Utel's 1998 Plans: New Phone Lines, New Services, New Opportunities for International and Long-Distance Telephone Subscribers in Ukraine.

KYIV, Ukraine--(BUSINESS WIRE)--April 3, 1998--

Utel's 1997 Revenues Increased by 20% and Income by 23.9%

"Successful results for 1997 and Utel's continued growth during the past five years have created the financial and technological base for furthering the development of international and long-distance telephone services in Ukraine," Utel President Olexiy Marynchuk said at a press conference today.

"Utel's future plans include establishing a new international station in L'viv, expanding the company's services to include Internet access, video-conferencing and toll free '800' services," Marynchuk said.

According to Utel's 1997 Annual Report the company generated USD 302 million in revenues and USD 33 million in profits. In 1996 Utel generated USD 251 million in revenues and USD 27 million in profits. Utel's financial report has been audited by an internationally recognized independent auditing firm.

"Utel's strong financial performance in 1997 is a result of the company's effective and successful business practices," Marynchuk said. "These results underscore Utel's leading role in the country's telecommunications industry and in the Ukrainian economy as a whole," continued Marynchuk.

Utel paid more than USD 21 million in enterprise profit and value-added taxes to the state budget and an additional USD 158 million in access and transmission fees to the state-owned holding company UkrTelecom.

During 1997, Utel's digital switches handled 40% of all long-distance traffic in Ukraine, representing 1.46 billion conversation minutes -- an increase of 22% over 1996.

Utel's total investment in Ukraine's telecommunications infrastructure at the end of 1997 surpassed USD 160 million.

"Utel's business achievements are a model illustration of effective foreign investment in the development of Ukraine's telecommunications infrastructure," said UkrTelecom Chairman Leonid Netudykhata. "In the new independent Ukraine, Utel has made a significant contribution to the creation of a modern international and long-distance telecommunications network," Mr. Netudykhata said.

In 1996, Utel completed a national network of digital long-distance exchanges, fully integrating all regional centers of Ukraine.

In 1997, Utel expanded Ukraine's national telecommunications network by more than 43,384 ports and almost 30,720 new subscriber lines. Working with UkrTelecom and Ukraine's State Committee on Communications, Utel constructed, tested, and leased local exchanges in Donetsk, Mariupol, L'viv, and Odesa.

Last year, Utel installed the CCS7 system at the company's long-distance exchanges in Ivano-Frankivsk, Lutsk, Odesa, Mykolaiv, Rivne, Ternopil, Cherkasy, and L'viv thereby allowing subscribers access to high speed Integrated Services Data Network (ISDN) facilities. In addition, Utel also expanded its fiber-optic network, commissioned CCS7 signalling to 16 international destinations, and launched ISDN services to Austria, Belarus, Great Britain, Denmark, Italy, France, and Switzerland.

Utel has been a market leader in Ukraine introducing high quality telecommunications services to businesses and organizations. At the end of 1997, more than 3,300 businesses with more than 6,300 Premium Business Service lines have been hooked-up to digital stations. The total number of Utel service subscribers throughout the country now totals 8 million. Utel plays an important role in both the development of the Ukrainian telecommunications infrastructure and the integration of Ukraine into the world economy.

"The creation of Utel and its subsequent investment of significant western capital has brought to Ukraine state-of-the-art telecommunications technologies," said Utel Supervisory Council Chairman Hans Wagenaar. "This has been a major win for subscribers in Ukraine and abroad," Wagenaar said.

In 1997, Utel's international telephone station in Kyiv handled almost 100% of Ukraine's international traffic. Last year, Utel's call completion rate for incoming international calls was 43.8%, an improvement of 1.4% over the previous year. The outgoing international call completion rate approached world standards at 51.4%, an increase of 2.7% over 1996.

"If one takes into account all factors -- the geopolitical location of Ukraine and the growing demand for modern telecommunications services by the multi-million army of subscribers -- for Ukraine there is a real chance to become one of the largest and most dynamic telecommunications markets in the world," Marynchuk said.

Utel -- founded in 1992 - is a Ukrainian-American-Holland-German closed joint stock company and Ukraine's leading provider of international and long-distance telephone services. The company's shareholders include the Ukrainian State Telecommunications Holding Company UkrTelecom (51%) and leading international telecommunications operators AT&T (19.5%); Deutsche Telecom (19.5%); and PTT Telecom -- Netherlands (10%).

Utel's mission is to improve telecommunications services and technologies for individuals and businesses throughout the country. A team of 1700 employees, led by an international management group, works to achieve this mission every day.

Utel Management: Olexiy Marynchuk, President; Robert Simmons, Vice President/Finance; Harry Visser, Vice President/Business Operations; Karl-Heinz Rinkens, Vice President/Operation and Maintenance; Anatoliy Stetsenko, Vice President/Network Planning, Strategy and Quality; and, Oleksandr Chernyshov, Vice President. -0-

                        UTEL FINANCIAL RESULTS
                       (millions of US Dollars)

                             1994       1995       1996        1997
Revenue                    52.998     72.100    251.584     302.240
Net Profit                  6.317     15.051     27.352      33.902

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For more information, please contact Utel press officer Arkadiy Polyak at 011-380-44-229-8622 (tel.), 011-380-44-229-8373 (fax).

CONTACT: Utel

Arkadiy Polyak, 011-380-44-229-8622