Rostelecom (ROS)

Foreign exchange risk

        The main business of the Group is maintained with Russian counterparties based on agreements in Russian Rubles. The Group's foreign currency receivables and payables arise mainly on contracts with foreign operators because of international industry practice to make settlements in US dollars, Euro or SDR. Hence, the Group will be exposed to foreign exchange risk as long as it continues to make settlements with foreign currencies.

        In 2008, approximately 11.1% (2007: 10.2%, 2006: 8%) of the Group's revenues and 17% (2007: 15%, 2006: 14%) of the Group's expenses were denominated in currencies other than the Russian Ruble. Revenues generated in foreign currency represent income received from foreign operators, and foreign currency denominated expenses consist primarily of payments to foreign operators for

The accompanying notes are an integral part of these consolidated financial statements.

F-67

OJSC Rostelecom

Notes to Consolidated Financial Statements as of and for the year ended December 31, 2008 (Continued)

31. MARKET RISK (Continued)

international long-distance traffic termination. Accounts receivable from foreign operators and accounts payable to foreign operators which are denominated in foreign currencies amounted to approximately 9% (2007: 8.2%, 2006: 5%) of the Group's total accounts receivable and 19% (2007: 11.5%, 2006: 18%) of the Group's total accounts payable as of December 31, 2008, 2007 and 2006, respectively. Borrowings denominated in foreign currencies and outstanding as of December 31, 2008, 2007 and 2006 amounted to 89.5%, 88.9% and 94% of the Group's total borrowings as of December 31, 2008, 2007 and 2006, respectively.

        The Group does not have formal arrangements to mitigate foreign exchange risks of the Group's operations.

        The table below demonstrates the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant, of the Group's profit before tax:

        Taking into account that the Ruble depreciated against the USD by 20% and depreciated against Euro by 15% in 2008, and assessing the current situation on financial markets, management believes that 20% is the most probable range of the Ruble exchange rate fluctuation against the foreign currencies. The analysis was applied to monetary items denominated in relevant currencies at the balance sheet date.

The accompanying notes are an integral part of these consolidated financial statements.

F-68

OJSC Rostelecom

Notes to Consolidated Financial Statements as of and for the year ended December 31, 2008 (Continued)

31. MARKET RISK (Continued)

Foreign exchange risk

        The main business of the Group is maintained with Russian counterparties on agreements in Russian Rubles. The Group's foreign currency receivables and payables arise mainly on contracts with foreign operators because of international industry practice to make settlements in US dollars or SDR. Hence, the Group will be exposed to foreign exchange risk as far as it continues to make settlements with foreign counterparties.

        In 2007, approximately 10.2% (2006: 8%, 2005: 12%) of the Group's revenues and 15.0% (2006: 14%, 2005: 17%) of the Group's expenses were denominated in currencies other than the Russian ruble. Revenues generated in foreign currency represent income received from foreign operators, and foreign currency denominated expenses consist primarily of payments to foreign operators for international long-distance traffic termination. Accounts receivable from foreign operators and accounts payable to foreign operators which are denominated in foreign currencies amounted to approximately 8.2% (2006: 5%, 2005: 9%) of the Group's total accounts receivable and 11.5% (2006: 18%, 2005: 36%) of the Group's total accounts payable as of December 31, 2007, 2006 and 2005, respectively. Borrowings denominated in foreign currencies and outstanding as of December 31, 2007, 2006 and 2005 amounted to 88.9%, 94% and 100% of the Group's total borrowings as of December 31, 2007, 2006 and 2005, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

F-72

OAO Rostelecom

Notes to Consolidated Financial Statements for the year ended December 31, 2007 (Continued)

(In millions of Russian Rubles unless otherwise stated)

31. MARKET RISK (Continued)

        The Group does not have formal arrangements to mitigate foreign exchange risks of the Group's operations.

        The following table demonstrates the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant, of the group profit before tax.

31.   FOREIGN EXCHANGE RISK

        In 2006, approximately 8% of the Group's revenues and 14% of the Group's expenses were denominated in currencies other than the Russian ruble. Revenues generated in foreign currency represent income received from foreign operators, and foreign currency denominated expenses consist primarily of payments to foreign operators for international long-distance traffic termination. Accounts receivable from foreign operators and accounts payable to foreign operators which are denominated in foreign currencies amounted to approximately 8% of the Group's total accounts receivable and 18% of the Group's total accounts payable as of December 31, 2006. Borrowings received by the Group during 2006 and outstanding as of December 31, 2006 amounted to 94% of the Group's total borrowings as of December 31, 2006. Thus the Group is exposed to foreign exchange risk.

        The Group does not have formal arrangements to mitigate foreign exchange risks of the Group's operations.

31.     FOREIGN EXCHANGE RISK

In 2006, approximately 8% of the Group’s revenues and 14% of the Group’s expenses were denominated in currencies other than the Russian ruble. Revenues generated in foreign currency represent income received from foreign operators, and foreign currency denominated expenses consist primarily of payments to foreign operators for international long-distance traffic termination. Accounts receivable from foreign operators and accounts payable to foreign operators which are denominated in foreign currencies amounted to approximately 8% of the Group’s total accounts receivable and 18% of the Group’s total accounts payable as of December 31, 2006. Borrowings received by the Group during 2006 and outstanding as of December 31, 2006 amounted to 94% of the Group’s total borrowings as of December 31, 2006. Thus the Group is exposed to foreign exchange risk.

The Group does not have formal arrangements to mitigate foreign exchange risks of the Group’s operations.