of independent directors in the Board of Directors to 4 persons;

- the creation four committees with Board of Directors;

-the Code of corporate governance took place.

В - В -

В

2002 2003 2004

27

Contents

28

Financial Summary





Guidance for 2004

Guidance to 2004

29

5,3

6,8

8,9

2002 2003 2004

Revenue, billion rubles

2002 2003 2004

932 981

1 260

Income, million rubles

2002 2003 2004

0.1 0.2

1.1

Net Income, billion rubles

Including Income from the selling of share of

Primtelefon and DVSS-900 (mobile companies)

IR Contacts

30

Questions?

Investor Relations Department“Far East Telecommunications Company” OJSC

Svetlanskaya St., Vladivostok,Russia 690950

Тel.: +8 (4232) 208-500, ext. [email protected]

www.dsv.ru

rts : espk micex : dlsv over-the-counter market usa : feeoy

Documents

months financial results

future results

financial results dynamics

quarter results guidance

issuer changes

future events

percentage rates changes

corporate governance