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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(MARK ONE)

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

COMMISSION FILE NUMBER 1-5706

METROMEDIA INTERNATIONAL GROUP, INC.(Exact name of registrant, as specified in its charter)

|DELAWARE                                                       |  | 58-0971455                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

8000 Tower Point Drive, Charlotte, North Carolina 28227(Address and zip code of principal executive offices)

(704) 321-7380(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES ý NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the exchange act).
YES o NO ý

The number of shares of common stock outstanding as of January 30, 2004 was 94,034,947.

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Restatement of Prior Financial Information

The Company determined that the following accounting errors had been made in its past financial statements:

The
effects of the tax adjustments resulted in an increase in "Prepaid expenses and other current assets" of $2.1 million; an increase in "Current assets of discontinued
components" of $0.8 million; and a reduction of "Accumulated deficit" of $2.9 million at December 31, 2002. For the statement of cash flows, the tax adjustments resulted in a
decrease in the "Net loss" of $4.2 million with an offsetting increase in the use of cash from "Changes in Other Assets and Liabilities" of $4.2 million, for the nine months ended
September 30, 2002. The adjustment related to the dividends has no impact on the balance sheet or on the statement of cash flows.

1

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The
effects of the adjustments for income statement purposes are summarized in the following financial results tables:

|                                                                             |  | September 30, 2002 |        
|---------------------------------------------------------------------------- |  | ------------------ | -------
|
|
|Revenues                                                                     |  | $                  | 24,368 
|Operating loss                                                               |  |                    | (7,253 
|Income tax expense                                                           |  |                    | (1,707 
|Loss from continuing operations                                              |  |                    | (36,684
|Loss from discontinued components                                            |  |                    | (7,913 
|Cumulative effect of a change in accounting principle                        |  |                    |       
|                                                                             |  |                    |        
|Net loss                                                                     |  |                    | (44,597
|Cumulative convertible preferred stock dividend                              |  |                    | (3,752 
|                                                                             |  |                    |        
|Net loss attributable to common stockholders                                 |  | $                  | (48,349
|                                                                             |  |                    |        
|Loss per common share attributable to common stockholders  Basic & Diluted: |  |                    |        
|Continuing Operations                                                        |  | $                  | (0.43  
|Discontinued components                                                      |  |                    | (0.08  
|Cumulative effect of a change in accounting principle                        |  |                    |       
|                                                                             |  |                    |        
|Net loss per common share attributable to common stockholders                |  | $                  | (0.51  
|                                                                             |  |                    |        

2

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METROMEDIA INTERNATIONAL GROUP, INC.  Index to  Quarterly Report on Form 10-Q

|PART IFINANCIAL INFORMATION                                                                 
|---------------------------------------------------------------------------------------------
|
|Item 1. Financial Statements (unaudited)                                                     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|Item 4. Controls and Procedures                                                              
|PART IIOTHER INFORMATION                                                                    
|Item 1. Legal Proceedings                                                                    
|Item 2. Changes in Securities and Use of Proceeds                                            
|Item 3. Defaults Upon Senior Securities                                                      
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|Item 6. Exhibits and Reports on Form 8-K                                                     
|Signatures                                                                                   

3

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METROMEDIA INTERNATIONAL GROUP, INC.  Consolidated Condensed Statements of Operations  (in thousands, except per share amounts)  (unaudited)

|                                                                                                                                                  |                                                                                        | Three months ended
September 30, |        | Nine months ended
September 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | -------------------------------- | ------ | ------------------------------- | -
|
|
|Revenues                                                                                                                                          |                                                                                        | $                                | 18,633 |                                 | $
|Cost and expenses:                                                                                                                                |                                                                                        |                                  |        |                                 |  
|                                                                                                                                                  | Cost of services and operating expenses                                                |                                  |        | 6,254                           |  
|                                                                                                                                                  | Selling, general and administrative                                                    |                                  |        | 10,126                          |  
|                                                                                                                                                  | Depreciation and amortization                                                          |                                  |        | 5,164                           |  
|                                                                                                                                                  | Asset impairment charges                                                               |                                  |        |                                |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Operating loss                                                                                                                                    |                                                                                        |                                  | (2,911 | )                               |  
|Other (expense) income:                                                                                                                           |                                                                                        |                                  |        |                                 |  
|                                                                                                                                                  | Interest expense, net                                                                  |                                  |        | (4,058                          | )
|                                                                                                                                                  | Equity in income (losses) of and write-down of investments in unconsolidated investees |                                  |        | 3,035                           |  
|                                                                                                                                                  | Gain on retirement of debt                                                             |                                  |        | 465                             |  
|                                                                                                                                                  | Gain on disposition of businesses                                                      |                                  |        | 12,031                          |  
|                                                                                                                                                  | Foreign currency loss                                                                  |                                  |        | (1                              | )
|                                                                                                                                                  | Other income (expense)                                                                 |                                  |        | 61                              |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Income (loss) before income tax expense, minority interest, discontinued components and the cumulative effect of a change in accounting principle |                                                                                        |                                  | 8,622  |                                 |  
|Income tax expense                                                                                                                                |                                                                                        |                                  | (1,766 | )                               |  
|Minority interest                                                                                                                                 |                                                                                        |                                  | (2,036 | )                               |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Income (loss) from continuing operations before discontinued components and the cumulative effect of a change in accounting principle             |                                                                                        |                                  | 4,820  |                                 |  
|(Loss) income from discontinued components                                                                                                        |                                                                                        |                                  | (386   | )                               |  
|Cumulative effect of a change in accounting principle                                                                                             |                                                                                        |                                  |       |                                 |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Net income (loss)                                                                                                                                 |                                                                                        |                                  | 4,434  |                                 |  
|Cumulative convertible preferred stock dividend requirement                                                                                       |                                                                                        |                                  | (4,410 | )                               |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Net income (loss) attributable to common stockholders                                                                                             |                                                                                        | $                                | 24     |                                 | $
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Weighted average common sharesBasic and diluted                                                                                                  |                                                                                        |                                  | 94,035 |                                 |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Income (loss) per common share attributable to common stockholders:                                                                               |                                                                                        |                                  |        |                                 |  
|                                                                                                                                                  | Continuing operations                                                                  |                                  | $      |                                |  
|                                                                                                                                                  | Discontinued components                                                                |                                  |        |                                |  
|                                                                                                                                                  | Cumulative effect of a change in accounting principle                                  |                                  |        |                                |  
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  
|Net income (loss) per common share attributable to common stockholders                                                                            |                                                                                        | $                                |       |                                 | $
|                                                                                                                                                  |                                                                                        |                                  |        |                                 |  

See
accompanying notes to consolidated condensed financial statements.

4

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METROMEDIA INTERNATIONAL GROUP, INC.  Consolidated Condensed Balance Sheets  (in thousands, except share amounts)  (unaudited)

|                                                 |                                                                                                            | September 30,
2003                             |         | December 31,
2002 |        
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------- | ----------------- | -------
|
|ASSETS:                                          |                                                                                                            |                                                |         |                   |        
|Current assets:                                  |                                                                                                            |                                                |         |                   |        
|                                                 | Cash and cash equivalents (Note 1)                                                                         |                                                | $       | 26,641            |        
|                                                 | Marketable securities                                                                                      |                                                |         | 1,000             |        
|                                                 | Accounts receivable, net                                                                                   |                                                |         | 6,419             |        
|                                                 | Prepaid expenses and other assets                                                                          |                                                |         | 7,335             |        
|                                                 | Current assets of discontinued components                                                                  |                                                |         | 6,778             |        
|                                                 |                                                                                                            |                                                |         |                   |        
|                                                 |                                                                                                            | Total current assets                           |         |                   | 48,173 
|Property, plant and equipment, net               |                                                                                                            |                                                | 78,792  |                   |        
|Investments in and advances to business ventures |                                                                                                            |                                                | 25,256  |                   |        
|Goodwill                                         |                                                                                                            |                                                | 25,205  |                   |        
|Intangible assets, net                           |                                                                                                            |                                                | 9,849   |                   |        
|Other assets                                     |                                                                                                            |                                                | 5,004   |                   |        
|Noncurrent assets of discontinued components     |                                                                                                            |                                                | 22,008  |                   |        
|Business ventures held for sale                  |                                                                                                            |                                                | 1,828   |                   |        
|                                                 |                                                                                                            |                                                |         |                   |        
|                                                 |                                                                                                            | Total assets                                   |         | $                 | 216,115
|                                                 |                                                                                                            |                                                |         |                   |        
|LIABILITIES AND STOCKHOLDERS' DEFICIENCY:        |                                                                                                            |                                                |         |                   |        
|Current liabilities:                             |                                                                                                            |                                                |         |                   |        
|                                                 | Accounts payable                                                                                           |                                                | $       | 4,316             |        
|                                                 | Accrued expenses                                                                                           |                                                |         | 20,393            |        
|                                                 | Current portion of long-term debt                                                                          |                                                |         | 1,559             |        
|                                                 | Current liabilities of discontinued components                                                             |                                                |         | 8,056             |        
|                                                 |                                                                                                            |                                                |         |                   |        
|                                                 |                                                                                                            | Total current liabilities                      |         |                   | 34,324 
|Long-term debt, less current portion             |                                                                                                            |                                                | 154,016 |                   |        
|Other long-term liabilities                      |                                                                                                            |                                                | 7,669   |                   |        
|Long-term liabilities of discontinued components |                                                                                                            |                                                | 92      |                   |        
|                                                 |                                                                                                            |                                                |         |                   |        
|                                                 |                                                                                                            | Total liabilities                              |         |                   | 196,101
|Minority interest                                |                                                                                                            |                                                | 30,276  |                   |        
|Commitments and contingencies                    |                                                                                                            |                                                |        |                   |        
|Stockholders' deficiency:                        |                                                                                                            |                                                |         |                   |        
|                                                 | 71/4% cumulative convertible preferred stock                                                               |                                                |         | 207,000           |        
|                                                 | Common stock, $1.00 par value, authorized 400.0 million shares, issued and outstanding 94.0 million shares |                                                |         | 94,035            |        
|                                                 | Paid-in surplus                                                                                            |                                                |         | 1,102,769         |        
|                                                 | Accumulated deficit                                                                                        |                                                |         | (1,400,016        | )      
|                                                 | Accumulated other comprehensive loss                                                                       |                                                |         | (14,050           | )      
|                                                 |                                                                                                            |                                                |         |                   |        
|                                                 |                                                                                                            | Total stockholders' deficiency                 |         |                   | (10,262
|                                                 |                                                                                                            |                                                |         |                   |        
|                                                 |                                                                                                            | Total liabilities and stockholders' deficiency |         | $                 | 216,115
|                                                 |                                                                                                            |                                                |         |                   |        

See
accompanying notes to consolidated condensed financial statements.

5

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METROMEDIA INTERNATIONAL GROUP, INC.  Consolidated Condensed Statements of Cash Flows  (in thousands)  (unaudited)

|                                                     |                                                                                  | Nine months ended
September 30,                                                       |       
|---------------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------
|
|
|Operating activities:                                |                                                                                  |                                                                                       |       
|                                                     | Net income (loss)                                                                |                                                                                       | $     
|                                                     | (Income) loss from discontinued components                                       |                                                                                       |       
|                                                     |                                                                                  |                                                                                       |       
|                                                     | Income (loss) from continuing operations                                         |                                                                                       |       
|                                                     | Adjustments to reconcile net income (loss) to cash used in operating activities: |                                                                                       |       
|                                                     |                                                                                  | Gain on retirement of debt                                                            |       
|                                                     |                                                                                  | Depreciation and amortization                                                         |       
|                                                     |                                                                                  | Minority interest                                                                     |       
|                                                     |                                                                                  | Gain on disposition of businesses                                                     |       
|                                                     |                                                                                  | Equity in (income) losses of and write-down of investment in unconsolidated investees |       
|                                                     |                                                                                  | Accretion of debt discount                                                            |       
|                                                     |                                                                                  | Asset impairment charges                                                              |       
|                                                     |                                                                                  | Cumulative effect of a change in accounting principle                                 |       
|Changes in:                                          |                                                                                  |                                                                                       |       
|                                                     | Accounts receivable                                                              |                                                                                       |       
|                                                     | Other assets and liabilities                                                     |                                                                                       |       
|                                                     | Accounts payable and accrued expenses                                            |                                                                                       |       
|                                                     |                                                                                  |                                                                                       |       
|                                                     | Cash used in operating activities                                                |                                                                                       |       
|Investing activities:                                |                                                                                  |                                                                                       |       
|                                                     | Proceeds on disposition of businesses, net                                       |                                                                                       |       
|                                                     | Investments in and advances to business ventures                                 |                                                                                       |       
|                                                     | Distributions from business ventures                                             |                                                                                       |       
|                                                     | Additions to property, plant and equipment                                       |                                                                                       |       
|                                                     | Purchase of marketable securities                                                |                                                                                       |       
|                                                     | Acquisition of other intangibles                                                 |                                                                                       |       
|                                                     |                                                                                  |                                                                                       |       
|                                                     | Cash provided by investing activities                                            |                                                                                       |       
|Financing activities:                                |                                                                                  |                                                                                       |       
|                                                     | Dividends paid to minority interests                                             |                                                                                       |       
|                                                     | Borrowings of debt                                                               |                                                                                       |       
|                                                     | Payments on debt and capital lease obligations                                   |                                                                                       |       
|                                                     |                                                                                  |                                                                                       |       
|                                                     | Cash used in financing activities                                                |                                                                                       |       
|                                                     | Cash provided by (used in) discontinued business components, net                 |                                                                                       |       
|                                                     |                                                                                  |                                                                                       |       
|Net increase (decrease) in cash and cash equivalents |                                                                                  |                                                                                       | 174   
|Cash and cash equivalents at beginning of period     |                                                                                  |                                                                                       | 26,467
|                                                     |                                                                                  |                                                                                       |       
|Cash and cash equivalents at end of period           |                                                                                  | $                                                                                     | 26,641
|                                                     |                                                                                  |                                                                                       |       

See
accompanying notes to consolidated condensed financial statement

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METROMEDIA INTERNATIONAL GROUP, INC.  Consolidated Condensed Statement of Stockholders' Equity (Deficiency) and Comprehensive Income (Loss)  (in thousands)  (unaudited)

|                                          |                                          | 71/4%
Cumulative
Convertible
Preferred Stock |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|----------------------------------------- | ---------------------------------------- | -------------------------------------------- | - | - | ------- | - | ------ | - | - | ------ | - | - | --------- | - | - | ---------- | -
|
|
|
|Balances at December 31, 2001             |                                          | 4,140                                        |   | $ | 207,000 |   | 94,035 |   | $ | 94,035 |   | $ | 1,102,769 |   | $ | (1,305,879 | )
|Net loss (restated)                       |                                          |                                             |   |   |        |   |       |   |   |       |   |   |          |   |   | (92,687    | )
|Other comprehensive income, net of tax:   |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|                                          | Foreign currency translation adjustments |                                              |  |   |         |  |        |  |   |        |  |   |           |  |   |            | 
|                                          | Minimum pension liability                |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|                                          |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|Total comprehensive loss (restated)       |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|                                          |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|Balances at September 30, 2002 (restated) |                                          | 4,140                                        |   | $ | 207,000 |   | 94,035 |   | $ | 94,035 |   | $ | 1,102,769 |   | $ | (1,398,566 | )
|                                          |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|Balances at December 31, 2002 (restated)  |                                          | 4,140                                        |   | $ | 207,000 |   | 94,035 |   | $ | 94,035 |   | $ | 1,102,769 |   | $ | (1,414,354 | )
|Net income                                |                                          |                                             |   |   |        |   |       |   |   |       |   |   |          |   |   | 14,338     |  
|Other comprehensive income, net of tax:   |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|                                          |                                          | Foreign currency translation adjustments     |   |  |         |   |       |   |  |        |   |  |           |   |  |            |  
|                                          |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|Total comprehensive income                |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|                                          |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  
|Balances at September 30, 2003            |                                          | 4,140                                        |   | $ | 207,000 |   | 94,035 |   | $ | 94,035 |   | $ | 1,102,769 |   | $ | (1,400,016 | )
|                                          |                                          |                                              |   |   |         |   |        |   |   |        |   |   |           |   |   |            |  

See accompanying notes to consolidated condensed financial statements.

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Metromedia International Group, Inc.        Notes to Consolidated Condensed Financial Statements

1.    Basis of Presentation, Going Concern and Recent Developments

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Metromedia International Group, Inc. ("MMG" or the "Company") and its direct and
indirect wholly-owned subsidiaries, Metromedia International Telecommunications, Inc. ("MITI") and PLD Telekom, Inc. All significant intercompany transactions and accounts have been
eliminated.

The
Company is a holding company with ownership interests in telephony and cable television businesses that operate in northwestern Russia and the Republic of Georgia. For the nine
months ended September 30, 2003, the telephony businesses generated 96% of consolidated revenues, while the cable television business generated 4% of consolidated revenues. On
September 30, 2003, the Board of Directors formally approved management's plan of disposing its remaining non-core media business. The Company's non-core media
businesses are comprised of four cable television networks, with operations in Russia, Romania, Belarus and Lithuania. The Company also owns interests in nineteen radio businesses operating in
Finland, Hungary, Bulgaria, Estonia, Latvia and the Czech Republic. These condensed consolidated financial statements also include the results of the Company's discontinued business components (see
Note 3, "Discontinued Business Components").

The
accompanying interim condensed consolidated financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to
such rules
and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with
the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2002. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2003, and the results of its
operations for the three and nine month periods ended September 30, 2003 and 2002 and its cash flows for the nine months ended September 30, 2003 and 2002, have been included. The
results of operations for the interim period are not necessarily indicative of the results, which may be realized for the full year.

Restatement of Prior Financial Information

The Company determined that the following accounting errors had been made in its past financial statements:

8

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The
effects of the tax adjustments resulted in an increase in "Prepaid expenses and other current assets" of $2.1 million; an increase in "Current assets of discontinued
components" of $0.8 million; and a reduction of "Accumulated deficit" of $2.9 million at December 31, 2002. For the statement of cash flows, the tax adjustments resulted in a
decrease in the "Net loss" of $4.2 million with an offsetting increase in the use of cash from "Changes in Other Assets and Liabilities" of $4.2 million for the nine months ended
September 30, 2002. The adjustment related to the dividends has no impact on the balance sheet or on the statement of cash flows.

The
effects of the adjustments for income statement purposes are summarized in the following financial results tables:

|                                                      |  | September 30, 2002 |        
|----------------------------------------------------- |  | ------------------ | -------
|
|
|Revenues                                              |  | $                  | 24,368 
|Operating loss                                        |  |                    | (7,253 
|Income tax expense                                    |  |                    | (1,707 
|Loss from continuing operations                       |  |                    | (36,684
|Loss from discontinued components                     |  |                    | (7,913 
|Cumulative effect of a change in accounting principle |  |                    |       
|                                                      |  |                    |        
|Net loss                                              |  |                    | (44,597
|Cumulative convertible preferred stock dividend       |  |                    | (3,752 
|                                                      |  |                    |        
|Net loss attributable to common stockholders          |  | $                  | (48,349
|                                                      |  |                    |        
|                                                      |  |                    |        

9

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|Loss per common share attributable to common stockholders  Basic & Diluted: |  |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |  
|---------------------------------------------------------------------------- |  | - | ----- | - | - | ----- | - | - | ----- | - | - | ----- | - | - | ----- | - | - | ----- | -
|Continuing Operations                                                        |  | $ | (0.43 | ) | $ | (0.44 | ) | $ | (0.41 | ) | $ | (0.89 | ) | $ | (0.85 | ) | $ | (0.72 | )
|Discontinued components                                                      |  |   | (0.08 | ) |   | (0.08 | ) |   | (0.11 | ) |   | (0.23 | ) |   | (0.23 | ) |   | (0.38 | )
|Cumulative effect of a change in accounting principle                        |  |   |      |   |   |      |   |   |      |   |   | (0.03 | ) |   | (0.03 | ) |   | (0.01 | )
|                                                                             |  |   |       |   |   |       |   |   |       |   |   |       |  
|Net loss per common share attributable to common stockholders                |  | $ | (0.51 | ) | $ | (0.52 | ) | $ | (0.52 | ) | $ | (1.15 | ) | $ | (1.11 | ) | $ | (1.11 | )
|                                                                             |  |   |       |   |   |       |   |   |       |   |   |       |  

Description of the Business

The Company's core businesses operate in northwestern Russia and the Republic of Georgia. The Company owns interests in and participates with partners in the
management of business ventures that have various operational systems, consisting of fixed telephony networks, a wireless telephone system and a cable television system. Historically, all of the
Company's core business ventures, other than PeterStar, have reported their financial results on a three-month lag. Therefore, the Company's condensed consolidated financial results for the three and
nine months ended September 30, 2003 and 2002 include the financial results for those business ventures for the three and nine months ended June 30, 2003 and 2002, respectively.

Going Concern and Recent Developments

The Company is currently in the process of an overall restructuring in which its interests in most cable television and all radio broadcast businesses will be
sold and a substantially downsized supervisory staff will manage the remaining business ventures. This restructuring was prompted by and is intended to resolve the severe liquidity issues confronting
the Company since the beginning of 2002. This restructuring focuses on "core" telephony business operations that are currently self-financed and hold leading positions in their respective
markets. These core operations will be held and developed, with the expectation that their future dividend distributions will be sufficient to meet the Company's debt service and overhead
requirements. All other "non-core" operations will be sold with the intention that sale proceeds will mitigate short-term liquidity concerns and provide capital for further
core business development.

Upon
completion of the restructuring, the Company intends that its core businesses will consist principally of PeterStar and its wholly-owned subsidiary, Baltic
Communications, Ltd., the leading competitive local exchange carrier in St. Petersburg, Russia, of which the Company has a 71% business
interest, and Magticom, a GSM mobile telephony operator in Tbilisi, Georgia, in which the Company has a 34.5% equity interest.

As
part of its overall restructuring efforts, the Company terminated substantially all of its employees at its U.S. headquarters as well as certain European-based business venture
support personnel during the first quarter of 2003. These actions were taken to help alleviate liquidity problems the Company had faced for an extended period of time. However, the Company has entered
into new

10

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employment
agreements with certain of these employees, including the Company's Chief Financial Officer, and has recruited accounting and finance personnel to work in Charlotte, North Carolina at the
Company's new corporate headquarters.

The
Company is a holding company; accordingly, it does not generate cash flows from operations. As of September 30, 2003 and January 31, 2004, the Company had
$24.1 million and $23.3 million, respectively, of unrestricted cash at its headquarters level. The $24.1 million of cash at September 30, 2003 reflects the cash held at
headquarters subsequent to the Company's $8.0 million semi-annual interest payment which was due on September 30, 2003, on its 101/2% Senior Discount Notes due
2007 (the "Senior Discount Notes").

In
addition, as of September 30, 2003, the Company had $2.5 million of cash at the Company's consolidated business ventures. Furthermore, as of September 30, 2003,
the Company's unconsolidated business ventures had $2.3 million of cash.

The
Company projects that its current corporate cash reserves, anticipated cash proceeds of non-core business sales and anticipated continuing dividends from core business
operations will be sufficient for the Company to meet its future operating and debt service obligations on a timely basis. If the Company does not realize the cash proceeds it anticipates on the
future sale of its non-core businesses and does not receive the amount of dividends from core operations that it currently anticipates, the Company does not believe that it will be able to
fund its planned operating, investing and financing cash flows through September 30, 2004. Assuming no proceeds from further sale of non-core assets nor dividends from core business
operations, the Company projects that its cash flow and existing capital resources will permit it to pay the $8.0 million semi-annual interest payment due on March 30, 2004
on its Senior Discount Notes.

During
2003, the Company engaged in discussions with representatives of holders of a substantial portion of the Company's 101/2% Senior Discount Notes due 2007 with a
current outstanding principal balance (fully accreted) of $152.0 million (the "Senior Discount Notes") concerning restructuring of the Senior Discount Notes. To date, no restructuring has been
agreed upon and further restructuring discussions with these substantial Senior Discount Note holders have been suspended. Opportunities to
restructure the Company's balance sheet, including to refinance the Senior Discount Notes and its preferred stock, which had an aggregate preference claim of $248.4 million as of
September 30, 2003, are being pursued, but present Company plans presume the continued service of the Senior Discount Notes debt on current terms and the continued deferral of the payment of
preferred stock dividends. The Company, cannot provide assurances at this time that capital restructuring effort will be undertaken or, if undertaken, that such effort would produce a material
improvement in short-run cash flows or equity valuations.

The
Company has sold several businesses, which have yielded proceeds in excess of carrying values. The Company continues to actively pursue the sale of remaining non-core
businesses to raise additional cash and has undertaken to maximize cash distributions from all of its business ventures. The Company believes these measures will succeed in providing sufficient
liquidity to meet cash demands for the coming twelve months and beyond. However, the Company cannot assure that it will be successful in selling any additional non-core businesses or that
these sales will raise sufficient cash to meet short-term liquidity requirements. The Company also is subject to legal and contractual restrictions, including those under the indenture for
the Senior Discount Notes, on its use of any cash proceeds from the sale of its assets or those of its business ventures or subsidiaries.

11

---

If
the Company is not able to satisfactorily address the liquidity issues described above, the Company may have to resort to certain other measures, including ultimately seeking the
protection afforded under the U.S. Bankruptcy Code. The Company cannot assure at this time that it will be successful in avoiding such measures. Additionally, the Company has a stockholders deficit
and has suffered recurring net operating cash deficiencies.

The
factors discussed above raise substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Actions related to the Company's Securities

On February 25, 2003, the Company received notice from the staff of The American Stock Exchange (the "Exchange") indicating that the Exchange filed an
application with the United States Securities and Exchange Commission ("SEC") on February 20, 2003, to strike the Company's Common Stock and 71/4% Cumulative Convertible
Preferred Stock from listing and registration on the Exchange, effective at the opening of the trading session on March 3, 2003. As a result, the Company's Common Stock (OTCBB: MTRM) and
71/4% Cumulative Convertible Preferred Stock (OTCBB: MTRMP) began trading on the OTC Bulletin Board.

On
September 24, 2003, the Company's equity securities were removed from quotation on the OTC Bulletin Board trading system ("OTCBB") because the Company was not then in
compliance with NASD Rule 6530. The Company was required to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 with the SEC by
September 23, 2003 to remain in compliance with Rule 6530. As a result, the Company's Common Stock (Pink Sheets: MTRM) and 71/4% Cumulative Convertible Preferred Stock
(Pink Sheets: MTRMP) is now quoted on the Pink Sheets. Concurrent with the filing of this quarterly report on Form 10-Q for the quarter ended September 30, 2003, the Company became
compliant with OTCBB trading eligibility requirements.

2.    Summary of Significant Accounting Policies

Stock Option Plans

The Company has elected to use the intrinsic value-based method to account for its stock-based compensation in accordance with the provisions of Accounting
Principles Board ("APB") No. 25, "Accounting for Stock Issued to Employees" and disclose the pro forma effects on results of operations

12

---

as
if the fair value method had been adopted to account for its stock-based employee compensation plans.

|                                                                                           |             | Three Months Ended
September 30, |      | Nine Months Ended
September 30, |  
|------------------------------------------------------------------------------------------ | ----------- | -------------------------------- | ---- | ------------------------------- | -
|
|Net income (loss) attributable to common stockholders, as reported                         |             | $                                | 24   |                                 | $
|Deduct: Stock-based employee compensation expense determined under fair value based method |             |                                  | (149 | )                               |  
|                                                                                           |             |                                  |      |                                 |  
|Pro forma net (loss) income                                                                |             | $                                | (125 | )                               | $
|                                                                                           |             |                                  |      |                                 |  
|Net (loss) income per share attributable to common stockholdersBasic and Diluted:         |             |                                  |      |                                 |  
|                                                                                           | As reported |                                  | $    |                                |  
|                                                                                           |             |                                  |      |                                 |  
|                                                                                           | Pro forma   |                                  | $    |                                |  
|                                                                                           |             |                                  |      |                                 |  

Accounting Change

The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets." Accordingly, the Company recorded a transitional impairment charge of
$16.7 million as of January 1, 2002, of which $15.6 million has been included in the loss from discontinued components with the remaining $1.1 million reflected as a change
in accounting principle.

Reclassifications

Certain reclassifications have been made to the prior period's financial information to conform to the current period presentation.

3.    Discontinued Business Components

On September 30, 2003, the Board of Directors formally approved management's plan to dispose of the remaining non-core media businesses of the
Company. Management anticipates that the remaining non-core media businesses will be disposed of by June 30, 2004. In light of
these events, the Company concluded that such businesses meet the criteria for classification as discontinued business components as outlined in SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", and these entities have been presented as such within the condensed consolidated financial statements.

Accordingly,
as of September 30, 2003, the income statement of the Company for current and prior periods has presented the results of operations of the discontinued components,
including any gain or loss recognized on such disposition, in income (loss) from discontinued components and the balance sheet presents the assets and liabilities of such operations as assets and
liabilities of discontinued components.

A
summary of such assets that are to be disposed include:



13

---



A
summary of significant dispositions of such businesses from January 1, 2002 to September 30, 2003 are summarized below.

Adamant Transaction

On April 24, 2003, the Company completed an exchange with Adamant Advisory Services ("Adamant") of its ownership in certain of its business units in Russia
for approximately $58.6 million, face value, of the Company's Senior Discount Notes held by Adamant. The Company conveyed to Adamant its ownership interests in Comstar, a Moscow-based
fixed-line telephony operator; Kosmos TV, a Moscow-based cable television operator; and the Company's Russian radio businesses (the "Radio Businesses"). In addition to conveying the Senior
Discount Notes to the Company, Adamant paid $5.0 million in cash and released the Company of its $3.5 million obligation to pay interest accrued on the Senior Discount Notes being
exchanged. The consideration was determined by arms length negotiations between the Company and Adamant.

The
Company has recorded a gain related to this transaction of approximately $31.6 million in the nine months ended September 30, 2003, which is comprised of a
$24.6 million gain related to the early extinguishment of the exchanged Senior Discount Notes and a $7.0 million gain on the transfer of the Company's interests in the Radio Businesses.
Such gain on debt was adjusted to $24.6 million in the third quarter of 2003, due to a favorable adjustment of $0.5 million to professional fees previously accrued. The gain on
extinguishment was reflected in the Company's income from continuing operations in the three months ended June 30, 2003, while the gain on sale of the Company's interests in the Radio
Businesses was reflected in the income from operations of discontinued components in the three months ended June 30, 2003. In addition, in the year ended December 31, 2002, the Company
recorded an additional impairment charge of $1.1 million to reflect Comstar and Kosmos TV, unconsolidated investees of the Company, at their respective fair values.

Snapper, Inc.

On November 27, 2002, the Company completed the sale of substantially all of the assets and certain liabilities of Snapper, Inc. ("Snapper") to
Simplicity Manufacturing, Inc. ("Simplicity") for an ultimate sale price of $60.0 million. Snapper manufactures premium-priced power lawnmowers, garden tillers, snow throwers and related
parts and accessories.

In
accordance with the provisions of SFAS No. 142, the Company completed its evaluation of the fair value of Snapper and determined that, as of January 1, 2002, there was a
transitional impairment charge required on the Company's then recorded goodwill. Accordingly, the Company recorded a $13.6 million transitional charge in 2002. In addition, the Company recorded
an estimated loss on disposal of $10.1 million during the year ended December 31, 2002. Such loss was based on the minimum amount of cash expected once the final terms of the settlement
with the buyer were agreed. The $10.1 million estimated loss was comprised of a write down of assets and estimated severance and disposal costs.

In
the six months ended June 30, 2003, a final accounting for this transaction was made, and the Company adjusted a receivable that was due from Simplicity to $6.0 million
to include additional net proceeds due to the Company of $0.7 million. The additional net proceeds were recorded as an

14

---

adjustment
to the loss on sale in income from discontinued components in the six months ended June 30, 2003 and resulted in a total net loss on disposal of $9.4 million.

Simplicity
paid the $6.0 million to the Company in the quarter ended September 30, 2003.

Technocom Transaction

On June 25, 2003, the Company sold its wholly owned subsidiary, Technocom Limited ("Technocom") for $4.5 million. Technocom holds interests in
several Russian telecommunications enterprises including satellite-based transport operator Teleport-TP. Simultaneous with the sale of Technocom, the Company entered into agreements
intended to settle all historical claims concerning Technocom-related businesses, including claims arising from litigation in Guernsey that Technocom initiated in 2002 concerning its majority-owned
subsidiary Roscomm and from arbitration proceedings initiated in 2003 in connection with that Guernsey litigation. The Company further expects that the broad releases, from and among all potential
claimants contained in the settlement agreements, will avoid any further dispute in connection with Technocom, its subsidiary businesses, or its past or present stakeholders.

The
Company received cash proceeds of $4.5 million and incurred closing costs of $0.6 million, principally legal fees and severance costs, resulting in an estimated gain of
$2.9 million on the disposition, which was recorded in the three months ended June 30, 2003.

Metromedia China Corporation

In July 2002, the Company commenced a rights offering to the existing minority shareholders of Metromedia China Corporation ("MCC"), a majority owned
subsidiary. The rights offering expired on August 22, 2002. Management determined prior to commencing the rights offering that it might not be able to continue to fund the operations or meet
the minimum capital contributions required under the existing charter documents for MCC's operating subsidiaries. Furthermore, management further recognized that if the rights offering were successful
in raising the minimal funding required to sustain the operations, the Company would be substantially diluted in its ownership rights in MCC.

Accordingly,
the Company recorded a charge to earnings in the three months ended June 30, 2002 totaling $0.9 million to reduce the carrying value of MCC to the Company's
best estimate as to the value that would be realized from the disposition of its ownership interests in MCC and/or the operating subsidiaries of MCC.

On
September 19, 2002, the Company notified the minority shareholders of MCC that it had negotiated the sale of two of the three MCC operating subsidiaries, to one of the general
directors of MCC. In addition, on September 27, 2002, the Company began the asset sale closing process for the two operating subsidiaries and began the liquidation process for the third
operating subsidiary.

The
sale of the two operating subsidiaries was completed in early 2003.

Other Non-Core Activities

The Company disposed of its ownership interests in ALTEL and CPY Yellow Pages during 2002. Accordingly, such businesses and operations have been presented as
discontinued components.

The
Company recorded a non-cash charge to earnings of $0.8 million during the third quarter of 2002. The Company initiated an assessment of the recoverability of
long-lived assets of Cardlink, as a

15

---

result
of the businesses venture's failure to meet financial projections due to loss of its principal customer in the third quarter. Accordingly, the intangibles (broadcast rights) were written down
to the estimated fair value based on the expected cash flows of Cardlink.

The
operating results of the Snapper business segment are as follows (in thousands):

Three months ended
September 30, 2002

Nine months ended
September 30, 2002Revenues

$
26,770

$
108,648Operating loss


(9,556
)

(6,288
)Cumulative effect of a change in accounting principle





(13,570
)Net loss

$
(7,113
)
$
(18,280
)


The
combined results of operations of the discontinued Radio businesses are as follows (in thousands):

Three months ended
September 30,

Nine months ended
September 30,2003

2002

2003

2002Revenues

$
4,004

$
4,898

$
12,526

$
13,629Operating loss


(314
)

(64
)

(1,573
)

(262
)Net (loss) income

$
(95
)
$
157

$
(931
)
$
(1,031
)


The
combined results of operations of the discontinued Cable businesses are as follows (in thousands):

Three months ended
September 30,

Nine months ended
September 30,2003

2002

2003

2002Revenues

$
3,174

$
3,098

$
9,252

$
9,166Operating (loss) income


(881
)

106


(800
)

315Cumulative effect of a change in accounting principle











(2,030
)Net (loss) income

$
(527
)
$
383

$
(234
)
$
(1,554
)


The
combined results of operations of the disposed Telephony businesses (Altel, CPY Yellow Pages and Technocom), Cardlink and MCC are as follows (in thousands):

Three months ended
September 30, 2002

Nine months ended
September 30, 2002Revenues

$
3,531

$
17,323Operating loss


(3,100
)

(9,584
)Net loss

$
(3,553
)
$
(14,719
)


The
results of operations of the disposed Technocom business as well as certain other activity related to discontinued operations were immaterial for 2003.

16

---



The principal balance sheet items included in Discontinued Business Components for the radio and cable companies (except Ayety TV) are as follows (in thousands):

September 30, 2003

December 31, 2002(restated)Cash and cash equivalents

$
1,350

$
4,114Other receivables


1,064


6,049Other current assets


4,364


4,769Current assets

$
6,778

$
14,932Goodwill

$
8,733

$
9,528Property, plant and equipment, net


7,996


14,989Intangible assets, net


4,047


6,503Investments in and advances to business ventures





1,218Other noncurrent assets


1,232


9,091Noncurrent assets

$
22,008

$
41,329Accounts payable

$
4,094

$
4,338Accrued expense


3,962


16,716Current portion of third party long-term debt





1,711Current liabilities

$
8,056

$
22,765Long-term liabilities

$
92

$
105


The
balance sheet items as of September 30, 2003 exclude those ventures disposed of during the nine months ended September 30, 2003, principally the Russian radio
businesses and the Telephony businesses.

4.    Asset Impairment

2003 Impairment Charges

In the three months ended September 30, 2003, the Company recorded a non-cash charge to earnings of $0.8 million for the
write-down of the Company's investment in Cosmos TV, which has been included as a write-down of investment in unconsolidated investees. The Company has received indicators of
value in relation to selling the Company's interest in Cosmos TV, and has evaluated the carrying value of Cosmos TV and determined that there was a loss in value that was other than temporary.
Accordingly, in accordance with APB Opinion No. 18, the Company recorded an impairment charge of $0.8 million against the goodwill related to the Company's investment in Cosmos TV during
the third quarter of 2003.

2002 Impairment Charges

In the three months ended September 30, 2002, the Company recorded a non-cash charge of $25.8 million for the writedown of the Company's
investment in Comstar, which has been included as a write-down of investment in unconsolidated investees. As the Company began the process of selling its investment in Comstar, the Company
evaluated the carrying value of Comstar and determined that there was a loss in value that was other than temporary. Accordingly, in accordance with APB Opinion No. 18, the Company recorded an
impairment charge of $25.8 million against the license related to the Company's investment in Comstar during the third quarter of 2002.

17

---

The
Company recorded a non-cash charge to earnings of $3.8 million during the third quarter of 2002. The Company initiated an assessment of the recoverability of
long-lived assets and investments in Ayety TV as a result of the business venture's failure to meet financial projections. Accordingly, the goodwill and intangibles (principally a
non-compete agreement) were written down to their estimated fair values based on the expected cash flows of Ayety TV.

5.    Business Ventures Held for Sale

Certain cable and telephony business ventures in which the Company disposed of its interests in or that the Board of Directors have approved a formal plan for
disposal were/are accounted for using the equity method of accounting. The Company has presented its investments in such ventures as "Business ventures held for sale" in noncurrent assets. Such
presentation resulted in a reduction of the Company's "Investments in and advances to ventures" totaling $1.8 million and $37.7 million at September 30, 2003 and December 31,
2002, respectively.

The
results of such business ventures are required to be presented in the Statements of Operations of the Company as continuing operations and have been included in the "Equity in income
of unconsolidated investees."

Such
ventures principally include:

| |  | Cable television businesses   |  | Date of Disposition |  | 
| |  | ----------------------------- |  | ------------------- |  | 
| |  |   Alma TV                    |  | May 24, 2002        |  | 
| |  |   Baltcom TV                 |  | August 1, 2003      |  | 
| |  |   Cosmos TV                  |  |                    |  | 
| |  |   Kosmos TV                  |  | April 24, 2003      |  | 
| |  |   Teleplus                   |  | November 21, 2003   |  | 
| |  | Fixed Telephony businesses    |  |                     |  | 
| |  |   Comstar                    |  | April 24, 2003      |  | 
| |  |   MTR Svyaz                  |  | June 25, 2003       |  | 
| |  |   Teleport-TP                |  | June 25, 2003       |  | 
| |  | Wireless Telephony businesses |  |                     |  | 
| |  |   BELCEL                     |  | July 25, 2002       |  | 
| |  |   Tyumenruskom               |  | September 24, 2003  |  | 

The combined results of operations for such business ventures until the date of sale for the three and nine months ended September 30, 2003
and 2002 are summarized as follows (in thousands):

|                                             |  | Three months ended September 30, 2003 |  
|-------------------------------------------- |  | ------------------------------------- | -
|
|Revenues                                     |  | $                                     | 
|Operating income (loss)                      |  |                                       | 
|Net income                                   |  |                                       | 
|Equity in losses of unconsolidated investees |  | $                                     | 

18

---

|                                                      |  | Three months ended September 30, 2002 |        
|----------------------------------------------------- |  | ------------------------------------- | -------
|
|Revenues                                              |  | $                                     | 15,855 
|Operating income (loss)                               |  |                                       | 1,062  
|Net income                                            |  |                                       | 351    
|Equity in (losses) income of unconsolidated investees |  | $                                     | (27,690

|                                             |  | Nine months ended September 30, 2003 |       
|-------------------------------------------- |  | ------------------------------------ | ------
|
|Revenues                                     |  | $                                    | 16,624
|Operating income (loss)                      |  |                                      | 1,183 
|Net income                                   |  |                                      | (344  
|Equity in losses of unconsolidated investees |  | $                                    | (337  

|                                                      |  | Nine months ended September 30, 2002 |        
|----------------------------------------------------- |  | ------------------------------------ | -------
|
|Revenues                                              |  | $                                    | 55,376 
|Operating income (loss)                               |  |                                      | 1,846  
|Net income (loss)                                     |  |                                      | (1,857 
|Equity in (losses) income of unconsolidated investees |  | $                                    | (34,197

The
Cable television business and Tyumenruskom include the results of operations for the three and nine months ended June 30, 2003, as such businesses are on a three month lag.

6.    Business Dispositions and Transactions

Tyumenruskom Transaction

On September 24, 2003, the Company sold its interest in the Russian mobile phone company Tyumenruskom to a Russian company for cash consideration of
$1.2 million. In addition, the Company was released from its guarantee of Tyumenruskom's debt by a vendor. The Company had previously recorded a reserve related to this guarantee that totaled
$1.4 million on the date of the transaction. The Company recognized a gain on the disposition of $2.6 million, which is recorded in the three months ended September 30, 2003.

Baltcom TV Transaction

On August 1, 2003, the Company sold all of its interest in the Latvian cable television company Baltcom TV ("Baltcom") to the Latvian company SIA Alina
("Alina") for cash consideration of $14.5 million. Alina was the owner of 45% of Baltcom prior to the transaction. The Company recognized a gain of $9.3 million on the disposition, which
was recorded in the three months ended September 30, 2003.

OMCL / CAT Transaction

On August 27, 2002, the Company sold its indirect 74.1% interest in Omni-Metromedia Caspian, Ltd. ("OMCL"). OMCL was a
holding company through which the Company owned a 50%

19

---

interest
in Caspian American Telecommunications LLC ("CAT"), a wireless telephony venture in Azerbaijan. The Company received proceeds of $0.1 million and incurred transactional costs of
$0.1 million, which were composed of legal fees and a severance payment to CAT's former co-general director. No loss was recognized on the disposal of CAT due to prior write-downs;
however, the Company recognized a gain of $2.4 million on the sale of its business interest in OMCL to reverse a contingent liability that previously had been recorded for this business in the
fourth quarter of 2000.

CIBBV / BELCEL Transaction

On July 25, 2002, the Company closed on the sale of its 100% ownership interest in Commstruct International Byelorussia B.V. ("CIBBV"). CIBBV was a holding
company for a 50% interest in Belarus-Netherlands BELCEL Joint Venture ("BELCEL"), which owns a wireless network in Belarus. The Company received cash proceeds from the sale of
$1.7 million and incurred immaterial transaction costs. The Company recorded a gain on the disposition of $1.3 million.

Alma TV Transaction

On May 24, 2002, the Company sold its indirect 50% interest in Alma TV, a cable television provider in Kazakhstan. The Company received cash proceeds of
$9.4 million from the sale and incurred transactional costs of $0.9 million, which were comprised principally of a $0.8 million broker fee with the remaining balance related to
legal and accounting fees. The Company recorded a gain on the disposition of $1.7 million.

7.    Investments in and advances to business ventures

Credit Agreements with Business Ventures

Advances are made to business ventures and subsidiaries in the form of cash, for working capital purposes, payment of expenses or capital expenditures, or in the
form of equipment purchased on behalf of the business ventures. Interest rates charged to the business ventures and subsidiaries range from prime rate to prime rate plus 6%. The credit agreements
generally provide for the payment of principal and interest from 90% of the business ventures' and subsidiaries' available cash flow, as defined, prior to any substantial distributions of dividends to
the business venture partners. The Company has entered into credit agreements with its business ventures and subsidiaries, including those classified as discontinued operations, of which
$3.0 million in funding obligations remain at September 30, 2003. The Company's funding commitments are contingent on its approval of the respective business ventures' and subsidiaries'
business plans. Due to dispositions of business ventures (See Note 5 "Business Ventures Held for Sale"), interest accruals and limited funding by the Company, partially offset by credit
agreement repayments, such commitment has been significantly reduced over the past eighteen months. In addition, Magticom repaid its obligation in early 2003 and such credit agreement was terminated.
Based on agreements currently in place, management expects that such commitment will cease to exist once the remaining discontinued businesses have been disposed.

20

---

The
following table summarizes the credit agreement activity for the nine months ended September 30, 2003 and 2002 (in thousands):

|                                                                              |  | Total Contract Amount |         | Total Available Credit |  
|----------------------------------------------------------------------------- |  | --------------------- | ------- | ---------------------- | -
|
|
|Balance at January 1, 2003 and 2002, respectively                             |  | $                     | 103,963 |                        | $
|Reductions due to dispositions of businesses                                  |  |                       | (45,884 | )                      |  
|Reductions due to termination of agreements, net of increases in agreements   |  |                       | (18,900 | )                      |  
|Decrease due to advances given and interest accrued, net of payments received |  |                       |        |                        |  
|                                                                              |  |                       |         |                        |  
|Balance at September 30, 2003 and 2002, respectively                          |  | $                     | 39,179  |                        | $
|                                                                              |  |                       |         |                        |  

Equity Method Investment Information

At September 30, 2003 and December 31, 2002, the Company's unconsolidated investments in and advances to business ventures by business line, located
principally in Georgia at cost, including associated goodwill and net intangible asset balances, and net of adjustments for its equity in earnings or losses, impairment charges and distributions were
as follows (in thousands):

|                              |  | September 30,
2003 |        | December 31,
2002 |   | Ownership % | 
|----------------------------- |  | ------------------ | ------ | ----------------- | - | ----------- | 
|Magticom                      |  | $                  | 25,051 |                   | $ | 30,462      | 
|Other Communications Entities |  |                    | 205    |                   |   | 258         | 
|                              |  |                    |        |                   |   |             | 
|                              |  | $                  | 25,256 |                   | $ | 30,720      | 
|                              |  |                    |        |                   |   |             | 

21

---

Summarized
combined financial information of unconsolidated business ventures accounted for under the equity method, which are on a three month lag, as of June 30, 2003 and
September 30, 2002 are as follows (in thousands):

Combined Information of Unconsolidated Business Ventures

Combined Balance Sheets

|                                           |                                             | June 30,
2003                                   |        | September 30,
2002
|------------------------------------------ | ------------------------------------------- | ----------------------------------------------- | ------ | ------------------
|Assets:                                    |                                             |                                                 |        |                   
|                                           | Cash                                        |                                                 | $      | 2,271             
|                                           | Accounts receivable, net                    |                                                 |        | 5,641             
|                                           | Other current assets                        |                                                 |        | 1,177             
|                                           | Property, plant and equipment, net          |                                                 |        | 50,876            
|                                           | Other long-lived assets                     |                                                 |        | 5,398             
|                                           |                                             |                                                 |        |                   
|                                           |                                             | Total assets                                    |        | $                 
|                                           |                                             |                                                 |        |                   
|Liabilities and Business Ventures' Equity: |                                             |                                                 |        |                   
|                                           | Accounts payable                            |                                                 | $      | 4,191             
|                                           | Accrued expenses                            |                                                 |        | 14,063            
|                                           | Amounts due under Company credit facilities |                                                 |        |                  
|                                           | Other long-term third party debt            |                                                 |        |                  
|                                           |                                             |                                                 |        |                   
|                                           |                                             |                                                 | 18,254 |                   
|Business ventures' equity                  |                                             |                                                 | 47,109 |                   
|                                           |                                             |                                                 |        |                   
|                                           |                                             | Total liabilities and business ventures' equity |        | $                 
|                                           |                                             |                                                 |        |                   

Excluded
from the combined balance sheet are those entities that are presented as "Business Ventures Held for Sale". Such entities are included in the combined results of operations
below until the date of sale. (see Note 5)

22

---

The
following tables present summary financial information for all operating entities being grouped by line of business for the three and nine months ended June 30, 2003 and 2002.
The results of operations presented below are before the elimination of intercompany interest (in thousands):

|                                                                                      |  | Three months ended June 30, 2003 |      
|------------------------------------------------------------------------------------- |  | -------------------------------- | -----
|
|Revenues                                                                              |  | $                                | 4,657
|Cost of services and operating expenses                                               |  |                                  | 2,976
|Selling, general and administrative                                                   |  |                                  | 919  
|Depreciation and amortization                                                         |  |                                  | 516  
|                                                                                      |  |                                  |      
|Operating income                                                                      |  |                                  | 246  
|Other (expense) income                                                                |  |                                  | (153 
|Interest expense, net                                                                 |  |                                  | (56  
|Income taxes                                                                          |  |                                  |     
|                                                                                      |  |                                  |      
|Net income                                                                            |  | $                                | 37   
|                                                                                      |  |                                  |      
|Capital expenditures                                                                  |  | $                                | 1,415
|                                                                                      |  |                                  |      
|Equity in income (losses) of and write-down of investment in unconsolidated investees |  | $                                | (74  
|                                                                                      |  |                                  |      

|                                                                                      |  | Three months ended June 30, 2002 |        
|------------------------------------------------------------------------------------- |  | -------------------------------- | -------
|
|Revenues                                                                              |  | $                                | 22,591 
|Cost of services and operating expenses                                               |  |                                  | 9,935  
|Selling, general and administrative                                                   |  |                                  | 5,861  
|Depreciation and amortization                                                         |  |                                  | 5,712  
|                                                                                      |  |                                  |        
|Operating income (loss)                                                               |  |                                  | 1,083  
|Other (expense) income                                                                |  |                                  | (163   
|Interest expense, net                                                                 |  |                                  | (172   
|Income taxes                                                                          |  |                                  | (469   
|                                                                                      |  |                                  |        
|Net income (loss)                                                                     |  | $                                | 279    
|                                                                                      |  |                                  |        
|Capital expenditures                                                                  |  | $                                | 3      
|                                                                                      |  |                                  |        
|Equity in income (losses) of and write-down of investment in unconsolidated investees |  | $                                | (26,163
|                                                                                      |  |                                  |        

23

---

|                                                                                      |  | Nine months ended June 30, 2003 |       
|------------------------------------------------------------------------------------- |  | ------------------------------- | ------
|
|Revenues                                                                              |  | $                               | 30,807
|Cost of services and operating expenses                                               |  |                                 | 15,584
|Selling, general and administrative                                                   |  |                                 | 8,014 
|Depreciation and amortization                                                         |  |                                 | 5,257 
|                                                                                      |  |                                 |       
|Operating income (loss)                                                               |  |                                 | 1,952 
|Other (expense) income                                                                |  |                                 | (1,170
|Interest expense, net                                                                 |  |                                 | (356  
|Income taxes                                                                          |  |                                 | (1,012
|                                                                                      |  |                                 |       
|Net income (loss)                                                                     |  | $                               | (586  
|                                                                                      |  |                                 |       
|Capital expenditures                                                                  |  | $                               | 3,117 
|                                                                                      |  |                                 |       
|Equity in income (losses) of and write-down of investment in unconsolidated investees |  | $                               | (389  
|                                                                                      |  |                                 |       

|                                                                                      |  | Nine months ended June 30, 2002 |        
|------------------------------------------------------------------------------------- |  | ------------------------------- | -------
|
|Revenues                                                                              |  | $                               | 70,667 
|Cost of services and operating expenses                                               |  |                                 | 35,796 
|Selling, general and administrative                                                   |  |                                 | 16,890 
|Depreciation and amortization                                                         |  |                                 | 17,108 
|Asset impairment charge                                                               |  |                                 | 440    
|                                                                                      |  |                                 |        
|Operating income (loss)                                                               |  |                                 | 433    
|Other (expense) income                                                                |  |                                 | (69    
|Interest expense, net                                                                 |  |                                 | (1,929 
|Income taxes                                                                          |  |                                 | (1,913 
|                                                                                      |  |                                 |        
|Net income (loss)                                                                     |  | $                               | (3,478 
|                                                                                      |  |                                 |        
|Capital expenditures                                                                  |  | $                               | 3,381  
|                                                                                      |  |                                 |        
|Equity in income (losses) of and write-down of investment in unconsolidated investees |  | $                               | (28,851
|                                                                                      |  |                                 |        

In the three and nine months ended September 30, 2002, a gain of $0.5 million and $1.0 million, respectively, was realized representing
recovery of an equipment payment guarantee, arising from loan repayments made by a business venture during 2003. During 1999, the Company had recorded an impairment charge of $4.3 million
relating to the guarantee of this loan. This guarantee has been cancelled as a result of the sales of the related business venture (See Note 6).

24

---



8.    Long-term Debt



In connection with the acquisition of PLD Telekom, the Company issued $210.6 million in aggregate principal amount at maturity of 101/2%
senior discount notes due 2007 (the "Senior Discount Notes") to the holders of certain PLD notes.

The
terms of the Senior Discount Notes are set forth in an Indenture, dated as of September 30, 1999, between the Company and U.S. Bank Trust National Association as trustee. The
Senior Discount Notes will mature on September 30, 2007. The Senior Discount Notes were issued at a discount to their aggregate principal amount at maturity and accreted in value until
March 30, 2002 at the rate of 101/2% per year, compounded semi-annually to an aggregate principal amount at maturity of $210.6 million. Holders of the Senior
Discount Notes are due interest in cash at the rate of 101/2% per year, payable semi-annually.

The
indenture for the Senior Discount Notes limits the ability of the Company and certain of its subsidiaries to, among other things, incur additional indebtedness or issue capital stock
or preferred stock, pay dividends on, or repurchase or redeem their capital stock or subordinated obligations, invest in and sell assets and subsidiary stock, engage in transactions with affiliates or
incur additional liens. The indenture for the Senior Discount Notes also limits the ability of the Company to engage in consolidations, mergers and transfers of substantially all of its assets and
contains limitations and restrictions on distributions from its subsidiaries.

On
April 24, 2003, the Company completed an exchange with Adamant of its ownership interest in certain of its business units in Russia for approximately $58.6 million, face
value of the Senior Discount Notes held by Adamant, $5.0 million in cash and a release of its $3.5 million obligation to pay interest
accrued on the Senior Discount Notes being exchanged (see Note 3, "Discontinued Business Components").

9.    Stockholders' Equity

Preferred Stock

There are 70.0 million authorized shares of 71/4% cumulative convertible preferred stock with a liquidation preference of $50.00 per share,
of which 4.1 million shares were outstanding as of September 30, 2003 and December 31, 2002.

Dividends
on the preferred stock are cumulative from the date of issuance and payable quarterly, in arrears. The Company may make any payments due on the preferred stock, including
dividend payments and redemptions (i) in cash; (ii) issuance of the Company's common stock or (iii) through a combination thereof. The dividend requirement for the twelve months
ending September 30, 2004 will be $18.5 million, including the effects of compounding and assuming there are no payments of the dividends.

Through
March 15, 2001, the Company paid its quarterly dividends in cash. The Company has elected not to declare a dividend for any quarterly dividend periods ending after
June 15, 2001. As of September 30, 2003, total dividends in arrears are $41.4 million. Holders of the preferred stock have the right to elect two new directors to the Company's
Board of Directors. A holder of the Company's preferred stock has recently inquired about the appointment of preferred stock designees to the Company's Board of Directors and the Company is in the
process of responding to that inquiry.

25

---

10.    Earnings (Loss) Per Share of Common Stock

Basic earnings per common share ("EPS") are computed by dividing income available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The
weighted average number of common shares outstanding for computing basic and diluted EPS was 94.0 million for each of the periods ended
September 30, 2003 and 2002. For the periods ended September 30, 2003 and 2002, 21.9 million and 23.8 million shares, respectively, attributable to the exercise of
outstanding options, warrants and convertible preferred stock were excluded from the calculation of diluted EPS because the effect was antidilutive.

11.    Business Segment Data

The Company operations provide the following services: (i) fixed telephony; (ii) wireless telephony and (iii) cable television.

The
Company evaluates the performance of its operating segments based on earnings before interest, taxes, depreciation, and amortization. The segment information is based on operating
income (loss), which includes depreciation and amortization. Equity in income (losses) of unconsolidated investees reflects elimination of intercompany interest expense.

The
Company's segment information is set forth as of and for the three and nine months ended September 30, 2003, and 2002 in the following tables (in thousands):

Three Months Ended September 30, 2003

|                                                                                                               |  | Fixed
Telephony |        | Wireless Telephony |   | Cable Television |  | Corporate and Eliminations |      | Consolidated |  
|-------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ------------------ | - | ---------------- |  | -------------------------- | ---- | ------------ | -
|Revenues                                                                                                       |  | $               | 18,015 |                    | $ |                 |  | $                          | 618  |              | $
|Cost of services and operating expenses                                                                        |  |                 | 6,246  |                    |   |                 |  |                            | 8    |              |  
|Selling, general and administrative                                                                            |  |                 | 3,764  |                    |   |                 |  |                            | 380  |              |  
|Depreciation and amortization                                                                                  |  |                 | 3,235  |                    |   |                 |  |                            | 223  |              |  
|                                                                                                               |  |                 |        |                    |   |                  |  |                            |      |              |  
|Operating income (loss)                                                                                        |  | $               | 4,770  |                    | $ |                 |  | $                          | 7    |              | $
|                                                                                                               |  |                 |        |                    |   |                  |  |                            |      |              |  
|Equity in income (losses) of unconsolidated investees and write-down of investment in unconsolidated investees |  | $               | (74    | )                  | $ | 3,418            |  | $                          | (309 | )            |  
|                                                                                                               |  |                 |        |                    |   |                  |  |                            |      |              |  

26

---

Three Months Ended September 30, 2002

|                                                                                                               |  | Fixed
Telephony |         | Wireless Telephony |   | Cable Television |  | Corporate and Eliminations |        | Consolidated |  
|-------------------------------------------------------------------------------------------------------------- |  | --------------- | ------- | ------------------ | - | ---------------- |  | -------------------------- | ------ | ------------ | -
|Revenues                                                                                                       |  | $               | 15,353  |                    | $ |                 |  | $                          | 499    |              | $
|Cost of services and operating expenses                                                                        |  |                 | 3,977   |                    |   |                 |  |                            | 46     |              |  
|Selling, general and administrative                                                                            |  |                 | 3,885   |                    |   |                 |  |                            | 491    |              |  
|Depreciation and amortization                                                                                  |  |                 | 2,923   |                    |   |                 |  |                            | 351    |              |  
|Asset impairment charges                                                                                       |  |                 |        |                    |   |                 |  |                            | 3,755  |              |  
|                                                                                                               |  |                 |         |                    |   |                  |  |                            |        |              |  
|Operating income (loss)                                                                                        |  | $               | 4,568   |                    | $ |                 |  | $                          | (4,144 | )            | $
|                                                                                                               |  |                 |         |                    |   |                  |  |                            |        |              |  
|Equity in income (losses) of unconsolidated investees and write-down of investment in unconsolidated investees |  | $               | (26,163 | )                  | $ | 1,757            |  | $                          | (271   | )            |  
|                                                                                                               |  |                 |         |                    |   |                  |  |                            |        |              |  

Nine Months Ended September 30, 2003

|                                                                                                               |  | Fixed
Telephony |        | Wireless Telephony |   | Cable Television |  | Corporate and Eliminations |       | Consolidated |  
|-------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ------------------ | - | ---------------- |  | -------------------------- | ----- | ------------ | -
|Revenues                                                                                                       |  | $               | 51,147 |                    | $ |                 |  | $                          | 1,984 |              | $
|Cost of services and operating expenses                                                                        |  |                 | 16,988 |                    |   |                 |  |                            | 46    |              |  
|Selling, general and administrative                                                                            |  |                 | 10,692 |                    |   |                 |  |                            | 1,313 |              |  
|Depreciation and amortization                                                                                  |  |                 | 9,798  |                    |   |                 |  |                            | 454   |              |  
|                                                                                                               |  |                 |        |                    |   |                  |  |                            |       |              |  
|Operating income (loss)                                                                                        |  | $               | 13,669 |                    | $ |                 |  | $                          | 171   |              | $
|                                                                                                               |  |                 |        |                    |   |                  |  |                            |       |              |  
|Equity in income (losses) of unconsolidated investees and write-down of investment in unconsolidated investees |  | $               | (389   | )                  | $ | 8,651            |  | $                          | 592   |              |  
|                                                                                                               |  |                 |        |                    |   |                  |  |                            |       |              |  

27

---

Nine Months Ended September 30, 2002

|                                                                                                             |  | Fixed
Telephony |         | Wireless Telephony |   | Cable Television |  | Corporate and Eliminations |        | Consolidated |  
|------------------------------------------------------------------------------------------------------------ |  | --------------- | ------- | ------------------ | - | ---------------- |  | -------------------------- | ------ | ------------ | -
|Revenues                                                                                                     |  | $               | 46,171  |                    | $ |                 |  | $                          | 1,685  |              | $
|Cost of services and operating expenses                                                                      |  |                 | 13,031  |                    |   |                 |  |                            | 142    |              |  
|Selling, general and administrative                                                                          |  |                 | 12,649  |                    |   |                 |  |                            | 1,345  |              |  
|Depreciation and amortization                                                                                |  |                 | 8,992   |                    |   |                 |  |                            | 1,022  |              |  
|Asset impairment charges                                                                                     |  |                 |        |                    |   |                 |  |                            | 3,755  |              |  
|                                                                                                             |  |                 |         |                    |   |                  |  |                            |        |              |  
|Operating income (loss)                                                                                      |  | $               | 11,499  |                    | $ |                 |  | $                          | (4,579 | )            | $
|                                                                                                             |  |                 |         |                    |   |                  |  |                            |        |              |  
|Equity in income (losses) of unconsolidated investees and write-down of investment in consolidated investees |  | $               | (28,851 | )                  | $ | 6,267            |  | $                          | 859    |              |  
|                                                                                                             |  |                 |         |                    |   |                  |  |                            |        |              |  

Information
about the Company's consolidated operating subsidiaries by geographic location for the nine months ended September 30, 2003 and 2002 and as of September 30,
2003 and December 31, 2002, is as follows (in thousands):

|        |  | Revenues |        | Assets
|------- |  | -------- | ------ | ------
|
|Russia  |  | $        | 51,147 |       
|Georgia |  |          | 1,984  |       
|        |  |          |        |       
|        |  | $        | 53,131 |       
|        |  |          |        |       

Investments
in and advances to business ventures and goodwill include amounts maintained at the corporate headquarters in the United States. Such amounts are relative to the Company's
operations in Russia. In addition, the Company has cash and nominal fixed assets at its corporate headquarters in the United States.

12.    Other Consolidated Condensed Financial Statement Information

Accounts Receivable

The total allowance for doubtful accounts at September 30, 2003 and December 31, 2002 was $2.3 million and $2.0 million, respectively.

Interest Expense

Interest expense includes accretion of debt discount of $5.3 million for the nine months ended September 30, 2002.

28

---

Intangible Assets

Intangible assets at September 30, 2003 and December 31, 2002 consist of the following (in thousands):

|                                       |  | 2003 |        | 2002
|-------------------------------------- |  | ---- | ------ | ----
|
|Licenses                               |  | $    | 33,639 |     
|Broadcast rights and other intangibles |  |      | 3,931  |     
|                                       |  |      |        |     
|                                       |  | $    | 37,570 |     
|                                       |  |      |        |     

Estimated
amortization expense for the years ended December 31 is as follows (in thousands):

2004

$
6,7192005

$
7522006

$
564Thereafter





Accrued Expenses

Accrued expenses at September 30, 2003 and December 31, 2002 consist of the following (in thousands):

September 30,
2003

December 31,
2002Accrued professional fees

$
3,796

$
4,852Self insurance reserves


3,641


4,357Deferred revenue


3,304


2,690Accrued pension and personnel costs


3,050


4,402Accrued taxes


1,371


2,939Accrued interest


152


5,681Other accrued expenses


5,079


4,697$
20,393

$
29,618


Other Long-term Liabilities

Other long-term liabilities at September 30, 2003 and December 31, 2002 consist of the following (in thousands):

September 30,
2003

December 31,
2002Pensions

$
6,035

$
6,485Deferred revenue


1,438


1,713Other long-term liabilities


196


594$
7,669

$
8,792


29

---



Supplemental Disclosure of Cash Flow Information

Supplemental disclosure of cash paid for the nine months ended September 30, 2003 and 2002 (in thousands):

2003

2002Interest

$
19,889

$
Income taxes

$
4,585

$
6,411


13.    Commitments

The Company maintains certain benefit pension plans for former employees of the Company and its subsidiaries (the "Pension Plans"). During 2002, actual asset
returns for the Company's plans were adversely affected by continued deterioration in the equity markets. For the year ended December 31, 2002, the asset returns on the Pension Plans were
negative. During the same time, corporate bond
yields, which are used in determining the discount rate for future pension obligations, continued to decline. The negative asset returns and declining discount rates unfavorably affected the Company's
year-end funded status of these Pension Plans. However, additional contributions, which are expected to be $0.6 million in 2003, will favorably impact the funded status of these
Pension Plans. As of December 31, 2002, the projected benefit obligations for these Pension Plans was $21.9 million based on the most recent actuarial analysis. As of
September 30, 2003 and December 31, 2002, the assets for these Pension Plans were approximately $13.4 million and $12.7 million, respectively.

14.    Contingencies

Risks Associated with the Company's Investments

The ability of the Company, its business ventures and its subsidiaries to establish and maintain profitable operations is subject to, among other things,
significant political, economic and social risks inherent in doing business in Russia and the Republic of Georgia. These include matters arising out of government policies, economic conditions,
imposition of or changes in government regulations or policies, imposition of or changes to taxes or other similar charges by government bodies, exchange rate fluctuations and controls, civil
disturbances, deprivation or unenforceability of contractual rights, and taking of property without fair compensation.

Recent
events in the Republic of Georgia arising from widespread discontent over prior public elections, including the premature resignation of President Eduard Shevardnadze and the
recent election of Mikhail Saakashvili, have significantly increased the level of political uncertainty in that country. This condition, which is expected to extend into the foreseeable future,
increases the level of economic and legal risks that the Company faces with respect to its operations in Georgia. In addition to those risks previously reported in the Company's Form 10-K/A for
the period ending December 31, 2002, present conditions in Georgia significantly increase the possibility of general economic distress, civil unrest, terrorism and a collapse of consumer
confidence in Georgia, each of which could have a material adverse effect on the Company's operations in that country.

The
Georgian Tax Inspectorate has recently performed a review of certain interconnect arrangements that Magticom has with other telecommunications businesses within the Republic of

30

---

Georgia
to determine whether Magticom has complied with Georgian tax regulations. In addition, at the request of the Prosecutor General's Office of the Republic of Georgia, the Center for Expertise
and Special Inquiries of the Ministry of Justice of Georgia (the "Representatives of the New Georgian Government") has recently begun an additional review of Magticom's interconnect arrangements to
determine whether Magticom has complied with Georgian tax regulations. The Prosecutor General has publicly stated that Magticom will not be the only telecommunications business in the Republic of
Georgia whose interconnect arrangements will be reviewed for compliance with Georgian tax regulations. It is possible that the Representatives of the New Georgian Government could interpret Georgian
tax regulations differently than the previous Georgian government and assess additional taxes (including VAT, revenue based and other taxes), penalties and/or interest charges on Magticom going back
to the inception of Magticom. It is also possible that the Representatives of the New Georgian Government could assert that Magticom intentionally violated Georgian tax regulations, in which event,
criminal charges could be brought against the senior executives of Magticom.

On
February 20, 2004, Dr. George Jokhtaberidze, co-founder and majority owner of Magticom and son-in-law of former Georgian president
Shevardnadze, was detained in the Republic of Georgia without any charges having been filed against him. As reported by various media sources, Dr. Jokhtaberidze is being held in connection with
continuing investigation of various tax-related matters.

The
Company is not currently in a position to predict the outcome of the reviews of Magticom's interconnect arrangements, the potential for charges to be brought against Magticom and/or
its senior executives and the current actions taken against Dr. George Jokhtaberidze, each as described above, or the extent to which the outcome of any of the foregoing could adversely affect
the Company's carrying value of its investment in Magticom, its financial condition, its expected cash flows from Magticom and/or its results of operations, if at all.

Escrowed Severance

As a condition of the settlement for the disposal of Snapper's assets and the termination of its employees, the Company was required to escrow monies owed to
former employees under severance arrangements. Such amounts outstanding totaled $1.2 million and $2.3 million as of September 30, 2003 and December 31, 2002, respectively.

Employee Matters

Under the terms of the key employee retention programs, the Company agreed to pay incremental termination benefits to employees in exchange for their agreement to
remain employed through a specified termination date. Generally, the Company paid a portion of the termination benefits upon reaching agreement with the affected employees with the remainder due
within 30 days of separation,

31

---

which
is at various dates through May 31, 2004. Following is a summary of the total termination benefits expected to be incurred in the nine months ended September 30, 2003 (in
thousands):

|                        |  | Total expected
to be incurred |       | Amount incurred in
nine months ended
September 30, 2003 |   | Amount paid in
nine months ended
September 30, 2003 |  | Accrued at
September 30, 2003
|----------------------- |  | ----------------------------- | ----- | ------------------------------------------------------- | - | --------------------------------------------------- |  | -----------------------------
|Continuing Businesses   |  | $                             | 540   |                                                         | $ | 178                                                 |  | $                            
|Corporate               |  |                               | 1,071 |                                                         |   | 965                                                 |  |                              
|Discontinued Components |  |                               | 1,826 |                                                         |   | 1,525                                               |  |                              
|                        |  |                               |       |                                                         |   |                                                     |  |                              
|Total                   |  | $                             | 3,437 |                                                         | $ | 2,668                                               |  | $                            
|                        |  |                               |       |                                                         |   |                                                     |  |                              

Litigation

Mr. James Campbell filed a complaint in the Circuit Court of Walker County, Alabama against Turtle Shell, Inc., formerly known as
Snapper, Inc. (a wholly owned subsidiary of the Company) for damages related to injuries allegedly sustained by him while operating a Snapper lawnmower. Subsequent to such date, the Company
disposed of all assets and most liabilities of Snapper, Inc. However, the Company retained certain liabilities, including any obligations that may arise out of this litigation.
Mr. Campbell expired on July 14, 2003. In light of Mr. Campbell's death, his complaint has been amended to include a wrongful death claim and a claim of damages for any pain and
suffering incurred by Mr. Campbell from the time of injury until death. Mr. Campbell's estate has been substituted as the plaintiff in this action. Discovery is ongoing in this case. The
Company is not currently in a position to predict the outcome of any such proceedings, or the extent to which they could adversely affect the Company's financial condition and results of operations.
However, the Company has insurance for any claims in excess of $3.0 million.

A
complaint was filed against the Company in the Court of Chancery of the State of Delaware. In the complaint the Mr. McLaughlin, the plaintiff, is seeking to enforce his rights
as a shareholder of the Company to inspect and copy certain books and records of the Company. The Company believes that the request made by the plaintiff is overly broad and lacks proper purpose. The
Company is preparing to defend its position in court. No trial has been scheduled in this case. The Company is not in a position to predict the outcome of any such proceedings, or the extent to which
they could adversely affect the Company's financial condition and results of operations.

The
Company is involved in other various legal and regulatory proceedings. While the results of any litigation or regulatory issue contain an element of uncertainty, management believes
that the outcome of any known, pending or threatened legal proceedings will not have a material effect on the Company's consolidated financial position and results of operations.

Georgian Matters

The Company has recently received letters from, and corresponded with, two Georgian individuals involved in the initial formation, approximately eight to ten
years ago, of certain of the Company's business ventures in the Republic of Georgia. These individuals allege that the Company has not fully complied with its obligations to them under certain
contracts. In addition, the individuals have alleged that Company personnel may have violated the Foreign Corrupt Practices Act and possibly engaged in

32

---

other
improper or illegal conduct. However, the individuals have so far refused to specify details of the alleged violations and have provided no evidence in support of the allegations that they have
made.

The
Company had entered into contracts with these Georgian individuals. The contract with one of these individuals entitles him to 5% of any dividends the Company receives from Telecom
Georgia. The contract with the other individual entitles him, assuming certain conditions were satisfied, to up to a 1% portion of the Company's equity interest in certain of the Company's business
ventures in the Republic of Georgia, which the Company currently believes could only include Telecom Georgia, Ayety TV and Paging One (a now defunct paging company).

The
Company believes it has fully performed its obligations to date under the aforementioned contracts and has so informed the individuals. The Company also believes that the fair value
of any continuing interest that these individuals may have in the Georgian businesses subject to the contracts is not material. Furthermore, nothing presented in the unsupported allegations of
improper or illegal conduct of Company personnel has prompted the Company to amend or alter the report that it made to the United States Justice Department and the Securities and Exchange Commission
in the first quarter of 2003 regarding possible violations of foreign and United States laws, including the FCPA. As a matter of prudence and to ensure the claims of these Georgian individuals are
properly considered, the Company's Board of Directors has authorized the Company's outside counsel to conduct an independent inquiry into both the Company's obligations under the contracts referred to
above and the allegations of possible improper or illegal conduct of Company personnel. The Company is not in a position to predict the outcome of this inquiry. However, due to the relatively low
current fair value of the businesses subject to contracts with these Georgian individuals and in view of the unspecific and unsupported nature of the individuals' allegations, the Company believes
that the inquiry will not result in any material adverse effect on the Company's business, financial condition or results of operations.

Report to the Pension Benefit Guaranty Corporation

The Company and a subsidiary maintain tax-qualified pension plans that are subject to regulation by the Pension Benefit Guaranty Corporation ("PBGC").
In June 2003, the Company notified the PBGC (i) that the Company may have historically failed to timely satisfy certain minimum funding requirements with respect to one plan;
(ii) that the sale of corporate assets by a subsidiary of the Company may have triggered certain PBGC reporting, bonding and/or escrow requirements with respect to a second plan;
(iii) that the Company had recently added extra contributions to one plan; and (iv) that the Company believes that there are no further corrective actions required with respect to either
plan. The PBGC has not formally responded to the June 2003 notification but it may seek late reporting penalties and/or other corrective actions, the cost of which could be material to the
Company and/or its subsidiary.

15.    Related Party Transactions

The Company entered into a Consulting Services Agreement with Metromedia Company for the provision by Metromedia Company to the Company of certain consulting
services on an hourly basis as requested by the Company. The services provided by Metromedia Company pursuant to the agreement have been provided as requested by us and have been invoiced to us at
agreed-upon hourly rates.

33

---

There
is no minimum required level of services. The Company is also obligated to reimburse Metromedia Company for all of its out-of-pocket costs and expenses
incurred and advances paid by Metromedia Company in connection with the agreement.

Fees
charged by Metromedia Company to the Company under the agreement amounted to $0.1 million and $0.1 million for the three months ended September 30, 2003 and
2002, respectively, and $0.3 million and $0.8 million for the nine months ended September 30, 2003 and 2002, respectively.

16.    Subsequent Events

Relocation of Corporate Headquarters

As part of its continuing corporate restructuring initiatives, the Company has undertaken to move its corporate headquarters from New York City to Charlotte,
North Carolina. Accordingly, on September 8, 2003, the Company entered into a five-year lease agreement for space for the corporate headquarters in Charlotte. A much downsized,
accounting and financial reporting work force has been successfully recruited and in October the Charlotte office began operations. The Company closed its New York City office before the end of 2003.

Executive Employment Arrangements

Mr. Hauf, Mr. Pyle and Mr. Elledge entered into new employment agreements with the Company on October 5, 2003. In addition, the
Company entered into an employment agreement with Natasha Alexeeva, the Company's General Counsel on November 3, 2003. The agreement is such that Ms. Alexeeva's employment will terminate
effective May 31, 2004. Ms. Alexeeva is entitled to her salary ($190,000 per annum) through the termination date and will be paid six months severance. In addition, Ms. Alexeeva
will be entitled to a housing allowance and automobile allowance while in Charlotte, North Carolina, not to exceed $3,500 per month in total. To the extent that such allowances are considered taxable
to Ms. Alexeeva, the Company will pay the amount equal to federal, state and local taxes.

Baltic Communications Ltd. Transaction

On October 1, 2003, the Company sold its 100% ownership interest in the local and long distance telephony Russian company, Baltic
Communications Ltd. ("BCL") to the Company's majority owned subsidiary PeterStar for cash consideration of $1.0 million and PeterStar's assumption of BCL's
$2.8 million debt owed to the Company. The Company anticipates that BCL will continue to operate as a wholly owned subsidiary of PeterStar and that such merger should provide a reduction of
overall ongoing expenses by removal of duplicative network infrastructure costs. Since the merger is among entities under common control, it will be accounted for at historical cost.

Change in Par Value

On November 5, 2003, the shareholders of the Company approved of an amendment to the Company's Amended and Restated Certificate of Incorporation decreasing
the par of value of the common stock from $1.00 to $0.01 per share.

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Sun TV Transaction

On October 12, 2003, the Company sold its interest in the Moldovan cable television company Sun TV and Sun Constructie S.R.L., a Moldovan trading company
to Lekert Management, LTD, a company organized under the laws of British Virgin Islands for cash consideration of $2.1 million. Lekert Management, Ltd. is an affiliated company
with Neocom S.R.L., which owned 35% of Sun TV prior to the transaction. Such transaction resulted in the Company recording a loss on the disposition of
$0.4 million. The Company recorded a charge to earnings in the third quarter of 2003 in the amount of $0.4 million to reflect its investment in Sun TV and Sun Constructie at the lower of
cost or fair value less cost to sell. Such loss in included in the results of discontinued operations.

Sun
TV's fiscal year 2002 revenues were $2.2 million, with cost of services of $0.3 million and operating expenses of $1.3 million, which included
$0.3 million of depreciation and amortization. Sun TV's nine month revenues were $1.6 million, with cost of services of $0.3 million and operating expenses of $1.7 million,
which included $0.4 million of depreciation and amortization and a $0.4 million asset impairment charge in 2003. In addition, Sun TV had approximately 53,000 direct wire and wireless
subscribers as of September 30, 2003.

Teleplus Transaction

On November 21, 2003, the Company sold all of its interest in the St. Petersburg, Russia cable television company, Teleplus to a Russian company,
"Svyaz-Kapital" and AVT Systems Ltd., a company organized under the laws of Cayman Islands, for cash consideration of $0.9 million. The Company anticipates recognizing a gain of
$0.7 million on the disposition, which will be recorded in the three months ended December 31, 2003.

Teleplus'
fiscal year 2002 revenues were $0.4 million, with cost of services of $0.1 million and operating expenses of $0.8 million, which included
$0.3 million of depreciation and amortization. Teleplus' nine month revenues were $0.3 million, with cost of services of $0.1 million and operating expenses of
$0.6 million, which included $0.3 million of depreciation and amortization in 2003. In addition, Teleplus had approximately 7,000 direct wire line and wireless subscribers as of
September 30, 2003.

Preferred Dividend

During the fourth quarter of 2003, the Company's Board of Directors elected to not declare a dividend on its 71/4% cumulative convertible preferred
stock for the quarterly dividend period ended on December 15, 2003.

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Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations

Certain statements set forth below in this Form 10-Q constitute "Forward-looking Statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. See "Special Note Regarding Forward-Looking Statements" on page
61.

Liquidity and Capital Resources

The Company

Overview.The Company is a holding company; accordingly, it does not generate cash flows from
operations. As a result, the Company is dependent on repayments of principal and interest under its credit agreements with its business ventures and subsidiaries and on payment of fees for services
provided by the Company to certain of its business ventures, as well as on the earnings of its subsidiaries and equity investees and the distribution or other payment of these earnings to it to meet
its obligations, including making distributions to its stockholders. The Company's business ventures and subsidiaries are separate legal entities that have no obligation to pay any amounts the Company
owes to third parties. Furthermore, due to legal and contractual restrictions, a substantial portion of the cash balances in certain of the Company's business ventures and subsidiaries cannot be
readily accessed, if at all, for the Company's liquidity requirements.

Liquidity Issues

As part of its overall restructuring efforts, the Company terminated substantially all of its employees at its U.S. headquarters as well as certain European-based
business venture support personnel during the first quarter of 2003. These actions were taken to help alleviate liquidity problems that the Company had faced for an extended period of time. However,
the Company has recently entered into new
employment agreements with certain of these employees, including the Company's Chief Financial Officer, and has recruited accounting and finance personnel who work in Charlotte, North Carolina at the
Company's new corporate headquarters.

In
late third quarter, the Company began the process of relocating its corporate headquarters from New York City to Charlotte, North Carolina and closed its New York City office before
the end of 2003. The Company's decision to move its corporate headquarters operation from New York City was principally driven by our commitment to substantially reduce corporate overhead
expenditures. Upon completing this move, the Company will benefit from significant reductions in continuing office-related, personnel and professional service costs. Management anticipates that upon
the completion of the relocation of its corporate headquarters, that the accounting and finance personnel that are currently engaged and the workflow processes that are currently in place will enable
the Company to meet its financial reporting obligations in a more timely manner. However, due to the timing of departures of New York City based accounting and financial personnel and the hiring of
Charlotte based personnel, the Company has experienced some delays in preparation of financial statements and reports.

As
of September 30, 2003 and January 31, 2004, the Company had $24.1 million and $23.3 million, respectively, of unrestricted cash at its headquarters level.
The $24.1 million of cash at September 30, 2003 reflects cash held at headquarters subsequent to the Company's $8.0 million semi-annual interest payment, due on
September 30, 2003, on its Senior Discount Notes due 2007.

In
addition, as of September 30, 2003, the Company had $2.5 million of cash at the Company's consolidated business ventures. Furthermore, as of September 30, 2003,
the Company's unconsolidated business ventures had $2.3 million of cash.

The
Company projects that its current corporate cash reserves, anticipated cash proceeds of non-core business sales and anticipated continuing dividends from core operations
will be sufficient for

36

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the
Company to meet its future operating and debt service obligations on a timely basis. If the Company does not realize the cash proceeds it currently anticipates on further sale of its
non-core businesses and does not receive the amount of dividends from the core operations that it currently anticipates, the Company does not believe that it will be able to fund its
planned operating, investing and financing cash flows through September 30, 2004. Assuming no proceeds from further sale of non-core businesses nor dividends from core operations,
the Company projects that its cash flow and existing capital resources will permit it to pay the $8.0 million semi-annual interest payment due on March 30, 2004 on its Senior
Discount Notes.

During
2003, the Company engaged in discussions with representatives of holders of a substantial portion of the Company's 101/2% Senior Discount Notes due 2007 with a
current outstanding principal balance (fully accreted) of $152.0 million (the "Senior Discount Notes") concerning restructuring of the Senior Discount Notes. To date, no restructuring has been
agreed upon and further restructuring discussions with these substantial Senior Discount Note holders have been suspended. Opportunities to restructure the Company's balance sheet, including to
refinance the Senior Discount Notes and its preferred stock, which had an aggregate preference claim of $248.4 million as of September 30, 2003, are being pursued, but present Company
plans presume the continued service of the Senior Discount Notes debt on current terms and the continued deferral of the payment of preferred stock dividends. The Company cannot provide assurances at
this time that capital restructuring effort will be undertaken or, if undertaken, that such effort would produce a material improvement in short-run cash flows or equity valuations.

The
outstanding principal on the Senior Discount Notes becomes due in full on September 30, 2007. Failure on the part of the Company to make any required payment of interest on
the Senior Discount Notes would represent a default under the Senior Discount Notes. A default, if not waived, could result in acceleration of the Company's indebtedness, in which case the full amount
of the Senior Discount Notes would become immediately due and payable. If this occurs, the Company would not be able to repay the Senior Discount Notes and would likely not be able to borrow
sufficient funds to refinance them.

The
Company has sold several businesses, which have yielded proceeds in excess of carrying values. The Company continues to actively pursue the sale of remaining non-core
businesses to raise additional cash and has undertaken measures to maximize cash distributions from all of its business ventures. The Company believes these measures will succeed in providing
sufficient liquidity to meet cash demands for the coming twelve months and beyond. However, the Company cannot assure that it will be successful in selling any of its non-core businesses
or that these sales will raise sufficient cash to meet short-term liquidity requirements. The Company also is subject to legal and contractual restrictions, including those under the
indenture for the Senior Discount Notes, on its use of any cash proceeds from the sale of its assets or those of its business ventures or subsidiaries.

If
the Company is not able to satisfactorily address the liquidity issues described above, the Company may have to resort to certain other measures, including ultimately seeking the
protection afforded under the U.S. Bankruptcy Code. The Company cannot provide any assurance at this time that it will be successful in avoiding such measures. Additionally, the Company has a
stockholders deficit and has suffered recurring net operating cash deficiencies.

The
aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Senior Discount Notes

In connection with the acquisition of PLD Telekom, the Company issued $210.6 million in aggregate principal amount at maturity of its Senior Discount Notes
in exchange for PLD Telekom's

37

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then
outstanding senior discount notes and convertible subordinated notes. The Senior Discount Notes did not accrue cash interest before March 30, 2002. As of April 1, 2002, holders of
the Senior Discount Notes are due interest at the rate of 101/2% per year, payable semi-annually in cash. The Senior Discount Notes are general senior unsecured obligations
of the Company, rank senior in right of payment to all existing and future subordinated indebtedness of the Company, rank equal in right of payment to all existing and future senior indebtedness of
the Company and will be effectively subordinated to all existing and future secured indebtedness of the Company to the extent of the assets securing such indebtedness and to all existing and future
indebtedness of the Company's subsidiaries, whether or not secured.

The
Senior Discount Notes are redeemable at the sole option of the Company only at a redemption price equal to their principal amount plus accrued and unpaid interest, if any, up to but
excluding the date of redemption. Upon the occurrence of a change of control of the Company (as such term is defined in the indenture for the Senior Discount Notes (the "Indenture")), the holders of
the Senior Discount Notes will be entitled to require the Company to repurchase such holders' notes at a purchase price equal to 101% of the principal amount of such notes plus accrued and unpaid
interest to the date of repurchase. The Indenture for the Senior Discount Notes limits the ability of the Company and certain of its subsidiaries to, among other things, incur additional indebtedness
or issue capital stock or preferred stock, pay dividends on, and repurchase or redeem their capital stock or subordinated obligations, invest in and sell assets and subsidiary stock, engage in
transactions with affiliates and incur additional liens. The Indenture for the Senior Discount Notes also limits the ability of the Company to engage in consolidations, mergers and transfers of
substantially all of its assets and also contains limitations on restrictions on distributions from its subsidiaries.

Convertible Preferred Stock

The Company has outstanding 4.1 million shares of $1.00 par value, 71/4% cumulative convertible preferred stock.

Dividends
on the preferred stock are cumulative from the date of issuance and payable quarterly, in arrears. The Company may make any payments due on the preferred stock, including
dividend payments and redemptions (i) in cash; (ii) through issuance of the Company's common stock or (iii) through a combination thereof. The dividend requirement for the twelve
months ending September 30, 2004 will be $18.5 million, including the effects of compounding and assuming there are no payments of the dividends.

Through
March 15, 2001, the Company paid its quarterly dividends on the preferred stock in cash. The Company has elected not to declare dividend for any quarterly dividend periods
ending after June 15, 2001. As of September 30, 2003, total dividends in arrears were $41.4 million. Holders of the preferred stock have the right to elect two new directors to
the Company's Board of Directors. A holder of the Company's preferred stock has recently inquired about the appointment of the preferred stock designees to the Company's Board of Directors and the
Company is in the process of responding to that inquiry.

Business Venture Support and Corporate Overhead Costs

In the years ended December 31, 2002 and 2001, the Company expended $31.2 million, and $34.0 million, respectively on support of its
subsidiary business ventures and headquarters overheads. The Company provides business development, engineering, marketing and financial reporting services to its operating units through its
wholly-owned subsidiary Metromedia International Telecommunications, Inc. (MITI). The principal components of the Company's corporate overhead costs relate to personnel costs (salaries and
wages, other employee benefits and travel related costs),

38

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professional
fees (lawyers, accountants and bankers), consultants, facility related costs and other general and associated administrative costs (insurance and regulatory compliance costs).

The
Company currently anticipates that its 2003 business venture support and corporate overhead costs will range from approximately $25.0 million to $30.0 million. A
substantial portion of these costs were expended in fees for financial and legal advice, cost of severance, and other similar expenditures with respect to the Company's restructuring. As of
September 30, 2003, the Company's year-to-date business venture support and corporate overhead costs were $23.7 million. Although the Company has been working to
reduce its overhead costs, the Company believes that there is a limit to such reduction without losing ability to provide the appropriate level of management oversight. Management's decision to
relocate the corporate headquarters to Charlotte, North Carolina and terminate a number of corporate employees overseeing the core and non-core businesses should continue to assist
management in its ability to reduce overhead costs.

Commitments

The Company maintains certain benefit pension plans for former employees of the Company and its subsidiaries (the "Pension Plans"). During 2002, actual asset
returns for the Company's Pension Plans were adversely affected by continued deterioration in the equity markets. For the year ended December 31, 2002, the asset returns on the Pension Plans
were negative. During the same time,
corporate bond yields, which are used in determining the discount rate for future pension obligations, continued to decline. The negative asset returns and declining discount rates unfavorably
affected the Company's year-end funded status of these Pension Plans. However, additional contributions, which are expected to be $0.6 million in 2003, will favorably impact the
funded status of these Pension Plans. As of December 31, 2002, the projected benefit obligations for these Pension Plans was $21.9 million based on the most recent actuarial analysis. As
of September 30, 2003 and December 31, 2002, the assets for these Pension Plans were approximately $13.4 million and $12.7 million, respectively.

The
Company has entered into credit agreements with its business ventures and subsidiaries to provide up to $39.2 million in funding of which $3.0 million in funding
obligations remain at September 30, 2003. The Company's funding commitments are contingent on its approval of the respective business ventures' and subsidiaries' business plans. The reduction
in outstanding credit agreements and funding obligations since December 31, 2002 is principally due to the disposition of certain businesses during the nine months ended September 30,
2003. The principal reductions from such dispositions include credit lines of $20.2 million and $12.5 million with Kosmos TV and Baltcom TV, respectively. In addition, Magticom repaid
the outstanding balance on its credit line and the credit line totaling $18.9 million was terminated during 2003. Management expects that such funding obligations will continue to decline as a
result of planned dispositions of non-core assets.

Discussion of Changes in Financial Position

As a result of the Company's determination that certain businesses meet the criteria for classification as discontinued components as outlined in SFAS
No. 144 as of September 30, 2003 (see Note 3), the Company's consolidated condensed statements of cash flows for the current and previously reported periods reflect the cash flows
of such discontinued business components, including any cash received on such disposition, within the "cash provided by (used in) discontinued business components" line item. Accordingly, the
previously presented cash flows are no longer reflective of the cash flows from operations of core businesses.

For
example, in the Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission ("SEC"), the Company's
consolidated statements of cash flows presented $10.3 million of cash outflows within the "additions to property, plant and equipment" investing activity line item. As $2.9 million of
such cash flows were used to acquire property, plant and

39

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equipment
principally for cable television and radio businesses, which management has determined that such business meet the criteria for classification as discontinued components as outlined in SFAS
No. 144, these cash outflows have been restated in accordance with SFAS No. 144. As a result, the accompanying statement of cash flows for the nine months ended September 30,
2002, the $2.9 million of cash outflows were included within the "cash provided by (used in) discontinued components" line item.

Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002

Cash Flows from Operating Activities

Cash used in operating activities for the nine months ended September 30, 2003 was $22.9 million, an increase of $16.5 million from cash used
in operating activities from the same period in the prior year. Of the $16.5 million of unfavorable change in cash used in operating activities, the Company results from continuing operations
provided an improvement in cash flows of $62.8 million, which was fully offset by a $71.0 million unfavorable change in non-cash items and $8.3 million unfavorable
change in cash flows due to changes in operating assets and liabilities.

Non-cash
items decreased by $71.0 million in the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002. During the
nine months ended September 30, 2003 the Company recognized a gain on the retirement of debt of $24.6 million. The Company also realized a $30.4 million decrease in the equity in
income (losses) and write-down of investment in unconsolidated investees principally due to an impairment charge of $25.8 million recorded against the Company's investment in
Comstar during the nine months ended September 30, 2002. The remaining components include a decrease in the accretion of debt discount of $5.3 million, a decrease in asset impairment
charges of $3.9 million and a decrease in cumulative effect of change in accounting principle of $1.1 million.

Of
the $8.3 million unfavorable change in cash flows due to changes in operating assets and liabilities for the nine months ended September 30, 2003 as compared to the nine
months ended September 30, 2002, the Company experienced an unfavorable change in cash flows of $15.8 million attributable to accrued interest payable with the remaining
$9.2 million attributable to a favorable change in other operating assets and liabilities. The $15.8 million of unfavorable cash flows associated with accrued interest payable was due to
the fact that the Company did not distribute its $11.2 million September 30, 2002 semi-annual interest payment until October 2002 and the Company distributed its
September 2003 semi-annual interest payment on September 26, 2003.

Cash Flows from Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2003 amounted to $15.9 million as compared to $3.1 million for
the nine months ended September 30, 2002, a favorable change in cash flows of $12.8 million. The increase in cash provided by investing activities is principally due to
$10.0 million of additional cash in flows from business ventures and $4.5 million of incremental proceeds from the sale of businesses for the nine months ended September 30, 2003
as compared to the same period in 2002. The additional proceeds from ventures mainly relate to distributions from Magticom while the sale distributions are due to the dispositions of Baltcom TV for
$14.5 million and Tyumenruskom for $1.2 million during the nine months ended September 30, 2003. During the nine months ended September 30, 2002, proceeds from the
dispositions of OMCL/CAT, CIBBV/BELCEL and Alma TV were $0.1 million, $1.7 million and $9.4 million, respectively. The additional proceeds were partially offset by increased
incremental spending on property, plant and equipment, primarily at PeterStar for expansion and upgrades to the network infrastructure.

40

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Cash Flows from Financing Activities

Cash used in financing activities was $8.0 million for the nine months ended September 30, 2003 as compared to $1.8 million for the same
period in the prior year, an unfavorable change in cash flows of $6.1 million. The increase in use of cash for financing activities in 2003 was due to a $3.2 million increase in
dividends paid to the Company's minority shareholders in PeterStar and Magticom during the respective periods, cash borrowings on a line of credit at one of the Company's subsidiaries of
$2.3 million in 2002, as well as a $0.6 million increase in debt payments.

Cash Flows from Discontinued Business Components

Cash provided by discontinued business components was $15.1 million for the nine months ended September 30, 2003 as compared to a cash use by
discontinued business components of $1.7 million for the nine months ended September 30, 2002, a favorable change in cash flows of $16.8 million. The favorable change in cash
flows attributable to discontinued business components was due to cash receipts related to the final accounting of the Snapper transaction, cash proceeds from the sale of the Technocom business and
sales of certain radio businesses in connection with the Adamant transaction of $6.0 million, $4.5 million and $5.0 million, respectively. These cash flows were partially offset
by cash used to fund the operations of the remaining discontinued business components.

Subsequent Cash Flows

Subsequent to September 30, 2003, in addition to normal operating activities, the Company received a tax refund of $2.1 million and has received
$3.0 million for the disposition of Sun TV and Teleplus.

Results of Operations

Overview

The Company has operations in northwestern Russia and the Republic of Georgia. The Company provides the following services: (i) fixed telephony;
(ii) wireless telephony and (iii) cable television.

The
Company is presently in the process of an overall restructuring in which its interests in most cable television, radio and certain telephony businesses will be sold and a
substantially downsized supervisory staff will manage the remaining business ventures. This restructuring was prompted by and is intended to resolve the severe liquidity issues confronting the Company
at the beginning of 2002. This restructuring focuses on "core" telephony business operations that are currently self-financed and hold leading positions in their respective markets. These
core operations will be held and developed, with the expectation that their future dividend distributions will be sufficient to meet the Company's debt service and overhead requirements. All other
"non-core" operations will be sold; with the intention that sale proceeds will mitigate short-term liquidity concerns and provide capital for further core business development.

Segment Information

The following tables set forth operating results for the three and nine months ended September 30, 2003 and 2002, for the Company's business segments.

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Segment Information  Three months ended September 30, 2003

|                                                                                                                               |  | Fixed
Telephony |        | Wireless
Telephony |   | Cable
Television |  | Corporate,
Other and
Eliminations |       | Consolidated |  
|------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------ | ------------------ | - | ---------------- |  | --------------------------------- | ----- | ------------ | -
|Consolidated                                                                                                                   |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Revenues                                                                                                                       |  | $               | 18,015 |                    | $ |                 |  | $                                 | 618   |              | $
|Cost of services and operating expenses                                                                                        |  |                 | 6,246  |                    |   |                 |  |                                   | 8     |              |  
|Selling, general and administrative                                                                                            |  |                 | 3,764  |                    |   |                 |  |                                   | 380   |              |  
|Depreciation and amortization                                                                                                  |  |                 | 3,235  |                    |   |                 |  |                                   | 223   |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Operating income (loss)                                                                                                        |  | $               | 4,770  |                    | $ |                 |  | $                                 | 7     |              | $
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Unconsolidated Business Ventures                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Revenues                                                                                                                       |  | $               | 4,657  |                    | $ | 17,791           |  | $                                 | 2,931 |              |  
|Costs of services and operating expenses                                                                                       |  |                 | 2,976  |                    |   | 2,820            |  |                                   | 513   |              |  
|Selling, general and administrative                                                                                            |  |                 | 919    |                    |   | 2,497            |  |                                   | 1,604 |              |  
|Depreciation and amortization                                                                                                  |  |                 | 516    |                    |   | 3,547            |  |                                   | 516   |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Operating income                                                                                                               |  | $               | 246    |                    | $ | 8,927            |  | $                                 | 298   |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Net income                                                                                                                     |  | $               | 37     |                    | $ | 6,839            |  | $                                 | 483   |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Equity in income (losses) of and write-down of investment in unconsolidated investees (Note 1)                                 |  | $               | (74    | )                  | $ | 3,418            |  | $                                 | (309  | )            |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Interest expense, net                                                                                                          |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Gain on retirement of debt                                                                                                     |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Gain on disposition of businesses                                                                                              |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Foreign currency loss                                                                                                          |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Other income                                                                                                                   |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Income tax expense                                                                                                             |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Minority interest                                                                                                              |  |                 |        |                    |   |                  |  |                                   |       |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  
|Income from continuing operations before discontinued components and the cumulative effect of a change in accounting principle |  |                 |        |                    |   |                  |  |                                   |       |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |       |              |  

---

Note 1:
Equity in income (losses) of and write-down of investment in unconsolidated investees reflects elimination of intercompany interest expense.

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Segment Information  Three months ended September 30, 2002  (in thousands)

|                                                                                                                             |  | Fixed
Telephony |         | Wireless
Telephony |   | Cable
Television |  | Corporate,
Other and
Eliminations |        | Consolidated |  
|---------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------- | ------------------ | - | ---------------- |  | --------------------------------- | ------ | ------------ | -
|Consolidated                                                                                                                 |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Revenues                                                                                                                     |  | $               | 15,353  |                    | $ |                 |  | $                                 | 499    |              | $
|Cost of services and operating expenses                                                                                      |  |                 | 3,977   |                    |   |                 |  |                                   | 46     |              |  
|Selling, general and administrative                                                                                          |  |                 | 3,885   |                    |   |                 |  |                                   | 491    |              |  
|Depreciation and amortization                                                                                                |  |                 | 2,923   |                    |   |                 |  |                                   | 351    |              |  
|Asset impairment charges                                                                                                     |  |                 |        |                    |   |                 |  |                                   | 3,755  |              |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Operating income (loss)                                                                                                      |  | $               | 4,568   |                    | $ |                 |  | $                                 | (4,144 | )            | $
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Unconsolidated Business Ventures                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Revenues                                                                                                                     |  | $               | 22,591  |                    | $ | 12,343           |  | $                                 | 4,257  |              |  
|Costs of services and operating expenses                                                                                     |  |                 | 9,935   |                    |   | 1,936            |  |                                   | 875    |              |  
|Selling, general and administrative                                                                                          |  |                 | 5,861   |                    |   | 2,176            |  |                                   | 2,715  |              |  
|Depreciation and amortization                                                                                                |  |                 | 5,712   |                    |   | 3,587            |  |                                   | 1,266  |              |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Operating income (loss)                                                                                                      |  | $               | 1,083   |                    | $ | 4,644            |  | $                                 | (599   | )            |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Net income (loss)                                                                                                            |  | $               | 279     |                    | $ | 3,639            |  | $                                 | (602   | )            |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Equity in income (losses) of and write-down of investment in unconsolidated investees (Note 1)                               |  | $               | (26,163 | )                  | $ | 1,757            |  | $                                 | (271   | )            |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Interest expense, net                                                                                                        |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Gain on disposition of businesses                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Foreign currency loss                                                                                                        |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Other income                                                                                                                 |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Income tax expense                                                                                                           |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Minority interest                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Loss from continuing operations before discontinued components and the cumulative effect of a change in accounting principle |  |                 |         |                    |   |                  |  |                                   |        |              |  
|                                                                                                                             |  |                 |         |                    |   |                  |  |                                   |        |              |  

---

Note 1:
Equity in income (losses) of and write-down of investment in unconsolidated investees reflects elimination of intercompany interest expense.

43

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Segment Information  Nine months ended September 30, 2003  (in thousands)

|                                                                                                                               |  | Fixed
Telephony |        | Wireless
Telephony |   | Cable
Television |  | Corporate,
Other and
Eliminations |        | Consolidated |  
|------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------ | ------------------ | - | ---------------- |  | --------------------------------- | ------ | ------------ | -
|Consolidated                                                                                                                   |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Revenues                                                                                                                       |  | $               | 51,147 |                    | $ |                 |  | $                                 | 1,984  |              | $
|Cost of services and operating expenses                                                                                        |  |                 | 16,988 |                    |   |                 |  |                                   | 46     |              |  
|Selling, general and administrative                                                                                            |  |                 | 10,692 |                    |   |                 |  |                                   | 1,313  |              |  
|Depreciation and amortization                                                                                                  |  |                 | 9,798  |                    |   |                 |  |                                   | 454    |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Operating income (loss)                                                                                                        |  | $               | 13,669 |                    | $ |                 |  | $                                 | 171    |              | $
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Unconsolidated Business Ventures                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Revenues                                                                                                                       |  | $               | 30,807 |                    | $ | 49,341           |  | $                                 | 12,417 |              |  
|Costs of services and operating expenses                                                                                       |  |                 | 15,584 |                    |   | 7,926            |  |                                   | 2,513  |              |  
|Selling, general and administrative                                                                                            |  |                 | 8,014  |                    |   | 5,965            |  |                                   | 7,184  |              |  
|Depreciation and amortization                                                                                                  |  |                 | 5,257  |                    |   | 11,177           |  |                                   | 3,267  |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Operating income (loss)                                                                                                        |  | $               | 1,952  |                    | $ | 24,273           |  | $                                 | (547   | )            |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Net (loss) income                                                                                                              |  | $               | (586   | )                  | $ | 17,392           |  | $                                 | 632    |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Equity in income (losses) of and write-down of investment in unconsolidated investees (Note 1)                                 |  | $               | (389   | )                  | $ | 8,651            |  | $                                 | 592    |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Interest expense, net                                                                                                          |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Gain on retirement of debt                                                                                                     |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Gain on disposition of businesses                                                                                              |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Foreign currency loss                                                                                                          |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Other expense                                                                                                                  |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Income tax expense                                                                                                             |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Minority interest                                                                                                              |  |                 |        |                    |   |                  |  |                                   |        |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  
|Income from continuing operations before discontinued components and the cumulative effect of a change in accounting principle |  |                 |        |                    |   |                  |  |                                   |        |              |  
|                                                                                                                               |  |                 |        |                    |   |                  |  |                                   |        |              |  

---

Note 1: Equity in income (losses) of and write-down of investment in unconsolidated investees reflects elimination of intercompany interest
expense.

44

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Segment Information  Nine months ended September 30, 2002  (in thousands)

|                                                                                                                            |  | Fixed
Telephony |         | Wireless
Telephony |   | Cable
Television |  | Corporate,
Other and
Eliminations |        | Consolidated |  
|--------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------- | ------------------ | - | ---------------- |  | --------------------------------- | ------ | ------------ | -
|Consolidated                                                                                                                |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Revenues                                                                                                                    |  | $               | 46,171  |                    | $ |                 |  | $                                 | 1,685  |              | $
|Cost of sales and operating expenses                                                                                        |  |                 | 13,031  |                    |   |                 |  |                                   | 142    |              |  
|Selling, general and administrative                                                                                         |  |                 | 12,649  |                    |   |                 |  |                                   | 1,345  |              |  
|Depreciation and amortization                                                                                               |  |                 | 8,992   |                    |   |                 |  |                                   | 1,022  |              |  
|Asset impairment charges                                                                                                    |  |                 |        |                    |   |                 |  |                                   | 3,755  |              |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Operating income (loss)                                                                                                     |  | $               | 11,499  |                    | $ |                 |  | $                                 | (4,579 | )            | $
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Unconsolidated Business Ventures                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Revenues                                                                                                                    |  | $               | 70,667  |                    | $ | 38,742           |  | $                                 | 17,044 |              |  
|Costs of sales and operating expenses                                                                                       |  |                 | 35,796  |                    |   | 6,049            |  |                                   | 3,517  |              |  
|Selling, general and administrative                                                                                         |  |                 | 16,890  |                    |   | 7,104            |  |                                   | 9,008  |              |  
|Depreciation and amortization                                                                                               |  |                 | 17,108  |                    |   | 11,257           |  |                                   | 5,170  |              |  
|Asset impairment charge                                                                                                     |  |                 | 440     |                    |   |                 |  |                                   |       |              |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Operating income (loss)                                                                                                     |  | $               | 433     |                    | $ | 14,332           |  | $                                 | (651   | )            |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Net (loss) income                                                                                                           |  | $               | (3,478  | )                  | $ | 10,976           |  | $                                 | (1,620 | )            |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Equity in income (losses) of and write-down of investment in unconsolidated investees (Note 1)                              |  | $               | (28,851 | )                  | $ | 6,267            |  | $                                 | 859    |              |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Interest expense, net                                                                                                       |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Gain on disposition of businesses                                                                                           |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Foreign currency loss                                                                                                       |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Other income                                                                                                                |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Income tax expense                                                                                                          |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Minority interest                                                                                                           |  |                 |         |                    |   |                  |  |                                   |        |              |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  
|Loss from continuing operations before discontinued components and the cumulative effects of change in accounting principle |  |                 |         |                    |   |                  |  |                                   |        |              |  
|                                                                                                                            |  |                 |         |                    |   |                  |  |                                   |        |              |  

---

Note 1: Equity in income (losses) of and write-down of investment in unconsolidated investees reflects elimination of intercompany interest
expense.

45

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CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2002

Fixed Telephony

Consolidated fixed telephony is comprised of PeterStar, the leading competitive local exchange carrier in St. Petersburg, Russia and Baltic
Communications Ltd. ("BCL"), a local and long distance telephony operator in St. Petersburg, Russia.

Revenues.Fixed telephony revenues increased by $2.7 million (18%) to $18.0 million for the three months ended
September 30, 2003 as compared to $15.3 million for the three months ended September 30, 2002. This revenue growth is primarily attributable to PeterStar.

Revenues
at PeterStar increased by $2.6 million (18%) to $16.4 million for the three months ended September 30, 2003 as compared to $13.9 million for the
three months ended September 30, 2002. This growth in revenues is driven by a $1.2 million growth in carrier revenues, $0.9 million increase in data and internet services and a
$0.5 million increase in equipment and other telecom revenues.

The
increase in carrier revenues is partially due to favorable pricing on transit based billings which are not expected to continue on a long-term basis. The increase in data
and internet services is principally due to the growing demand for leased lines and dial up services within the St. Petersburg market. In addition, management believes that PeterStar has increased its
share of the market of internet services. Management expects that it will continue to experience revenue growth for its data and Internet product portfolio, however, the rate of growth may decline due
to competitive pressures. The increase in equipment and other revenues is principally due to PeterStar's efforts to market its high speed digital fiber network, in lieu of traditional copper telephone
infrastructure, to its business customers which has resulted in customers purchasing telephony equipment (digital PBX's) directly from PeterStar. These marketing efforts have also resulted in 66% of
new connections, as of September 30, 2003, utilizing the PeterStar digital fiber network versus 56% of new connections, as of March 31, 2003. Management anticipates that such connections
will continue to remain at such proportionate levels. As a result, PeterStar has effectively increased its customer base for other high band-width intensive products.

Revenues
at BCL increased by $0.1 million (10%) to $1.6 million for the three months ended September 30, 2003 as compared to $1.5 million for the three months
ended September 30, 2002. This growth is the result of increased revenue from data services.

Gross margin.Fixed telephony gross margin increased by $0.4 million (4%) to $11.8 million for the three months
ended September 30, 2003 as compared to $11.4 million for the three months ended September 30, 2002. Gross margin as a percentage of revenues was 65% for the three months ended
September 30, 2003 as compared to 74% for the three months ended September 30, 2002.

PeterStar's
gross margin increased by $0.4 million (8%) principally due to revenue growth offset by lower margins on long distance traffic. PeterStar's gross margin percentage
decreased from 76% in 2002 to 66% in 2003. The decrease in gross margin percentage is primarily due to lower margins on long distance traffic, which is traditionally low margin. Even though long
distance traffic volume is increasing, the margin percentages are contracting due to competitive pressures on tariffs charged to customers. Furthermore, PeterStar's interconnection costs have also
increased since September 2002, which is another factor that has caused PeterStar's gross margin percentage to decline. As discussed previously, PeterStar has had success in marketing the use
of its digital fiber network to its customer base, which management expects will slow the erosion of its gross margin as PeterStar should be able to reduce third-party access fees associated with its
historical reliance upon leased copper line telephone infrastructure.

46

---

BCL's
gross margin was unchanged at $0.9 million for the three months ended September 30, 2003 and 2002.

Selling, general and administrative.Fixed telephony selling, general and administrative expenses decreased by
$0.1 million (6%) to $3.8 million for the three months ended September 30, 2003 as compared to $3.9 million for the three months ended September 30, 2002. This
decrease is principally the result of a decrease at PeterStar of $0.4 million (11%) principally due to a $0.3 million decrease in management fees, a $0.1 million decrease in
advertising expenses and a $0.1 million decrease in taxes other than income. Such decrease is partially offset by an increase of $0.3 million at BCL, which is principally due to
additional bad debts of $0.1 million and other increases.

Depreciation and amortization.Fixed telephony depreciation and amortization expense increased by $0.3 million to
$3.2 million for the three months ended September 30, 2003 as compared to $2.9 million for the three months ended September 30, 2002.

PeterStar's
depreciation and amortization expense increased $0.5 million to $3.2 million for the three months ended September 30, 2003 compared to
$2.7 million for the three months ended September 30, 2002. This growth in depreciation and amortization expense is due to the increase in investment to expand and upgrade the PeterStar
network infrastructure, thereby creating an increase in the fixed asset depreciable base when compared to prior year.

BCL's
depreciation and amortization expense decreased $0.2 million for the three months ended September 30, 2003 as compared to the three months ended September 30,
2002. This is principally due to the impairment of certain BCL fixed assets as of December 31, 2002, thereby creating a reduction in the fixed asset depreciable base when compared to prior
year.

Cable Television

Consolidated cable television is comprised of Ayety TV, a cable television provider in Tbilisi, Georgia.

Revenues.Cable television revenues for the three months ended September 30, 2003 increased by $0.1 million
(24%) to $0.6 million for the three months ended September 30, 2003 as compared to $0.5 million for the three months ended September 30, 2002. The growth in revenue is due
to an increase in the active subscriber base and a higher average revenue per user at Ayety TV.

Gross margin.Cable television gross margin increased by $0.1 million (35%) to $0.6 million for the three
months ended September 30, 2003 as compared to $0.5 million for the three months ended September 30, 2002. The increase in revenues contributed to the growth in margins as Ayety
TV pays a flat fee for broadcasting Russian TV channels which is the key driver for growth.

Selling, general and administrative expenses.Cable television selling, general and administrative expenses decreased by
$0.1 million (23%) to $0.4 million for the three months ended September 30, 2003 as compared to $0.5 million for the three months ended September 30, 2002. The
decrease is primarily due to reductions in bad debt expense and technical costs.

Depreciation and amortization.Cable television depreciation and amortization decreased by $0.1 million to
$0.2 million for the three months ended September 30, 2003 as compared to $0.3 million for the three months ended September 30, 2002. The reduction relates to an impairment
charge relating to fixed assets at Ayety TV recorded in the third quarter of 2002.

Asset impairment charge.During the three months ended September 30, 2002, the Company wrote-down goodwill
and intangibles related to Ayety TV totaling $3.8 million to reflect the Company's assessment of the recoverability of long-lived assets at Ayety TV.

47

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OTHER CONSOLIDATED RESULTS

Other consolidated results include the activities of the segment headquarters, which relate to executive, administrative, logistical and business venture support
activities including corporate headquarters costs.

Selling, general and administrative.Selling, general and administrative expenses at the corporate level increased from
$3.5 million in the three months ended September 30, 2002 to $6.0 million for the three months ended September 30, 2003. The increase in selling, general and administrative
expenses on a year-over-year basis is due to the incurrence of additional professional fees attributed principally to the Company's restructuring initiatives and severance
related expenses due to the Company's actions to substantially down-size the Company's Corporate headquarters personnel in first quarter 2003. The Company incurred incremental professional
and outside consulting fees of $1.7 million on a year over year basis and recognized severance related charges of $0.7 million in the three months ended September 30, 2003.

Depreciation and amortization.Depreciation and amortization at the corporate level decreased from $2.2 million in the
three months ended September 30, 2002 to $1.7million for the three months ended September 30, 2003. This is principally due to impairment changes recorded in 2002 related to the
Company's intangibles related to BCL.

Interest expense, net.Interest expense decreased by $1.1 million to $4.1 million for the three months ended
September 30, 2003 as compared to $5.2 million for the three months ended September 30, 2002. The decrease in interest is principally due to the retirement of $58.6 million
of Senior Discount Notes in the second quarter of 2003.

Equity in income (losses) of and write-down of investment in unconsolidated investees.Equity in income of
unconsolidated investees increased by $27.7 million to an income of $3.0 million for the three months ended September 30, 2003 as compared to a loss of $24.7 million for
the three months ended September 30, 2002. The increase is principally the result of $25.8 million charge to earnings in 2002 for the Company's investment in Comstar, during the three
months ended September 30, 2002, and also to the favorable year-over-year operating performance of Magticom.

Gain on disposition of businesses.On September 24, 2003, the Company sold its interest in Tyumenruskom and recognized
a gain of $2.6 million. Additionally, on August 1, 2003, the Company sold its interests in Baltcom TV and recognized a gain of $9.3 million. On July 25, 2002, the Company
disposed of its interest in CIBBV/BELCEL and recognized a gain of $1.3 million. On August 27, 2002, the Company disposed of its interest in OMCL/CAT and recognized a gain of
$2.4 million on the transaction.

Income tax expense.Income tax expense increased by $0.4 million to $1.8 million for the three months ended
September 30, 2003 as compared to $1.4 million for the three months ended September 30, 2002. The income tax expense in 2003 and 2002 is principally from foreign taxes on
PeterStar's operations.

Minority interest.Minority interest represents the allocation of income and losses by majority owned subsidiaries and
business ventures to its minority ownership interest. Minority interest increased by $0.8 million to $2.0 million for the three months ended September 30, 2003 as compared to
$1.2 million for the three months ended September 30, 2002. The minority interest amount principally relates to PeterStar's and Telcell Wireless's business operations. Telcell Wireless
is a 70% owned holding company, which in turn holds a 49% ownership in Magticom.

48

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UNCONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE UNCONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2002

Fixed Telephony

Unconsolidated fixed telephony is comprised of the Company's 30% minority ownership interest in Telecom Georgia, which is an international and long distance
telephony provider in the Republic of Georgia. Since the Company's US GAAP investment is $0 and as there is no obligation to fund operations, the Company does not record any share of the losses for
Telecom Georgia. Therefore, the Company does not deem Telecom Georgia's current financial performance to be material. During the three months ended September 30, 2002, fixed telephony was also
comprised of Comstar, MTR Svyaz and Teleport-TP. The Company disposed of its interests in Comstar on April 24, 2003 and its interests in MTR Svyaz and Teleport-TP on
June 25, 2003.

Revenues.Fixed telephony revenues decreased by $17.9 million (79%) to $4.7 million for the three months ended
September 30, 2003 as compared to $22.6 million for the three months ended September 30, 2002. This decrease is principally attributable to the Company's sale of its business
interests in Comstar and MTR Svyaz.

Comstar
and MTR Svyaz contributed revenues of $15.6 million and $0.3 million, respectively, for the three months ended September 30, 2002.

Gross margin.Fixed telephony gross margin decreased by $11.0 million (87%) to $1.7 million for the three
months ended September 30, 2003 as compared to $12.7 million for the three months ended September 30, 2002. The decrease is primarily attributable to the Company's sale of its
business interest in Comstar and MTR Svyaz in the second quarter of 2003.

Comstar
and MTR Svyaz contributed gross margins of $10.5 million and $0.1 million, respectively, for the three months ended September 30, 2002.

Selling, general and administrative.Fixed telephony selling, general and administrative expenses decreased by
$4.9 million (84%) to $0.9 million for the three months ended September 30, 2003 as compared to $5.8 million for the three months ended September 30, 2002. The
decrease is primarily attributable to the Company's sale of its business interest in Comstar.

Comstar
incurred selling, general and administrative expenses of $4.7 million for the three months ended September 30, 2002.

Depreciation and amortization.Fixed telephony depreciation and amortization expense decreased by $5.2 million to
$0.5 million for the three months ended September 30, 2003 as compared to $5.7 million for the three months ended September 30, 2002. The reduction in depreciation and
amortization is principally due to a reduction of $4.9 million due to the sale of Comstar in the first quarter of 2003.

Wireless Telephony

Unconsolidated wireless telephony is comprised of Magticom in Tbilisi, Georgia and Tyumenruskom in Tyumen, Russia. The Company owns effectively 35% of Magticom,
which operates and markets mobile voice communications in the Republic of Georgia utilizing a GSM telephony infrastructure. The Company owned 46% of Tyumenruskom, which operates and markets
communication services in the Tyumen region of Russia utilizing a D-AMPS telephony infrastructure. The Company disposed of its interests in Tyumenruskom on September 24, 2003.

Revenues.Wireless telephony revenues increased by $5.5 million (44%) to $17.8 million for the three months
ended September 30, 2003 as compared to $12.3 million for the three months ended

49

---

September 30,
2002. This growth in revenues is primarily attributable to Magticom, offset slightly by a reduction in revenues at Tyumenruskom.

Revenues
at Magticom increased by $5.8 million (53%) to $16.8 million for three months ended September 30, 2003 as compared to $11.0 million for three months
ended September 30, 2002. This increase in revenues is due to strong growth in the subscriber base, a rate increase for incoming traffic and an increase in average minutes of use. Total
subscribers were 284 thousand at September 30, 2003 compared to 205 thousand at September 30, 2002, an increase of 38%. Management expects future revenue growth to more
closely follow subscriber growth.

Tyumenruskom's
revenues decreased by $0.4 million (29%) to $0.9 million for the three months ended September 30, 2003 compared to $1.3 million for the three
months ended September 30, 2002. Subscribers were flat at 11 thousand at September 30, 2003 and September 30, 2002. Despite the flat level of subscribers, revenue decreased
because of falling rates due to intense pricing competition from GSM companies in the region.

Gross margin.Wireless telephony gross margin increased by $4.6 million (44%) to $15.0 million for the three
months ended September 30, 2003 as compared to $10.4 million for the three months ended September 30, 2002. This increase was due primarily to the increase in gross margin at
Magticom of $4.9 million (52%) to $14.3 million for the three months ended September 30, 2003 as compared to $9.4 million for the three months ended September 30,
2002. Total gross margin dollars increased due to the strong increase in revenue.

Tyumenruskom's
gross margin decreased $0.3 million (31%) to $0.7 million for the three months ended September 30, 2003 as compared to $1.0 million for the
three months ended September 30, 2002. This decrease is due to lower revenues because of decreased tariffs from increased GSM competition.

Selling, general and administrative.Wireless telephony selling, general and administrative expenses increased by
$0.3 million (15%) to $2.5 million for the three months ended September 30, 2003 as compared to $2.2 million for the three months ended September 30, 2002 mainly due
to increased bad debts and taxes other than income incurred at Magticom.

Tyumenruskom's
selling, general and administrative expenses are flat at $0.4 million for the three months ended September 30, 2003 and 2002.

Depreciation and amortization.Wireless telephony depreciation and amortization expense decreased by $0.1 million to
$3.5 million for the three months ended September 30, 2003 as compared to $3.6 million for the three months ended September 30, 2002. This decrease is due to Magticom's
depreciation and amortization expense decreasing by $0.1 million to $3.1 million for the three months ended September 30, 2003 as compared to $3.2 million for the three
months ended September 30, 2002 due to a decrease in the fixed asset base resulting from a change in functional currency in 2003.

Tyumenruskom's
depreciation and amortization expense is flat at $0.4 million for the three months ended September 30, 2003 and September 30, 2002.

Cable Television

Unconsolidated cable television is comprised of Cosmos TV, a cable television provider in Minsk, Belarus of which the Company owns 50% and Baltcom TV, a cable
television provider in Riga, Latvia. The Company disposed of its interest in Baltcom TV on August 1, 2003.

Revenues.Cable television revenues for the three months ended September 30, 2003 decreased by $1.4 million
(31%) to $2.9 million as compared to $4.3 million for the three months ended September 30, 2002. Such decrease is principally due to the disposal of Kosmos TV in the second

50

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quarter
of 2003. Kosmos TV contributed $1.7 million during the three months ended September 30, 2002. This decrease is partially offset by increased revenues of $0.2 million each
at Baltcom TV and Cosmos Minsk for the comparable periods.

Cost of services.Cable television cost of services decreased by $0.4 million (41%) to $0.5 million for the
three months ended September 30, 2003 as compared to $0.9 million for the three months ended September 30, 2002. Such decrease is principally due to the disposal of Kosmos TV in
April 2003. Kosmos TV cost of services during the three months ended September 30, 2002 was $0.3 million.

Selling, general and administrative.Cable television selling, general and administrative expenses decreased by
$1.1 million (41%) to $1.6 million for the three months ended September 30, 2003 as compared to $2.7 million for the three months ending September 30, 2002. Such
decrease is principally due to the disposal of Kosmos TV in April 2003. Kosmos TV incurred selling, general and administrative expenses of $1.1 million during the three months ended
September 30, 2002.

Depreciation and Amortization.Cable television depreciation and amortization decreased by $0.8 million to
$0.5 million for the three months ended September 30, 2003 as compared to $1.3 million for the three months ended September 30, 2002. Such decrease is principally due to
the disposal of Kosmos TV in April 2003. Kosmos TV incurred depreciation and amortization expenses of $0.7 million during the three months ended September 30, 2002.

51

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CONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE CONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2002

Fixed Telephony

Consolidated fixed telephony is comprised of PeterStar, the leading competitive local exchange carrier in St. Petersburg, Russia and Baltic
Communications Ltd. ("BCL"), a local and long distance telephony operator in St. Petersburg, Russia.

Revenues.Fixed telephony revenues increased by $4.9 million (11%) to $51.1 million for the nine months ended
September 30, 2003 as compared to $46.2 million for the nine months ended September 30, 2002.

Revenues
at PeterStar increased by $5.4 million (13%) to $46.2 million for the nine months ended September 30, 2003 as compared to $40.8 million for the nine
months ended September 30, 2002. This growth in revenues was driven by a $2.3 million growth in carrier revenues, a $2.2 million increase in data and Internet services and
$0.9 million higher equipment sales and other telecom revenues.

The
increase in carrier revenues is partially due to favorable pricing on transit based billings, which are not expected to continue on a long-term basis. The increase in
data and Internet services is principally due to the growing demand for leased lines and dial up services within the St. Petersburg market. In addition, management believes that PeterStar has
increased its share of the market of Internet services. Management expects that it will continue to experience revenue growth for its data and Internet product portfolio; however, the rate of growth
may decline due to competitive pressures. The increase in equipment and other revenues is principally due to PeterStar's efforts to market its high speed digital fiber network, in lieu of the
traditional copper telephone infrastructure, to its business customers which has resulted in customers purchasing telephony equipment (digital PBX's) directly from PeteStar. These marketing efforts
have also resulted in 66% of new connections, as of September 30, 2003, utilizing the PeterStar digital fiber network versus 56% of new connections, as of March 31, 2003. Management
anticipates that such connections will continue to remain at such proportionate levels. As a result, PeterStar has effectively increased its customer base for other high band-width
intensive products.

Revenues
at BCL decreased by $0.5 million (8%) to $4.9 million for the nine months ended September 30, 2003 as compared to $5.4 million for the nine months
ended September 30, 2002. This decrease is principally the result of a $1.0 million drop in call revenue due to the loss of a major customer.

Gross margin.Fixed telephony gross margin increased by $1.1 million (3%) to $34.2 million for the nine months
ended September 30, 2003 as compared to $33.1 million for the nine months ended September 30, 2002. Fixed telephony gross margin as a percentage of revenues was 62% for the nine
months September 30, 2003 as compared to 72% for the nine months ended September 30, 2002

PeterStar's
gross margin increased $0.6 million (2%) to $31.2 million for the nine months ended September 30, 2003 as compared to $30.6 million for the nine
months ended September 30, 2002. PeterStar's gross margin percentage decreased from 75% in 2002 to 67% in 2003. The decrease in the gross margin percentage is primarily due to lower margins on
long distance traffic, which is traditionally low margin. Even though long distance traffic volume is increasing, the margin percentages are contracting due to competitive pressures on tariffs charged
to customers. Furthermore, PeterStar's interconnection costs have also increased during the period. As discussed previously, PeterStar has had success in marketing the use of its digital fiber network
to its customer base, which management expects will slow the erosion of its gross margin as PeterStar should be able to reduce third-party access fees associated with its historical reliance upon
leased copper line telephone infrastructure.

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BCL's
gross margin increased $0.5 million (19%) to $3.0 million for the nine months ended September 30, 2003 compared to $2.5 million for the nine months
ended September 30, 2002. BCL's gross margin percentage increased from 47% in 2002 to 61% in 2003. This increase in gross margin on both on an absolute dollar basis and on a
percentage of sales is the result in a change of product mix as low margin transit traffic was replaced by high margin data revenues.

Selling, general and administrative.Fixed telephony selling, general and administrative expenses decreased by
$1.9 million (15%) to $10.7 million for the nine months ended September 30, 2003 as compared to $12.6 million for the nine months ended September 30, 2002.

PeterStar's
selling, general and administrative expenses decreased $1.4 million (14%) to $8.9 million for the nine months ended September 30, 2003 as compared to
$10.3 million for the nine months ended September 30, 2002. Management fee expenses decreased by $0.9 million, advertising expenses decreased by $0.3 million, bad debt
decreased by $0.1 million and taxes other than income decreased by $0.2 million. BCL's selling, general and administrative expenses decreased by $0.6 million (32%)
to $1.7 million for the nine months ended September 30, 2003 as compared to $2.3 million for the nine months ended September 30, 2002 due to the reduction of bad debt
expense.

Depreciation and amortization.Fixed telephony depreciation and amortization expense increased by $0.8 million to
$9.8 million for the nine months ended September 30, 2003 as compared to $9.0 million for the nine months ended September 30, 2002.

PeterStar's
depreciation and amortization increased $1.2 million to $9.6 million for the nine months ended September 30, 2003 compared to $8.4 million for the
nine months ended September 30, 2002. This growth in depreciation and amortization expense is due to the increase in investment to expand and upgrade the PeterStar network infrastructure,
thereby creating an increase in the fixed asset depreciable base when compared to prior year.

BCL's
depreciation and amortization decreased $0.4 million to $0.2 million for the nine months ended September 30, 2003 as compared to $0.6 million for the
nine months ended September 30, 2002. This was principally due to the impairment of certain BCL fixed assets as of December 31, 2002, thereby creating a reduction in the fixed asset
depreciable base when compared to a year-ago.

Cable Television

Consolidated cable television is comprised of Ayety TV, a cable television provider in Tbilisi, Georgia.

Revenues.Cable television revenues increased by $0.3 million (18%) to $2.0 million for the nine months ended
September 30, 2003 as compared to $1.7 million for the nine months ended September 30, 2002. The growth in revenue is due to an increase in the active subscriber base and a higher
average revenue per user.

Gross profit.Cable television gross profit increased by $0.4 million (26%) to $1.9 million for the nine months
ended September 30, 2003 as compared to $1.5 million for the nine months ended September 30, 2002. The increase in revenues contributed to the growth in margins as Ayety TV pays a
flat fee for broadcasting Russian TV channels which is the key driver for growth at Ayety TV.

Selling, general and administrative.Cable television selling, general and administrative expenses were unchanged at
$1.3 million for the nine months ended September 30, 2003 and 2002.

Depreciation and amortization.Cable television depreciation and amortization decreased by $0.5 million to
$0.5 million for the nine months ended September 30, 2003 as compared to $1.0 million for the nine months ended September 30, 2002. The decrease in amortization is
principally due to an impairment charge that was recorded in the third quarter of 2002 as well as the fact that Ayety TV's

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network
was built several years ago and as a result, a number of fixed assets have become fully depreciated.

Asset impairment charge.During the nine months ended September 30, 2002, Ayety TV wrote-down goodwill and
intangibles totaling $3.8 million to reflect the Company's assessment of the recoverability of long-lived assets.

OTHER CONSOLIDATED RESULTS

Other consolidated results include the activities of the segment headquarters, which relate to executive, administrative, logistical and business venture support
activities including corporate headquarters costs.

Selling, general and administrative.Selling, general and administrative expenses at the corporate level increased from
$21.2 million in the nine months ended September 30, 2002 to $23.7 million for the nine months ended September 30, 2003. The increase in selling, general and administrative
expenses on a year-over-year basis is due to the incurrence of additional professional fees attributed principally to the Company's restructuring initiatives and severance
related expenses due to the Company's actions to substantially down-size the Company's Corporate headquarters personnel in first quarter 2003. The Company recognized severance related
charges of $3.4 million in the nine months ended September 30, 2003 and incurred incremental professional and outside consulting fees of $2.8 million on a year over year basis.
These incremental costs were partially offset by reduced payroll and related benefits as well as overall discretionary spending in the amount of $3.7 million as a result of the Company's
downsizing efforts.

Depreciation and amortization.Depreciation and amortization at the corporate level decreased from $6.8 million in the
nine months ended September 30, 2002 to $5.3 million for the nine months ended September 30, 2003. This is principally related to impairment of certain intangibles in the fourth
quarter of 2002, which had been recorded at the corporate level.

Interest expense, net.Interest expense decreased by $1.3 million to $13.8 million for the nine months ended
September 30, 2003 as compared to $15.1 million for the nine months ended September 30, 2002. The decrease is principally due to the reduction of outstanding Senior Discount
Notes.

Equity in income (losses) of and write-down of investment in unconsolidated investees.Equity in losses of and
write-down of investment in unconsolidated investees increased by $30.6 million to $8.9 million for the nine months ended September 30, 2003 as compared to a loss of
$21.7 million for the nine months ended September 30, 2002. The increase is principally the result of $25.8 million charge to earnings in 2002 for the Company's investment in
Comstar, during the nine months ended September 30, 2002, and also to the favorable year-over-year operating performance of Magticom.

Gain on retirement of debt.On April 24, 2003, the Company completed an exchange with Adamant of certain business
ventures for $58.6 million of the Company's Senior Discount Notes. The Company recognized a gain of $24.6 million related to the early extinguishment of the exchanged Senior Discount
Notes.

Gain on disposition of businesses.On September 24, 2003, the Company sold its interest in Tyumenrusrom and recognized
a gain of $2.6 million. Additionally, on August 1, 2003, the Company sold its interests in Baltcom TV and recognized a gain of $9.3 million. On May 24, 2002, the Company
disposed of its interest in Alma TV and recognized a gain of $1.7 million on the transaction. On July 25, 2002, the Company disposed of its interest in CIBBV/BELCEL and recognized a gain
of $1.3 million on the transaction. On August 27, 2002, the Company disposed of its interest in OMCL/CAT and recognized a gain of $2.4 million on the transaction.

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Income tax expense.Income tax expense increased by $4.5 million to $4.6 million for the nine months ended
September 30, 2003 as compared to $0.1 million for the nine months ended September 30, 2002. The income tax expense in 2003 and 2002 is principally from foreign income taxes on
PeterStar's operations. In 2002, the foreign taxes were offset by tax benefits realized related to alternative minimum tax carry backs of $4.2 million.

Minority interest.Minority interest represents the allocation of income and losses by the Company's majority owned
subsidiaries and business ventures to its minority ownership interest. Minority interest increased by $2.1 million to $5.9 million for the nine months ended September 30, 2003 as
compared to $3.8 million for the nine months ended September 30, 2002. The minority interest amount principally relates to PeterStar's and Telcell Wireless's operations. Telcell Wireless
is a 70% owned holding company, which in turn holds a 49% investment in Magticom.

Cumulative effect of a change in accounting principle.The Company adopted Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangibles" effective January 1, 2002. Accordingly, the Company recorded the cumulative effect of adoption for transitional impairment as a charge to
earnings of $1.1 million. There was no such similar charge in the nine months ended September 30, 2003.

UNCONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE UNCONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2002

Fixed Telephony

Unconsolidated fixed telephony is comprised of the Company's 30% minority ownership interest in Telecom Georgia, which is an international and long distance
telephony provider in the Republic of Georgia. Since the Company's US GAAP investment is $0 and as there is no obligation to fund operations, the Company does not record any share of the losses for
Telecom Georgia. Therefore, the Company does not deem Telecom Georgia's current financial performance to be material. During the nine months ended September 30, 2002, fixed telephony was also
comprised of Comstar, MTR Svyaz and Teleport-TP. The Company disposed of its interests in Comstar on April 24, 2003 and its interests in MTR Svyaz and Teleport-TP on
June 25, 2003.

Revenues.Fixed telephony revenues decreased by $39.9 million (56%) to $30.8 million for the nine months ended
September 30, 2003 as compared to $70.7 million for the nine months ended September 30, 2002. This decrease is principally attributable to the sales of the Company's interests in
Comstar, Teleport-TP and MTR Svyaz.

Comstar,
Teleport-TP and MTR Svyaz contributed additional incremental revenues of $30.9 million, $7.2 million and $0.6 million, respectively, for the
nine months ended September 30, 2002 as compared to the nine months ended September 30, 2003.

Gross margin.Fixed telephony gross margin decreased by $19.6 million (56%) to $15.2 million for the nine
months ended September 30, 2003 as compared to $34.8 million for the nine months ended September 30, 2002. This decrease is principally due the sales of the Company's interests in
Comstar, Teleport-TP and MTR Svyaz in the second quarter of 2003.

Comstar,
Teleport-TP and MTR Svyaz contributed additional incremental gross margins of $18.7 million, $1.7 million and $0.5 million, respectively, for
the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2003.

Selling, general and administrative.Fixed telephony selling, general and administrative expenses decreased by
$8.9 million (53%) to $8.0 million for the nine months ended September 30, 2003 as compared to $16.9 million for the nine months ended September 30, 2002. This
decrease is principally

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attributable
to the sales of the Company's interests in Comstar, Teleport-TP and MTR Svyaz in the second quarter of 2003.

Comstar,
Teleport-TP and MTR Svyaz incurred additional selling, general and administrative expenses of $8.0 million, $1.0 million and $0.2 million,
respectively, for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2003.

Depreciation and amortization.Fixed telephony depreciation and amortization expense decreased by $11.8 million to
$5.3 million for the nine months ended September 30, 2003 as compared to $17.1 million for the nine months ended September 30, 2002. The reduction in depreciation and
amortization is principally due to the sales of the Company's interest in Comstar, Teleport-TP and MTR Svyaz in second quarter of 2003.

Comstar,
Teleport-TP and MTR Svyaz incurred incremental depreciation and amortization expense of $10.6 million, $0.2 million and $0.3 million,
respectively for the nine months ended September 30, 2002.

Asset impairment charge.During the second quarter of 2002, Comstar wrote down certain assets totaling $0.4 million
related to one of its locations. No such charge was incurred in 2003.

Wireless Telephony

Unconsolidated wireless telephony is comprised of Magticom in Tbilisi, Georgia and Tyumenruskom in Tyumen, Russia. The Company owns effectively 35% of Magticom,
which operates and markets mobile voice communications in the Republic of Georgia utilizing a GSM telephony infrastructure. The Company owned 46% of Tyumenruskom, which operates and markets
communication services in the Tyumen region of Russia utilizing a D-AMPS telephony infrastructure. The Company disposed of its interests in Tyumenruskom on September 24, 2003.

Revenues.Wireless telephony revenues increased by $10.6 million (27%) to $49.3 million for the nine months
ended September 30, 2003 as compared to $38.7 million for the nine months ended September 30, 2002. This growth in revenues is primarily attributable to Magticom.

Revenues
at Magticom increased by $14.2 million (44%) to $46.1 million for nine months ended September 30, 2003 as compared to $31.9 million for nine months
ended September 30, 2002. This increase in revenues is due to strong growth in the subscriber base, a rate increase for incoming traffic and an increase in average minutes of use. Total
subscribers were 284 thousand at September 30, 2003 compared to 205 thousand at September 30, 2002, an increase of 39%.

Tyumenruskom's
revenues decreased by $0.6 million (16%) to $3.2 million for the nine months ended September 30, 2003 compared to $3.8 million for the nine
months ended September 30, 2002. Subscribers were flat at 11 thousand at September 30, 2002 and at September 30, 2003. Despite the flat level of subscribers, revenue
decreased because of falling rates due to intense pricing competition from GSM companies in the region. The Company disposed of its interest in Tyumenruskom on September 24, 2003.

BELCEL
which was sold in July 2002 included revenues of $3.0 million for the nine months ended 2002.

Gross margin.Wireless telephony gross margin increased by $8.7 million (27%) to $41.4 million for the nine
months ended September 30, 2003 as compared to $32.7 million for the nine months ended September 30, 2002. This increase is due primarily to the increase in gross margin at
Magticom of $11.6 million (42%) to $38.9 million for the nine months ended September 30, 2003 as compared to $27.3 million for the nine months ended September 30,
2002. Total gross margin dollars increased due to the strong increase in revenue.

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Tyumenruskom's
gross margin decreased by $0.4 million (13%) to $2.5 million for the nine months ended September 30, 2003 as compared to $2.9 million for the
nine months ended September 30, 2002. Lower revenues contributed to the decrease in margins.

BELCEL
which was sold in July 2002 included gross margin of $2.5 million for the nine months ended September 30, 2002.

Selling, general and administrative.Wireless telephony selling, general and administrative expenses decreased by
$1.1 million (16%) to $6.0 million for the nine months ended September 30, 2003 as
compared to $7.1 million for the nine months ended September 30, 2002. This decrease is principally related to BELCEL which was sold in July 2002 and incurred $1.1 million
of expenses the nine months ended September 30, 2002.

Depreciation and amortization.Wireless telephony depreciation and amortization expense decreased by $0.1 million to
$11.2 million for the nine months ended September 30, 2003 as compared to $11.3 million for the nine months ended September 30, 2002.

Magticom's
depreciation and amortization expense increased $0.6 million to $9.9 million for the nine months ended September 30, 2003 as compared to
$9.3 million for the nine months ended September 30, 2002 due to depreciation on new capital expenditures supporting geographic network expansion and increasing subscriber capacity at
existing cell sites, partially offset by a decrease in the fixed asset base resulting from a change in functional currency in 2003.

Tyumenruskom's
depreciation and amortization expense increased $0.3 million to $1.3 million for the nine months ended September 30, 2003 as compared to
$1.0 million for the nine months ended September 30, 2002. The increase relates to a building that was put into service along with expansion of the network.

Incremental
depreciation and amortization at Magticom and Tyumenruskom was partially offset by $0.9 million of depreciation and amortization that was included for BELCEL for the
nine months ended September 30, 2002.

Cable Television

Unconsolidated cable television is comprised of Cosmos TV, a cable television provider in Minsk, Belamus of which the Company owns 50% and Baltcom TV, a cable
television provider in Riga, Latvia. The Company disposed of its interest in Baltcom TV on August 1, 2003.

Revenues.Cable television revenues decreased by $4.6 million (27%) to $12.4 million for the nine months ended
September 30, 2003 as compared to $17.0 million for the nine months ended September 30, 2002. Such decrease is principally due to the disposal of Kosmos TV in April 2003
and Alma TV in May 2002.

Kosmos
TV and Alma TV contributed incremental revenue of $1.5 million and $4.0 million, respectively, for the nine months ended September 30, 2002 as compared to the
nine months ended September 30, 2003.

Baltcom
TV and Cosmos Minsk experienced revenue growth of $0.5 million each primarily driven by growth of wired cable subscribers.

Cost of services.Cable television cost of services decreased by $1.0 million (29%) to $2.5 million for the
nine months ended September 30, 2003 as compared to $3.5 million for the nine months ended September 30, 2002. Such decrease is principally due to the disposal of Kosmos TV in
April 2003 and Alma TV in May 2002.

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Kosmos
TV and Alma TV incurred additional costs of services of $0.3 million and $0.5 million, respectively, for the nine months ended September 30, 2002 as compared
to the nine months ended September 30, 2003.

Baltcom
TV's cost of services decreased $0.3 million to $1.2 million for the nine months ended September 30, 2003 as compared to $1.5 million for the nine
months ended September 30, 2002 as a result of renegotiating the rate for a Russian channel.

Selling, general and administrative.Cable television selling, general and administrative expenses decreased by
$1.8 million (20%) to $7.2 million for the nine months ended September 30, 2003 as compared to $9.0 million for the nine months ending September 30, 2002. Such
decrease is principally due to the disposal of Kosmos TV in April 2003 and Alma TV in May 2002.

Kosmos
TV and Alma TV incurred additional selling, general and administrative expenses of $0.8 million and $1.6 million, respectively, for the nine months ended
September 30, 2002 as compared to the nine months ended September 30, 2003.

Baltcom
TV's selling, administrative and general expenses increased by $0.5 million to $3.4 million for the nine months ended September 30, 2003 from
$2.9 million for the nine months ended September 30, 2002. This increase is primarily related to a general increase in salaries, network expenses, advertising and management fees.

Depreciation and amortization.Cable television depreciation and amortization decreased by $1.9 million to
$3.3 million for the nine months ended September 30, 2003 as compared to $5.2 million for the nine months ended September 30, 2002. Such decrease is principally due to the
disposal of Kosmos TV in the second quarter of 2003 and Alma TV in May 2002.

Kosmos
TV and Alma TV incurred additional depreciation and amortization expenses of $0.6 million and $1.3 million, respectively, for the nine months ended
September 30, 2002 as compared to the nine months ended September 30, 2003.

DISCONTINUED BUSINESS COMPONENTS

Radio Businesses

On April 24, 2003 the Company completed an exchange with Adamant Advisory Services, a British Virgin Islands company, of its ownership in certain of its
business units in Russia for approximately $58.6 million, face value, of the Company's Senior Discount Notes held by Adamant. As part of this transaction, the Company conveyed to Adamant its
ownership interests in its Russian radio stationsZAO SAC in Moscow and ZAO Radio Katusha in St. Petersburg.

In
addition, on May 5, 2003 the Company completed the sale of its ownership interests in Radio Georgia. Further, on September 30, 2003, the Board of Directors formally
approved management's plan to dispose of the remaining non-core Radio businesses.

Revenues.Radio broadcasting revenues decreased by $1.1 million (8%) for the nine months ended September 30,
2003 to $12.5 million as compared to $13.6 million for the nine months ended September 30, 2002. The decrease is principally due to the disposal of the interests in the Russian
radio stations and Radio Georgia, partially offset by increased revenue at Country Radio, Radio Juventus and Trio Radio as well as currency appreciation. A total of $1.1 million of the revenue
increase was due to local currency appreciation to the U.S. dollar, principally in Hungary, the Czech Republic, Finland and Estonia.

ZAO
SAC, ZAO Radio Katusha and Radio Georgia contributed incremental revenue of $2.4 million, $0.9 million and $0.1 million, respectively, for the nine months ended
September 30, 2003.

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Revenues
at Country Radio increased by $0.3 million (32%) on a comparable currency basis for the nine months ended September 30, 2003 due to a change of the sales house
selling advertising in the station's programming on an exclusive basis to national clients, resulting in improved terms of representation.

The
comparable currency basis increase of $0.4 million (10%) at Juventus includes the effect of increased sales from non-owned network affiliate sales, the additional
revenue from Sztar FM, which the company manages under a management agreement and the acquisitions of two stations in Miskolc, a key secondary market after Budapest.

Trio
Group recorded an increase in revenues of $0.2 million (15%) on a comparable currency basis. The increase was primarily due to increases in agency revenue due to the exit of
state TV from the advertising market as of August 2002, which resulted in an across-the-board increase in the pricing of advertising in electronic media. In addition,
revenues were bolstered by an improvement in Trio's revenue market share, resulting from hiring additional sales force in the third quarter of 2002.

Operating loss.Radio broadcasting operating loss increased from $0.2 million in the nine months ended
September 30, 2002 to $1.6 million in the nine months ended September 30, 2003. The increase is principally due to the disposal of the interests in the Russian radio stations.

ZAO
SAC and ZAO Radio Katusha contributed incremental operating income of $1.3 million and $0.4 million, respectively, for the nine months ended September 30, 2003.

Cable Businesses

On September 30, 2003, the Board of Directors formally approved management's plan to dispose the remaining non-core Cable businesses, with the
exception of Aytey TV.

Revenues.Revenues increased by $0.1 million (1%) to $9.3 million for the nine months ended
September 30, 2003 as compared to $9.2 million for the nine months ended September 30, 2002. This increase is principally due to increased subscribers at ATK and Vilsat TV,
partially offset by incremental revenue in 2002 from Ala TV which was sold during the first quarter of 2003.

Operating income (loss).Operating income decreased from $0.3 million in the nine months ended September 30,
2002 to an operating loss of $0.8 million for the nine months ended September 30, 2003. The decrease is primarily attributable to $1.3 million in impairment charges for Sun TV and
ATK
recorded in accordance with the provisions of SFAS No. 142 based evaluations of their respective fair values during the current year.

Cumulative effect of a change in accounting principle.In accordance with the provisions of SFAS No. 142, the Company
completed its evaluation of the fair value of the Cable businesses and determined there was a transitional impairment charge required and accordingly recorded a $2.0 million charge as of
January 1, 2002.

Snapper, Telephony Businesses, Cardlink and Metromedia China Corporation

During 2002, the company disposed of Snapper and certain telephony ventures, ALTEL and CPY Yellow Pages ("Yellow Pages"). Accordingly, there are no results
reported in 2003 for these business operations. In addition, in 2003, the Company disposed of its interests in Technocom. Together these business ventures are collectively referred to as the
"Telephony businesses." During 2002 and 2003, the Company disposed of its interests in Cardlink and Metromedia China Corporation ("MCC") and its related operating subsidiaries.

Revenues.Revenues for Snapper and the Telephony businesses, including Cardlink and MCC, for the nine months ended
September 30, 2002 were $108.6 million and $17.3 million, respectively. The

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Telephony
businesses (Technocom) had revenues of $0.3 million in the nine months ended September 30, 2003.

Operating loss.Snapper operating loss was $6.3 million in the nine months ended September 30, 2002. Telephony
business, including Cardlink and MCC, operating loss was $9.6 million for the nine months ended September 30, 2002. Technocom and MCC operating losses were not material for the nine
months ended September 30, 2003.

Cumulative effect of a change in accounting principle.In accordance with the provisions of SFAS No. 142, the Company
completed its evaluation of the fair value of Snapper and determined there was a transitional impairment charge required and accordingly recorded a $13.6 million charge as of January 1,
2002.

Critical Accounting Policies

The Company reviews all significant estimates affecting its consolidated financial statements on a recurring basis and records the effect of any necessary
adjustment prior to their publication. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, it is possible that actual
results could differ from those estimates and changes to estimates could occur in the near term. The preparation of the Company's financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Estimates and judgments are used when accounting for the allowance for doubtful accounts, inventory obsolescence, long-lived assets,
intangible assets, recognition of revenue, assessing control over operations of business ventures, self-insured workers' compensation and product liability claims, depreciation and
amortization, employee benefit plans, income taxes, among others. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the
preparation of its consolidated financial statements:



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New Accounting Pronouncements

Effective January 1, 2002, we adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." In
accordance with SFAS No. 142, we discontinued the amortization of goodwill as of such date. Upon the adoption of SFAS No. 142, we recorded a cumulative effect of a change in accounting
principle for the impairment of goodwill in the amount of $3.2 million.

In
August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligation." This statement deals with the costs of
closing facilities and removing assets. SFAS No. 143 requires entities to record the fair value of a legal liability for an asset retirement obligation in the period it is incurred. This cost
is initially capitalized and amortized over the remaining life of the asset. Once the obligation is ultimately settled, any difference between the final cost and the recorded liability is recognized
as a gain or loss on disposition. SFAS No. 143 is effective for years beginning after June 15, 2002. The adoption of FAS No. 143 did not have an impact on our consolidated
financial position or results of operations.

During
the year ended December 31, 2002, the FASB issued several new accounting standards including, SFAS No. 145, "Rescission of FASB Statements No.4, 44 and 64, Amendment
of FASB Statement No. 13, and Technical Corrections" and SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." In November 2002, the FASB also issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". These standards did not have a material
impact on the consolidated financial position or results of operations.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation Transition and Disclosure," which amends SFAS No. 123, "Accounting for
Stock-Based Compensation", to provide alternative methods of transition of SFAS No. 123's fair value method of accounting for stock-based employee compensation. SFAS No. 148 also amends
the disclosure provisions of SFAS No. 123 and APB No. 28, "Interim Financial Reporting", to require disclosure in the summary of significant accounting policies of the effects of an
entity's accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. While the Statement does not
amend SFAS No.123 fair value method, the disclosure provisions of SFAS No. 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for
that compensation using the fair value method of SFAS No. 123 or the intrinsic value method of APB No. 25. SFAS No. 148 disclosure provisions are effective for years ending after
December 15, 2002. We have adopted the amendments to SFAS No. 123 disclosure provisions required under SFAS No. 148 but we will continue to use the intrinsic value method under
APB No. 25 to account for stock-based compensation. As such, the adoption of SFAS No. 148 did not have an impact on our consolidated financial position or results of operations.

In
January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities". FIN No. 46 defines the concept of "variable interest" and requires
existing unconsolidated variable interest entities to be consolidated into the financial statements of their primary beneficiaries if the variable interest entities do not effectively disperse risks
among the parties involved. FIN No. 46 applies

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immediately
to variable interest entities created after January 31, 2003. In October 2003, the FASB delayed the effective date of FIN No. 46 for entities created before
February 1, 2003 until it completed debate on an amendment during the fourth quarter. The amendment to FIN No. 46 will be effective in the first quarter of 2004. The
interpretation may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more
years, with a cumulative-effect adjustment as of the beginning of the first year restated. The Company has not yet completed its analysis of the effect of adopting the provisions of FIN No. 46.
The Company has determined that its investment in Magticom will not be consolidated under this interpretation. The Company holds interest in another telephony venture for which the analysis is not yet
complete. See Note 7 for further discussions and summary financial information of the Company's unconsolidated investees.

In
April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS
No. 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS No. 133, (b) in connection with other
Board projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of derivative. The amendments set forth in
SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS No. 149 is generally effective for contracts entered
into or modified after June 30, 2003. The adoption of the provisions of SFAS No. 149 did not have an impact on our financial position or results of operations.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS No. 150 requires
certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity to be classified as liabilities. The provisions of SFAS No. 150 are
effective for financial instruments entered into or modified after May 31, 2003 and to all other instruments that exist as of the beginning of the first interim financial reporting period
beginning after June 15, 2003. The Company does not have any financial instruments that meet the provisions of SFAS No. 150, therefore, adopting the provisions of SFAS No. 150 did
not have an impact on the financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, the financial position of the Company is routinely subjected to a variety of risks. In addition to the market risk associated
with interest rate movements on outstanding debt and currency rate movements on non-U.S. dollar denominated assets and liabilities, other examples of risk include collectibility of
accounts receivable and significant political, economic and social risks inherent in doing business in emerging markets such as Eastern Europe and the CIS.

The
Company does not currently hedge against foreign exchange rate risks. In the majority of the countries that the Company's business ventures operate, the currencies (such as the
Russian ruble) are non-convertible outside the country, so the Company's ability to hedge against devaluation by converting to other currencies is significantly limited. In these
countries, a sophisticated or reliable market for the trade of derivative instruments does not currently exist in order to allow the Company to hedge foreign currency risk. Accordingly, the Company
seeks to maintain the minimal amount of foreign currency on hand to reduce its exposure. However, such amount is limited by the fact that certain expenses are denominated in foreign currencies and
many countries in which the Company does business have strict foreign currency regulations.

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The Company is exposed to foreign exchange price risk in that a substantial portion of its operations is located outside of the United States. In remeasuring the financial statements
stated in the local currency into the functional currency, U.S. dollars, a gain or loss may result. In Russia, where the Company has the majority of its operations in consolidated subsidiaries, a
further 10% devaluation of the Russian ruble in the first nine months of 2003, for example, would have resulted in a decrease to the Company's net income of $0.3 million, with all other
variables held constant. In addition, certain of the Company's business ventures accounted for under the equity method are exposed to foreign exchange price risk. The Company's exposure to these risks
is limited by its less significant ownership interest.

The
majority of the Company's debt obligations and those of its operating businesses are fixed rate obligations, and are therefore not exposed to market risk from upward changes in
interest rates. Although market risk exists for downward changes in interest rates, the Company's fixed interest rate of 101/2% on its Senior Discount Notes would likely approximate or
be lower than a hypothetical rate on similar variable rate obligations, thereby limiting the risk. Furthermore, the Company's long-term debt and that of its operating businesses are
denominated in or tied to U.S. dollars. The Company does not believe that the Company's debt not denominated in U.S. dollars exposes the Company to a material market risk from changes in foreign
exchange rates.

"Item
2:Management's Discussion and Analysis of Financial Conditions and Results of Operations" contains additional information on risks
associated with the Company's investments in Eastern Europe and the CIS.

Special Note Regarding Forward-Looking Statements

Any statements in this document about the Company's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are often but not always made through the use of words or phrases like "believes," "expects," "may," "will," "should" or "anticipates" or the negative of these words or
phrases or other variations on these words or phrases or comparable terminology, or by discussions of strategy that involves risks and uncertainties.

These
forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements or industry
results to be
materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others:



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Accordingly,
any forward-looking statement is qualified in its entirety by reference to these risks, uncertainties and other factors and you should not place any undue reliance on them.
Furthermore, any forward-looking statement speaks only as of the date on which it is made. New factors emerge from time to time and it is not possible for the Company to predict which will arise. In
addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.

Item 4. Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits, is
recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. An evaluation was performed by the Company's management,
with the participation of the Chief Executive Officer and Chief Financial Officer, of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report.

Based
on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the presence of the matters described below constitute material weaknesses as
defined under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more internal
control

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components
does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their assigned functions. To specifically respond to this matter, and in general to meet our obligations under Section 404
of the Sarbanes-Oxley Act of 2002, the Company has taken the actions described below.

As
of the date of this Report, the Company believes it has a plan that, when fully implemented, will reduce the likelihood that similar errors could occur in the future. There were no
other changes during the fourth quarter ended December 31, 2003 that have materially affected, or are reasonably likely to materially affect, the Company's disclosure controls and procedures,
subsequent to the date of their evaluation, except as described below.

The
Company continues to use both financial and personnel resources to improve its management, accounting, reporting and business operations processes. However, the Company's limited
liquidity has, and could continue to limit management's ability to implement improvements to its management and accounting, reporting and business operations processes. In addition, certain structural
complexities of the Company's business may impact the effectiveness of disclosure controls and procedures and internal controls.

The
Company's management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the disclosure controls and procedures or internal controls will prevent
all errors and all improper conduct. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are
met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, within the Company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The
design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures
may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

The
effective oversight by the Company of the business managers who are responsible for managing the daily business matters of the Company's business ventures, both consolidated and
unconsolidated, may be encumbered due to business practice common within the geographic area of the business operations, the degree of the Company's historic and current participation as a shareholder
within the respective businesses and resource constraints imposed by the Company's current liquidity situation.

Furthermore,
the Company does not control and may be limited in its participation in management of its unconsolidated business ventures. Thus, its disclosure controls and procedures with
respect to such business ventures are necessarily more limited than those it maintains with respect to its consolidated business ventures. The Company has from time to time been unable and may in the
future be unable to prevent expenditures and commitments from occurring at certain business ventures that do not provide full economic benefit to the business venture's operations. Such expenditures
or commitments have not been material to the Company's historical results of operations and financial condition, and management is not aware of any instances in which such expenditures and commitments
are not properly reflected in its consolidated financial statements.

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In
addition, the Company has experienced, and may continue to experience difficulty and incur significant cost in the timely collection of financial data with respect to certain of its
business ventures. Many of the foreign emerging market countries in which the Company operates are lacking in standard Western management, accounting, reporting and business operations processes. As a
result, the timely collection of financial data and preparation of consolidated financial statements in accordance with accounting standards generally accepted in the United States, based on the books
of account and corporate records of those business ventures, has required significant resources of the Company.

Due
to liquidity pressures, management and the Board of Directors determined that it was most appropriate to terminate the employment of a significant number of personnel that oversaw or
provided supporting services to the Company's various European business ventures. Such terminations had effective dates that were staggered in relation to expected disposal dates of various ventures
and businesses. There is no guarantee that the Company will be able to dispose of these various ventures and businesses during the employment periods of the affected individuals. However, the Company
believes that relations with these individuals are generally good and that should the disposals not occur within the time frame estimated by management, that the individuals would likely extend their
employment to the dates of disposal. Should the disposals not occur within management's estimated time frame, there can be no guarantees that the affected individuals would agree to similar terms for
an extended period. Under such circumstances, the Company could be significantly hindered in production of books and records within a timely fashion to remain compliant with its financial reporting
obligations.

As
part of its restructuring efforts, the Company terminated substantially all of its employees at its U.S. headquarters as well as certain European-based business venture support
personnel during the first quarter of 2003. However, the Company has entered into new employment agreements with certain individuals, including the Company's Chief Financial Officer, Chief Accounting
Officer and General Counsel, and has recruited accounting and finance personnel who work in Charlotte, North Carolina. Furthermore, during the third quarter of 2003, the Company began the process of
relocating its corporate headquarters from New York City to Charlotte and closed its New York City office before the end of 2003. The Company's decision to move its corporate headquarters operation
from New York City was principally driven by the Company's commitment to substantially reduce corporate overhead expenditures. Upon completing this move, the Company will benefit from significant
reductions in continuing office-related, personnel and professional service costs. Management anticipates that upon the completion of the relocation of its corporate headquarters, that the accounting
and finance personnel that are currently engaged and the workflow processes that are currently in place will enable the Company to meet its financial reporting obligations in a more timely manner.
However, due to the timing of departures of New York City based accounting and financial personnel and the hiring of Charlotte based personnel, the Company has experienced some delays in preparation
of financial statements and reports.

In
the fourth quarter of 2003, it was determined that the Company's consolidated statements of operations for fiscal 2002, and the first two quarters of fiscal 2003, would need to be
restated as a result of an error discovered in the computation of its unpaid dividends on its 71/4% cumulative convertible preferred stock. The error was a result of the failure by
Company personnel to correctly apply compounding to the unpaid dividends. The Company has determined that deficiencies in its internal review processes resulted in this error not being detected on a
timely basis. As a result of the Company's recent relocation to Charlotte, NC, management of the Company reassessed its finance organizational structure and has recruited the necessary personnel to
improve its internal control and review processes.

In
addition, during the fourth quarter of 2003 and early 2004, it was determined that the Company's consolidated statements of operations for fiscal 2002, and the first two quarters of
fiscal 2003, would need to be restated as a result of errors regarding the reporting of certain tax refunds.

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Most
of these refunds were received because the Company became eligible to carry back certain losses and recover taxes previously paid to various taxing authorities five or more years ago. One of
these refunds resulted from a change in tax laws. The Company has determined that not having full-time in-house tax personnel resulted in this error not being detected on a more timely basis. In an
effort to prevent these errors from occurring again, the Company recently hired a tax director to oversee the preparation of tax filings and deferred tax computations. In addition, the Company intends
to implement a more stringent review process over the filing of tax returns and preparation of its deferred tax computations on a prospective basis.

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PART IIOTHER INFORMATION

Item 1. Legal Proceedings

Georgian Matters

The Company has recently received letters from, and corresponded with, two Georgian individuals involved in the initial formation, approximately eight to ten
years ago, of certain of the Company's business ventures in the Republic of Georgia. These individuals allege that the Company has not fully complied with its obligations to them under certain
contracts. In addition, the individuals have alleged that Company personnel may have violated the Foreign Corrupt Practices Act and possibly engaged in other improper or illegal conduct. However, the
individuals have so far refused to specify details of the alleged violations and have provided no evidence in support of the allegations that they have made.

The
Company had entered into contracts with these Georgian individuals. The contract with one of these individuals entitles him to 5% of any dividends the Company receives from Telecom
Georgia. The contract with the other individual entitles him, assuming certain conditions were satisfied, to up to a 1% portion of the Company's equity interest in certain of the Company's business
ventures in the Republic of Georgia, which the Company currently believes could only include Telecom Georgia, Ayety TV and Paging One (a now defunct paging company).

The
Company believes it has fully performed its obligations to date under the aforementioned contracts and has so informed the individuals. The Company also believes that the fair value
of any continuing interest that these individuals may have in the Georgian businesses subject to the contracts is not material. Furthermore, nothing presented in the unsupported allegations of
improper or illegal conduct of Company personnel has prompted the Company to amend or alter the report that it made to the United States Justice Department and the Securities and Exchange Commission
in the first quarter of 2003 regarding possible violations of foreign and United States laws, including the FCPA. As a matter of prudence and to ensure the claims of these Georgian individuals are
properly considered, the
Company's Board of Directors has authorized the Company's outside counsel to conduct an independent inquiry into both the Company's obligations under the contracts referred to above and the
allegations of possible improper or illegal conduct of Company personnel. The Company is not in a position to predict the outcome of this inquiry. However, due to the relatively low current fair value
of the businesses subject to contracts with these Georgian individuals and in view of the unspecific and unsupported nature of the individuals' allegations, the Company believes that the inquiry will
not result in any material adverse effect on the Company's business, financial condition or results of operations.

James S. Campbell v. Snapper, et al.

Mr. James Campbell filed a complaint in the Circuit Court of Walker County, Alabama against Turtle Shell, Inc., formerly known as
Snapper, Inc. (a wholly owned subsidiary of the Company) for damages related to injuries allegedly sustained by him while operating a Snapper lawnmower. Subsequent to such date, the Company
disposed of all assets and most liabilities of Snapper, Inc. However, the Company retained certain liabilities, including any obligations that may arise out of this litigation.
Mr. Campbell expired on July 14, 2003. In light of Mr. Campbell's death, his complaint has been amended to include a wrongful death claim and a claim of compensatory damages for
any pain and suffering incurred by Mr. Campbell from the time of injury until death. Mr. Campbell's estate has been substituted as the plaintiff in this action. Discovery is ongoing in
this case. The Company is not currently in a position to predict the outcome of any such proceedings, or the extent to which they could adversely affect the Company's financial condition and results
of operations. However, the Company has insurance for any claims in excess of $3.0 million.

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Matthew McLaughlin v. Metromedia

The plaintiff in this case, Matthew McLaughlin, filed a complaint against the Company in the Court of Chancery of the State of Delaware. In his complaint the
plaintiff is seeking to enforce his rights as a shareholder of the Company to inspect and copy certain books and records of the Company. The Company believes that the request made by the plaintiff is
overly broad and lacks a proper purpose. The Company is preparing to defend its position in court. No trial has been scheduled in this case. The Company is not in a position to predict the outcome of
any such proceedings, or the extent to which they could adversely affect the Company's financial condition and results of operations.

Updated
information on litigation and environmental matters subsequent to December 31, 2002 is as follows:

Contact with the United States Justice Department and Securities and Exchange Commission

For description of this proceeding through December 31, 2002, see Item 3 in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.

Fuqua Industries, Inc., Shareholder Litigation

For description of this proceeding through December 31, 2002, see Item 3 in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.

Report to the Pension Benefit Guaranty Corporation ("PBGC")

The Company and a subsidiary maintain tax-qualified pension plans that are subject to regulation by the Pension Benefit Guaranty Corporation ("PBGC").
In June 2003, the Company notified the PBGC (i) that the Company may have historically failed to timely satisfy certain minimum funding requirements with respect to one plan,
(ii) that the sale of corporate assets by a subsidiary of the Company may have triggered certain PBGC reporting, bonding and/or escrow requirements with respect to a second plan,
(iii) that the Company had recently added extra contributions to one plan, and (iv) that the Company believes that there are no further corrective actions required with respect to either
plan. The PBGC has not formally responded to the June 2003 notification but it may seek late reporting penalties and/or other corrective actions, the cost of which could be material to the
Company and/or its subsidiary.

Indemnification Agreements

In accordance with Section 145 of the General Corporation Law of the State of Delaware, pursuant to the Company's Restated Certificate of Incorporation,
the Company has agreed to indemnify its officers and directors against, among other things, any and all judgments, fines, penalties, amounts paid in settlements and expenses paid or incurred by virtue
of the fact that such officer or director was acting in such capacity to the extent not prohibited by law.

Item 2. Changes in Securities and Use of Proceeds

On November 5, 2003, the shareholders of the Company approved an amendment to the Company's Amended and Restated Certificate of Incorporation decreasing
the par of value of the common stock from $1.00 to $0.01 per share.

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Item 3. Defaults Upon Senior Securities

Preferred Stock

The Company has authorized 70.0 million shares of 71/4% cumulative convertible preferred stock with a liquidation preference of $50.00 per
share of which 4.1 million shares were outstanding as of September 30, 2003 and December 31, 2002.

Dividends
on the preferred stock are cumulative from the date of issuance and payable quarterly, in arrears. The Company may make any payments due on the preferred stock, including
dividend payments and redemptions (i) in cash; (ii) issuance of the Company's common stock or (iii) through a combination thereof. The dividend requirement for the twelve months
ending September 30, 2004 will be $18.5 million, including the effects of compounding and assuming there are no payments of the dividends.

The
Company has elected not to declare a dividend for any quarterly dividend periods ending after June 15, 2001. As of September 30, 2003, total dividends in arrears are
$41.4 million. As the Company has not paid the dividend on the preferred stock for at least six consecutive quarters as required, holders of the preferred stock have the right to elect two new
directors to the Company's Board of Directors. A holder of the Company's preferred stock has recently inquired about the appointment of the preferred stock designees to the Company's Board of
Directors and the Company is in the process of responding to the inquiry.

Item 4. Submission of Matters to a Vote of Security Holders

At the Company's 2003 Annual Meeting of Stockholders held on November 5, 2003, the stockholders of the Company were asked to consider and vote on the
following matters: (i) the election of two members to the Company's Board of Directors to serve as Class II Directors for three year terms ending in the year 2006; (ii) the
Proposed Amendment to the Amended and Restated Certificate of Incorporation to decrease the par value of the common stock from $1.00 to $0.01 per share; and (iii) the ratification of the
appointment of KPMG LLP as the Company's independent accountants for the year ending December 31, 2003.

At
such meeting, a majority of the Company's stockholders voted to approve the election of I. Martin Pompadur and Leonard White as Class II Directors for three year terms ending
in the year 2006; the Amendment to the Amended and Restated Certificate of Incorporation to decrease the par value of the common stock from $1.00 to $0.01 per share and the ratification of the
appointment of KPMG LLP as the Company's independent accountants for the year ending December 31, 2003.

The
following is a summary of the voting results with respect to each of the proposals:

|Proposal |  | Votes For                                                                                                                                      |                    | Votes Against |            | Withheld  |   | Abstention & Broker
Non-Votes
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ------------- | ---------- | --------- | - | -----------------------------
|1.       |  | The Election of Class II Directors                                                                                                             |                    |               |            |           |   |                              
|Name     |  |                                                                                                                                                |                    |               |            |           |   |                              
|         |  |                                                                                                                                                | I. Martin Pompadur |               | 69,168,376 |           |  |                              
|         |  |                                                                                                                                                | Leonard White      |               | 67,881,840 |           |  |                              
|2.       |  | Amendment to the Amended and Restated Certificate of Incorporation to decrease the par value of the common stock from $1.00 to $0.01 per share |                    | 69,995,665    |            | 2,319,797 |   | 204,172                      
|3.       |  | Ratification of the Appointment of Independent Accountants                                                                                     |                    | 70,859,565    |            | 1,548,717 |   | 111,352                      

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No
other matters were submitted to a vote of the Company's stockholders, through the solicitation of proxies or otherwise.

Item 6. Exhibits and Reports on Form 8-K

|Exhibit
Number  |  | Description                                                                                                                     
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------
|(a)    Exhibits
|3.7*            |  | Certificate of Amendment to the Restated Certificate of Incorporation of Metromedia International Group, Inc.                   
|10.56*          |  | Employment Agreement by and between Metromedia International Telecommunications, Inc. and Natasha Alexeeva dated January 1, 2003
|10.57*          |  | Retention Agreement, dated as of November 3, 2003, between Metromedia International Group, Inc. and Natasha Alexeeva            
|31.1*           |  | Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                      
|31.2*           |  | Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                      
|32.1*           |  | Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                          
|32.2*           |  | Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                          



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

| |  | METROMEDIA INTERNATIONAL GROUP, INC.
| |  | ------------------------------------
| |  | By:                                 
| |  | By:                                 

Dated:
February 24, 2004

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