Q&A About Shares Buyback

Under what circumstance does OJSC Far East Telecom offer to buyback its shares from holders?

On June 28, 2010, the General Shareholders’ Meeting of OJSC Far East Telecom (“GSM”) approved, among other things, Company’s reorganization in form of merger with OJSC Rostelecom (the “Transaction Proposals”).In accordance with the Russian legislation, if the reorganization proposal is approved by the GSM, all such OJSC Far East Telecom’s shareholders who voted against or did not vote in respect of the reorganization proposal have the right to submit their shares for repurchase by OJSC Far East Telecom (the “Buyback”). OJSC Far East Telecom has instructed JPMorgan Chase Bank, N.A., its Depositary for OJSC Far East Telecom’s ADR program (“J.P. Morgan” or the “Depositary”), to establish procedures for eligible ADR holders to participate in the Buyback by arranging to cancel their ADRs and instructing the Depositary to deliver the underlying shares into the Buyback.

Who is eligible to participate in the Buyback?

Shareholders and ADR holders who (i) owned their positions as of the May 17, 2010, GSM record date and (ii) either voted against or did not submit a vote in respect of the reorganization proposal can have their shares purchased by OJSC Far East Telecom at a fixed price, as determined by the company’s Board of Directors.

What is the price offered by OJSC Far East Telecom for the shares eligible to participate in the Buyback?

OJSC Far East Telecom’s Board of Directors has approved a fixed price of RUB 91.81 to be offered for each ordinary share eligible to participate in the Buyback. The consideration paid on shares delivered into the Buyback by the Depositary at the instruction of an eligible ADR holder will be converted into US Dollars and remitted by the Depositary to the participating ADR holder net of a cancellation fee of US $0.05 per ADR cancelled.

Is there a limit of the total number of shares to be repurchased by OJSC Far East Telecom?

In accordance with the Russian legislation the total sum of money that can be appropriated for the purpose of mandatory repurchase must not exceed 10% of OJSC Far East Telecom’s net assets value as at the end of the last reporting period before the GSM’s approval of the reorganization proposal. If the total number of shares, in reference to which claims to repurchase were filed, exceeds the number of shares that can be repurchased in accordance with the restriction described above, shares will be repurchased proportionally to the filed claims.

ADRs not accepted into the Buyback will be returned to participating ADR holders. To the extent rounding results in a fractional ADR being returned, cash-in-lieu of such fractional ADRs may be paid by the Depositary.

What are the procedures for ADR holders who want to participate in the Buyback?

ADR holders wishing to participate in the Buyback will have to arrange to cancel their ADRs and to instruct the Depositary to deliver the underlying shares into the Buyback. Direct participants of the Depository Trust Company (DTC) can submit their instructions through the applicable clearing system. Beneficial owners of ADRs who are not direct account holders or participants of DTC must arrange through their broker, dealer, bank, or other nominee who is the direct account holder or participant of one of the clearing systems to cancel the ADRs.

Participating ADR holders will have to certify that they owned the ADRs as of the GSM record date of May 17, 2010 and either voted against or did not submit any voting instruction with respect to the reorganization proposal. Such certification will be in addition to any usual certifications required by the Depositary for cancellation of OJSC Far East Telecom ADRs, as per terms and conditions in accordance with the Deposit Agreement between OJSC Far East Telecom and J.P. Morgan.

On or prior to the date set by the Depositary as the deadline for accepting ADRs for cancellation pursuant to the Buyback (“Buyback ADR Cancellation Date”), DTC will advise the Depositary of the total number of ADRs presented for participation in the Buyback. The Depositary will ensure that each instruction is supported by a Buyback certification as described above.

Subsequently, the Depositary will make arrangements through its Russian custodian to deliver all the underlying shares into the Buyback.

The Depositary will collect any RUB paid with respect to all shares accepted into the Buyback. After converting the funds into US dollars, the Depositary will remit payment to each participating ADR holder net of an ADR cancellation fee of $0.05 per ADR. Shares that are not accepted into the Buyback will be re-deposited with the Depositary’s custodian and ADRs subsequently re-issued by the Depositary to participating ADR holders.

What is the time period for the Buyback?

OJSC Far East Telecom will accept shares into the Buyback for 45 calendar days from the date of the GSM, i.e. no later than August 12, 2010. To allow sufficient processing time, the Depositary expects to set the Buyback ADR cancellation deadline on or about August 5, 2010, approximately one week prior to the Buyback deadline expected to be established by OJSC Far East Telecom for holders of ordinary shares.

IsitpossibletorecallADRspreviouslysubmittedintotheBuyback?

Prior to the deadline established by the Depositary for participation in the Buyback, an instruction to cancel ADRs in relation to the Buyback may be reversed. Subsequent to the ADR deadline, an instruction to cancel ADRs cannot be reversed.

WhenwillADR holders receive payment with respect to ADRs cancelled for the Buyback?

In accordance with the Russian law, OJSC Far East Telecom has 30 calendar days to effect payment to its shareholders after the end of the Buyback period. Consequently, it is expected that cash will be remitted by OJSC Far East Telecom to the Depositary no later than September 11, 2010. The Depositary will convert all received funds to US dollars and remit each payment to a participating ADR holder through the applicable clearing system or DTC.