Transcript Slide 1

Golden Telecom, Inc.
INVESTOR ROADSHOW
May 2003
Agenda

Investment Highlights

Golden Telecom Business Overview and Strategy

Golden Telecom Financial Overview

Appendix
2
Investment Highlights

Unique growth proposition






Growth rate of an alternative operator with the profitability of an incumbent
Standard & Poor’s gave Golden Telecom an issuer credit rating of BB-/Stable, one notch below the sovereign
rating and higher than any other rated telecom operator in Russia
Solid and growing market share with attractive corporate customer base in an expanding economy

Corporate incumbent of choice with blue chip customers and widest geographic reach

#1 in corporate market in key cities of Moscow, Kiev, N. Novgorod, #2 in St. Petersburg

Continued expansion of Russian economy will stimulate further demand
Profitable, cash generative business model with modest capex needs

Operating cash flow positive since 1998

Net income positive throughout 2002

Modest capex needs of $55-65mm for 2003, at approx. 18% of sales
Poised for significant growth both organically and through consolidation

2003 Revenue expected to be $320-340mm

2003 EBITDA expected to improve to $100-120mm

Well positioned to play consolidator role in fragmented market which will further solidify market share
Strong management team and committed shareholders

Shareholders include Russian and foreign strategic and financial investors, committed to maximising
shareholder value
3
Strong Historical Growth and Track Record
Acquisition of the remaining 50% stake in Sovintel in September 2002 has a major positive impact on
consolidated results
Consolidated Revenue
Consolidated EBITDA
US$ mm
US$ mm
Margins, %
198.7
30.1%
140.0
19.6%
113.1
97.9
1999
16.8%
2000
2001
2002
14.8%
16.4
16.7
27.4
1999
2000
2001
61.4
2002
¹ Revenue CAGR based on 1999-2002 period
² EBITDA CAGR based on 1999-2002 period
4
Agenda

Introduction

Golden Telecom Business Overview and Strategy

Golden Telecom Financial Overview

Appendixes
5
Golden Telecom: The Facts


GTI largest independent provider of fixed-line telecommunication services in Russia and CIS

More than 10 years of operating history

Market leader (#1 or #2) in core markets

Blue chip customer base
Consolidated revenues of $198.7 million in 2002, consolidated EBITDA - $61.4 million


Profitable since 1Q02: consolidated net income of $29.8 million in 2002
Publicly traded on NASDAQ since 1999

Nasdaq: GLDN

Market capitalization as of May 12, 2003: $521mm

Closing price as of May 12, 2003: $19.20
6
Operating and Ownership Structure
Ownership Structure – As of March 20, 2003
Operating Structure
Golden Telecom, Inc.
and affiliates
Capital International 8%
Sovintel
100%
Golden Telecom
(Ukraine)
SA Telcom
(Kazakhstan)
100%
50%
58%
TeleRoss’s
Regional JVs
ING Baring Affiliates 10%
ADS
(N.Novgorod)
EBRD 11%
Alfa Group 40%
Public and others 16%
100%
Rostelecom 15%
7
Golden Telecom’s success model: creation of corporate incumbent
The three elements of successful conversion of an
alternative into incumbent

Lack of adequate infrastructure in the market –
still only 30% of infrastructure is digital
Lack of adequate telecom infrastructure in Russia sparked
accelerated growth of facilities-based alternative operators

Combellga,
3.9%
Comstar, 4.8%
Golden
Telecom, 15.7%
Equant, 10.0%
Weak incumbents – alternatives command 40%
share in industry revenues
Weak incumbents were, and still are, slow in adjusting
operations to market conditions and highly competitive
environment

Market Shares in Moscow, 2001
Building own customer access
Golden Telecom consistently puts highest priority on
development of its own local access infrastructure to
preserve high degree of independence from incumbents and
therefore high sustainable margins
Other, 13.2%
Rostelecom,
26.8%
MTU, 6.3%
MGTS, 19.3%
Source: RosBusiness Consulting: Telecom Report, 2001
Golden Telecom’s strong competitive position and customer base, its sustainable high margins
and superior service offering make it the best positioned fixed-line operator in Russia
8
Continuing economic expansion drives demand for modern digital
communications

Russian economic growth

Fifth consecutive year of growth

Stable political environment

Progress with tax and judicial reform

Slowing inflation

Trade surplus and stable currency

CB forex reserves are at all time high levels




2% of GDP for telecom industry is considerably
below 4-5% average for developed countries
Low penetration levels: fixed line penetration is
21%, mobile penetration is 12%, internet
penetration is 3%
Weak incumbents  Alternative operators are
the locomotive of fixed line telecom growth



GDP per capita ($ at PPP)
8.3%
4,980
Russia’s credit rating upgraded by S&P to “BB”
and by Moody’s to “Ba2” in December 2002
Telecom industry in Russia poised to grow
quicker than economy

GDP growth in Russia
Incumbent operators continue to lag behind
technologically, operationally and financially
Social burden of servicing residential
customers at prices below cost
The need to upgrade legacy analog networks to
digital standard with no incremental revenue
5,400
5,720
6,080
6,500
4.0%
4.0%
4.2%
4.4%
2002E
2003E
2004E
2005E
5.0%
2000A
2001A
Real GDP growth
7,450
6,980
4.0%
2006E
Source: Economist Intelligence Unit, August 2002
Historic penetration levels in Russia
Fixed Line Penetration
Internet Penetration
25%
20%
15%
Mobile Penetration
17%
18%
19%
0%
21%
12%
10%
5%
21%
20%
6%
1%
0%
1997
1%
0%
1998
1%
1%
1999
2%
2%
2000
2%
2001
3%
2002
Source: Pyramid Research
9
Services by Product Lines and Customer Segments
Product lines
Voice

Customer segments
Business
customers
Operators
Consumers

Local, DLD & International
Telephony
Data
Internet

Dedicated Private Lines


Frame Relay and ATM
based services
Dedicated Internet
access

Virtual Private Networks
Digital network “Value Added
Services”

Equipment sales &
maintenance

Call center services

Local numbering

Capacity Resale

Voice over IP Termination

Local traffic termination



Outbound DLD & International
voice
Global partnership with
international carriers without
presence in Russia
Broadband IP
Connectivity

Inbound DLD & International
voice termination

Prepaid calling cards

Dial-up Internet Access
10
How Do Various Businesses Fit Together?
Business Customers: Core
Why business customers?

High and stable growth

High gross margin, although substantial SG&A

Low customer turnover

Ability to differentiate ourselves  Negates commoditization

Customer “ownership”: profits can be protected against migration up the supply chain (for example to MGTS or to Rostelecom)
Golden Telecom leverages its business services network into operator and consumer markets,
hence diversifying revenue streams and improving profitability through scale and scope economies
Operators: Bulk Revenues at Low Incremental Cost
Why operators?
Consumer Internet: Anticipation of Rapid Growth
Why dial-up Internet?

Improved profitability through better capacity utilization:
economies of scale and scope

Further capacity utilization: filling the network during night
hours

Lower gross margin, but very low SG&A


Very stable revenue flows from cellular operators for local
access and numbering, although other wholesale revenues
are more volatile
Wide geographic coverage by POPs provides excellent
technological platform for building unique nation-wide brand

Very low Internet penetration (1.5%) in Russia: high
potential for exponential growth

ROL content provides excellent marketing platform,
differentiation attribute and market development stimulant

Active participation in VoIP traffic – capturing revenues
which bypass traditional voice channels
11
Business Services: Customer Base and Product Mix
MNC and large Russian enterprises are the main customers of managed network solutions and account
for over three quarters of all business customer segment revenues
Business customers
Clients that spend more than $2,000/month;
access through fiber optic
Clients that spend less than $2,000/month;
access through direct access (fiber/copper),
MGTS copper, indirect access, WLL
Enterprises
SME/SOHO
Business
centers &
hotels
Moscow
corporate
Russia MNC
2002 business services: revenue by customers
Pre-paid &
Residential 4%
Business
customers
Residential &
elite
apartments
Prepaid phone
cards
2002 business services: revenue by product
Business Services:
61% of total 2002
revenue
Internet
19%
Voice 59%
SME/SOHO 19%
Data
17%
Large
Enterprises
77%
Prepaid
Cards 5%
Source: Golden Telecom forecast
12
Business Services: market position in voice services
Voice market shares of alternative operators
in Moscow, 2001
Equant
8%
Other
13%
Golden
Telecom
32%
Telmos
5%
Combellga
12%
Comstar
13%
MTU
17%

The size of the corporate voice services
market exceeded US$500mm in 2001
(excluding incumbent providers)

Market share of 32% in Moscow, leading
positions in St. Petersburg (#2), Nyzhny
Novgorod (#1), Kiev (#1) among alternative
providers

Historically development focused on higher
end of the market – large corporate customers

Growth priorities: SME/SOHO market
segment, sales to government

Growth expectations of around 10% p.a.

Voice services will remain the biggest revenue
and EBITDA contributor in the next 3 – 4 years

Distribution and local numbering capacity are
key drivers of business growth
Source: Golden Telecom
With its leadership position in Moscow,
Golden Telecom is the largest independent fixed-line voice services provider in Russia and the CIS
13
Business Services: market position in corporate data & Internet
Golden Telecom is the #2 corporate network solutions provider in Russia
Corporate networks market share Russia, 2001
Other
15%
Golden
Telecom
35%
Global One
50%

The size of the corporate network market
exceeded US$200mm in 2001 (excluding
incumbent providers)

Market share of 35% nationwide (Russian
Federation)

Market share in IP/data of 24% in Moscow
(Equant 36%, Golden Line 9%)

Only one major competitor nationwide: Equant
(50%); one upcoming competitor: TTK

Growth expectations of around 30-40% p.a.

Complex business with high barriers to entry
(geographical spread, integrated services)

High margin business (limited competition)

Predatory growth opportunity (Equant
difficulties)

Russian & CIS networks
Source: Golden Telecom
Given its strong market position in the corporate network market, Golden Telecom capitalizes on the
growth potential of a highly profitable and sustainable segment of the telecom sector
14
Carrier Services: Customer base and product mix
Carrier Customers
Voice Services
Cellular
Operators
- Local
numbering
- Local, DLD,
ILD outbound
voice traffic
Domestic
Operators
- Local
numbering
- DLD, ILD
outbound
voice traffic
Data & Internet Services
International
Carriers
2nd and 3rd Tier
ISPs
- Termination of
inbound voice
traffic
- IP transit
2002 carrier services revenue by customers
Intl. Carriers – Data
7%
Intl. Carriers – Voice
11%
ISPs
2%
VoIP Operators
15%
Domestic Carriers
14%
Source: Golden Telecom forecast
VoIP
Operators
- Termination
of inbound
VoIP traffic
International Carriers
- FR distribution for
MNCs customers of
international carriers
- SDH bandwidth
between Russia and
RoW
2002 carrier services revenue by product
Internet
2%
Data
7%
Carrier Services:
24% of total 2003
revenue
Cellular Operators
51%
Voice
91%
15
Carrier Services: market position
Wholesale market share Russia, 2001

The size of the Wholesale market equaled
US$1. 5bn in 2001 (including incumbent
providers)

Market share GTI < 5 %

Major competitors: incumbents


Other
34%
Rostelecom
45%

Rostelecom, Svyazinvest, MGTS
Ukrtelecom, Kazakh Telecom, etc.
Other players in Russia



International operators: C&W, Telia, Sonera
Local LD operators: Transtelecom, Equant,
ComBellga, Teleport-TP, Andrew
Local alternative operators: MTU, PTT
Golden
Telecom
4%
Svyazinvest
17%
Source: Golden Telecom
Carrier Services provide excellent synergies with Business Services,
thus improving capacity utilization rates and return on investment
16
Carrier Services:
A stable combination of businesses with different fundamentals
Cellular Operators

Since 1993 GTI provides local
(numbering capacity), DLD and ILD
access

Service offering expanded into
system integration activities such
as construction of base station
networks, building call center ring
across 14 cities, etc. All cellular
operators are customers


~ 50% of Carrier Services in
revenue (12% of total GTI revenue
estimate for 2003)
High margins, very low customer
churn (no number portability)

Growth rates = 10% and regional
expansion may bring this higher

Limited competition (MTU Inform)
Voice Carrier Services
Data Networking
GTI distributes FR service to MNCs –
customers of GTI’s global partners,
provides IP backbone access to small
ISPs, sells excess SDH capacity
GTI terminates inbound
international voice and VoIP
traffic from international carriers
and provides DLD and ILD
access to local fixed line
operators interconnected with
GTI network


10% of Carrier Services revenue
(2% of total revenue estimate for 2003)

~ 40% of Carrier Services
revenue (10% of total GTI
revenue estimate for 2003)


Lower margin: pricesensitive commoditized
service
High margins, very low churn (IT
directors don’t want to switch network
providers, expensive to have two
providers as compared to having two
voice providers)

Growth rates = 15%

For international FR connectivity,
limited competitors (C&W and other
international carriers won’t connect
with Equant due to global competition).
IP Transit and SDH have 5
competitors


Organic outbound traffic is
leveraged to receive and retain
inbound streams

Many competitors
60% of Carrier Service revenue is a stable and predictably growing with solid margins
17
Golden Telecom is the only nationwide ISP in Russia
ROL brand subscriber/revenue organic growth
Count
in ‘000
US$’000
2,200
2,000
1,800
1,600
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Access Revenues (left axis)
Subscribers (right axis)
1,400
1,200
1,000
800
600
400
200
0
Jan-99
Oct-99
Jul-00
Apr-01
Jan-02

Market Share: 24% in the Russian
Federation; 40% in Moscow

Competition




Mass market product



Oct-02
Moscow: MTU – Inform
Regions: local providers
Nationwide: none
Distribution as opposed to direct sales
Low margins necessitate high volumes
Market is poised for region-driven growth



+40% growth p.a., largely driven by regions
Access driven – lack of infrastructure in
Russia guarantees sustainable market
shares for facilities based ISPs
In 2001 Moscow accounted for 45% of ISP
market-wide revenues. In 2002, the figure is
estimated at 35%
Note: excludes Cityline brand subscribers to exhibit organic growth rates; Source: Golden Telecom
The growing ISP market offers attractive synergies with the core business of GTI
and a high standalone growth potential
18
A winning strategy
Under new management, Golden Telecom pursues a focused growth strategy based on core competencies
Core resources
Leading market position

High market shares in the largest Russian and Ukrainian
cities

Blue chip customer base - including




Grow $ base in core markets: Moscow, St. Petersburg

Grow in line with the market

Capitalise on new consolidated position: cross selling
opportunities between Sovintel & TeleRoss
Coca-Cola, Pepsi, Mars, Nestle
Ford, Renault
UBS Warburg, Citibank, Renaisance Capital, Bank Menatep
TNK, Caspian Pipeline Consortium
Superior service offering
Unmatched breadth and depth of service offering in all
customer segments

Growth strategy

Businesses

Operators

Consumer
Access to Capital

Significant cash resources on balance sheet

Unused debt capacity

Access to international financial markets
Expand to new markets and new market segments

Expand regionally replicating Moscow model (MANs with
high degree of independence from incumbents)

Expand aggressively in SME

Tap into sales to Government market
Growth through acquisitions

Pursue consolidation opportunities in Moscow and St.
Petersburg

Leverage regional presence into market dominance in the
largest regional cities through potential acquisitions of
existing MANs

Strict acquisition criteria and conservative financial
approach
19
Formulation of regional strategy

Goal: replicate successful Moscow model in economically strong regional centers

Keys to success: focus on corporate market, independence from incumbents

Focus on high margin corporate market

Ability to develop independently from incumbent protects margins

Independence is secured through obtaining sufficient interconnect with local PSTN and
building own access network

Three alternative approaches of regional development: green field, acquisition,
building on existing presence

All approaches are feasible and decision to use one or another is based on local
circumstances
20
Acquisitions of ADS and KIS as an example of regional acquisition strategy
Market Share of ADS Merged in Nyzhny Novgorod
Other
2%
GTI
(ADS
Merged)
16%
Volga
Telecom
82%

Reasons for choosing acquisition approach:

ADS maintains working relationship with
Volga Telecom

It has sufficient local numbering capacity and
sufficient interconnect with incumbent

The company operates almost entirely on its
own infrastructure

It has experience in services to business
customers

The market is poised for growth in business
services

It is operating cash flow positive

Golden Telecom has controlling interest of
58%
Source: Golden Telecom
Created the leading alternative provider in the third largest Russian city with growth rate of 30% in 2002
21
Agenda

Introduction

Golden Telecom Business Overview and Strategy

Golden Telecom Financial Overview

Appendix
22
Group Financial Characteristics

High and consistent revenue growth

High EBITDA growth with expanding margins

High earnings growth

High cash flow generation

Modest capex needs

Strong balance sheet with positive net cash position and unused debt
capacity
23
Trended quarterly income statement 2001-3 (unaudited)
GOLDEN TELECOM, INC.
1Q 2001
(US$,000)
Total Revenue
2Q 2001
$32,320
Growth -1%
Total Cost of Sales
Gross Margin %
Selling, general and administrative
SG&A %
EBITDA %
Depreciation
Amortization (including Goodwill)
Impairment charge
Operating income/(loss)
Equity in earnings (losses) of ventures
Interest income (expense),net
Foreign currency loss
Income/(loss) before Taxes & MI
Provision for income taxes
Minority interests
Cum. effect of change in acctg principle
15%
20,664
10,642
29%
7,357
9,687
27%
11,293
13%
1%
27%
31%
4,426
5,954
0
4,863
5,650
0
5,322
5,430
31,291
4,982
1,021
0
(4,826)
(5,268)
(3,156)
(32,021)
583
851
(295)
2,159
414
(13)
2,441
(23)
(53)
2,972
(465)
(286)
(3,687)
(2,708)
(791)
(29,800)
(223)
(0)
(823)
(3)
(1,039)
(43)
183
(71)
0
0
$ (3,534)
0
$ (1,873)
21,661
58%
4,075
5,678
0
$ (3,910)
3Q 2002
3%
10,022
36%
20%
20,980
2%
56%
12,787
34%
44%
2Q 2002
4Q 2002
1Q 2003
$36,350
$39,217
$46,376
$76,784
$78,376
-1%
8%
18%
66%
2%
16,096
15,370
17,556
21,617
36,646
37,299
3%
54%
5,112
4%
15%
20,144
12,799
38%
4,927
Growth 8%
16,923
12%
1Q 2002
$36,760
-1%
53%
12,707
39%
EBITDA
$37,067
17,911
2%
55%
4Q 2001
9%
15,980
17,634
Growth 4%
Net income/(loss)
$33,891
5%
14,686
Gross Margin
3Q 2001
0
$ (29,688)
24,759
14%
55%
53%
10,237
26%
13,438
17%
24,707
77%
30%
52%
15,431
20%
13,967
22%
41,077
2%
52%
10,792
23%
11,424
29%
40,138
62%
27,639
12%
32%
35%
5,035
1,212
0
5,638
1,680
0
7,905
2,488
0
8,024
2,381
5,290
5,177
6,649
14,314
17,234
1,710
(61)
(325)
(1,223)
(24)
(182)
3,294
(133)
(119)
6,614
3,748
9,691
(1,316)
(66)
(833)
(161)
(1,630)
(182)
594
(449)
(548)
13,911
(848)
(118)
119
(398)
190
17,145
(4,233)
(92)
974
0
0
0
0
$ 6,206
$ 2,754
$ 7,879
$ 12,945
$ 12,820
24
Trended Quarterly Balance Sheet (1)
GOLDEN TELECOM, INC.
As at the end of
Q1 2001
(US$ ,000)
ASSETS
Current assets
Cash and cash equivalents
Investments available for sale
Accounts receivable, net
Restricted cash
Prepaid expenses
Other assets
Total current assets
$
Property and equipment, net
Investments in and advances to ventures
Goodwill and intangible assets, net
Restricted cash and other noncurrent assets
TOTAL ASSETS
$
103,521 $
18,158
97
4,595
5,564
Q2 2001
70,586 $
19,763
97
6,175
6,594
Q3 2001
Q4 2001
Q1 2002
Q2 2002
42,983 $
20,049
97
5,833
6,472
37,404 $
8,976
21,875
6,356
10,124
47,219 $
5,025
26,757
5,522
8,762
51,679 $
1,998
24,514
6,275
10,151
Q3 2002
65,527 $
47,026
8,388
13,656
Q4 2002
Q1 2003
59,625
46,224
7,811
13,794
69,294
51,054
7,439
16,449
131,935
103,215
75,434
84,735
93,285
94,617
134,597
127,454
144,236
89,109
51,106
64,994
5,035
92,580
53,793
88,988
6,476
106,413
53,753
83,580
6,938
98,590
45,981
57,146
13,932
98,133
49,358
56,220
10,901
98,278
46,447
53,403
10,199
162,878
754
127,270
11,587
166,121
721
127,669
13,845
167,834
596
127,293
11,773
437,086 $
435,810
451,732
342,179 $
345,052 $
326,118 $
300,384 $
307,897 $
302,944 $
25
Trended Quarterly Balance Sheet (2)
GOLDEN TELECOM, INC.
As at the end of
Q1 2001
(US$ ,000)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses
$
Debt maturing within one year
Due to affiliates
Short-term capital lease obligation
Other current liabilities
Total current liabilities
Long-term debt, less current portion
Related party long-term debt
Long-term capital lease obligation
Taxes and other non-current liabilities
TOTAL LIABILITIES
Minority Interest
SHAREHOLDERS' EQUITY
Common stock
Treasury stock
Additional paid-in capital
Accumulated deficit
TOTAL SHAREHOLDERS' EQUITY
Q2 2001
Q3 2001
Q4 2001
Q1 2002
Q2 2002
Q3 2002
Q4 2002
Q1 2003
26,513 $
2,923
8,643
30,141 $
8,583
6,250
9,003
34,314 $
3,833
6,250
1,392
8,284
27,327 $
9,869
1,597
9,932
30,183 $
8,256
1,643
9,737
31,505 $
1,747
1,694
7,556
52,847 $
1,747
15,492
1,734
10,439
48,268
8,988
1,999
1,775
9,950
48,572
16,488
3,236
1,816
9,861
38,079
53,977
54,073
48,725
49,819
42,502
82,259
70,980
79,973
9,933
6,250
4,955
4,297
7,003
4,197
6,484
7,183
3,337
7,453
14,058
3,289
7,112
13,540
2,612
6,529
12,983
2,439
30,000
6,081
21,895
24,111
5,621
25,453
16,463
5,151
25,969
59,217
65,277
71,937
73,573
73,760
64,626
142,674
126,165
127,556
3,337
3,238
4,456
5,967
6,033
4,761
2,076
2,187
2,279
246
413,095
(133,716)
246
413,541
(137,250)
246
(25,000)
413,602
(139,123)
248
(25,000)
414,407
(168,811)
249
(25,000)
415,460
(162,605)
251
(25,000)
418,157
(159,851)
291
(25,000)
469,017
(151,972)
270
446,215
(139,027)
272
447,832
(126,207)
279,625
276,537
249,725
220,844
228,104
233,557
292,336
307,458
321,897
342,179 $
345,052 $
326,118 $
300,384 $
307,897 $
302,944 $
437,086 $
435,810
451,732
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
$
26
Consolidated Results by Line of Business (unaudited)
Continuing growth, improving margins
Golden Telecom Key Consolidated Financials
Revenues
CLEC
Data and Internet
Long distance
Mobile services
Eliminations
Total revenues
Growth, %
3Q01
12.2
16.5
4.9
3.7
(0.2)
37.1
8%
4Q01
10.8
18.6
4.2
3.5
(0.4)
36.7
-1%
1Q02
10.7
18.2
4.3
3.3
(0.1)
36.4
-1%
2Q02
11.4
20.0
4.6
3.3
(0.1)
39.2
8%
3Q02
19.7
19.2
4.6
3.3
(0.5)
46.3
18%
4Q02
49.7
21.5
5.2
3.1
(2.7)
76.8
66%
1Q03
51.2
21.0
5.0
3.2
(2.0)
78.4
2%
EBITDA
CLEC
Data and Internet
Long distance
Mobile services
Corporate
Total EBITDA
EBITDA Margin
6.0
3.0
0.4
1.3
(3.3)
7.4
20%
4.9
5.4
0.1
1.1
(1.5)
10.0
27%
5.4
6.2
0.1
1.2
(1.6)
11.3
31%
5.2
6.0
(0.2)
1.6
(1.2)
11.4
29%
8.2
5.5
0.0
1.8
(1.5)
14.0
30%
18.9
5.3
0.4
1.6
(1.5)
24.7
32%
20.4
6.4
0.0
1.8
(1.0)
27.6
35%
27
Agenda

Introduction

Golden Telecom Business Overview and Strategy

Golden Telecom Financial Overview

Appendixes
28
Sovintel Network in Moscow
SOVINTEL PABX NETWORK SCHEME '2002 (MOSCOW REGION)
Sheremetyevo
Soleans
Cargo
OneximBank
Tykhvinsky
Kaliningrad
V.Novgorod
Pskov
N-W_Region
St.Peterburg
EWSD
BIC
IMB-2
ShternCement-1
Stoleshniki
IMB
(Dmitrovka)
Astoria
OneximBank
(Porivaevoy)
OneximBank
(Czepkina)
Interros
Estate
Trast
Credit
DHL
CQG
FinAkad
(Prospekt Mira)
Sputnik
Investment
Tzerit
China
Bank
Telf
Hilti
Klobex
Unibest
SOVINTEL
M-10
ZAO
Orlikov-5
Avikos
West
Call
MMCS
DMS
300
Baskin
Robbins
SilverWood
ZenitInter
DMS
100i
TransAtlanticLine
IAS
BashKreditBank
IBS
DMS
100e
Iteranet
Rosital
Sovlink
CO 202
NCI-4
CO 197
PTT
Teleport
City
Bank
Art
Hotel
ItarTASS
Tsentr
Elcode
VYMPELCOM
Vympelcom
NETWORK
GVC-GA
InaIndustrya
Chapaevskij
Dupont
STS
Moscow
Credit
Bank
CO 212
Microsoft
3Com
Intel
BMW
Soleans
MIRT
WestBridge
Aeroflot
ShneiderElectric
RevicoRussia
CityBank(Igarskiy)
EricsoonVolvo
ISTC
Elsat
TelecomPremier
Aerostar
Reuters
Almaz
Telecom
Baring Vostok
Nortel
MorganStanley
Conoco
VISA
IDV
S.G.Baker
Norilskkiy
Nikel
Boston
Consulting Group
RJR Reinolds
Renaissance
Strachovanie
TEK
Loreal
Poljot
AMT
CIBA
Honeywell
Grey
GOLDEN
TELECOM
NETWORK
EastLine
(Sadovo-Chern.)
(Lubyanka)
Societe
General
AlfaCapital
Brok
Kraft&
Jakobs
GlobalTel
NewTrinity
Investment
Inst.Pravov.
Economy
Kuif
(Gazetniy)
Detkovo
MES
Rhinocerus
Key Stone Monetchikov
(New)
EastLine
Pyatnitskaya
HrunichevTelecom
CO 927
CTU
CO 940
CO 230
CommerceBank
FreshFields
M+B Zander
CO 241/258
SBS
Yakimanka
MBB
Podolskoe
KLM
MTU-Inform
(Smolenskaya)
Philips
Radio
Page
Sokol
Offices
(Kulneva st.)
DialogBank
(Smolenskaya)
Toko Tower
Crudex
Lucent
AT&T
TranscomEra
/Lukoil
RGC
DX
200
VostokZapad
Sputnic Eng.
Niderland
Embassy
Vnesh
TorgBank
(Plushiha)
Krest
Russian
Capital
Ugol
Telecom
Codest
CO 245
MES
Ksenyinskiy
Arhangelskoe,10
CO 201
Darin
MarkRich
Stupino
TV Tower
NikoloUrupino
Katron
Pepsico
Holding
Leocadia
DX
200
MTU-Inform
NETWORK
Domodedovo
EastLine
MorSviaz
Molcom
AS_Patriarch
Zukovsky
Nestle
President
Golden Keys
RossBusiness
Consulting
Almenda
Severstal
OneximBank (Veresaeva)
Transstal
Komet
CO 235
MFBK
FCC
Mosenka-3
Solomon
Brothers
Clifford
Chance
SovFraht
SovMor
CO 915
Paveletsk.Plaza1
Nestle
Castrol
J.P.Morgan
BPAmoco
FMCG
Abert
Sovintel
(Shluzovaya)
SlavNeft
Paveletsk.Plaza2
HupoFerainsBank
Gillette
Tangens
Medsystems
MTS
Telmos
Moskva
NETWORK
NETWORK
Ramenka-5
ABK Group
Deeline (Mitino)
EFES
34
20
HUB
327
309
Ramenka (Kashirskoe)
Ramenka (Mitino)
Ramenka (Yartsevskaya)
Ramenka (Sheremetyevo)
TEK
Eniro RUS_M
KOMKOR
Paribas
NETWORK
Convers
Telenet
Smart Call
Runicom
TN-4
COMBELLGA
KOMET
NETWORK
6
Mega
Sputnik
Investment
Alitalia
ZolotoeKoltso
TN-16
Mosenka-2
Stepton&Jonson
Tusrif
Linklaters
&Pains
Deutsche Bank
SterlingHealth
ArturAnderssen
Chadbourne&Parke
AndersenConsulting
TCM
DX
200
RCI
HP
GarantiBank
Dresdner
Itera
Impex
MARS
Sitenka
TransAero
AirHotel
AlterEgo
Promotion
KalitaGrad
DialogBank
(Levshinsky)
Stupino
CO 7
Avaya
PW
NCR
Cisco
Canon
Astelit
SAPAG
Kalijn
CO 952
MMCS
Transammonia
Benckiser
Brunswick
Mitsubishi
FinArtist
Rose
Inter
National
SEYO
Invest
Sberbank
Severstal
OccidentalCIS
RossAxim
Bank
Sovincenter
MARS
Luzniki
TranscomEra
GLAXO
Wellcome
Credit
Suisse
TzentroBank
MFBC
Sidanko
-Vostok
OON
Chak Assienda
Sun
Group
RedHills
AgioRus
Herbert
Smith-2
Swiss
Embs
Star
CO 135
Hogan
&Hurston
Japan
Labneftemash
Joint
Tefal
Redisson
(Slavyanskaya)
ARZ3
Alcoa
Azbuka
McDonalds
SHH
Boeing
Pererabotchik
Tetra
PakHO
Shell
AgenstvoIntellect
ResourseGroup
GOLDEN
TELECOM
EWSD
M-9
Felix
Rosinka
Noble
Pelican
Amro
Bank
CreditSuisse
Trojka
PromStroyBank
(Lubyanka)
Reuters
West LB
Bank
SobinBank2
RFBS
Savatsky
Metropol
Sumsung
Venture
Impex
Continental
Beverage
Macomnet
CIA
SterlingGroup
Geolink
Nosta
(Sevashskaya)
Geolink
Avon
Oninen
MAN_2
Unikon
MosOtis
West
Technics
TNT
Partiya
DMB&B
Diona
Holding
CO 265
TeleRoss
Slavyanskaya
Nikfi
ENKA-3
(Chaplygina)
Regent
Pacicfic
Regent
Pacicfic_2
NETWORK
IMB
(Prechistenka)
Savoj
CO 252
DirectStar
Rusbel
E-Business
Admin
Alko
CO 243
IBM-1
(Bahrushina)
Office
Club
Fintest
Treiding
ENKA-1
(Poslednij)
MACOMNET
KTK
Gorbi Fund
DionaHolding-2
CO 253
Aviatechn.
Mosenka-6
Hotel
Isolator
Bank Euro
Finance
OBI Bank
BNR
Dukat
MFK
Fund-2
Prim-Tzentr
PLM
LuisDreifus
EBRD
CSI
ChaseManhattan
Bank-4
InterInvest
Holding
Compaq
DowChamical
Procter&
Gamble
Ratmir
Mark
Rich
Renessans
Bank
StolichniyBank
Sovetskaya
Hotel
Mosenka-4
Grand
Hotel
CO 250
ENKA-2
Inturist
Mosenka-5
DialogBank
British Airways
Petro
Alyans
BAT
Tverskaya
Hotel
Novinskiy
Bulvar
InvestPro
Interantenna
CO 973
PARUS
Rostelekom
(Tverskaya)
EastLine
(Nikitskaya)
SBS
Smolnaya
SBS
(Basmannaya)
CO 207
Access
Industries
Nikulino
CO 198
OneximBank
(Shepkina)
NII
Neirohirurgii
Drofa
Afisha
Oktyabrskaya
Smolnaya
Hoffmann
Scala
Desert
Rostelekom
Rutsog
Maersk
Bank
Vozhrozdenja
Tyson CIS
PhilipMorris
(Tverskaya)
Leningradskaya
Hotel
CSS
Dostoevskogo
Mobile
Telecom
Gamma
Telecom
Wrigley
Allen&Overy
Republic
NationalBank
Allen&Overy
(new)
Herbalife
Vvedenskogo
FinAkad
(Kibalchicha)
Kurkino
Kommersant
Scadden Arps
Cargill
Myasnitskaya
Polishelk
Mosoblalko
Shtern Cement 2
29
ADS Network in Nizhny Novgorod
Fiber optic channels
Coverage
Nodes
30
Current network - MAN and Local Access
(US$mm)
Moscow
Nyzhny Nov.
St. Petersburg
Ukraine
Other Regions
# fiber km
2,500
150
450
300
190
# copper km
300
400
% owned local access
95%
95%
90%
90%
35%
% owned backbone
95%
90%
90%
90%
40%
250,000
25,000
14,000
100,000
20,000
700
10
100
30
70
6
3
1
6
12
# local area numbers
# PBXs
# Exchanges
•
Golden Telecom focuses its network investment where maximum value is created for the customer:
access and switching
•
Ownership of last mile also provides high degree of Golden Telecom’s independence from local
incumbent operators
31
Current network - DLD and International
International connectivity:

STM-16 from Moscow to Stockholm: IRU with Sonera

STM-4 from Stockholm to London: IRU with Sprint

45M Moscow to New York: from Sonera
Domestic connectivity:

STM-4(16) to St. Petersburg: IRUs from Sonera

Three VC3 Links IRUs from Transtelecom:
Moscow – Ekaterenburg-Novosibirsk-Irkutsk-Khabarovsk-Vladivostok;
Moscow - Nyzhny Novgorod;
Moscow - Voronezh - Samara - Ufa - Ekaterenburg.

Intercity connection to major cities in European part of Russia: 60 E1 leases from Rostelecom and
Transtelecom

Leased space segment to providing connectivity for 62 owned and customer earth stations used for remote
locations and as a back up for terrestrial channels(C-band – 72MHz, Ku-band-18MHz).
•
Prudent investment strategy:
•
investment is directed into demand driven access infrastructure,
•
highly commoditized long-distance capacity is leased on a competitive market to avoid
significant one-time cash outlays into capacity with unproven demand
33
Network expansion plan objectives
30% of next year’s capex is allocated for building access infrastructure, 30% will be for maintenance and
the remaining 40% - for services upgrades, switching and transport
Current status

The industry development over past 20-25 years has moved from focus on switching to transport and now to
access

Ability to access customers over own infrastructure is the key to success

Move toward smaller customers in Moscow and St. Petersburg and the regions requires differentiated
approach to network expansion.

Renting access lines from incumbents has proven to be difficult with incumbents protecting their monopoly
position and government not interfering
The focus of network development going forward will be access:
1.
Further expansion with fiber to large customers
2.
Building own access network to smaller customers utilizing different technologies:
wireless, copper and others
3.
Replacing rented access lines with own network assets in a variety of technological
ways
34
Special Note Regarding Forward Looking Statements
Certain statements contained in this presentation or made during the meeting concerning management’s intentions, expectations or predictions are forward looking
statements. Such statements include estimates of future financial and operating performance, expectations regarding future market position, geographical markets
that we plan to enter, our future product offerings, our assessment of the risk factors and effectiveness of our strategic responses.
It is important to note that the company’s actual results may differ materially from those projected in such forward looking statements. Factors that may cause the
anticipated results not to occur include unanticipated changes in customer demand, changes in competitive product offerings, increased price competition, change
in macroeconomic and political environment, changes in local regulatory regimes, or shifts in strategy of our partners.
All forward looking statements are made as of today and Golden Telecom disclaims any duty to update such statements.
Additional information concerning the factors that could cause actual results to differ materially from those projected in the forward looking statements is contained
in the company’s annual report on Form 10K for the year ended December 31, 2002, quarterly reports on Form 10Q for quarters ended March 31, 2003 and other
filings with the U.S. Securities and Exchange Commission (SEC). Copies of these filings may be obtained by contacting Golden Telecom or the SEC.
For more information contact
Investor Relations:
e-mail: [email protected], web: www.goldentelecom.ru
tel.: +7-501-797-9300; fax: +7-501-797-9332