COLLATERAL AGREEMENT

Among

Eco Telecom Limited,

as Pledgor,

The Bank of New York,

as Securities Intermediary

The Bank of New York,

as Depositary under the ADR Program

and

Deutsche International Corporate Services Limited,

as Collateral Agent and Trustee

Dated as of

April 28, 2005

The following Table of Contents has been inserted for convenience of reference only and does not constitute a part of the Collateral Agreement.

TABLE OF CONTENTS

SECTION

i

COLLATERAL AGREEMENT

THIS COLLATERAL AGREEMENT (this Collateral Agreement), dated as of April 28, 2005, among Eco Telecom Limited, a company organized under the laws of Gibraltar (the Pledgor), Deutsche International Corporate Services Limited, a Jersey company, as Collateral Agent (in such capacity, together with its successors in such capacity, the Collateral Agent) for the benefit of Deutsche International Corporate Services Limited, as trustee under the Indenture referred to below (in such capacity, together with its successors in such capacity, the Trustee), the Trustee, The Bank of New York, in its capacity as Securities Intermediary in respect of the Collateral Account (as defined herein) (the Securities Intermediary) and, solely with respect to Section 11 of this Collateral Agreement, The Bank of New York, in its capacity as depositary under the ADR Program (as defined below) (in such capacity, together with its successors in such capacity, the Depositary).

W I T N E S S E T H:

WHEREAS, pursuant to the Indenture (the Indenture), dated as of the date hereof, between the Pledgor, the Trustee, Alfa Telecom Limited, as guarantor (the Guarantor) and Deutsche Bank AG London branch, as Calculation Agent, the Pledgor has issued bonds in aggregate principal amount of $350,000,000 (the Securities) fully and unconditionally guaranteed by the Guarantor;

NOW, THEREFORE, to secure the performance by the Pledgor of its obligations under the Securities and the Indenture and to secure the observance and performance of the covenants and agreements contained herein and in the Indenture, the parties hereto agree as follows:

1. The Security Interests.

In order to secure the observance and performance of the covenants, agreements and obligations contained herein and in the Indenture and the Securities:

(a) Security Interests. The Pledgor hereby grants and pledges unto the Collateral Agent, as agent of and for the benefit of the Collateral Agent and the Trustee, as trustee for the Holders from time to time of the Securities, a security interest in and to, and a lien upon and right of set-off against, all of the Pledgors right, title and interest in and to (i) the Pledged Items described in paragraph (b); (ii) all additions to such Pledged Items; (iii) the Collateral Account, all securities and other financial assets (each as defined in Section 8-102 of the UCC) and other funds, property or assets from time to time held therein or credited thereto and all security entitlements in respect thereof; (iv) all powers and rights now owned or hereafter acquired under or with respect to the Pledged Items; and (v) all income, proceeds and collections received or to be received, or derived or to be derived, now or any time hereafter from or in connection with the Pledged Items (whether such proceeds arise before or after the commencement of any proceeding under any applicable bankruptcy, insolvency or other similar law, by or against the Pledgor with respect to the Pledgor) (the Proceeds) (such Pledged Items, additions, substitutions, income, collections, powers, rights and Proceeds described in clauses (i)

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