Overall results of company performance for 2006.

Social Contribution and Sponsorship

One of the benefits of these activities, which bring respect and a good reputation for leading companies of the world, is the value that is placed on social responsibility. Azercell in 2006 again showed high interest in Corporate Social Responsibility (CSR) projects. Our CSR approach is “Azerbaijan and its people deserve all the best” and in 2006 we contribute 1.9 million AZN and 4.6 million AZN during 10 years.

Azercell Telecom JV is taking an active part in public life of the country. It has become a tradition for Azercell Telecom to keep in the centre of attention low-income part of population, which needs social protection and support. As a continuation of the tradition, on Novruz Bayram the company has provided food products to nearly 4,000 refugees and internally displaced families located in the camps Turk Qizil Ay, Arab 1 and Arab 2 in Barda, Agjabedi and Aghdam regions.

One more social investments program has been implemented in Neftchala region. Azercell representatives visited Neftchala city boarding school named after Mehman Safarov and presented the children with 100 bedroom suites and 2 computers. Last year Azercell Telecom JV, which during 10 years of its activity was awarded with national public award Leave No Child Out, remained being loyal to its traditions.

On the Day of Knowledge Azercell representatives has visited boarding schools and children’s homes and presented them with necessary school materials.

In connection with International Day of Disabled People, Azercell Telecom JV has implemented two important projects to improve living conditions and education as well as to make easier movement of disabled people. The company has presented Six Points printing house, which has been operating in Azerbaijan Society of Blind People, with necessary printing equipment. Playing a great role in distribution of Social Responsibility culture among Azerbaijani entrepreneurs, Azercell bought 400 modern wheelchairs for disabled people.

During the whole period of its activity Azercell Telecom JV pays a special attention to such fields as science, culture and takes an active part in development of logistics of science, providing support to young specialists and protection of our cultural heritage. The company has continued this tradition in 2006. In March the group of Azercell Telecom representatives met with students and teaching staff of Azerbaijan State Oil Academy and presented to them computers.

Azercell also organized personal exhibition of People’s Artist Elbey Rzaguliyev and published catalogue of his paintings dedicated to his 80 years jubilee.

In May Azercell Telecom started the new football tournament - Azercell Cup - among its corporate subscribers. The mini-football tournament is held by Azercell for the second time. The operator’s goal in this project was to promote football development in Azerbaijan, strengthen friendly relationships between the companies, to help corporate subscribers to spend free time and take care of health.

Azercell Telecom has taken very important step for development and preservation of Azerbaijani culture. The company has achieved return of personal piano of our genius composer Gara Garayev to Azerbaijani culture and presented it to National Conservatoire.

For the second time Azercell Telecom JV sponsored Baku Jazz Festival 2006. This year Baku Jazz Festival-2006 was held in six places – Baku Jazz Centre, Heydar Aliyev Palace, Opera Studio named after Shovkat Mamedova, Azerbaijan State Philharmonic named after Muslim Magomayev, 1033 Club and at the Fountain Square.

June 27, 2006 the concert of famous U.S. jazz band Herbie Hancock Quintet, which received Grammy award eight times, took place in Heydar Aliyev Palace with Azercell Telecom main sponsorship.

June 28, 2006 The concert of famous Turkish singer Mustafa Sandal and many local singers in the Seaside Park was one of the projects implemented by Azercell in 2006. Thousands of people came to the concert, which was devoted to the first anniversary of GəncSim .

September 20, 2006 General Manager of Azercell Telecom JV Mr. A. Halim Ates met with members of Rabita volleyball team. Azercell has been sponsoring the team since 2004.

December 13, 2006 Azercell Telecom JV, which always contributes to development of Azerbaijani culture and provides support to high-intellectual projects, was general sponsor of the III International Festival of Student Films START.

Campaigns

March 1, 2006 Azercell Telecom JV reduced payment for MultiMesajCELL service and during 6 months cost of 1 MMS was same with cost of 1 SMS . After ending of the campaign payment for MMS reduced for twice from the tariff, which was before campaign.

March 18, 2006 in connection with Novruz Bayram Azercell Telecom has announced the tariff reduction campaign for new SimSim, GəncSim and BizdənBizə subscribers. During the month, the subscribers paid 1 unit for each 3 seconds of calls within the network and to Dost-Tanış numbers.

May 28, 2006 in connection with Republic Day the company has presented its corporate post-paid subscribers with 25 minutes of conversation time and SimSim, GəncSim and BizdənBizə subscribers with 1,500 units.

September 15, 2006 Cost of IzahatCELL was reduced by 50% during 90 days.

September 29, 2006 the BonusPay campaign was launched on. Participation in the campaign brought SimSim subscribers additional 200 units.

October 15, 2006 SMS Günləri (SMS Days) was launched from. The campaign lasted till the end of the year. During the campaign all Azercell subscribers could send SMS at reduced tariffs on certain days.

SimSim subscribers, who entered universities in 2006, could use advantages of Student Tariff Package.

During the campaign new subscribers paid 1 unit for each 3 seconds of call within the network and to Dost-Tanış numbers. In addition, subscribers of this group are offered an opportunity to send 200 SMS free of charge.

Lottery campaign

In connection with its 10th jubilee Azercell Telecom JV has launched the lottery campaign, which has no analogues in Azerbaijan! This grandiose project called 10 il Kampaniyası has offered a chance to 10 Azercell subscribers win apartments in Baku by simple increase in their account. In addition, 10 il Kampaniyası has presented about 450,000 subscribers with millions of contours and conversational time.

BakuTel-2006: As previously, participation of Azercell Telecom JV at BakuTel-2006 exhibition was grandiose. The company has presented participants of international information community with innovations:

1. Technology 3G, which will be put into operation in the nearest future, will offer Azercell Telecom JV’s subscribers new opportunities in mobile communication.

2. New updated web site of the Azercell www.azercell.com has modern design, which combines a color of East and West.

Achievements:

In 2006 Azercell Telecom JV made glad its subscribers with introduction of the latest information technologies achievements. Company is an author of progressive projects at the mobile communication market and all this was noticed by authoritative foreign and local organizations. During 2006, which could be called a year of sucesses, the operator was awarded with many prizes and awards.

Azercell Telecom JV was awarded with Investors In People (IIP) International Certificate. For the first time in the CIS, Azercell met all 12 requirements and was recognized as an IIP company.

Last year Azercell Telecom presented to publicity of the country the document Evaluation of Impact on Environment and Socio-Economic Field. Azercell is the only enterprise in the comunication sector, which has made such an assessment.

Azercell Telecom has been awarded with Caspian Energy Integration Award 2006 in the nomination of GSM Company of the Year by international analytical magazine Caspian Energy. Company also recieved Intellect award from IT magazine and National Public Prize Leave No Child Out by the NGO Alliance for Children’s Rights.

Azercell has been awarded Intellect prize for Simurq service, which is an individual information tool for more than 2,3 million subscribers of the company.

Azercell Telecom JV was awarded the national public prize Company of the Year by Consulting and Business magazine in two nominations - Corporate Social Resposibility and Telecommunication Company in th fields of economy and business.

A. Halim Ates, Azercell’s General Manager recieved Ugur award in the nomination of the Top Manager of the Year and SimSim as the National Brand of the Year.

Network Coverage and Subscribers

At present Azercell Telecom JV, controls 76% of Azerbaijani mobile communication market. Its network covers 77% territory of the country and owing to that 99% population of the republic can use qualitative services of mobile communication provided by the operator.

By December 31, 2006 Azercell Telecom numbered 2,333,387 subscribers.

Technical equipment

To provide its communication services, in the end of 2006 Azercell Telecom had 2 Home Location Registers (HLR), 12 Base Stations Controller Systems (BSCS), 15 Mobile Services Switching Centers (MSSC) and 1,078 Radio Base Stations (RBS). During 2006 the operator has installed 328 new RBS in Baku and various Azerbaijani regions. In 2007 Azercell Telecom plans to install over 350 Radio Base Stations throughout the republic.

International communication

Azercell Telecom JV pays special attention to development of international communication. By the end of 2006, Azercell subscribers could make calls in the networks of 310 operators in 135 world countries using “RoamCell” service. During 2006 the company put into operation roaming services with 50 mobile communication operators in 18 countries.

In addition, Azercell Telecom is the first Azerbaijani operator, which has concluded agreements on providing GPRS roaming service with foreign companies. By the end of 2006 Azercell Telecom JV has established cooperation in this field with over 66 operators from 32 world countries.

Investments

During 2006 Azercell Telecom JV has invested nearly 120 million AZN into development of mobile communication in Azerbaijan and approximately 460 million AZN during 10 years of its activity in the country. Azercell still remains among the biggest investors in the non-oil industry.

Investing in People

Human is the main asset of Azercell and vital for providing better services for its subscribers. Therefore in 2006 Azercell invested approximately 550,000 AZN for the employees’ development. To sustain the highest service quality, besides the current employees Azercell cared about the future family members too. Therefore with the Career Days Program, Azercell visited 10 universities and recruited 30 new graduates from these universities. Career Days approach; besides providing the best human resources, also offers an enhanced career for the well educated youth of Azerbaijan.

Taxes

During 2006 Azercell Telecom JV has transferred in taxes nearly 60 million AZN to budget of the country and approximately 275 million AZN during 10 years.Although the state budget significantly increased, Azercell payments were equal to nearly 2% of the total in 2006.

Social Contribution

During 2006 Azercell Telecom JV contributes in social life of the country 1.9 million AZN in 2006 and 4.6 million AZN during 10 years.

Tariffs

It is an indisputable fact that since beginning of Azercell Telecom JV’s activities in Azerbaijan tariffs for mobile communication dropped in the country. Azercell is the first GSM operator in the country, which provides to the subscribers high-quality, reliable and stable communication services.

On February 14, 2006 the operator puts into operation new tariff ŞirkətimCELL. This tariff scale allows Azercell’s corporate subscribers to make calls at reduced tariffs.

On February 15, 2006 it offered its SimSim and GəncSim subscribers privileged BizdənBizə tariff package. On May 10, 2006 the company put into operation an interesting and privileged tariff scale Optimist without monthly subscription fee.

Services

In 2006, Azercell Telecom continues of being loyal to its principles of introduction the most modern services to its subscribers, which has not analogues in the country.

WebIzahCELL service has been put into operation for corporate subscribers to receive invoices.

In 2006, students could receive information on the results of examinations using Azercell Telecom’s ImtahanCELL service.

January 25, 2006 new DostCELL service was provided to Azercell post-paid and SimSim, GəncSim, BizdənBizə subscribers. DostCELL service allows all Azercell subscribers to ask each other to pay for the calls three times per day.

March 9, 2006 Azercell puts into operation new service - EkizKartCELL. Subscriber can use one post-paid Azercell number in two different mobile phones.

March 14, 2006 the company puts into operation new service – IzahatCELL. This service allows SimSim, GəncSim and BizdənBizə subscribers to receive information about calls and SMS made and sent by them during the past 15 and 30 days.

June 8, 2006 the operator put into operation PayCELL service for Azercell post-paid,SimSim, GəncSim and BizdənBizə subscribers. Using PayCELL service the abovementioned subscribers could send a certain amount of units from their account to the account of other SimSim, GəncSim and BizdənBizə subscribers.

August 1, 2006 Azercell Telecom JV put into operation new service centre – Front Office – to provide subscribers with qualitative services up to high standards. The Front Office is located at 2 Bagirov street, Baku and equipped with latest equipment to provide high quality services to the subscribers.

December 5, 2006 Azercell Telecom JV put into operation Q-SMS service. Using this service subscribers, could be registered in advance, get a special number (code) and information about office address, work hours in Azerbaijani, Russian and English languages. When came to the Front Office, the subscribers could use Q-matik device, insert this number (code) and wait for reception.

December 15, 2006, on the day of its 10th year anniversary Azercell Telecom JV put into operation Simurq service, which made a revolution in mobile telecommunication. Simurq – interactive information and entertainment service – is based on modern technologies and it has no analogues in Azerbaijan. It will draw subscribers nearer to new generation of mobile telecommunication technology.