PLD TELEKOM INC
DEF 14A, 1998-07-22
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>   1
                                  SCHEDULE 14A
                                 (RULE 14a-101)
 
                    INFORMATION REQUIRED IN PROXY STATEMENT
 
                            SCHEDULE 14A INFORMATION
          PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
 
     Filed by the Registrant [x]

     Filed by a Party other than the Registrant [ ]
 
     Check the appropriate box:
 
     [ ] Preliminary Proxy Statement        [ ] Confidential, for Use of the
                                                Commission Only (as permitted by
                                                Rule 14a-6(e)(2))
     [X] Definitive Proxy Statement
 
     [ ] Definitive Additional Materials
 
     [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

                              PLD TELEKOM INC.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

 
- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
     [ ] No fee required.
 
     [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
         0-11.
 
     (1) Title of each class of securities to which transaction applies:
 
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     (2) Aggregate number of securities to which transaction applies:
 
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     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
         filing fee is calculated and state how it was determined):
 
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     (4) Proposed maximum aggregate value of transaction:
 
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     (5) Total fee paid:
 
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     [x] Fee paid previously with preliminary materials.
 
     [ ] Check box if any part of the fee is offset as provided by Exchange Act
         Rule 0-11(a)(2) and identify the filing for which the offsetting fee
         was paid previously. Identify the previous filing by registration
         statement number, or the form or schedule and the date of its filing.
 
     (1) Amount previously paid:
 
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     (2) Form, schedule or registration statement no.:
 
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     (3) Filing party:
 
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<PAGE>   2
 
                                PLD TELEKOM INC.
                                680 Fifth Avenue
                                   24th Floor
                            New York, New York 10019
                            ------------------------
 
              NOTICE OF SPECIAL AND ANNUAL MEETING OF STOCKHOLDERS
                                 TO BE HELD ON
                                August 13, 1998
                            ------------------------
 
TO THE STOCKHOLDERS OF
PLD TELEKOM INC.:
 
     Notice is hereby given that a combined Special and Annual Meeting (the
"Meeting") of the stockholders of PLD Telekom Inc. (the "Company") will be held
at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New
York 10178 on August 13, 1998, at 10:00 a.m., local time, for the following
purposes:
 
          1. To consider and vote upon a proposal to approve an Asset Exchange
     Agreement, dated April 19, 1998 (the "Asset Exchange Agreement"), between
     the Company and News America Incorporated, subsequently assigned by News
     America Incorporated to NewsPLD LLC (together, "News"), providing for the
     acquisition by the Company from News of 100% of the outstanding shares in
     PLD Holdings Limited, in exchange for the issuance of 3,826,041 shares of
     Common Stock of the Company, and the transactions contemplated thereby;
 
          2. To elect ten directors; and
 
          3. To transact such other business as may properly come before the
     Meeting or any adjournments thereof.
 
     THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE ASSET EXCHANGE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS VOTE TO APPROVE THE ASSET EXCHANGE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
 
     Only stockholders of record as of the close of business on June 15, 1998
will be entitled to notice of the Meeting and to vote at the Meeting and any
adjournments thereof. A list of stockholders of the Company as of the close of
business on June 15, 1998 will be available for inspection during normal
business hours for ten days prior to the Meeting at the Company's executive
offices at 680 Fifth Avenue, 24th Floor, New York, New York.
 
                                          By order of the Board of Directors,
 
                                          JAMES R.S. HATT
                                          Chairman, President and
                                            Chief Executive Officer
 
New York, New York
July 22, 1998
 
 EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD
  IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
  STATES. IF A STOCKHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY, IF SO
            DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE>   3
 
                                PLD TELEKOM INC.
                                680 FIFTH AVENUE
                                   24TH FLOOR
                            NEW YORK, NEW YORK 10019
                            ------------------------
 
                                PROXY STATEMENT
                                      FOR
                   SPECIAL AND ANNUAL MEETING OF STOCKHOLDERS
                                 TO BE HELD ON
                                AUGUST 13, 1998
                            ------------------------
 
     This proxy statement and the accompanying form of proxy are being mailed on
or about July 22, 1998, to the stockholders of PLD Telekom Inc. ("PLD" or the
"Company"). These materials are being furnished in connection with the
solicitation by the Board of Directors of the Company (the "Board") of proxies
to be voted at a combined Special and Annual Meeting of Stockholders (the
"Meeting") to be held at the offices of Morgan, Lewis & Bockius LLP, 101 Park
Avenue, New York, New York 10178 on August 13, 1998, at 10:00 a.m., local time,
and at any adjournments thereof.
 
     At the Meeting, the stockholders of record of the common stock, par value
$0.01 per share, of the Company (the "Common Stock") as of the close of business
on June 15, 1998 (the "Record Date") will consider and vote upon proposals: (i)
to approve an Asset Exchange Agreement, dated April 19, 1998 (the "Asset
Exchange Agreement"), between the Company and News America Incorporated,
subsequently assigned by News America Incorporated to NewsPLD LLC (together,
"News"), providing for the acquisition by the Company from News of 100% of the
outstanding shares in PLD Holdings Limited, in exchange for the issuance of
3,826,041 shares of Common Stock (the "Exchange Shares"), and the transactions
contemplated thereby (such transactions being referred to herein collectively as
the "Asset Exchange"); (ii) to elect ten directors to the Board; and (iii) to
transact such other business as may properly come before the Meeting or any
adjournments thereof.
 
     The Asset Exchange Agreement and the transactions contemplated thereby are
complex and are discussed in detail in this Proxy Statement. Stockholders are
strongly encouraged to read carefully and consider this Proxy Statement in its
entirety.
<PAGE>   4
 
                             AVAILABLE INFORMATION
 
     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). These reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Seven World
Trade Center, New York, New York 10048, and Northwestern Atrium Center, 800 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains
a World Wide Web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. The address of that site is http://www.sec.gov.
 
     Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents filed by the Company with the Commission are
incorporated by reference in this Proxy Statement:
 
          (a) Annual Report on Form 10-K, filed with the Commission on March 31,
     1998 for the fiscal year ended December 31, 1997;
 
          (b) Amendment No. 1 to Annual Report on Form 10-K/A, filed with the
     Commission on April 29, 1998 for the fiscal year ended December 31, 1997;
 
          (c) Amendment No. 2 to Annual Report on Form 10-K/A, filed with the
     Commission on July 22, 1998 for the fiscal year ended December 31, 1997;
 
          (d) Quarterly Report on Form 10-Q, filed with the Commission on May
     15, 1998 for the quarter ended March 31, 1998;
 
          (e) Amendment No. 1 to Quarterly Report on Form 10-Q/A, filed with the
     Commission on July 22, 1998 for the quarter ended March 31, 1998;
 
          (f) Current Report on Form 8-K, filed with the Commission on April 3,
     1998, as amended by a Current Report on Form 8-K/A, filed with the
     Commission on April 8, 1998;
 
          (g) Current Report on Form 8-K, filed with the Commission on April 22,
     1998; and
 
          (h) The descriptions of the Common Stock set forth in the Company's
     Registration Statements pursuant to Section 12 of the Exchange Act, and any
     amendment or report filed for the purpose of updating such description.
 
     All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Proxy Statement and
prior to the date of the Meeting shall be deemed to be incorporated by reference
into this Proxy Statement.
 
     Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document which is also incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
 
                                        2
<PAGE>   5
 
     This Proxy Statement incorporates documents by reference which are not
presented herein or delivered herewith. These documents (not including exhibits
to the documents incorporated by reference unless such exhibits are specifically
incorporated by reference into the information that this Proxy Statement
incorporates) are available without charge to any person, including any
beneficial owner, to whom a Proxy Statement is delivered upon written or oral
request. Requests should be directed to: PLD Telekom Inc., 680 Fifth Avenue,
24th Floor, New York, New York 10019, Attention: Secretary (telephone number
(212) 262-6060).
 
                                        3
<PAGE>   6
 
                                    SUMMARY
 
     The following is a summary of significant matters discussed elsewhere in
this Proxy Statement. This summary is qualified in its entirety by reference to
the more detailed information appearing in this Proxy Statement and the
Appendices hereto. Stockholders are urged to read the entire Proxy Statement,
including the Appendices hereto.
 
THE TRANSACTIONS
 
     At the Meeting, stockholders of the Company will be asked to consider and
vote upon proposals: (i) to approve the Asset Exchange Agreement and the
transactions contemplated thereby; and (ii) to elect ten directors to the Board.
 
     The Asset Exchange Agreement, which was executed on April 19, 1998, is one
of three agreements executed on that date between the Company, News and Cable
and Wireless plc ("C&W") relating to the acquisition by the Company and News of
certain assets owned by C&W. The closing of the transactions contemplated by
each of these agreements is subject to a number of conditions as described in
more detail in "The Asset Exchange -- Terms of the Transaction;" "The Asset
Exchange Agreement" and "-- Regulatory Approvals."
 
     A summary of each of these agreements and the transactions contemplated
thereby are set forth below.
 
     BELCEL Acquisition.  Pursuant to an agreement between the Company and C&W,
(the "BELCEL Acquisition Agreement"), the Company agreed with Cable and Wireless
plc ("C&W") to acquire all of the shares of CommStruct International Byelorussia
BV, a Netherlands corporation ("CIBBV"), which is the owner of 50% of
Belarus-Netherlands Belcel Joint Venture ("BELCEL"), which in turn is the
operator of a mobile telephone business in Belarus, plus certain intercompany
indebtedness. The other 50% interest in BELCEL is now, and will, following the
consummation of the acquisition continue to be, owned by the Minsk City
Telephone Network (45%) and the Minsk Regional Telephone Network (5%). The
shares of CIBBV and the intercompany indebtedness being acquired are hereinafter
referred to as the "BELCEL Interest". The Company will issue 500,000 shares of
Common Stock for the BELCEL Interest.
 
     C&W-News Transaction.  Pursuant to an agreement between C&W and News (the
"C&W-News Agreement"), News agreed to acquire from C&W all of the shares of the
Company's Common Stock owned directly and indirectly by C&W (including the
shares to be issued pursuant to the BELCEL Acquisition Agreement), a warrant to
purchase 250,000 additional such shares, and all of the shares of PLD Holdings
Limited, a Bermuda company ("Holdings"), for $80,000,000. Holdings owns 11% of
PeterStar Company Limited ("PeterStar"), in which the Company also currently
owns a 60% interest and which is one of the Company's principal operating
businesses in the former Soviet Union.
 
     Asset Exchange.  Pursuant to the Asset Exchange Agreement, the Company
agreed to acquire from News 100% of the outstanding shares of Holdings (which
News acquired from C&W) in exchange for the issuance of 3,826,041 shares of
Common Stock.
 
     Resulting Ownerships.  Following completion of the three transactions
summarized above:
 
          - News PLD LLC, a wholly owned subsidiary of News America
            Incorporated, will own an aggregate of 14,381,780 shares of the
            Company's Common Stock (representing approximately 38.0% of the
            outstanding Common Stock after the completion of the transactions)
            and a warrant to purchase an additional 250,000 shares of Common
            Stock;
 
          - PLD will own, in addition to its other holdings: (i) a 100% interest
            in CIBBV and, indirectly, a 50% interest in BELCEL; and (ii) a total
            interest of 71% in PeterStar; and
 
          - C&W will have no remaining interests in any of PLD, CIBBV or
            Holdings and will have received an aggregate of $80,000,000.
 
     See "Business -- Corporate Structure" for organizational charts showing the
ownership of the Company and its interests in operating businesses including
PeterStar, and after the closing of the transactions contemplated by the BELCEL
Acquisition Agreement, BELCEL.
 
                                        4
<PAGE>   7
 
PARTIES
 
     PLD Telekom Inc.  The Company, through its operating subsidiaries, is a
major provider of local, long distance and international telecommunications
services in the Russian Federation and Kazakhstan. The Company's four principal
operating businesses are: (i) PeterStar, which provides integrated local, long
distance and international telecommunications services in St. Petersburg through
a fully digital fiber optic network; (ii) Technocom Limited ("Technocom"),
which, through Teleport-TP, provides dedicated international telecommunications
services to Russian and foreign businesses in Moscow and operates a
satellite-based pan-Russian long distance network; (iii) Baltic Communications
Limited ("BCL"), which provides dedicated international telecommunications
services in St. Petersburg; and (iv) ALTEL (formerly known as BECET
International), ("ALTEL"), which currently provides the only national cellular
service in Kazakhstan. The Company's executive offices are located at 680 Fifth
Avenue, 24th Floor, New York, New York 10019 and its telephone number is (212)
262-6060.
 
     News America Incorporated.  News America Incorporated, the principal
subsidiary in the United States of The News Corporation Limited ("News
Corporation"), is a holding company whose affiliates and subsidiaries conduct
the United States activities of News Corporation. News Corporation is a
diversified international communications company principally engaged in the
production and distribution of motion pictures and television programming,
television broadcasting, publication of newspapers, magazines and books,
promotional marketing services, digital broadcasting system design, conditional
access and subscriber management systems and providing computer information
services. All of the businesses in which News Corporation are engaged are
conducted in highly competitive markets. The activities of News Corporation are
conducted principally in the United States, the United Kingdom, Australia and
the Asia Pacific region. News Corporation has also entered into joint ventures
to provide direct broadcast satellite television services in Latin America.
 
     PeterStar Company Limited.  PeterStar, in which the Company currently owns
a 60% interest, operates a fully digital, city-wide fiber optic
telecommunications network in St. Petersburg that is interconnected with the
network of Petersburg Telephone Network ("PTN"), the local telephone company, as
well as the Russian national and international long distance systems. PeterStar
provides integrated, high quality, digital telecommunications services with
modern transmission equipment, including local, national and international long
distance and value-added services, to businesses in St. Petersburg. PeterStar's
executive offices are located at: Building 31, Line 16, Vassilievski Island,
199178, St. Petersburg, Russia.
 
     PLD Holdings Limited.  Holdings, a Bermuda corporation which is an indirect
wholly owned subsidiary of C&W, is the holding company for C&W's 11% interest in
PeterStar. At the time of its acquisition by the Company, it will have no other
business activities or material assets. Holdings' registered offices are located
at: Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda.
 
MARKET PRICE INFORMATION
 
     On April 17, 1998, the last trading day prior to the announcement of the
proposed transactions, the last reported sale price of the Company's Common
Stock on the Nasdaq Stock Market (ticker symbol: PLDI) was $9.015625 and the
last reported sale prices of the American Depositary Receipts of News
Corporation (ticker symbol: NWS) and C&W (ticker symbol: CWP) on the New York
Stock Exchange were $29.625 and $37.4375, respectively.
 
THE MEETING
 
     The Meeting will be held on August 13, 1998, at 10:00 a.m., local time, at
the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York
10178.
 
     At the Meeting, the stockholders of record of Common Stock as of the close
of business on June 15, 1998 will consider and vote upon proposals: (i) to
approve the Asset Exchange Agreement between the Company and News, providing for
the acquisition by the Company from News of 100% of the outstanding shares in
Holdings, in exchange for the issuance of 3,826,041 shares of Common Stock, and
the transactions
 
                                        5
<PAGE>   8
 
contemplated thereby; (ii) to elect ten directors to the Board; and (iii) to
transact such other business as may properly come before the Meeting or any
adjournments thereof.
 
     Approval of the Asset Exchange Agreement and the transactions contemplated
thereby requires the affirmative vote of a majority of the shares present in
person or represented by proxy at the Meeting and entitled to vote. Directors
are to be elected at the Meeting by a plurality of the votes cast by holders of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote.
 
     Shareholder approval of the Asset Exchange Agreement is being sought by
reason of the application to this transaction of Rule 4460(i)(C)(i) of the
Marketplace Rules of The Nasdaq Stock Market (the "Nasdaq Rules"), on which the
Company's shares are listed.
 
     C&W, which currently owns approximately 30.0% of the outstanding shares of
Common Stock, has indicated that it intends to vote in favor of the Asset
Exchange Agreement and the transactions contemplated thereby.
 
REASONS FOR THE ASSET EXCHANGE
 
     See "The Asset Exchange -- Reasons for the Asset Exchange Agreement;
Recommendation of the Board of Directors."
 
RECOMMENDATION OF BOARD OF DIRECTORS
 
     The Board of Directors of the Company has approved the Asset Exchange
Agreement and the transactions contemplated thereby and recommends that the
Company's stockholders vote to approve the Asset Exchange Agreement and the
transactions contemplated thereby. See "The Asset Exchange -- Reasons for the
Asset Exchange Agreement; Recommendation of the Board of Directors."
 
THE ASSET EXCHANGE AGREEMENT
 
     The Asset Exchange Agreement sets forth the principal terms by which the
transactions contemplated by the Asset Exchange Agreement will be consummated.
The Asset Exchange Agreement contains representations, warranties and agreements
of the parties, and provides specific conditions to the consummation of the
transactions contemplated by the Asset Exchange Agreement. See "The Asset
Exchange -- The Asset Exchange Agreement."
 
CLOSING DATE
 
     Subject to the Company's or News' rights to terminate the Asset Exchange
Agreement, the closing of the Asset Exchange will occur three business days
after the date upon which all of the conditions to the Asset Exchange Agreement
are satisfied or duly waived, or at such other time and date as the Company and
News may agree. The Asset Exchange will close at the same time as, and is
conditioned on, the completion of the transactions contemplated by the C&W-News
Agreement and the BELCEL Acquisition Agreement. The Company and News currently
anticipate that the Asset Exchange will be completed on or about August 14,
1998, if the Asset Exchange Agreement and the transactions contemplated thereby
are approved at the Meeting.
 
RECENT DEVELOPMENTS
 
     In recent weeks, there has been considerable turmoil and uncertainty in the
Russian financial markets, prompted in large part by the crisis in the Asian
financial markets which began in late 1997 and is still continuing, and the
economic and political problems being experienced by a number of Asian
countries. While this has not had an immediate impact upon the Company, there
can be no assurance that it will not have a material adverse effect in the
future. See "Business -- Recent Developments."
 
     As of June 1, 1998 the interest rates payable in respect of the Company's
Senior Notes due 2004 and its Revolving Credit Notes due 1998 increased from 14%
to 14.5%, and from 12% to 15%, respectively, because the Company did not raise
$20,000,000 in additional equity by May 31, 1998, as provided by the terms of
those Notes. See "Business -- Recent Developments."
 
                                        6
<PAGE>   9
 
                                  THE MEETING
 
GENERAL
 
     This Proxy Statement is being furnished to holders of Common Stock in
connection with the solicitation of proxies by the Board for use at the combined
Special and Annual Meeting of Stockholders to be held on August 13, 1998, at
10:00 a.m., and at any adjournment or postponement thereof.
 
PURPOSE OF THE MEETING
 
     At the Meeting, stockholders of the Company will be asked to consider and
vote upon proposals: (i) to approve the Asset Exchange Agreement and the
transactions contemplated thereby; and (ii) to elect ten directors to the Board.
 
     This Proxy Statement and its contents have been approved and its
distribution authorized by the Board.
 
     THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE ASSET EXCHANGE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE ASSET EXCHANGE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
 
VOTING RIGHTS
 
     The Board has fixed June 15, 1998 as the Record Date for the determination
of stockholders entitled to notice of and to vote at the Meeting. Accordingly,
only stockholders of record of Common Stock at the close of business on the
Record Date are entitled to notice of, and to vote at, the Meeting. As of June
15, 1998, there were 33,520,748 shares of Common Stock outstanding. Each
stockholder entitled to vote shall have the right to one vote for each share of
Common Stock outstanding in such stockholder's name.
 
     The Company presently has no other class of stock outstanding and entitled
to be voted at the Meeting (pursuant to the Company's Certificate of
Incorporation, holders of the Company's Series II Convertible Preferred Stock,
par value $.01 and Series III Convertible Preferred Stock, par value $.01 are
not entitled to receive notice of or to attend the Meeting or to vote at the
Meeting).
 
     The presence in person or by proxy of holders entitled to cast a majority
of all votes entitled to be cast at the Meeting will constitute a quorum.
 
     Shares cannot be voted at the Meeting unless the holder of record is
present in person or by proxy.
 
SOLICITATION AND REVOCATION OF PROXIES
 
     The enclosed form of proxy is a means by which a stockholder may authorize
the voting of his or her shares at the Meeting. All shares represented by
properly executed proxies will be voted in accordance with the directions on the
proxies, unless such proxies are revoked prior to the vote. PROPERLY EXECUTED
PROXIES CONTAINING NO INSTRUCTIONS REGARDING ANY PARTICULAR MATTER SPECIFIED
THEREIN WILL BE VOTED FOR THE APPROVAL OF SUCH MATTER OR, IN THE CASE OF
ELECTION OF DIRECTORS, FOR THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS.
 
     Approval of the Asset Exchange Agreement and the transactions contemplated
thereby requires the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Meeting and entitled to
vote. Directors are to be elected at the Meeting by a plurality of the votes
cast by holders of Common Stock present in person or represented by proxy at the
Meeting and entitled to vote.
 
     In the case of shares that are present at the Meeting for quorum purposes,
not voting those shares for a particular nominee for director (including by
withholding authority on the proxy) will not operate to prevent the election of
that nominee if he otherwise receives affirmative votes. An abstention on any
other item (including as to the Asset Exchange Agreement and the transactions
contemplated thereby) will operate to prevent approval of the item to the same
extent as a vote against approval of such item and a broker "non-
 
                                        7
<PAGE>   10
 
vote" on any item (which results when a broker holding shares for a beneficial
owner has not received timely voting instructions on certain matters from such
beneficial owner and those matters are matters with respect to which the broker
has no discretion to vote) will have the same effect on the outcome of the vote
on such item.
 
     The Board does not know of any other matters which may come before the
Meeting. If any other matters are properly presented to the Meeting, for action,
the proxy holders will vote the proxies (which confer discretionary authority to
vote on such matters) in accordance with their best judgment.
 
     Any stockholder of the Company who executes and returns a proxy has the
power to revoke it any time before it is voted. The giving of a proxy does not
affect a stockholder's right to attend the Meeting and vote in person. A
stockholder's presence at the meeting, however, will not in itself revoke the
stockholder's proxy. Any stockholder giving a proxy has the right to revoke it
by giving written or oral notice of revocation to the Secretary of the Company,
at 680 Fifth Avenue, 24th Floor, New York, NY 10019, or by delivering a
subsequently executed proxy, at any time before the proxy is voted.
 
     The Company will bear the cost of solicitation of proxies for the Meeting.
In addition to the use of the mails, proxies may be solicited by telephone by
directors and officers and employees of the Company who will not be specially
compensated for such services. The Company will request that the Notice of
Meeting, this Proxy Statement, the proxy and related materials, if any, be
forwarded to beneficial owners and expects to reimburse banks, brokers and other
persons for their reasonable out-of-pocket expenses in handling such matters.
 
     Your proxy vote is important. Accordingly, you are asked to complete, sign
and return the accompanying proxy card whether or not you plan to attend the
Meeting. If you plan to attend the Meeting to vote in person and your shares are
registered with the Company's transfer agent in the name of a broker or bank,
you must secure a proxy from your broker or bank assigning voting rights to you
for your shares of Common Stock.
 
                                        8
<PAGE>   11
 
                               THE ASSET EXCHANGE
 
     This portion of the Proxy Statement describes various aspects of the Asset
Exchange. The following descriptions do not purport to be complete and are
qualified in their entirety by reference to the Asset Exchange Agreement
attached hereto as Appendix A and incorporated herein by reference. ALL
STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE ASSET EXCHANGE AGREEMENT IN
ITS ENTIRETY.
 
BACKGROUND TO THE ASSET EXCHANGE
 
     In 1997, C&W announced its decision to dispose of its interest in the
Company. The Company is aware that C&W had discussions with a number of other
telecommunications companies regarding the acquisition of such interest. The
Company does not know the details of those discussions, nor why they terminated.
The Company has had its own discussions with C&W relating to the Company's
acquisition of the C&W interests in PeterStar and BELCEL. Those discussions
terminated in 1997 when C&W indicated an unwillingness to sell such interests
separately from any sale of its interest in the Company. Since C&W was not
willing to entertain an offer for its PeterStar and BELCEL stakes separate from
its stake in the Company, the discussions were of a preliminary nature and did
not progress to a discussion of pricing or other terms.
 
     In July 1997 the Russian government conducted an auction for a 25% interest
in Sviazinvest, an entity created by the government to hold its interests in 85
privatized regional telephone companies and in Rostelecom, the privatized long
distance carrier. A number of national and international consortia bid for this
interest, which was eventually acquired by a group including Oneximbank and
Renaissance Capital. AO LogoVAZ, a major Russian industrial conglomerate with
interests, inter alia, in oil, automobiles, airlines and media ("LogoVAZ"), was
a member of one of the losing consortia. LogoVAZ continued to be interested in
developing a presence in the Russian telecommunications market and approached
the Company to discuss ways in which the Company and LogoVAZ might cooperate to
achieve this.
 
     In early 1998, News and LogoVAZ began discussing an investment in the
Company by News in conjunction with LogoVAZ, and more specifically, a
transaction in which News and LogoVAZ would jointly purchase the C&W interest in
the Company.
 
     Following this, News approached the Company to obtain more information
regarding its business and operations. On March 16, 1998, it executed a
confidentiality agreement with the Company and thereafter conducted extensive
due diligence with respect to the Company.
 
     It was agreed between LogoVAZ and News that News would negotiate to buy the
C&W interest in the Company on its own and, if it was successful, would then
enter into negotiations with LogoVAZ for the acquisition by LogoVAZ of an
interest in the position purchased by News.
 
     News has advised the Company that negotiations with LogoVAZ have commenced
and are continuing.
 
     Negotiations between C&W and News ensued with respect to C&W's interest in
the Company as well as its interests in PeterStar and BELCEL. News agreed to
acquire the PeterStar interest from C&W, but made it a condition to its
acquisition that the Company agree to acquire this interest from News
substantially simultaneously with its acquisition from C&W, and that the Company
separately acquire the BELCEL Interest from C&W.
 
     The Company was willing to accede to these requirements of News for the
reasons set forth in "Reasons for the Asset Exchange Agreement; Recommendation
of the Board of Directors" below. The Board, which had been kept generally
apprised of the status of the multi-party negotiations, met by telephone
conference on April 17 and April 19, 1998 to approve the terms of the
transactions, and the Asset Exchange Agreement, together with the C&W-News
Agreement and the BELCEL Acquisition Agreement, were signed on April 19, 1998.
The directors nominated by Navona Communications Corporation Ltd., a Bermuda
corporation ("Navona") and a wholly owned subsidiary of C&W through which C&W
holds its shares in the Company, abstained from voting on the transactions. All
of the other directors of the Company voted in favor of the transactions except
Mr. Gennady Kudriavtsev, who was not present. Mr. Kudriavtsev subsequently
indicated his approval of the transactions.
 
                                        9
<PAGE>   12
 
TERMS OF THE TRANSACTIONS
 
     General.  At the Meeting, the stockholders of the Company will be asked to
consider and vote upon, among other things, a proposal to approve the Asset
Exchange Agreement and the transactions contemplated thereby.
 
     The Asset Exchange Agreement was executed on April 19, 1998. Closing is
subject to a number of conditions, including approval by the stockholders of the
Company, regulatory approvals and the closing of the two other agreements also
executed on April 19, 1998.
 
     The transactions contemplated by the Asset Exchange Agreement, the BELCEL
Acquisition Agreement and the C&W-News Agreement will not effectuate any
material changes in the rights of the holders of any capital stock of the
Company.
 
     BELCEL Acquisition.  Under the BELCEL Acquisition Agreement, the Company
agreed with C&W to acquire 100% of the shares of CIBBV, which is the owner of
50% of BELCEL, which in turn is the operator of a mobile telephone business in
Belarus (the other 50% interest in BELCEL is now, and will, following the
consummation of the acquisition continue to be, owned by the Minsk City
Telephone Network (45%) and the Minsk Regional Telephone Network (5%)). C&W also
agreed to assign to PLD the benefit of the Loan Agreement, dated November 28,
1995, between C&W and CIBBV, as amended. The current balance owed by CIBBV to
C&W (and which will be owed to PLD after the closing of the transactions
contemplated by the BELCEL Acquisition Agreement) was approximately $8.6 million
as of December 31, 1997. In addition, C&W agreed to either terminate, or assign
to PLD the benefit of, the existing intercompany indebtedness for money owed to
C&W and its subsidiaries and affiliates by CIBBV and BELCEL which totaled
approximately $3.9 million as of December 31, 1997. The Company will issue a
total of 500,000 shares of Common Stock to C&W for the BELCEL Interest in a
private placement under Section 4(2) of the Securities Act of 1933 (the
"Securities Act"). C&W, which is a leading global communications company,
already owns 10,055,739 shares of Common Stock, or approximately 30.0% of the
total common stock outstanding.
 
     Closing of the transactions contemplated by the BELCEL Acquisition
Agreement is subject to a number of conditions, including, among other things:
(i) the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), applicable to the C&W-News Agreement shall
have expired or been terminated (the waiting period was terminated on May 4,
1998); (ii) no preliminary or permanent injunction or other order or decree by
any court shall have been issued and remain in effect which prevents the
consummation of the BELCEL Acquisition Agreement and the transactions
contemplated thereby, and no statute, rule or regulation shall have been enacted
by any government or governmental agency which prohibits the consummation of the
BELCEL Acquisition Agreement; (iii) the stockholders of the Company shall have
approved the Asset Exchange Agreement; (iv) the stockholders of CIBBV shall have
approved the transfer of the CIBBV shares to the Company; and (v) the
performance by the Company and C&W of their respective obligations under the
BELCEL Acquisition Agreement and the accuracy of their respective
representations and warranties thereunder. In addition, the obligations of C&W
to consummate the transactions contemplated by the BELCEL Acquisition Agreement
are subject to the satisfaction of the conditions to the closing of the
transactions contemplated by the C&W-News Agreement. Management of the Company
is not presently aware of any circumstance that would be reasonably likely to
prevent any of the conditions to the BELCEL Acquisition Agreement from being
satisfied.
 
     The BELCEL Acquisition Agreement was filed as an exhibit to the Company's
Current Report on Form 8-K, filed with the Commission on April 22, 1998, which
report is incorporated by reference herein.
 
     C&W-News Transaction.  Under the C&W-News Agreement, News agreed to acquire
from C&W all of the shares of the Company's Common Stock owned by C&W (including
the shares to be issued pursuant to the BELCEL Acquisition Agreement), a warrant
to purchase 250,000 additional such shares, and all of the shares of Holdings,
for $80,000,000. Holdings owns 11% of PeterStar, in which the Company also
currently owns a 60% interest and which is one of the Company's principal
operating businesses in the former Soviet Union. As noted, at the time of its
acquisition by the Company, Holdings will have no business activities or
material assets other than its interest in PeterStar.
 
                                       10
<PAGE>   13
 
     Closing of the transactions contemplated by the C&W-News Agreement is
subject to a number of conditions, including, among other things: (i) the
waiting period under the HSR Act applicable to the C&W-News Agreement shall have
expired or been terminated (the waiting period was terminated on May 4, 1998);
(ii) no preliminary or permanent injunction or other order or decree by any
court shall have been issued and remain in effect which prevents the
consummation of the C&W-News Agreement and the transactions contemplated
thereby, and no statute, rule or regulation shall have been enacted by any
government or governmental agency which prohibits the consummation of the
C&W-News Agreement; (iii) the Company shall have issued to C&W the 500,000
shares of the Company's Common Stock pursuant to the BELCEL Acquisition
Agreement; and (iv) the performance by News and C&W of their respective
obligations under the C&W-News Agreement and the accuracy of their respective
representations and warranties thereunder. In addition, the obligations of News
to consummate the transactions contemplated by the C&W-News Agreement are
subject to, among other things; (i) no event or events shall have occurred and
be continuing which, either individually or in the aggregate, would have a
material adverse effect on the property, business, operations, prospects or
condition (financial or otherwise) of the Company or PeterStar; and (ii) the
conditions to closing under the Asset Exchange Agreement shall have been
satisfied or waived by News. Management of the Company is not presently aware of
any circumstance that would be reasonably likely to prevent any of the
conditions to the C&W-News Agreement from being satisfied.
 
     The C&W-News Agreement was filed as an exhibit to C&W's Amendment No. 6 to
its Schedule 13D, filed with the Commission on April 20, 1998.
 
     Asset Exchange.  The shares of Holdings to be acquired by News (the
"PeterStar Interest") are the subject of the Asset Exchange Agreement between
News and the Company. Under the Asset Exchange Agreement, the Company agreed to
acquire the PeterStar Interest from News immediately upon News' acquisition of
this Interest from C&W, in exchange for the issuance to News of 3,705,631 shares
of Common Stock. The Company subsequently agreed to issue News an additional
120,410 shares of Common Stock, in light of an increase in the number of shares
of Common Stock outstanding. The shares of Common Stock will be issued in a
private placement under Section 4(2) of the Securities Act. Following the
completion of these transactions, the Company's interest in PeterStar will have
increased from 60% to 71%, and News will hold approximately 38% of the
outstanding shares of the Company's Common Stock. In addition, pursuant to a
Directors Nomination Agreement between the Company and News, executed at the
same time as the Asset Exchange Agreement (the "Directors Nomination
Agreement"), News will have the right to nominate four individuals for election
to the Board, which currently numbers ten individuals. The Directors Nomination
Agreement also provides that the number of individuals which News may nominate
will be adjusted proportionately based upon the size of the Board at any time,
and will be reduced in the event of certain reductions in the percentage
interest held by News in the Company. See "The Directors Nomination Agreement."
 
     Shareholder Approval.  Shareholder approval of the Asset Exchange Agreement
is being sought by reason of the application to this transaction of Rule
4460(i)(C)(i) of the Nasdaq Rules. This Rule requires shareholder approval of
any acquisition for shares of the acquiror of stock of another company in which
a substantial shareholder of the acquiror owns a 5% or greater interest, and the
number of shares being issued by the acquiror will result in a 5% or greater
increase in the number of outstanding shares. In this instance, at the time News
transfers the PeterStar Interest to the Company, it will be a substantial
shareholder of the Company, and the number of shares it will receive for the
PeterStar Interest will represent approximately 10.1% of the total shares
outstanding after the issuance.
 
     Shareholder approval of the BELCEL Acquisition Agreement is not required
under the Nasdaq Rules and, accordingly, is not being sought in this instance.
Nevertheless, because the closing of each of the three agreements described
above is conditioned upon the closing of the other two, a negative vote by
shareholders of the Company on the Asset Exchange Agreement would mean that the
transactions contemplated by the C&W-News Agreement and the BELCEL Acquisition
Agreement would not occur. Conversely, the fact that shareholders of the Company
approve the Asset Exchange Agreement will not assure that the transactions
contemplated by such Agreement close, not only because the Agreement itself is
subject to certain other conditions, but in addition because the failure of
either of the BELCEL Acquisition Agreement or the C&W-News Agreement to close
will mean that the Asset Exchange Agreement does not close.
 
                                       11
<PAGE>   14
 
     C&W, which currently owns approximately 30.0% of the outstanding shares of
Common Stock, has indicated that it intends to vote in favor of the Asset
Exchange Agreement and the transactions contemplated thereby.
 
REASONS FOR THE ASSET EXCHANGE AGREEMENT; RECOMMENDATION OF THE BOARD OF
DIRECTORS
 
     The Board believes that the Asset Exchange Agreement and the transactions
contemplated thereby are fair to and in the best interests of the Company and
its shareholders. Accordingly, the Board approved the Asset Exchange Agreement
and the transactions contemplated thereby and recommends that the shareholders
of the Company vote for approval of the Asset Exchange Agreement and the
transactions contemplated thereby.
 
     In reaching its decision to approve the Asset Exchange Agreement and the
transactions contemplated thereby, the Board consulted with its legal and
financial advisors, as well as the Company's management. The factors which were
material to the Board's decision were:
 
          (1) the ability of the Company to increase the size of its interest in
     PeterStar which to date has been the Company's most successful venture in
     the former Soviet Union; and
 
          (2) management's analysis that, based upon its direct knowledge of
     PeterStar's condition based on managing and operating this company for over
     five years, the value of the additional 11% interest in PeterStar being
     acquired by the Company was at least equal to the value of the Exchange
     Shares being issued to News.
 
     Other factors considered by the Board included: management's familiarity
with the operation of PeterStar, a desire to increase the Company's presence in
the St. Petersburg market and the perceived favorable impact on the market for
the Company's Common Stock.
 
     In addition, because the consummation of the transactions contemplated by
the Asset Exchange Agreement is a condition to the C&W-News Agreement which
would, inter alia, have the effect of making News the largest shareholder in the
Company in place of C&W, the Board of Directors also considered the impact of
this transaction upon the Company and concluded that it was in the best
interests of the Company and its shareholders because of the following factors:
 
          (1) the transaction would bring the Company a new shareholder in place
     of a shareholder which had been seeking to dispose of its interest;
 
          (2) the interest of News in developing a presence in the Russian
     telecommunications industry; and
 
          (3) the profile of News and its affiliates in the international
     business community, and their significant experience in international
     business transactions.
 
     In addition, while the shareholders of the Company are not being asked to
vote on the acquisition of the BELCEL Interest, the Board of Directors of the
Company also believes that this transaction is fair to and in the best interests
of the Company for the following reasons:
 
          (1) the opportunity to expand its cellular telephony operations into a
     new territory in the former Soviet Union;
 
          (2) the fact that members of senior management had been involved in
     the management or operation of BELCEL earlier in their careers, and
     therefore had significant familiarity with its business; and
 
          (3) management's analysis that the value of the BELCEL Interest being
     acquired by the Company was at least equal to the value of the shares of
     Common Stock being issued to C&W in exchange.
 
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE ASSET EXCHANGE AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE ASSET EXCHANGE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
 
                                       12
<PAGE>   15
 
CLOSING DATE
 
     Subject to the Company's or News' rights to terminate the Asset Exchange
Agreement, the closing (the "Closing") of the Asset Exchange will occur three
business days after the date upon which all of the conditions to the Asset
Exchange Agreement are satisfied or duly waived, or at such other time and date
as the Company and News may agree. For a description of the circumstances under
which the Company or News may terminate the Asset Exchange Agreement, see
"-- Termination." The Asset Exchange Agreement will close together with the
completion of the transactions contemplated by the C&W-News Agreement and the
BELCEL Acquisition Agreement. The Company and News currently anticipate that the
transactions contemplated by the Asset Exchange Agreement will be completed on
or about August 14, 1998, if the Asset Exchange Agreement and the transactions
contemplated thereby are approved at the Meeting.
 
THE ASSET EXCHANGE AGREEMENT
 
     The description of the Asset Exchange Agreement set forth below summarizes
the material provisions of the Asset Exchange Agreement, a copy of which is
attached as Appendix A to this Proxy Statement and incorporated by reference
herein. Shareholders are urged to read carefully the Asset Exchange Agreement.
 
     Representations and Warranties.  The Asset Exchange Agreement contains
representations and warranties made by the Company and News regarding, among
other things, the Company's and News': (i) proper organization, powers and
qualifications of each corporation and similar corporate matters; (ii) the
authorization, performance and enforceability of the Asset Exchange Agreement;
and (iii) consents and approvals required to effect the transactions
contemplated by the Asset Exchange Agreement. In addition, the Company made
certain representations and warranties as to its business and that of PeterStar,
including, without limitation: (i) financial statements; (ii) absence of certain
changes or events; (iii) legal proceedings and (iv) permits. The representations
and warranties were made as of the date of the Asset Exchange Agreement and, as
a condition to the closing of the transactions contemplated by the Asset
Exchange Agreement, must be true in all material respects as of the Closing. The
representations and warranties survive for one year following the Closing.
 
     Conduct of Business Prior to Closing.  The Company has agreed that, prior
to Closing, it will, and will cause PeterStar to: (i) conduct their respective
businesses and operations according to their ordinary and usual course of
business consistent with past practice; and (ii) provide News and its
representatives with reasonable access to their respective books, records,
offices and other facilities and properties. In addition, each of the Company
and News have agreed to: (i) take all actions and to do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective the
transactions contemplated by the Asset Exchange Agreement; (ii) consult with
each other prior to issuing any public announcement, statement or other
disclosure with respect to the Asset Exchange Agreement and the transactions
contemplated thereby; and (iii) cooperate with each other and use all reasonable
efforts to obtain all necessary permits, consents, approvals and authorizations
of all parties necessary or advisable to consummate the transactions
contemplated by the Asset Exchange Agreement, including the filing of any
documentation, applications, notices and documents with government bodies.
 
     Conditions to the Asset Exchange Agreement.  The obligations of the Company
and News to consummate the Asset Exchange Agreement and the transactions
contemplated thereby are subject to, among other things, the satisfaction of the
following conditions: (i) the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the Asset Exchange shall have expired or been terminated (the waiting period was
terminated on May 4, 1998); (ii) no preliminary or permanent injunction or other
order or decree by any court shall have been issued and remain in effect which
prevents the consummation of the Asset Exchange Agreement and the transactions
contemplated thereby, and no statute, rule or regulation shall have been enacted
by any government or governmental agency which prohibits the consummation of the
Asset Exchange Agreement; (iii) the stockholders of the Company shall have
approved the Asset Exchange Agreement; (iv) the transactions contemplated by the
C&W-News Agreement shall have closed; (v) the performance by the Company and
News of their respective obligations
 
                                       13
<PAGE>   16
 
under the Asset Exchange Agreement and the accuracy of their representations and
warranties thereunder; and (vii) delivery of opinions of counsel for the Company
and News as to certain corporate matters.
 
     In addition, the obligations of the Company to consummate the Asset
Exchange are subject to the closing of the transactions contemplated by the
BELCEL Acquisition Agreement.
 
     The obligations of News to consummate the Asset Exchange Agreement are
subject to, among other things, the satisfaction of the following additional
conditions: (i) the absence of any event or events, either individually or in
the aggregate, which would have a material and adverse effect on the property,
business, operations, prospects or condition (financial or otherwise) of the
Company; and (ii) the execution of the Directors Nomination Agreement by the
Company and News (which was executed on April 19, 1998).
 
     Management of the Company is not presently aware of any circumstance that
would be reasonably likely to prevent any of the conditions to the Asset
Exchange Agreement from being satisfied.
 
     Indemnification.  The Company and News have agreed to indemnify, defend and
hold harmless the other party and their respective parents, subsidiaries and
affiliates from and against all claims, actions, damages, liabilities, costs and
expenses arising out of or resulting from a breach of any representation,
warranty or agreement in the Asset Exchange Agreement by such party; provided
that the liability of News pursuant to the indemnification provisions of the
Asset Exchange Agreement is limited to $100,000 and that of the Company is
limited to $20,000,000. Any indemnification claims paid by the Company will be
paid in the form of shares of Common Stock, subject to the rules and regulations
of any stock exchange upon which the Common Stock is traded or any interdealer
quotation system on which the Common Stock is quoted.
 
     Amendment; Waiver; Termination.  The Asset Exchange Agreement may be
amended, modified or supplemented only by written agreement signed by both News
and the Company. The Asset Exchange Agreement may be terminated at any time
prior to Closing: (i) by mutual written consent of the Company and News; (ii) by
either the Company or News if the Asset Exchange has not been consummated on or
before June 30, 1998 (the date was subsequently extended to August 7, 1998 by
mutual agreement and the Company anticipates a future extension will be agreed
upon to such date as may be necessary to close the transactions), unless the
absence of such occurrence is due to the failure of the party seeking to
terminate to perform any of its covenants or obligations under the Asset
Exchange Agreement; (iii) by either the Company or News if any required
governmental or regulatory consent is not obtained or if an order, judgment or
decree permanently restraining, enjoining or otherwise prohibiting the Asset
Exchange shall have been issued; and (iv) by either the Company or News if there
has been a material violation or breach of any agreement, representation or
warranty contained in the Asset Exchange Agreement.
 
THE DIRECTORS NOMINATION AGREEMENT
 
     Simultaneously with the execution of the Asset Exchange Agreement, the
Company and News entered into the Directors Nomination Agreement regarding,
among other things, the nomination by the Company of certain individuals
designated by News for election as directors. The Company has agreed that, upon
the closing of the transactions contemplated by the Asset Exchange Agreement,
the BELCEL Acquisition Agreement and the C&W-News Agreement, it will use its
best efforts to maintain the size of the Board at 10 and cause the Board
initially to elect as directors four individuals designated by News. Thereafter,
for the term of the Directors Nomination Agreement, the Company will nominate
the appropriate number of News designees for election by stockholders, as
described below.
 
                                       14
<PAGE>   17
 
     Pursuant to the terms of the Directors Nomination Agreement, the number of
individuals that News shall be permitted to designate for nomination will be
based on the percentage of the issued and outstanding shares of Common Stock
then held by News, News Corporation and its subsidiaries and affiliates, as
follows:
 
<TABLE>
<CAPTION>
                                                             PERCENTAGE OF
                 NUMBER OF DESIGNEES                    TOTAL SHARES OUTSTANDING
                 -------------------                    ------------------------
<S>                                                     <C>
       4..............................................        23% or over
       3..............................................         15%-22.99%
       2..............................................         10%-14.99%
       1..............................................          5%-9.99%
       0..............................................          Below 5%
</TABLE>
 
     In addition, if the size of the Board is increased to greater than 10
directors, the number of directors to be designated by News will be
proportionately adjusted, rounding up where necessary to the next highest whole
number.
 
     The Directors Nomination Agreement expires on April 19, 2008.
 
     In connection with entering into the Directors Nomination Agreement, the
Company and News also entered into a letter agreement, dated April 19, 1998,
providing for the Company and News to continue discussions concerning the size
of the Board and the number of persons that News may designate as nominees on
the Company's slate of nominees for election as director. Prior to executing the
Directors Nomination Agreement, the Company had been seeking to implement a
structure whereby the size of the Board would be expanded to 12 and News would
be entitled to designate six persons as nominees for the election to the Board.
Because of uncertainty as to whether the Nasdaq Rules would permit such number
of designees, the Company and News determined initially to place only four
members, of a total Board membership of 10 persons, as News' designees on the
Board, as reflected in the Directors Nomination Agreement. However, the Company
and News agreed to continue to discuss the issue of Board size and composition
with a view to preserving their original intent and, if successful, to take such
action as is reasonably necessary to expand the size of the Board to 12 and to
name a total of six persons to such an expanded Board as representatives of
News.
 
     No assurance can be given that the Company and News will be able to secure
the approval of the National Association of Securities Dealers, Inc. to the
foregoing intentions. If such approval is obtained, the Company will consult
with News with respect to the persons to be nominated and the manner of
expanding the Board and electing such persons.
 
REGULATORY APPROVALS
 
     Under the provisions of the HSR Act, notice of the Asset Exchange Agreement
was provided to the United States Department of Justice and to the Federal Trade
Commission on April 24, 1998 for the purpose of allowing these federal agencies
to evaluate the impact of the transactions contemplated by the Asset Exchange
Agreement on competition in the market. On May 4, 1998, the Company and News
were notified that the FTC had granted "early termination" of the waiting period
under the HSR Act, thereby clearing the transactions contemplated by the Asset
Exchange Agreement under the HSR Act. There are no other regulatory approvals
required for the consummation of the transactions contemplated by the Asset
Exchange Agreement.
 
REGISTRATION RIGHTS
 
     The Exchange Shares to be issued to News pursuant to the Asset Exchange
Agreement will be issued in a private placement under Section 4(2) of the
Securities Act. Pursuant to the Asset Exchange Agreement, the Company has
granted both demand and "piggy-back" registration rights to News with respect to
the resale by News of the Exchange Shares and the shares of Common Stock
acquired by News pursuant to the C&W-News Agreement, and any other security of
the Company owned at any time by News which is registrable under the applicable
laws of the United States (collectively, the "Registrable Securities").
 
                                       15
<PAGE>   18
 
     In the case of demand registrations, upon the request of News, the Company
will file a shelf registration statement with the Commission with respect to the
Registrable Securities identified by News within 60 days, and will use its best
efforts to cause such registration statement to become and remain effective, and
thereafter to keep the registration statement continuously effective,
supplemented and amended to the extent necessary to ensure that it is available
for sales of the shares of the Registrable Securities so registered, until the
earlier of: (i) the time all such Registrable Securities have been disposed of;
and (ii) 180 days after the applicable registration statement becomes effective.
 
     The "piggy-back" rights granted to News give it the right, subject to
customary reductions and carve-outs, to include Registrable Securities in
registration statements filed by the Company. The Company has agreed to keep any
such registration statements continuously effective, supplemented and amended to
the extent necessary to ensure that it is available for sales of the shares of
the Registrable Securities so registered, until the earlier of: (i) the time all
such Registrable Securities have been disposed of; and (ii) 90 days after the
applicable registration statement becomes effective.
 
     The Company has agreed to pay all registration-related expenses relating to
the exercise by News of its registration rights; provided that the Company shall
pay such expenses for only one demand registration statement; provided further
that, if at or subsequent to April 19, 2003, News, together with its affiliates,
subsidiaries and permitted successors and assigns, collectively own more than
50% of the aggregate Registrable Securities, then pursuant to the terms of the
registration rights provisions of the Asset Exchange Agreement, the Company will
be obligated to pay the registration-related expenses for an additional
registration statement.
 
EXPENSES
 
     All costs and expenses incurred in connection with the Asset Exchange
Agreement and the transactions contemplated thereby shall be borne by the party
incurring such costs and expenses.
 
ACCOUNTING TREATMENT
 
     PeterStar Acquisition.  The acquisition of the additional 11% interest in
PeterStar through the acquisition of 100% of Holdings will be accounted for
under the purchase method of accounting. Consideration for the additional
interest will be 3,826,041 shares of Common Stock valued at approximately $33.4
million. Since the financial statements of PeterStar are consolidated with the
Company's, the effect of the additional ownership will reduce the minority
interest charge in the Company's consolidated statement of operations. The
reduction of the minority interest charge is expected to be offset by increased
amortization charges since the consideration exceeds the fair value of net
assets acquired.
 
     CIBBV Acquisition.  The acquisition of all of the outstanding shares of
CIBBV and of certain intercompany indebtedness will be accounted for under the
purchase method of accounting. Consideration will be 500,000 shares of Common
Stock valued at approximately $4.4 million.
 
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
 
     On April 19, 1998, in connection with its discussions regarding the Asset
Exchange Agreement and the transactions contemplated by the BELCEL Acquisition
Agreement and the C&W-News Agreement, the Board granted stock options to James
R.S. Hatt, President and Chief Executive Officer of the Company, and Simon
Edwards, Senior Vice President and Chief Financial Officer of the Company, to
incentivize them to continue to develop the Company's businesses and in
recognition of the fact that these executives had not been granted stock options
by the Company in almost two years. Mr. Hatt was granted options to purchase an
aggregate of 280,000 shares of Common Stock and Mr. Edwards was granted options
to purchase an aggregate of 340,000 shares of Common Stock. The exercise price
of the stock options is $7.00 as to one-third of each grant and $8.00 as to the
remaining two-thirds of each grant. The options vested as to one-third on the
date of grant and the remainder will vest as to one-third each on the first and
second anniversaries of the date of grant.
 
                                       16
<PAGE>   19
 
                                    BUSINESS
 
PLD TELEKOM INC.
 
     The Company, through its operating subsidiaries, is a major provider of
local, long distance and international telecommunications services in the
Russian Federation and Kazakhstan. The Company's four principal operating
businesses are: (i) PeterStar, which provides integrated local, long distance
and international telecommunications services in St. Petersburg through a fully
digital fiber optic network; (ii) Technocom, which, through Teleport-TP,
provides dedicated international telecommunications services to Russian and
foreign businesses in Moscow and operates a satellite-based pan-Russian long
distance network; (iii) BCL, which provides dedicated international
telecommunications services in St. Petersburg; and (iv) ALTEL, which currently
provides the only national cellular service in Kazakhstan. ALTEL was formerly
known as BECET International, although marketing its services under the name
"ALTEL". In May 1998, ALTEL changed its corporate name to the name under which
it was doing business.
 
     The Company's objective is to be a leading participant in the targeted
development of telecommunications infrastructure in the emerging markets of the
Russian Federation and other countries of the former Soviet Union. The Company
expects to achieve this goal through: (i) expanding and further integrating its
existing business and network infrastructure into the public telecommunications
networks; (ii) providing high quality national long distance services in the
Russian Federation to complement the international long distance services it
currently provides to its business customers; (iii) providing additional
value-added services such as wireless communications, fax, data and Internet
service as a means of developing new traffic streams; and (iv) further
developing relationships with local and national strategic partners in the
Russian Federation and other countries of the former Soviet Union.
 
     The Company has several potential sources of cash flows, including fees
from management services, dividends, repayment of intercompany advances, lease
payments and payments under equipment sales contracts. The Company currently
generates fees from management services provided to certain of its operating
subsidiaries. Although its ability to generate dividend income in the near
future may be limited due to the cash flow requirements of its operating
businesses, the Company expects to receive dividends in the future. One of its
operating subsidiaries, ALTEL, paid two dividends in 1997 and a further one
early in 1998. The Company received payments in respect of intercompany advances
during the course of 1997 and expects this to continue in 1998. In relation to
leases and equipment sales contracts entered into with its operating
subsidiaries, the Company started to receive payments in 1998.
 
     The Company's receivables (described above) are all denominated in U.S.
Dollars, as are its Senior Notes due 2004, its Convertible Notes due 2006 and
its Revolving Credit Notes due 1998, which represent all of its outstanding
indebtedness. Certain of its operating subsidiaries have incurred bank
indebtedness, and are expected to continue to do so from time to time. All such
indebtedness has been, and is expected to continue to be denominated in U.S.
Dollars. The Company's operating subsidiaries invoice in U.S. Dollars, but
receive payment in local currency at the then-current rate of exchange for the
U.S. Dollar. The Company faces an exchange risk to the extent that payment is
delayed, or the operating subsidiary experiences any difficulty in converting
the local currency payment received into U.S. Dollars. The Company does not
attempt to hedge this exchange risk. To date, this exchange risk has not been
significant. However, there can be no assurance that delays or difficulties in
converting local currencies may not occur, and that such developments, in
conjunction with volatility in the local currencies, may not have a material
adverse effect on the Company.
 
     The fostering of existing, and the creation of new, partnerships with local
and regional partners is crucial to the long-term success of the Company in this
environment. In its operating businesses, the Company's partners include: PTN,
the local telephone system operator in St. Petersburg, and St. Petersburg
Intercity & International Telephone, the gateway for national and international
long distance calls to and from St. Petersburg, which together hold an indirect
14% interest in PeterStar; Kazakhtelekom, the state-owned national
telecommunications operator in Kazakhstan and the holder of a 50% interest in
ALTEL; and AO Rostelecom, the primary long distance and international carrier in
the Russian Federation and a 44% shareholder in Teleport-TP. The Company will
seek to continue developing ventures with local partners who
 
                                       17
<PAGE>   20
 
can provide: (i) assistance in obtaining telecommunications operating licenses;
(ii) access to network facilities; and (iii) political support.
 
     FOR ADDITIONAL INFORMATION CONCERNING THE COMPANY AND ITS OPERATING
SUBSIDIARIES, INCLUDING PETERSTAR, SEE THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE COMPANY'S QUARTERLY REPORT ON FORM
10-Q FOR THE QUARTER ENDED MARCH 31, 1998, BOTH OF WHICH, AS AMENDED, ARE
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT.
 
PETERSTAR COMPANY LIMITED
 
     PeterStar, in which the Company currently owns a 60% interest, operates a
fully digital, city-wide fiber optic telecommunications network in St.
Petersburg that is interconnected with the network of PTN, the local telephone
company, as well as the Russian national and international long distance
systems. PeterStar provides integrated, high quality, digital telecommunications
services with modern transmission equipment, including local, national and
international long distance and value-added services, to businesses in St.
Petersburg. The PeterStar network provides an alternative to the PTN network,
which to date has been characterized by significant capacity constraints.
PeterStar is able to provide integrated telecommunications services to business
customers, including users of high bandwidth voice, data and video
communications services. PeterStar's network is designed to support a wide range
of telecommunications products and services with a high degree of reliability.
Additionally, PeterStar provides the three cellular operators in St. Petersburg
with access to digital switching and transmission capacity which significantly
improves their ability to consistently receive and deliver their customers'
traffic. As of December 31, 1997, PeterStar had a total of 114,774 lines, of
which 85,948 were provided to cellular operators.
 
     PeterStar, which started limited service in 1993, generated net income for
the year ended December 31, 1997 of $16.5 million on operating revenues of $54.5
million, as compared to net income of $5.9 million on operating revenues of
$32.5 million for the year ended December 31, 1996. Subscriber lines installed
increased from 52,005 at the end of 1996 to 114,774 at December 31, 1997,
reflecting increased penetration of the business community and cellular
operators. PeterStar accounted for 47.6% of the Company's operating revenues for
the year ended December 31, 1997, as compared to 52.4% for the year ended
December 31,1996.
 
     PeterStar's strategy is to meet the growing demands of business customers
and other network operators in St. Petersburg through the expansion of its
current numbering capacity of 100,000 lines allocated by the Russian Federal
Committee on Telecommunications and Informatics to a total of approximately
200,000 lines by 2001. PeterStar has recently added incremental transmission
capacity and upgraded its transmission network from STM-4 to STM-16, as well as
introducing new service features such as ISDN capability, which allows
simultaneous transmission of voice, data, video and still images. In addition,
as part of its strategic relationship with PTN, PeterStar intends to continue to
provide targeted support to PTN in its efforts to upgrade and modernize its
network. The business environment in St. Petersburg continues to improve, with
the ongoing growth of small to mid-sized Russian and foreign businesses and the
development of the banking and financial services industries. PeterStar has
placed increased emphasis on this market segment in order to capitalize on what
it considers to be a significant market opportunity.
 
     PeterStar has recently commenced several projects designed to expand its
direct dial services in St. Petersburg and Northwest Russia. PeterStar has
agreed with PTN to undertake a major infrastructure project involving the
replacement of analog exchanges with digital exchanges for certain parts of the
network on Vassilievski Island, a city district in St. Petersburg. This project
will require the conversion of approximately 30,000 business and residential
lines that are currently operated by PTN, after which such lines become a part
of the PeterStar network. In addition, PeterStar plans to further enhance its
transit network capabilities in order to provide continued support to the
cellular and other network providers in terminating traffic in St. Petersburg
and to the national and international gateway.
 
     FOR ADDITIONAL INFORMATION CONCERNING PETERSTAR, SEE THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE COMPANY'S
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998, BOTH OF
WHICH, AS AMENDED, ARE INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT.
 
                                       18
<PAGE>   21
 
RECENT DEVELOPMENTS
 
     In recent weeks there has been considerable turmoil and uncertainty in the
Russian financial markets, prompted in large part by the crisis in the Asian
financial markets which began in late 1997 and is still continuing, and the
economic and political problems being experienced by a number of Asian
countries. The Russian Rouble has been under significant pressure, requiring the
Russian government to raise interest rates substantially, and to seek assistance
from the International Monetary Fund in order to defend its currency. These
developments have been accompanied by a substantial decline in the Russian stock
market, the Moscow Times Index having dropped over 50% since January 1, 1998.
 
     At the present time it is not possible to predict whether the Russian
government will be successful in avoiding a devaluation of the Rouble, or when
stability will return to its financial markets. Any devaluation of the Rouble
could exacerbate existing economic problems in Russia. Such devaluation would
not immediately affect the Company's operating subsidiaries which, although they
receive payment in local currencies, invoice by reference to U.S. Dollars.
However, increased economic difficulties in Russia could have an impact on the
Company's operating subsidiaries, the effect of which it is impossible to assess
at the present time. There can be no assurance that these developments will not
have a material adverse effect upon the Company in the future.
 
     Under the terms of the Company's Senior Notes due 2004 and its Revolving
Credit Notes due 1998, the interest rate payable increases if the Company has
not raised $20,000,000 in additional equity by May 31, 1998. The Company did not
complete such an equity offering by such date and accordingly the interest rate
on the Senior Notes increased from 14% to 14.5% per annum, and the interest rate
on the Revolving Credit Notes increased from 12% to 15% per annum, in each case
effective June 1, 1998. Such rates revert to their former levels once the equity
offering has been completed. The accreted value of the Senior Notes as of March
31, 1998 was $99.7 million. Interest due thereon accretes until December 1,
1998, and thereafter is payable in cash, semi-annually, on each June 1 and
December 1 thereafter. The amount currently outstanding in respect of the
Revolving Credit Notes is $15,420,000, and interest is payable thereon monthly
in cash.
 
CORPORATE STRUCTURE
 
     The following charts show the corporate structure of the Company and its
material interests (but exclude intermediate holding companies such as CIBBV and
Holdings), both before and after the transactions contemplated by the Asset
Exchange Agreement, the C&W-News Agreement and the BELCEL Acquisition Agreement,
together with the percentage of equity ownership of the Company and Technocom in
each operating subsidiary and other significant investments.
 
                                       19
<PAGE>   22
 
     Before the contemplated transactions:
 
                             [CORPORATE STRUCTURE]
- ---------------
(1) Navona Communications Corporation Limited, a Bermuda company, is a wholly
    owned subsidiary of C&W.
 
                                       20
<PAGE>   23
 
     After the contemplated transactions:
 
                          [CORPORATE STRUCTURE CHART]
- ---------------
(1) News PLD LLC, a Delaware holding company, is a wholly owned subsidiary of
    News America Incorporated.
 
                                       21
<PAGE>   24
 
                      PLD TELEKOM INC. SECURITY OWNERSHIP
 
The following table sets forth certain information (as of May 30, 1998, except
as otherwise noted), with respect to shares of Common Stock beneficially owned
by owners of more than five percent of the outstanding Common Stock, by all
current directors and nominees, by the executive officers of the Company named
in the Summary Compensation Table included elsewhere in this proxy statement and
by all current directors and executive officers of the Company as a group, both
on an actual ownership basis and after giving effect to the transactions
contemplated by the Asset Exchange Agreement, the C&W-News Agreement and the
BELCEL Acquisition Agreement.
 
<TABLE>
<CAPTION>
                                                        ACTUAL                AFTER THE TRANSACTIONS(3)
                                              ---------------------------    ---------------------------
                                                 NUMBER                         NUMBER
                                               OF SHARES                      OF SHARES
                                              BENEFICIALLY      PERCENT      BENEFICIALLY      PERCENT
BENEFICIAL OWNER                                OWNED(1)      OF CLASS(2)      OWNED(3)      OF CLASS(3)
- ----------------                              ------------    -----------    ------------    -----------
<S>                                           <C>             <C>            <C>             <C>
Cable and Wireless plc(4)...................   10,305,739        30.5%                --          --
News PLD LLC(5).............................           --          --         14,631,780        38.4%
Princeton Services, Inc.(6).................    7,013,856        18.1%         7,013,856        16.2%
BEA Associates(7)...........................    2,165,000         6.5%         2,165,000         5.7%
Citibank, N.A.(8)...........................    1,928,525         5.8%         1,928,525         5.1%
James R.S. Hatt(9)..........................      374,999         1.1%           374,999           *
John G. Davies(10)..........................      333,333           *            333,333           *
Simon Edwards(11)...........................      318,666           *            318,666           *
Alan G. Brooks(12)..........................      151,500           *            151,500           *
Conor Carroll(13)...........................      152,500           *            152,500           *
Robert Smith(14)............................      149,666           *            149,666           *
Dr. Boris Antoniuk(15)......................    1,326,240         4.0%         1,326,240         3.5%
Edward Charles Dilley.......................           --          --                 --          --
Gordon Humphrey(10).........................       10,000           *             10,000           *
Gennady Kudriavtsev(10).....................       10,000           *             10,000           *
Dr. Vladimir Kvint(10)......................       10,000           *             10,000           *
I. Martin Pompadur(10)......................       10,000          --             10,000           *
Julian Rawle................................           --          --                 --          --
David M. Stovel(10).........................       22,500           *             22,500           *
All current directors and executive officers
  of the Company as a group (14 persons)....    2,717,904         7.8%         2,717,904         6.9%
</TABLE>
 
- ---------------
 (1) In accordance with Commission regulations, the table lists all shares as to
     which such persons have or share the power to vote or to direct
     disposition. The number of shares indicated includes shares issuable upon
     the exercise of outstanding stock options, warrants or convertible
     securities held by each individual or group to the extent exercisable or
     convertible at May 30, 1998 or within 60 days thereafter. Unless otherwise
     indicated, each person has the sole power to vote and to direct disposition
     of the shares listed as beneficially owned by such person.
 
 (2) Percentage for each individual or group calculated with reference to an
     aggregate of 33,520,748 shares of Common Stock outstanding at May 30, 1998
     and all shares issuable upon the exercise of outstanding stock options,
     warrants or convertible securities that are exercisable by such individual
     or group within 60 days of May 30, 1998. Percentages of less than 1% have
     not been indicated.
 
 (3) The number of shares of Common Stock beneficially owned and the percentage
     of the outstanding Common Stock after giving effect to the transactions
     contemplated by the Asset Exchange Agreement, the C&W-News Agreement and
     the BELCEL Acquisition Agreement. The percentage for each individual or
     group has been calculated with reference to an aggregate of 37,846,789
     shares of Common Stock to be outstanding after the completion of the
     transactions contemplated by the Asset Exchange
 
                                       22
<PAGE>   25
 
     Agreement, the C&W-News Agreement and the BELCEL Acquisition Agreement, and
     all shares issuable upon the exercise of outstanding stock options,
     warrants or convertible securities that are exercisable by such individual
     or group within 60 days of May 30, 1998. Percentages of less than 1% have
     not been indicated.
 
 (4) This information is based upon Amendment No. 6 to Schedule 13D, filed April
     21, 1998, with the Commission by C&W, a corporation organized under the
     laws of England and located at 124 Theobalds Road, London WC1X 8RX. The
     amount shown includes currently exercisable warrants to purchase 250,000
     shares of Common Stock held by C&W. The remaining shares are held by
     Navona, a Bermuda corporation and a wholly owned subsidiary of C&W. Navona
     is located at Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda. C&W
     has agreed to sell, and News has agreed to acquire, the shares of Common
     Stock and the warrants pursuant to (and subject to the terms and
     conditions) of the C&W-News Agreement.
 
 (5) The amount shown represents (i) 10,555,739 shares of Common Stock and a
     warrant to purchase an additional 250,000 shares of Common Stock which News
     has agreed to acquire from C&W pursuant to, and on the terms and conditions
     set forth in, the C&W-News Agreement and (ii) 3,826,041 shares of Common
     Stock which the Company has agreed to issue to News pursuant to, and on the
     terms and conditions set forth in, the Asset Exchange Agreement. The shares
     of Common Stock and the warrant will be held by News PLD LLC, a Delaware
     limited liability company and a wholly owned subsidiary of News America
     Incorporated, which is located at 1221 Avenue of the Americas, New York,
     New York 10036.
 
 (6) This information is based upon Amendment No. 2 to Schedule 13G, filed
     February 2, 1998, with the Commission by Princeton Services, Inc. ("PSI"),
     Merrill Lynch Asset Management, L.P. ("Merrill Lynch Asset Management") and
     Merrill Lynch Global Allocation Fund, Inc., each of which is located at 800
     Scudders Mill Road, Princeton, New Jersey 08536. The amount shown includes
     shares of Common Stock issuable upon the conversion of 9% Convertible
     Subordinated Notes of the Company (CUSIP 71623PAC) (the "Convertible
     Notes") and upon exercise of warrants to purchase shares of Common Stock
     (CUSIP 71623PAA) (the "Warrants"). In the aggregate, PSI may be deemed to
     beneficially own 1,698,200 shares of Common Stock, $19,200,000 aggregate
     principal amount of Convertible Notes and 74,500 warrants. Each such
     warrant may be exercised for 34 shares of Common Stock at an exercise price
     of $6.60 per share. The Convertible Notes are convertible, at the rate of
     144.93 shares per $1,000 principal amount, at a conversion price of $6.90
     per share. PSI disclaims beneficial ownership of the securities of the
     Company.
 
 (7) This information is as of December 31, 1997 and is based upon Schedule 13F,
     filed with the Commission by BEA Associates, Inc., which is located at 153
     East 53rd Street, New York, New York 10022.
 
 (8) This information is as of December 31, 1997 and is based upon Schedule 13G,
     filed February 13, 1998, with the Commission by Citicorp and Citibank,
     N.A., which are located at 399 Park Avenue, New York, New York 10043.
 
 (9) The amount shown includes currently exercisable options to purchase 329,999
     shares of Common Stock.
 
(10) The amount shown consists entirely of currently exercisable options to
     purchase shares of Common Stock.
 
(11) The amount shown includes currently exercisable options to purchase 306,666
     shares of Common Stock.
 
(12) The amount shown includes currently exercisable options to purchase 150,000
     shares of Common Stock.
 
(13) The amount shown includes currently exercisable options to purchase 150,000
     shares of Common Stock.
 
(14) The amount shown includes currently exercisable options to purchase 149,166
     shares of Common Stock. Mr. Smith was an executive officer of the Company
     as of December 31, 1997 but he will not be considered as such for the 1998
     fiscal year.
 
(15) The amount shown includes 1,316,240 shares held by P.S. Marketing &
     Consultancy Services Limited "P.S. Marketing"), which were issued to P.S.
     Marketing, at the direction of Elite International Limited ("Elite"), in
     connection with the November 1997 acquisition by the Company from Elite of
     additional
 
                                       23
<PAGE>   26
     interests in Technocom. Elite is an Irish company owned by a trust advised
     by Dr. Antoniuk and the shares of Common Stock are deemed to be
     beneficially owned by Dr. Antoniuk. The amount shown also includes
     currently exercisable options to purchase 10,000 shares of Common Stock.
     Elite is the beneficial owner of 10 ordinary shares, par value IRPound
     Sterling 1.00, of Technocom, an Irish corporation and subsidiary of the
     Company, representing 5.03% of the outstanding ordinary shares of
     Technocom. The Company understands that Dr. Antoniuk has the power to
     exercise the voting rights of the shares of Technocom owned by Elite. None
     of the other current directors and executive officers of the Company own
     any ordinary shares of Technocom, in which the Company owns a 80.4% equity
     interest.
 
                                       24
<PAGE>   27
 
                             ELECTION OF DIRECTORS
 
     The Board currently consists of ten members. Each director is elected each
year to hold office for a one year term and until the election and qualification
of the director's successor or until the director's death, removal or
resignation.
 
     James R.S. Hatt, Boris Antoniuk, Edward Charles Dilley, Simon Edwards,
Gordon Humphrey, Gennady Kudriavtsev, Vladimir Kvint, I. Martin Pompadur, Julian
Rawle and David M. Stovel, all of whom are current members of the Board, have
been nominated by the Board of Directors for election as directors at the
Meeting.
 
     All nominees have consented to be named and to serve if elected. Unless
otherwise instructed by the stockholders, the persons named in the proxies will
vote the shares represented thereby for the election of such nominees. The Board
of Directors believes that all nominees will be able to serve as directors; if
this should not be the case, however, the proxies may be voted for one or more
substitute nominees to be designated by the Board of Directors or the board may
decide to reduce the number of directors. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
 
     Upon closing of the transactions contemplated by the Asset Exchange
Agreement, as well as the BELCEL Acquisition Agreement and C&W-News Agreement,
four current directors will resign from the Board and, pursuant to the terms of
the Directors Nomination Agreement, News will designate, and the Company will
nominate, four persons to fill the vacancies created by their resignations. Two
of the current directors who will resign will be Messrs. Dilley and Rawle, the
designees of Navona. However, at present, it is not finally determined which
other current directors will resign. This determination is not expected to be
made until shortly before the closing of the transactions described above. It is
anticipated that, upon the nomination of the News designees, the remaining
members of the Board will elect such nominees to fill the vacancies created by
the resignations of the four members of the Board mentioned in the previous
sentence. See "The Asset Exchange -- Directors Nomination Agreement" for a
description of the terms of the Directors Nomination Agreement. If the
transactions contemplated by the Asset Exchange Agreement, the BELCEL
Acquisition Agreement and the C&W News Agreement are not consummated, the
members of the Board will remain unchanged.
 
                             NOMINEES FOR ELECTION
 
<TABLE>
<CAPTION>
                                  YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATIONS DURING
    NAME OF DIRECTOR      AGE            PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
    ----------------      ---     --------------------------------------------------------
<S>                       <C>   <C>
Dr. Boris Antoniuk......  49    Dr. Antoniuk has served as a Director of the Company since
                                June 1997 and as Group Director -- CIS and Russia of the
                                Company since November 1997. He has many years' experience
                                in the telecommunications field, having worked for various
                                government agencies and trade delegations in the Soviet
                                Union and Russia since 1974, including six years as head of
                                the U.S. department of the USSR State Committee for Science
                                and Technology in Moscow and three years as economic adviser
                                to a deputy Prime Minister of the USSR Council of Ministers.
                                Since the economic liberalization of Russia, he has been
                                involved in a number of commercial ventures, including the
                                publishing of several Russian computer magazines. Dr.
                                Antoniuk has served as general manager of Technocom and
                                Chairman and Chief Executive Officer of Teleport-TP since
                                1992. Both Technocom and Teleport-TP are operating
                                subsidiaries of the Company. He also holds the post of
                                Deputy Chairman of Technopark, a subsidiary of Technocom.
</TABLE>
 
                                       25
<PAGE>   28
 
<TABLE>
<CAPTION>
                                  YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATIONS DURING
    NAME OF DIRECTOR      AGE            PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
    ----------------      ---     --------------------------------------------------------
<S>                       <C>   <C>
Edward Charles
  Dilley(1).............  59    Mr. Dilley has served as a Director of the Company since
                                June 1997. Since January 1996, Mr. Dilley has been Director
                                of Corporate Financial Services for C&W. Prior to joining
                                C&W, he was employed by Barclays Bank for 40 years,
                                including in several executive positions. From 1988 to
                                December 1995, he was Business Centre Director for Barclays
                                Bank.
Simon Edwards...........  35    Mr. Edwards has served as Director of the Company since June
                                1997, as Chief Financial Officer of the Company since
                                October 1995 and Senior Vice President and Treasurer since
                                February 1997. He was previously Director of Finance for C&W
                                Europe from October 1994 to September 1995. From July 1992
                                to October 1994, he held a number of corporate finance
                                positions within C&W. From July 1988 to June 1992 he was a
                                management consultant with Arthur Andersen.
James R.S. Hatt.........  38    Mr. Hatt has served as a Director of the Company since June
                                1994, as Chief Executive Officer since January 1995 and as
                                Chairman since June 1995. His career has been exclusively
                                devoted to building telecommunications businesses in
                                developed and emerging countries around the world. Prior to
                                joining the Company, Mr. Hatt worked in a number of senior
                                positions at C&W, involved extensively in privatizatons and
                                new business development. From 1988 to January 1995, he was
                                Group Manager for Business Development, Europe, where he was
                                responsible for corporate development activities in Europe,
                                the Middle East, India, the CIS, the Baltic States and
                                Scandinavia.
Gordon Humphrey.........  57    Senator Humphrey has served as a Director of the Company
                                since June 1997. He served two terms as United States
                                Senator from the State of New Hampshire, from 1979 to 1991,
                                where he was a member of the Committee on Foreign Relations,
                                the Armed Services Committee and the Judiciary Committee.
                                Upon his return to the private sector in 1991, Senator
                                Humphrey founded the Humphrey Group, Inc., which serves
                                clients in international commerce, with primary focus on
                                Russia and the CIS.
Gennady Kudriavtsev.....  57    Mr. Kudriavtsev has served as a Director of the Company
                                since June 1997. He has many years of telecommunications
                                experience in Russia and the former Soviet Union. He has
                                served as Director General of Intersputnik, a Russian
                                state-owned satellite operator since 1992. Prior to the
                                breakup of the former Soviet Union, he served as Minister of
                                Communications of the USSR.
Dr. Vladimir Kvint......  48    Dr. Kvint has served as a Director of the Company since June
                                1997. He is currently Professor, Management Systems and
                                International Business at Fordham University Graduate School
                                of Business and Adjunct Professor of Management Strategy at
                                the Stern School of Business, New York University. Dr. Kvint
                                is a Full Lifetime Member of the Russian Academy of Natural
                                Sciences. From 1989 until 1995 he was a consultant to C&W
                                Executive Chairman, Lord David Young. From 1992 to 1997, he
                                was Director, Emerging Markets for Arthur Andersen LLP. He
                                has published numerous articles and books on emerging
                                Eastern European markets.
</TABLE>
 
                                       26
<PAGE>   29
 
<TABLE>
<CAPTION>
                                  YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATIONS DURING
    NAME OF DIRECTOR      AGE            PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
    ----------------      ---     --------------------------------------------------------
<S>                       <C>   <C>
I. Martin Pompadur......  63    Mr. Pompadur has served as a Director of the Company since
                                May 1998. Since 1988, he has been the President and CEO of
                                RP Companies, Inc. and he is currently the Chairman, Chief
                                Executive Officer and Chief Operating Officer of a number of
                                limited partnerships which operate network-affiliated
                                television stations, radio stations and cable television
                                systems. From 1977 to 1982, Mr. Pompadur was President of
                                Ziff Corporation and, prior to joining Ziff, he was with
                                American Broadcasting Companies for 17 years in several
                                senior executive positions, including as a member of its
                                Board of Directors. Mr. Pompadur has been actively involved
                                in various business ventures in Moscow and the CIS since
                                1990.
Julian Rawle(1).........  36    Mr. Rawle has served as a Director of the Company since
                                March 1998. He joined C&W in April 1995 and is currently the
                                Representative Director of the C&W CIS office in Moscow.
                                Prior to joining C&W, Mr. Rawle worked for several
                                international petroleum companies in Russia and Kazakhstan.
                                From 1990 to 1993, he was Business Development Manager -- BP
                                International Lubricants Marketing in Moscow, where he was
                                responsible for setting up BP's first sales office in the
                                former Soviet Union. From 1993 to 1995, he was a Business
                                Development Consultant for Chevron involved in business
                                planning and other projects in Russia and Kazakhstan.
David M. Stovel.........  49    Mr. Stovel has served as a Director of the Company since
                                February 1993. He has been President of Brawley Cathers
                                Limited, an investment bank headquartered in Toronto, Canada
                                since 1987.
</TABLE>
 
- ---------------
(1) Pursuant to an agreement dated March 3, 1994 between Navona and the Company,
    the Company agreed to nominate two individuals designated by Navona to the
    Company's board of directors so long as Navona holds at least 25% of the
    total voting shares of the Company. Messrs. Dilley and Rawle are the
    nominees of Navona.
 
GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
 
     The Board of Directors of the Company met on 12 occasions during 1997. With
the exception of Mr. Kudriavtsev, each director attended at least 75% of the
aggregate of the meetings of the Board of Directors held during the period for
which he was a director. Pursuant to applicable Canadian law, to which the
Company was subject prior to February 28, 1997 as a corporation organized under
the Business Corporations Act (Ontario), the Company was required to have an
audit committee of the Board of Directors. The Delaware General Corporation Law,
to which the Company was subject as of February 28, 1997, provides that the
Board of Directors, by resolution adopted by a majority of the entire board, may
designate one or more committees, each of which shall consist of one or more
directors.
 
     Compensation Committee.  The Compensation Committee, consisting of David M.
Stovel, Edward Charles Dilley and Dr. Vladimir Kvint, currently has the
authority to approve salaries, bonuses, stock option grants and other
compensation matters for officers of the Company and to approve employee health
and benefit plans. David L. Heavenridge was the Chairman of the Compensation
Committee prior to his resignation from the Board of Directors in October 1997,
at which time Dr. Kvint was appointed to replace him on the Compensation
Committee. Prior to the continuance of the Company from Ontario to Delaware in
February 1997, Robert Smith also served on the Compensation Committee. In
addition, prior to the continuance, the Compensation Committee did not have the
authority to approve stock option grants, which were approved by the entire
Board of Directors. The Compensation Committee met two times during 1997. Each
member of the Compensation Committee attended the meeting or meetings of the
Compensation Committee in 1997 held during the period for which he was a member
of the committee.
 
                                       27
<PAGE>   30
 
     Audit Committee.  The Audit Committee, consisting of Edward Charles Dilley
and David M. Stovel has the authority to recommend the appointment of the
Company's independent auditors and review the results and scope of audits,
internal accounting controls and tax and other accounting related matters. The
Audit Committee met three times during 1997. Each member of the Audit Committee
attended the meeting or meetings of the Audit Committee in 1997 held during the
period for which he was a member of the committee. Mr. Smith was a member of the
Audit Committee until his resignation as a director in May 1998.
 
CERTAIN BUSINESS RELATIONSHIPS WITH DIRECTORS AND NOMINEES
 
     During 1994 and 1995, C&W provided services to and met certain liabilities
of the Company. At December 31, 1995, the aggregate amount owed to C&W under
these arrangements was $1,843,000. These amounts were repaid in 1996. C&W and
the Company are parties to a support services agreement, pursuant to which, on
an arms'-length basis, the Company and its subsidiaries have access to C&W's
resources. During 1997, the Company paid an aggregate of approximately $400,000
to C&W for services provided under such agreement.
 
     The Company entered into an agreement as of January 1, 1995 with Newmark
Capital Limited ("Newmark") with respect to the provision of the services of
Robert Smith as a consultant to the Company and to act as Chairman of ALTEL. The
agreement provides for the payment of $100,000 per annum (plus additional
amounts depending on the amount of time devoted by Mr. Smith to the affairs of
the Company or ALTEL) and is terminable for cause or by either party upon two
years notice of termination. In addition, Newmark has the option of terminating
the agreement in the event of a change of control of the Company (defined as
control of more than 30% of all outstanding voting shares being acquired by any
person or persons acting in concert other than C&W and its affiliates) and shall
be terminated if Mr. Smith shall be removed from the office of Chairman of
ALTEL, in which events Newmark shall be entitled to the payment of two years
remuneration. In 1997, Newmark received $100,000 with respect to the provision
of Mr. Smith's services. Mr. Smith is President of Newmark. In May 1998, the
Company and Newmark agreed to terminate the agreement, in exchange for a cash
payment of $200,000 from the Company to Newmark. At such time, Mr. Smith
resigned as a director of the Company, Chairman of ALTEL and ceased providing
consulting services to the Company.
 
     On November 26, 1997 the Company acquired a further 59 ordinary shares of
Technocom from the two minority shareholders of Technocom, thereby increasing
its percentage interest in Technocom from 50.75% to 80.4%. The Company acquired
29 of these shares from Elite, an Irish company beneficially owned by a trust
advised by Dr. Antoniuk. The total consideration for the shares purchased from
Elite was $6.25 million in cash and 1,316,240 shares of the Company's Common
Stock. Sale of these shares is prohibited prior to January 1, 2000.
 
     In addition, the Company restructured certain "put and call" arrangements
with the other two shareholders of Technocom. Under these arrangements as
originally structured the remaining ordinary shares of Technocom held by these
shareholders (10 shares, or approximately 5% of the total ordinary shares
outstanding, in the case of Elite) were to have been independently valued in
1999 and the Company had the right to call, and Elite and the other shareholder
had the right to put, their respective interests at the per share value
established by the valuation. These arrangements were restructured as follows.
In the case of Elite, two of its remaining ten ordinary shares were made subject
to a new put and call arrangement which would come into effect in 1998, with the
"put and call" price to be $1 million or, at Elite's option, that number of
shares of the Common Stock which resulted from dividing $1 million by the lower
of $5.85 and the average closing price of such shares over the preceding ten
trading days. The remaining eight ordinary shares continued to be subject to the
existing put and call arrangements in 1999, except that the valuation would be
made by the Company and that the amount paid pursuant to the exercise of either
the put or the call could not exceed $9,620,689 or be less than $6,689,655.
 
     Technocom has entered into a consulting agreement with Elite for the
provision to Technocom of the services of Dr. Antoniuk for a period expiring on
June 30, 2002, pursuant to which Technocom paid Elite fees equal to $108,333 per
annum for the term of the agreement, reviewable periodically, plus the
reasonable
 
                                       28
<PAGE>   31
 
expenses of Dr. Antoniuk. As of November 26, 1997, the annual fees payable to
Elite under this agreement were increased to $158,333.
 
     In addition, pursuant to a Service Agreement, dated as of November 26,
1997, with the Company, Dr. Antoniuk has been employed since such date as Group
Director -- Russia and CIS, at an annual salary of $50,000. The agreement may be
terminated without cause by either party upon six months prior written notice or
for cause as specified; provided that, if either party gives notice of
termination of employment with the Company, the Company may, in its sole
discretion, terminate such employment immediately upon the payment of the lump
sum of six months' gross salary. Dr. Antoniuk may also terminate his employment
with the Company upon three months prior written notice upon a change in control
of the Company, as defined in the Company's Equity Compensation Plan (a "Change
of Control"). Upon termination without cause by the Company or upon termination
by Dr. Antoniuk upon a Change of Control, Dr. Antoniuk is to receive as a
termination fee an amount equal to two times his then current annual salary from
the Company.
 
     Since June 16, 1997, Dorothea Hatt, the wife of James Hatt, the Company's
President and Chief Executive Officer, has been employed as Legal Assistant of
the Company at an annual salary of $75,000.
 
                                       29
<PAGE>   32
 
                       EXECUTIVE OFFICERS OF THE COMPANY
 
     Set forth below is certain information regarding each of the executive
officers of the Company as of December 31, 1997.
 
<TABLE>
<CAPTION>
        EXECUTIVE OFFICERS          AGE                            POSITION
        ------------------          ---                            --------
<S>                                 <C>    <C>
James R.S. Hatt(1)................  38     President and Chief Executive Officer
John Davies(2)....................  51     Deputy Chief Executive Officer and Chief Operating
                                           Officer
Simon Edwards(1)..................  35     Senior Vice President, Chief Financial Officer and
                                           Treasurer
Alan G. Brooks(3).................  56     Special Projects Director
Conor Carroll(4)..................  31     Vice President, Operations
Robert Smith(5)...................  60     Former Chairman, BECET International
</TABLE>
 
- ---------------
(1) See "Directors" for biographical information.
 
(2) Mr. Davies has served as Deputy Chief Executive Officer of the Company since
    June 1997 and as Chief Operating Officer of the Company since February 1,
    1998. Previously, from 1995 to 1997, he was a director and partner in Beldi
    & Cie SA providing services to a multinational companies and entrepreneur.
    From 1987 to 1995, he was one of the founding directors of Financiere
    Indosuez, a subsidiary of the Suez Group, which was active in cross-border
    mergers and acquisitions and corporate finance. Prior to that, Mr. Davies
    served as a business consultant and a vice president for international
    finance of a privately-owned shipping and commodity trading group.
 
(3) Mr. Brooks has served as Special Projects Director of the Company since
    February 1, 1998. He served as Chief Operating Officer of the Company from
    January 1996 through January 1998 and Senior Vice President from February
    1997 through January 1998. Previously, he served in a number of senior
    management positions with C&W for over 30 years, most recently in Sweden,
    Japan, Papua New Guinea and the Middle East. Mr. Brooks was on secondment to
    the Company from C&W from March 1995 until December 1995.
 
(4) Mr. Carroll has served as Vice President, Operations of the Company since
    February 1997. From January 1995 until February 1997 he was Vice President,
    Business Development of the Company. From 1991 to December 1994, Mr. Carroll
    was Business Development Manager for C&W Europe.
 
(5) Mr. Smith served as a Director of the Company from September 1993 until May
    1998. Until May 1998, he also served as Chairman of ALTEL, an operating
    subsidiary of the Company. He was an executive officer of the Company as of
    December 31, 1997 but he will not be considered as such for the 1998 fiscal
    year. He has been President of Newmark, a private investment and consulting
    company, since 1992. From 1990 to 1992, he was Chief Executive Officer of
    the First Hungarian Investment Advisory RT.
 
                                       30
<PAGE>   33
 
                COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
 
     The following table sets forth for the years ended December 31, 1997, 1996
and 1995 certain compensation paid by the Company to its Chief Executive Officer
and the four other most highly paid executive officers of the Company.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                        LONG TERM
                                                       ANNUAL COMPENSATION             COMPENSATION
                                             ---------------------------------------   ------------
                                                                                        SECURITIES
                                                                      OTHER ANNUAL      UNDERLYING
    NAME AND PRINCIPAL POSITION       YEAR   SALARY(1)     BONUS     COMPENSATION(2)     OPTIONS
    ---------------------------       ----   ---------    --------   ---------------   ------------
<S>                                   <C>    <C>          <C>        <C>               <C>
James R.S. Hatt.....................  1997   $390,000     $117,000       $78,000             -0-
  Chairman, President and             1996   $290,000     $191,000       $58,000         250,000
  Chief Executive Officer             1995   $220,000     $ 75,000       $44,000         200,000
John Davies.........................  1997   $175,000(3)  $ 52,500       $17,500         500,000
  Deputy Chief Executive Officer      1996         --           --            --              --
  and Chief Operating Officer         1995         --           --            --              --
Simon Edwards.......................  1997   $325,000     $ 97,500       $65,000             -0-
  Senior Vice President, Chief        1996   $225,000     $165,000       $45,000         200,000
  Financial Officer and Treasurer     1995   $ 43,750     $ 15,000       $ 8,750         150,000
Conor Carroll.......................  1997   $150,700     $ 45,210       $30,140             -0-
  Vice President, Operations          1996   $150,700     $ 90,280       $30,140         150,000
                                      1995   $110,000     $ 14,300       $22,000          50,000
Robert Smith........................  1997   $100,000(4)       -0-           -0-             -0-
  Former Chairman of ALTEL            1996   $145,833(4)       -0-           -0-         100,000
                                      1995   $200,000(4)       -0-           -0-             -0-
Alan G. Brooks......................  1997   $200,000     $ 60,000           -0-         150,000
  Special Projects Director           1996   $149,500     $ 40,000           -0-             -0-
                                      1995        -0-          -0-           -0-             -0-
</TABLE>
 
- ---------------
(1) All amounts are stated in U.S. Dollars. Certain amounts were paid to Messrs.
    Hatt, Edwards, Carroll and Brooks in British Pounds and have been converted
    to U.S. Dollars at a conversion rate of $1.50/Pound Sterling 1.00.
 
(2) Other Annual Compensation consists of amounts paid in lieu of certain
    benefits.
 
(3) Mr. Davies' employment with the Company commenced on June 1, 1997 and this
    amount is the amount paid to him in salary during the period June 1 to
    December 31, 1997. His current base salary is $300,000 per annum.
 
(4) Amounts classified as "salary" were paid as a consulting fee to Newmark for
    the provision of Mr. Smith's services to ALTEL and the Company. See "Certain
    Business Relationships with Directors and Nominees."
 
                                       31
<PAGE>   34
 
     The following table summarizes stock options granted during 1997 to the
persons named in the Summary Compensation Table.
 
                       OPTION GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                               POTENTIAL REALIZABLE VALUE AT
                                        PERCENT OF                                ASSUMED ANNUAL RATES OF
                                       TOTAL OPTIONS                            STOCK PRICE APPRECIATION FOR
                                        GRANTED TO                                     OPTION TERM(1)
                             OPTIONS     EMPLOYEES     EXERCISE   EXPIRATION   ------------------------------
           NAME              GRANTED      IN 1997       PRICE        DATE           5%               10%
           ----              -------   -------------   --------   ----------   -------------    -------------
<S>                          <C>       <C>             <C>        <C>          <C>              <C>
James R. S. Hatt...........      -0-          --           --           --              --               --
John Davies................  500,000        37.0%       $5.25      6/23/07      $1,650,848       $4,183,574
Simon Edwards..............      -0-          --           --           --              --               --
Conor Carroll..............      -0-          --           --           --              --               --
Robert Smith...............      -0-          --           --           --              --               --
Alan G. Brooks.............  150,000        11.1%       $6.00      4/27/02      $  248,653       $  549,459
</TABLE>
 
- ---------------
(1) Potential Realizable Values are based on an assumption that the stock price
    of the Common Stock starts equal to the exercise price shown for each
    particular option grant and appreciates at the annual rate shown (compounded
    annually) from the date of grant until the end of the term of the option.
    These amounts are reported net of the option exercise price, but before any
    taxes associated with exercise or subsequent sale of the underlying stock.
    The actual value, if any, an option holder may realize will be a function of
    the extent to which the stock price exceeds the exercise price on the date
    the option is exercised. The actual value to be realized by the option
    holder may be greater or less than the values estimated in this table.
 
     The following table summarizes option exercises during 1997 and the value
of vested and unvested options for the persons named in the Summary Compensation
Table at December 31, 1997. Year-end values are based upon a price of $5.375 per
share, which was the closing market price of a share of the Company's Common
Stock on the Nasdaq Stock Market on December 31, 1997.
 
                  AGGREGATED OPTION EXERCISES IN LAST YEAR AND
                             YEAR-END OPTION VALUES
 
<TABLE>
<CAPTION>
                                                             NUMBER OF UNEXERCISED         VALUE OF UNEXERCISED
                                                                  OPTIONS AT              IN-THE-MONEY OPTIONS AT
                                                               DECEMBER 31, 1997             DECEMBER 31, 1997
                             SHARES ACQUIRED    VALUE     ---------------------------   ---------------------------
           NAME                ON EXERCISE     REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
           ----              ---------------   --------   -----------   -------------   -----------   -------------
<S>                          <C>               <C>        <C>           <C>             <C>           <C>
James R.S. Hatt............      90,000        $222,150     153,333        166,667              0              0
John Davies................         -0-              --     166,666        333,334        $31,250       $104,167
Simon Edwards..............      90,000        $250,950     126,666        133,334              0              0
Conor Carroll..............         -0-              --      83,333        116,667              0              0
Robert Smith...............      10,000        $ 21,886     115,833         66,666              0              0
Alan G. Brooks.............         -0-              --     150,000            -0-              0             --
</TABLE>
 
     The Company does not currently grant any long-term incentives, other than
stock options, to its executives or other employees. Similarly, the Company does
not sponsor any defined benefit or actuarial plans at this time.
 
EMPLOYMENT AGREEMENTS
 
     Pursuant to employment agreements, dated as of January 1, 1995, with the
Company and PLD Management Services Limited ("PLDMS"), James Hatt was employed
(i) as Chief Executive Officer of the Company at an initial annual salary of
$167,500 and (ii) as an Executive of PLDMS at an initial annual salary of Pound
Sterling 35,000. During 1996, Mr. Hatt's annual salaries under these agreements
were $237,500 and Pound Sterling 35,000, respectively. Effective as of August 1,
1997, and as a consequence of the Company moving its executive offices
 
                                       32
<PAGE>   35
 
to the United States, the agreement with PLDMS was terminated, and the agreement
with the Company was amended and restated so as, inter alia, to combine the
salary and other compensation arrangements previously provided by the two
separate agreements. Under the amended and restated agreement Mr. Hatt's annual
salary was $390,000 for 1997. In addition to his salary, an amount equal to
twenty percent of his then current salary amount is payable by the Company to
Mr. Hatt annually in lieu of all pension and other benefits. The agreement may
be terminated without cause by either party upon six months prior written notice
or for cause as specified; provided, that if Mr. Hatt gives notice of
termination of employment with the Company, the Company may, in its sole
discretion, terminate employment immediately upon the payment of the lump sum of
six months' gross salary. Mr. Hatt may also terminate his employment with the
Company upon three months prior written notice upon a Change of Control. Upon
termination without cause by the Company or upon termination by Mr. Hatt upon a
Change of Control, Mr. Hatt is to receive as a termination fee an amount equal
to two times his then current annual salary from the Company.
 
     John Davies is employed as Deputy Chief Executive Officer pursuant to a
letter agreement intended to be effective as June 1, 1997, at an initial annual
salary of $300,000. In addition, he receives an amount equal to ten percent of
his then current salary amount annually until such time as the Company is able
to put in place for his benefit a full range of fringe benefits, including
pension arrangements. The agreement may be terminated without cause by either
party upon six months prior written notice or for cause as specified. Mr. Davies
may also terminate his employment with the Company upon three months prior
written notice upon a Change of Control. Upon termination without cause by the
Company or upon termination by Mr. Davies upon a Change of Control, Mr. Davies
is to receive as a termination fee an amount equal to two times his then current
annual salary from the Company.
 
     Pursuant to employment agreements, dated as of October 1, 1995, with the
Company and PLDMS, Simon Edwards was employed (i) as Chief Financial Officer of
the Company at an initial annual salary of $107,500 and (ii) as an Executive of
PLDMS at an initial annual salary of Pound Sterling 45,000. During 1996, Mr.
Edwards' annual salaries under these agreements were $157,500 and Pound Sterling
45,000, respectively. As with Mr. Hatt, effective as of July 1, 1997 the
agreement with PLDMS was terminated and the agreement with the Company was
amended and restated. Under the amended and restated agreement Mr. Edwards'
annual salary for 1997 was $325,000. In addition to his salary, an amount equal
to twenty percent of his then current salary amount is payable by the Company to
Mr. Edwards annually in lieu of all pension and other benefits. The agreement
may be terminated without cause by either party upon six months prior written
notice or for cause as specified; provided, that if Mr. Edwards gives notice of
termination of employment with the Company, the Company may, in its sole
discretion, terminate employment immediately upon the payment of the lump sum of
six months' gross salary. Mr. Edwards may also terminate his employment with the
Company upon three months prior written notice upon a Change in Control of the
Company. Upon termination without cause by the Company or upon termination by
Mr. Edwards upon a Change of Control, Mr. Edwards is to receive as a termination
fee an amount equal to two times his then current annual salary from the
Company.
 
     Pursuant to an employment agreement, dated August 6, 1996, with PLDMS, Mr.
Brooks was employed as Chief Operating Officer as of July 1, 1996 at an initial
annual salary of $200,000 and for an initial term of 18 months. During 1997, Mr.
Brooks' annual salary under this agreement was $200,000. Effective July 28,
1997, the termination date for the agreement was extended to September 30, 1997,
and that termination date has been extended orally. Since February 1, 1998, Mr.
Brooks has been Special Projects Director of the Company.

     Pursuant to employment agreements, dated as of January 1, 1995, with the
Company and PLDMS, Mr. Carroll was employed (i) as Vice President, Business
Development of the Company at an initial annual salary of $55,000 and (ii) as an
Executive of PLDMS at an initial annual salary of Pound Sterling 36,000. During
1996, Mr. Carroll's annual salaries under these agreements were $75,000 and
Pound Sterling 50,000, respectively. As of February 1997, Mr. Carroll became
Vice President, Operations of the Company. The agreement with the Company was
amended and restated effective as of August 1, 1997 to incorporate various
changes made in the agreements with Messrs. Hatt and Edwards, but without
changing the overall compensation arrangements. The agreement may be terminated
without cause by either party upon six months prior written notice or for cause
as specified; provided, that if Mr. Carroll gives notice of termination of
employment with the Company, the Company may,
 
                                       33
<PAGE>   36
 
in its sole discretion, terminate employment immediately upon the payment of the
lump sum of six months' gross salary. Mr. Carroll may also terminate his
employment with the Company upon three months prior written notice upon a Change
in Control of the Company. The agreement with PLDMS may be terminated without
cause by either party upon thirty days prior written notice or for cause as
specified. Upon termination without cause by the Company or upon termination by
Mr. Carroll upon a Change of Control, Mr. Carroll is to receive as a termination
fee a specific multiple of his then annual current salary from the Company, as
determined from time to time by the board of directors. As of December 31, 1997,
the applicable multiple for Mr. Carroll is 4.000. In addition to his salary from
the Company and PLDMS, an amount equal to twenty percent of his then current
salary amount is payable by the Company to Mr. Carroll annually in lieu of all
pension and other benefits. No termination payment is payable to Mr. Carroll by
PLDMS.
 
COMPENSATION OF DIRECTORS
 
     Non-employee directors are paid an annual directors' fees of $15,000 and
fees of $750 for each board meeting and $250 for each committee meeting
attended, and are reimbursed for expenses incurred in connection with attendance
at Board of Directors and Committee meetings. In addition, the chairman of each
Committee receives an additional annual fee of $5,000. Messrs. Dilley and
Timothy Lowry (the other representative of Navona during 1997) declined all fees
during 1997, and Messrs. Dilley, Lowry and Rawle (the other representative of
Navona since March 1998) have declined all fees during 1998. All directors are
eligible to participate in the Company's 1997 Equity Compensation Plan (the
"Plan"). However, non-employee directors are only permitted to receive
non-qualified stock options under the Plan, pursuant to arrangements under
which, subject to approval by the Board of Directors, such individuals are
automatically awarded 10,000 options upon becoming a director and a further
5,000 options annually, thereafter. Messrs. Dilley and Lowry declined all such
options during 1997.
 
     See "Certain Business Relationships with Directors and Nominees" for a
description of (i) the Company's consulting agreement with Newmark for the
provision of services by Robert Smith during 1997, (ii) a description of certain
arrangements between the Company and C&W and (iii) a description of certain
arrangements between the Company, Technocom and Dr. Antoniuk.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     Mr. Hatt was on the board of directors of ALTEL during 1997. Until February
1997, Robert Smith, the Chairman of ALTEL, was a member of the Compensation
Committee.
 
     The following Compensation Committee Report and the Comparative Stock
Performance Graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Annual Report on Form 10-K, as
amended, into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
 
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
 
     The Board of Directors created the Compensation Committee (the "Committee")
to have the responsibility for implementing and administrating the Company's
compensation policies and programs for its executive officers.
 
     The Compensation Committee is responsible for setting the base salaries and
the total compensation levels of the Chief Executive Officer (the "CEO") and the
other executive officers of the Company having total annual compensation of over
$200,000 and for determining which executives, including the CEO, will be
granted stock options and the size of such grants. Mr. Hatt does not participate
in the approval of his compensation.
 
     Prior to the continuance of the Company from Ontario to Delaware in
February 1997, the Compensation Committee did not have the authority to approve
stock option grants, which were approved by the entire Board of Directors.
Robert Smith served on the Compensation Committee during 1996, but ceased to be
a member
 
                                       34
<PAGE>   37
 
of the committee in February 1997. David L. Heavenridge served on the Committee
during his tenure as a director of the Company during 1997 and, upon his
resignation as a director in October 1997, was replaced by Vladimir Kvint.
 
  Compensation Policies
 
     The Company's compensation policies for executive officers are designed to
(a) provide competitive compensation packages that will attract and retain
superior executive talent, (b) link a significant portion of compensation to
financial results, so as to reward successful performance, and (c) provide
long-term equity compensation, to further align the interests of executive
officers with those of stockholders and further reward successful performance.
The principal components of the Company's executive officer compensation program
are base salary, annual cash incentive awards, and grants of stock options.
Pursuant to the terms of the Plan, the Company's executive officer compensation
program also includes grants of stock appreciation rights, restricted stock and
performance units.
 
     Base salary levels for the Company's executive officers are reviewed on an
annual basis by the Committee and are set generally to be competitive with other
companies of comparable size and geographic location, taking into consideration
the positions' complexity, responsibility, need for special expertise and
personal hardships due to extensive international travel. Individual salaries
also take into account individual experience and performance.
 
     The bonus program in 1997 was based on the performance of the Company's
principal operating subsidiaries during 1997. Bonuses earned for 1997 consisted
of 30% of base salary for each of Messrs. Hatt, Edwards, Davies, Brooks and
Carroll.
 
  Long-Term Compensation
 
     The Committee periodically considers the desirability of granting stock
options to officers and other employees of the Company. Prior to the Company's
continuance as a Delaware corporation in February 1997, stock option grants were
subject to approval by the entire Board of Directors. After February 1997, the
Committee was granted the authority to make such grants. The objective of these
grants are to align senior management and stockholder long-term interest by
creating a strong and direct link between the executive's accumulation of wealth
and stockholder return and to enable executives to develop and maintain a
significant, long-term stock ownership position in the Company's Common Stock.
Individual grants of stock options are based upon individual performance. The
Committee believes that its past grants of stock options have successfully
focused the Company's executive officers and other members of senior management
on building stockholder value.
 
  Compensation of Chief Executive Officer
 
     In determining the compensation of Mr. Hatt, the Committee has taken into
consideration his experience, dedication, performance and contribution to the
growth of the Company and its operating subsidiaries over the past two years,
the personal hardships resulting from extensive international travel, including
long periods in the countries of the former Soviet Union, and Mr. Hatt's overall
management strengths and business acumen.
 
                                          Presented by the Compensation
                                          Committee:
 
                                               David M. Stovel
                                               Edward Charles Dilley
                                               Dr. Vladimir Kvint
 
                                       35
<PAGE>   38
 
COMPARATIVE STOCK PERFORMANCE GRAPH
 
     The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total stockholder return of: (i) the
Nasdaq Stock Market Composite Index (the "Nasdaq Index"); and (ii) the Nasdaq
Telecommunications Index, assuming an investment of $100 on February 18, 1993
(the date the Company's Common Shares were first traded in the United States on
the Nasdaq Stock Market) in each of the Common Stock of the Company, the stocks
comprising the Nasdaq Index and the stocks comprising the Nasdaq
Telecommunications Index, and further assuming reinvestment of dividends, if
any.
 
<TABLE>
<CAPTION>
                                                          Nasdaq Stock            Nasdaq
        Measurement Period                              Market Composite    Telecommunications
      (Fiscal Year Covered)         PLD Telekom Inc.          Index               Index
<S>                                 <C>                 <C>                 <C>
2/18/93                                  100.00              100.00               100.00
12/31/93                                 121.10              117.30               142.00
12/31/94                                  67.10              113.50               119.20
12/31/95                                  50.00              158.80               159.90
12/31/96                                  64.50              194.90               165.70
12/31/97                                  56.60              237.10               235.20
</TABLE>
 
               COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
 
     Section 16(a) of the Exchange Act requires that directors and certain
officers of the Company, and persons who own more than ten percent of the
Company's Common Stock, file with the Commission initial reports of ownership
and reports of changes of ownership of such Common Stock. Based solely on its
review of the copies of such reports received by the Company and written
representations from certain reporting persons that no Forms 5 were required for
those persons, the Company believes that during the year ended December 31, 1997
all filing requirements applicable to its officers, directors and ten-percent
stockholders were satisfied, with the exception of the Initial Statements of
Beneficial Ownership on Form 3 for Messrs. Antoniuk, Kvint and Kudriavtsev,
current directors of the Company. Each such director was elected as a director
of the Company in June 1997 and was obligated to file Initial Statements of
Beneficial Ownership within 10 days of their election. Due to an administrative
oversight, these filings were not timely made, but were filed in February 1998
as soon as the oversight was discovered.
 
                                 OTHER MATTERS
 
     The Board of Directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgment.
 
     The accounting firm of KPMG Peat Marwick LLP has been selected as the
Company's independent auditors for the 1998 fiscal year. A representative of
KPMG Peat Marwick LLP, the Company's auditors during 1997, is expected to be
present at the Meeting. Such representative will have an opportunity to make a
 
                                       36
<PAGE>   39
 
statement if he or she desires to do so and will be available to respond to
appropriate questions from stockholders of the Company.
 
               STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
 
     Stockholders may submit proposals on matters appropriate for stockholder
action at annual meetings in accordance with regulations adopted by the
Commission. To be considered for inclusion in the proxy statement and form of
proxy relating to the 1999 annual meeting, such proposals must be received by
the Company no later than December 31, 1998. Proposals should be directed to the
attention of the Secretary of the Company.
 
                           ANNUAL REPORT ON FORM 10-K
 
     The Company will furnish without charge to each person whose proxy is being
solicited, upon the written request of such person, a copy of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, as amended,
including the financial statements, but excluding exhibits. Requests for copies
of such report should be directed to the Company, Attention: Secretary.
 
                                          By order of the Board of Directors,
 
                                          JAMES R.S. HATT
                                          Chairman, President and
                                            Chief Executive Officer
 
July 22, 1998
 
                                       37
<PAGE>   40
 
                                                                      APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                            ASSET EXCHANGE AGREEMENT
                                    BETWEEN
                           NEWS AMERICA INCORPORATED
                                      AND
                                PLD TELEKOM INC.
 
                              DATED APRIL 19, 1998
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   41
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                     PAGE
                                                                     ----
<S>    <C>                                                           <C>
                                ARTICLE I
EXCHANGE OF STOCK
 1.1.  Exchange of Holdings Shares.................................   A-4
                               ARTICLE II
THE CLOSING
 2.1.  Time and Place of Closing...................................   A-4
 2.2.  Deliveries by News America..................................   A-4
 2.3.  Deliveries by PLD...........................................   A-4
                               ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PLD
 3.1.  Organization; Qualification.................................   A-5
 3.2.  Capitalization of PLD and PeterStar.........................   A-5
 3.3.  Authority Relative to this Agreement........................   A-5
 3.4.  Consents and Approvals; No Violation........................   A-6
 3.5.  Reports.....................................................   A-6
 3.6.  Financial Statements........................................   A-6
 3.7.  Undisclosed Liabilities.....................................   A-6
 3.8.  Absence of Certain Changes or Events........................   A-6
 3.9.  Certain Disclosure Matters..................................   A-7
 3.10. Legal Proceedings, etc......................................   A-8
 3.11. Permits.....................................................   A-8
                               ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWS AMERICA
 4.1.  Organization................................................   A-8
 4.2.  Authority Relative to this Agreement........................   A-8
 4.3.  Consents and Approvals; No Violation........................   A-8
 4.4.  Fees and Commissions........................................   A-9
 4.5.  Title.......................................................   A-9
 4.6.  Investment Intent; Private Placement........................   A-9
                                ARTICLE V
COVENANTS OF THE PARTIES
 5.1   Conduct of Business of PLD and PeterStar....................   A-9
 5.2   Access to Information.......................................  A-10
 5.3   Expenses....................................................  A-10
 5.4   Further Assurances..........................................  A-10
 5.5   Public Statements...........................................  A-11
 5.6   Consents and Approvals......................................  A-11
 5.7   Supplements to Schedules....................................  A-11
 5.8   Completion of Ancillary Agreements..........................  A-12
                               ARTICLE VI
CLOSING CONDITIONS
 6.1   Conditions to Each Party's Obligations to Effect the
            Transactions Contemplated Hereby.......................  A-12
 6.2   Conditions to Obligations of News America...................  A-12
 6.3   Conditions to Obligations of PLD............................  A-13
</TABLE>
 
                                       A-1
<PAGE>   42
 
<TABLE>
<CAPTION>
                                                                     PAGE
                                                                     ----
<S>    <C>                                                           <C>
                               ARTICLE VII
REGISTRATION RIGHTS
 7.1   Registration on Request.....................................  A-14
 7.2   Incidental Registration.....................................  A-15
 7.3   Registration Procedures.....................................  A-16
 7.4   Provision of Information; Transfer of Shares After
            Registration...........................................  A-18
 7.5   Indemnification.............................................  A-19
                              ARTICLE VIII
TERMINATION AND ABANDONMENT
 8.1   Termination.................................................  A-20
 8.2   Procedure and Effect of Termination.........................  A-20
                               ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
 9.1   Survival of Representations.................................  A-20
 9.2   Statements as Representations...............................  A-20
 9.3   PLD's Indemnification of News America.......................  A-20
 9.4   News America's Indemnification of PLD.......................  A-21
 9.5   Conditions of Indemnification...............................  A-21
 9.6   Cushion.....................................................  A-21
 9.7.  Limitation of Liability.....................................  A-22
 9.8.  Remedies Cumulative.........................................  A-22
 9.9.  Assignment of Certain Representations, Warranties and
            Indemnification Obligations............................  A-22
                                ARTICLE X
MISCELLANEOUS PROVISIONS
10.1.  Amendment and Modification..................................  A-22
10.2.  Waiver of Compliance; Consents..............................  A-22
10.3.  Notices.....................................................  A-22
10.4.  Assignment..................................................  A-23
10.5.  Confidentiality.............................................  A-23
10.6.  Governing Law...............................................  A-24
10.7.  Counterparts................................................  A-24
10.8.  Interpretation..............................................  A-24
10.9.  Entire Agreement............................................  A-24
</TABLE>
 
                                       A-2
<PAGE>   43
 
                            ASSET EXCHANGE AGREEMENT
 
     ASSET EXCHANGE AGREEMENT (this "Agreement"), dated April 19, 1998, by and
between:
 
     NEWS AMERICA INCORPORATED, a corporation organized under the laws of the
State of Delaware ("News America"), with an address at 1211 Avenue of the
Americas, New York, New York 10036, and
 
     PLD TELEKOM INC., a corporation organized under the laws of Delaware
("PLD"), with an address at 680 Fifth Avenue, New York, New York 10019.
 
                              W I T N E S S E T H:
 
     WHEREAS, PLD is a provider of local, long distance and international
telecommunications services in the Russian Federation and Kazakstan; and
 
     WHEREAS, News America and Cable and Wireless Plc, a company registered
under the laws of England under the number 238525 ("C&W"), are substantially
simultaneously with the execution and delivery of this Agreement entering into
that certain Stock Purchase Agreement (the "Stock Purchase Agreement"), pursuant
to which News America will purchase from (a) Navona Communications Corporation
Ltd. (a wholly owned subsidiary of C&W), a corporation organized under the laws
of Bermuda ("Navona"), (i) 10,555,739 shares of common stock, par value $.01 per
share ("PLD Common Stock"), of PLD, constituting as at April 16, 1998
approximately 31.21% of the presently issued and outstanding capital stock of
PLD (the "PLD Shares"), and (ii) 12,000 shares of common stock, par value
USD$1.00 per share, of PLD Holdings Ltd., a limited liability company organized
under the laws of Bermuda ("Holdings"), constituting 100% of the issued and
outstanding capital stock of Holdings (the "Holdings Shares"), which is the
owner of eleven percent (11%) of the outstanding common equity interests in
PeterStar Company Limited, a closed joint stock company organized under the laws
of the Russian Federation ("PeterStar") and (b) C&W, a warrant dated June 28,
1995, conferring on C&W the right to purchase up to 250,000 shares (subject to
adjustment on the occurrence of certain events) of PLD Common Stock at an
exercise price of 11.3125 Canadian dollars per share, expiring on June 22, 1999
a copy of which is attached hereto as Exhibit A (the "PLD Warrant"; the PLD
Warrant and the PLD Shares are collectively referred to herein as the "PLD
Interest") and
 
     WHEREAS, PLD deems it to be advisable and in the best interests of PLD and
its shareholders to facilitate the acquisition of the PLD Interest and the
Holdings Shares by News America; and
 
     WHEREAS, News America has advised PLD and C&W that it does not wish to hold
the Holdings Shares and that it is not willing to consummate the acquisition of
the PLD Interest and the Holdings Shares unless it can substantially
simultaneously therewith exchange the Holdings Shares with PLD for additional
shares of PLD Common Stock; and
 
     WHEREAS, PLD deems it advisable and in the best interests of PLD and its
shareholders to acquire the Holdings Shares in exchange for shares of PLD Common
Stock; and
 
     WHEREAS, PLD presently owns sixty percent (60%) of the equity interest in
PeterStar; and
 
     WHEREAS, immediately prior to the consummation of the transaction
contemplated hereby, PLD shall have acquired, pursuant to a Share Purchase
Agreement between PLD and C&W (the "CIBBV Purchase Agreement"), 100 shares of
common stock, par value 400 Netherlands Guilders per share, of CommStruct
International Byelorussia BV, a closed limited liability company organized under
the laws of The Netherlands ("CIBBV"), constituting 100% of the issued and
outstanding capital stock (the "CIBBV Shares") of CIBBV, which is the owner of
fifty percent (50%) of the outstanding common equity interests in
Belarus-Netherlands Belcel Joint Venture ("Belcel") and one hundred percent
(100%) of the outstanding common equity interests in Baltic Operations
Ltd. -- Latvia, from C&W in exchange for 200,000 shares of PLD Common Stock plus
300,000 shares of PLD Common Stock in consideration for the assignment of
certain liabilities of CIBBV to PLD or its designee; and
 
                                       A-3
<PAGE>   44
 
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties, intending to be legally
bound, hereby agree as follows:
 
                                   ARTICLE I
 
                               EXCHANGE OF STOCK
 
     1.1. Exchange of Holdings Shares.
 
          (a) On the Closing Date and substantially simultaneously with, and
     subject to, the purchase of the Holdings Shares by News America as
     described in the Stock Purchase Agreement, News America agrees to sell,
     assign, transfer and deliver to PLD, and PLD agrees to purchase and acquire
     from News America, all of News America's right, title and interest to the
     Holdings Shares.
 
          (b) On the Closing Date and against delivery of the Holdings Shares as
     set forth above, PLD will issue and deliver to News America 3,705,631
     newly-issued, fully paid and nonassessable shares of PLD Common Stock (the
     "New PLD Shares"), registered in the name of News America or its designee
     or nominee.
 
                                   ARTICLE II
 
                                  THE CLOSING
 
     2.1. Time and Place of Closing.  Subject to the terms and conditions of
this Agreement, the consummation of the transaction contemplated hereby (the
"Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York 10022 on the third business day
after News America shall have delivered to PLD written notice that the
conditions set forth in Section 6.2 hereof have been satisfied (the "Closing
Date"), or at such other time and place as shall be determined by mutual
agreement of the parties.
 
     2.2. Deliveries by News America.  At the Closing, News America will deliver
or cause to be delivered the following to PLD:
 
          (a) Immediately upon (and subject to) the receipt thereof from C&W,
     the stock certificates or other instruments representing all of the
     Holdings Shares, duly endorsed in blank or accompanied by duly executed
     instruments of transfer, together with any other documents that are
     necessary to transfer to PLD all of News America's right, title and
     interest in and to the Holdings Shares theretofore acquired from C&W or its
     affiliates;
 
          (b) the Officer's Certificate referred to in Section 6.3(d) hereof;
 
          (c) the Opinion of Counsel referred to in Section 6.3(e) hereof; and
 
        (d) such other documents, instruments and writings as are required to be
     delivered by News America at or prior to the Closing Date pursuant to this
     Agreement or otherwise required in connection herewith.
 
     2.3 Deliveries by PLD.  At the Closing, PLD will deliver the following to
News America:
 
          (a) stock certificates, registered in the name of News America or its
     nominee or designee, representing 3,705,631 shares of duly issued, fully
     paid and nonassessable PLD Common Stock, and any other documents that are
     necessary to transfer to News America good and marketable title to such
     shares;
 
          (b) the Officer's Certificate referred to in Section 6.2(f) hereof;
 
          (c) the Opinion of Counsel referred to in Section 6.2(g) hereof; and
 
                                       A-4
<PAGE>   45
 
          (d) such other documents, instruments and writings as are required to
     be delivered by News America at or prior to the Closing Date pursuant to
     this Agreement or otherwise required in connection herewith.
 
                                  ARTICLE III
 
                     REPRESENTATIONS AND WARRANTIES OF PLD
 
     PLD represents and warrants to News America as follows (for purposes of
Sections 3.7, 3.8, 3.9, 3.10 and 3.11 hereof, the term PLD, as of the Closing
Date, shall mean PLD and its subsidiaries taken as a whole, including without
limitation, the assets, liabilities, business and operations of Belcel acquired
pursuant to the CIBBV Purchase Agreement):
 
     3.1. Organization; Qualification.  PLD is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own, lease, and operate
its properties and to carry on its business as now being conducted. PLD is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary. Schedule 3.1 sets forth, as of the date of this Agreement, each
jurisdiction in which PLD is qualified to do business as a foreign corporation.
PLD has heretofore delivered to News America complete and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect.
 
     3.2. Capitalization of PLD and PeterStar.  Set forth on Schedule 3.2 is the
number of shares in the capital stock or other equity interests of each of PLD
and PeterStar which are issued and outstanding as of the date of this Agreement.
All such shares are validly issued, fully paid and nonassessable. Other than
this Agreement, or as set forth in Schedule 3.2, there is no subscription,
option, warrant, call, right, agreement or commitment relating to the issuance,
sale, delivery or transfer by PLD and PeterStar of any shares of capital stock
or other equity interest (including any right of conversion or exchange under
any outstanding security or other instrument). There are no outstanding
contractual obligations of PLD and PeterStar to repurchase, redeem or otherwise
acquire any outstanding shares of capital stock or other equity interest of PLD
or PeterStar. There are no restrictions or limitations contained in the
organizational documents of PLD or in any contract, agreement, document or other
instrument to which PLD or any direct or indirect subsidiary is a party or of
which PLD or any direct or indirect subsidiary is aware that restricts, or
purports to restrict, the ability of C&W or any of its direct or indirect
subsidiaries to transfer the PLD Interest to News America or that create or give
rise to, by reason of the transfer of the PLD Interest to News America, any
pledge, security interest, lien, charge, encumbrance, claim, option or
limitation affecting the ability of News America to vote such shares or to
exercise any other rights appurtenant thereto under the Stock Purchase
Agreement. The New PLD Shares, taken together with the PLD Shares, will
represent an aggregate of not less than thirty-eight (38%) of the outstanding
PLD shares after giving effect to the issuance of the New PLD Shares. The PLD
Warrant is exercisable for shares of PLD Common Stock in accordance with its
terms.
 
     3.3. Authority Relative to this Agreement.  PLD has full corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and all ancillary agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and all ancillary agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized, by the Board of Directors and, if required, shall be
duly and validly authorized by the shareholders of PLD prior to the Closing
Date, and no other corporate proceedings on the part of PLD are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
and thereby. This Agreement and each such ancillary agreement to which PLD is a
party has been duly and validly executed and delivered by PLD, and assuming that
this Agreement constitutes a valid and binding agreement of News America,
constitutes a valid and binding agreement of PLD, enforceable against PLD in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general principles of
equity.
 
                                       A-5
<PAGE>   46
 
     3.4. Consents and Approvals; No Violation.  Except as set forth in Schedule
3.4, the execution and delivery by PLD of this Agreement and all ancillary
agreements to which it is a party will not (i) conflict with or result in any
breach of any provision of the Certificate of Incorporation or Bylaws, or
similar charter documents, of PLD, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which PLD is a party or by which PLD or any of its
assets may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained, or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to PLD or any of its assets.
 
     (b) Except as set forth in Schedule 3.4 and except for the filings by News
America and PLD required by Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of any
governmental or regulatory body or authority is necessary for the consummation
by PLD of the transactions contemplated hereby.
 
     3.5. Reports.  Since January 1, 1997, PLD has, pursuant to the Securities
Act of 1933, as amended (the "Securities Act") and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), filed or caused to be filed with the
United States Securities and Exchange Commission ("SEC") all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the business
and operations of PLD under each of the Securities Act and the Exchange Act and
the respective rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder in effect on the date each such report was
filed. True and complete copies of each of such forms, statements, reports and
documents, and such exhibits, have been delivered to News America.
 
     3.6. Financial Statements.  PLD has previously furnished to News America
copies of (a) PLD's audited consolidated and (b) PeterStar's audited (i) balance
sheets as of December 31, in each of the years 1997, 1996 and 1995 and (ii)
related consolidated statements of income and retained earnings and consolidated
changes in financial position of PLD and PeterStar for the fiscal years then
ended, together with the respective reports thereon of KPMG Peat Marwick LLP and
KPMG, as independent auditors of PLD for 1997, and 1996 and 1995, respectively,
and KPMG, as independent auditors of PeterStar. Each of the balance sheets
included in the financial statements referred to in this Section 3.6 (including
the related notes thereto) present fairly the financial information purported to
be set therein as of the dates thereof, and the other related statements
included therein (including the related notes thereto) present fairly the
results of operations and changes in financial position for the periods then
ended, all in conformity with generally accepted accounting principles applied
on a consistent basis, except as otherwise noted therein. For purposes of this
Agreement, the audited consolidated balance sheet of PLD and the audited balance
sheet of PeterStar as of December 31, 1997 are hereinafter referred to as (the
"Companies' Balance Sheets").
 
     3.7. Undisclosed Liabilities.  Except as set forth in Schedule 3.7, neither
PLD nor PeterStar has any material liability or obligation, secured or unsecured
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due), of a nature required by generally accepted accounting principles to
be reflected in a corporate balance sheet or disclosed in the notes thereto,
which are not accrued or reserved against in the Companies' Balance Sheets or
disclosed in the notes thereto in accordance with generally accepted accounting
principles.
 
     3.8. Absence of Certain Changes or Events.  Except as set forth in Schedule
3.8 or in PLD's Annual Report on Form 10-K for the year ended December 31, 1997,
since the date of the Companies' Balance Sheets there has not been:
 
          (a) any material adverse change in the business, prospects,
     operations, properties, assets, liabilities, competition, earnings, or
     condition (financial or otherwise) of PLD or PeterStar, or any failure by
     PLD or PeterStar to pay its debts when due;
 
                                       A-6
<PAGE>   47
 
          (b) any event or condition of any character which either individually
     or in the aggregate, might reasonably be expected to have a material
     adverse effect on the business, prospects, operations, properties, assets,
     liabilities, competition, earnings or condition (financial or otherwise),
     of PLD or PeterStar;
 
          (c) any damage, destruction or loss (regardless of whether covered by
     insurance) that might reasonably be expected to have a material adverse
     effect on the business, prospects, operation, properties, assets,
     liabilities, competition, earnings, or condition (financial or otherwise),
     of PLD or PeterStar;
 
          (d) any declaration, setting aside or payment of any dividend or other
     distribution (whether in cash, stock, property, or any combination of the
     foregoing) with respect to the capital stock or other equity interest of
     PLD or PeterStar except as specifically provided for in this Agreement;
 
          (e) any increase in the compensation paid, payable or to become
     payable by PLD or PeterStar to its officers, directors or employees (other
     than increases for employees in the ordinary course of business and
     consistent with past practice), any hiring of new officers, directors or
     employees (other than hiring of new employees in the ordinary course of
     business consistent with past practice) or any increase in any bonus,
     insurance, pension or other employee benefit plan, payments or arrangement
     (including loans) made to, for or with any officers, directors, or
     employees (other than increases for employees in the ordinary course of
     business and consistent with past practice or other increases pursuant to
     written employee benefit plans);
 
          (f) any entry into, material amendment of, or termination of, any
     material agreement, material commitment or material transaction by PLD or
     PeterStar, including, without limitation, any (i) merger, consolidation,
     share exchange, acquisition or disposition of assets or stock or any
     financing transaction or capital expenditure, (ii) indenture, mortgage,
     note, agreement or other instrument relating to the borrowing of money
     (other than intercompany accounts), (iii) partnership or joint venture
     agreement, (iv) material license agreement relating to intellectual
     property (other than off-the-shelf software licenses), or (v) agreement to
     amend its charter or other organizational documents or any other document,
     contract, agreement, arrangement, undertaking or instrument relating to any
     of the foregoing;
 
          (g) any entry into, material change to the terms or conditions of
     termination of, any license, permit, franchise, governmental approval or
     decree pursuant to which PLD or PeterStar provides telephony, data
     transmission or other telecommunications services;
 
          (h) any notes or accounts receivable or portions of notes or accounts
     receivable written off by PLD or PeterStar as uncollectible, other than in
     the ordinary course of business and consistent with past practice;
 
          (i) any material obligation or material liability paid (whether
     absolute, accrued, contingent or otherwise), or any lien or encumbrance in
     connection therewith discharged, by PLD or PeterStar, other than (i) in the
     ordinary course of business and consistent with past practice, or (ii)
     current liabilities shown on the financial statements and current
     liabilities incurred since their date;
 
          (j) any properties or assets, real, personal or mixed, tangible or
     intangible, of PLD or PeterStar mortgaged, pledged or subjected to any
     security interest, lien or encumbrance;
 
          (k) except as specifically provided for in this Agreement, any sale,
     assignment, transfer, lease, dividend, distribution or other disposition of
     any of property or assets by PLD or PeterStar, other than sales of products
     in the ordinary course of business; or
 
          (l) any agreement, understanding or undertaking to do any of the
     foregoing by PLD or PeterStar.
 
     3.9. Certain Disclosure Matters.
 
     News America has been furnished with copies of each of the documents,
contracts, agreements, licenses, permits and other instruments identified on
Schedule 3.9 hereof (collectively, the "Written Disclosure Materials"). All of
the Written Disclosure Materials are true and complete copies of each of the
documents, contracts, agreements, licenses, permits and other instruments that
they purport to represent, and the Written Disclosure Materials, together with
the schedules attached hereto, collectively represent a true, fair and
                                       A-7
<PAGE>   48
 
complete portrayal of the material business operations of PLD and PeterStar.
None of the Written Disclosure Materials contains an untrue statement of
material fact or omits to state any fact required to be stated therein or
necessary, in light of the circumstances under which such statements are made,
so as not to be misleading, except to the extent that such statements were later
amended, revised or updated by PLD or PeterStar.
 
     3.10. Legal Proceedings, etc.  Except as set forth in Schedule 3.10, there
are no claims, actions, or proceedings pending or investigation pending or, to
PLD's knowledge, threatened against or relating to PLD or PeterStar before any
court, governmental or regulatory authority or body acting in an adjudicative
capacity. Except as set forth in Schedule 3.10, none of PLD or PeterStar is
subject to any outstanding judgment, rule, order, writ, injunction or decree of
any court, governmental or regulatory authority.
 
     3.11. Permits.  Each of PLD and PeterStar has all material permits,
licenses, franchises and other governmental authorizations, consents and
approvals (collectively, "Permits") necessary to conduct its business as
presently conducted. Except as set forth in Schedule 3.11, neither PLD nor
PeterStar has received any written notification that it is in violation of any
of such Permits, or any law, statute, order, rule, regulation, ordinance or
judgment of any governmental or regulatory body or authority applicable to it.
Each of PLD and PeterStar is in compliance with all material Permits, laws,
statutes, orders, rules, regulations, ordinances, or judgments of any
governmental or regulatory body or authority applicable to it.
 
                                   ARTICLE IV
 
                 REPRESENTATIONS AND WARRANTIES OF NEWS AMERICA
 
     News America represents and warrants to PLD as follows:
 
     4.1. Organization.  News America is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. News
America has heretofore delivered to PLD complete and correct copies of its
organizational documents as currently in effect.
 
     4.2. Authority Relative to this Agreement.  News America has full power and
authority to execute, deliver and perform all obligations under this Agreement
and all ancillary agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and all ancillary agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by News America and no other proceedings on the part of
News America are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement and all ancillary agreements to
which it is a party have been duly and validly executed and delivered by News
America, and assuming that this Agreement and each such ancillary agreement
constitutes a valid and binding agreement of PLD, constitutes a valid and
binding agreement of News America, enforceable against News America in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general principles of
equity.
 
     4.3. Consents and Approvals; No Violation.  (a) Except as set forth in
Schedule 4.3, neither the execution and delivery of this Agreement by News
America nor the exchange by News America of the Holdings Shares pursuant to this
Agreement will (i) conflict with or result in any breach of any provision of the
organizational documents of News America, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, or (iii) result in a default (or give rise to any right
of termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, agreement, lease or other
instrument or obligation to which News America or any of its subsidiaries are a
party or by which any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained.
 
     (b) Except for the filings by News America and PLD required by Title II of
the HSR Act, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of any governmental
 
                                       A-8
<PAGE>   49
 
or regulatory body or authority is necessary for the consummation by News
America of the transactions contemplated hereby.
 
     4.4. Fees and Commissions.  No broker, finder or other person is entitled
to any brokerage fees, commissions or finder's fees in connection with the
transaction contemplated hereby by reason of any action taken by News America.
News America hereby covenants that it will pay to PLD or otherwise discharge,
and will indemnify and hold PLD harmless from and against, any and all claims or
liabilities for all brokerage fees, commissions and finder's fees (other than as
described above) incurred by reason of any action taken by News America.
 
     4.5. Title.  News America makes no representations or warranties regarding
the title to the Holdings Shares (including the interest in PeterStar) that are
the subject of this Agreement or the business or operation of PeterStar or any
other matter relating to the Holdings Shares or their provenance; provided,
however, that News America shall represent in writing to PLD on the Closing Date
that News America shall have taken no action with respect to the Holdings Shares
that would interfere with the transfer to PLD, and the receipt by PLD, of title
to the Holdings Shares which is of the same quality as the title thereto which
News America received from C&W. News America hereby assigns to PLD each of the
representations and warranties made by C&W to News America in the Stock Purchase
Agreement.
 
     4.6. Investment Intent; Private Placement.
 
          (a) News America is knowledgeable, sophisticated and experienced in
     making, and is qualified to make, decisions with respect to investments in
     equity securities presenting an investment decision like that involved in
     the acquisition of the New PLD Shares. News America or its counsel,
     accountants or other investment advisers have requested, received, reviewed
     and considered all information deemed relevant by them in making an
     informed decisions to acquire the New PLD Shares.
 
          (b) News America is acquiring the New PLD Shares for investment for
     its own account only and not with a view to, or for resale in connection
     with, any "distribution" thereof within the meaning of the Securities Act.
     News America has no present intention of selling, granting any
     participation in, or otherwise distributing the New PLD Shares, except in
     compliance with the Securities Act or pursuant to an available exemption
     thereunder.
 
          (c) News America understands that the New PLD Shares have not been
     registered under the Securities Act or registered or qualified under any
     state securities law in reliance on specific exemptions therefrom, which
     exemptions may depend upon, among other things, the bona fide nature of
     News America's investment intent as expressed herein. News America is
     familiar with Rule 144 under the Securities Act, as presently in effect,
     and understands the resale limitations imposed thereby and by the
     Securities Act. News America further understands that the certificate(s)
     representing the New PLD Shares shall bear the following legend:
 
           THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
           ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
           THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE
           SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED
           IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
           THEREFROM.
 
                                   ARTICLE V
 
                            COVENANTS OF THE PARTIES
 
     5.1. Conduct of Business of PLD and PeterStar.  Except as described in
Schedule 5.1, during the period from the date of this Agreement to the Closing
Date, PLD will, and will cause PeterStar to, conduct their respective businesses
and operations according to their ordinary and usual course of business
consistent with past practice. Without limiting the generality of the foregoing,
and, except as contemplated in this Agreement
 
                                       A-9
<PAGE>   50
 
or as described in Schedule 5.1, prior to the Closing Date, without the prior
written consent of News America, PLD will not, and will not permit PeterStar to:
 
          (a) (i) create, incur or assume any amount of indebtedness for money
     borrowed, other than in the ordinary course of business, or (ii) assume,
     guarantee, endorse or otherwise become liable or responsible (whether
     directly, contingently or otherwise) for the obligations of any other
     person except in the ordinary course of business; provided, PLD and
     PeterStar may endorse negotiable instruments in the ordinary course of
     business;
 
          (b) declare, set aside or pay any dividend or other distribution
     (whether in cash, stock or property or any combination thereof) in respect
     of their respective capital stock, or redeem or otherwise acquire any
     shares of their respective capital stock;
 
          (c) enter into any agreement, commitment or transaction (including
     without limitation any borrowing, capital expenditure or capital
     financing), except agreements, commitments or transactions in the ordinary
     course of business or as contemplated herein provided, that PLD may
     nevertheless effect the public offering of shares of PLD Common Stock as
     contemplated by the terms of (i) that certain Indenture, dated May 31,
     1996, among the parties signatories thereto, relating to the $123,000,000
     14% senior discount notes due 2004, (ii) that certain Indenture, dated May
     31, 1996, among the parties signatories thereto, relating to the
     $26,000,000 9% convertible subordinated notes due 2006 (each such Indenture
     are collectively referred to herein as the "Indentures") and (iii) the
     Revolving Credit Note and Warrant Agreement relating to PLD's $12,400,000
     12% Series A Revolving Credit Notes due 1998 and $3,100,000 12% Series B
     Revolving Credit Notes due 1998; or
 
          (d) enter into any contract, agreement, commitment or arrangement,
     whether written or oral, with respect to any of the transactions set forth
     in the foregoing paragraphs (a) through (c).
 
     5.2. Access to Information.  Between the date of this Agreement and the
Closing Date, PLD will, and will cause PeterStar, during ordinary business hours
and upon reasonable notice to, (i) give News America and its accountants,
counsel, financial advisors and other authorized representatives (the "News
America Representatives") reasonable access to all books, records, plants,
offices and other facilities and properties of PLD and PeterStar to which News
America is permitted access by law, (ii) permit News America to make such
reasonable inspections thereof as News America may reasonably request; (iii)
cause the officers and advisors of PLD and PeterStar to furnish News America
with such financial and operating data and other information with respect to the
business and properties of PLD and PeterStar as News America may from time to
time reasonably request; (iv) cause the officers and advisors of PLD and
PeterStar to furnish News America a copy of each report, schedule or other
document filed by them with any governmental agency or authority, provided,
however, that (A) any such investigation shall be conducted in such a manner as
not to interfere unreasonably with the operation of the business of PLD and
PeterStar or PLD's relationship with the other shareholders of PeterStar, (B)
PLD and PeterStar shall not be required to take any action which would
constitute a waiver of the attorney-client privilege and (C) PLD and PeterStar
need not supply News America with any information which PLD or PeterStar is
under a legal obligation not to supply.
 
     All information furnished to or obtained by News America and any News
America Representatives pursuant to this Section 5.2 shall be subject to the
confidentiality provisions set forth in Section 10.5 hereof.
 
     5.3. Expenses.  Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such costs and expenses.
 
     5.4. Further Assurances.  Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the sale, assignment, transfer and delivery of the
PLD Interest, and the Holdings Shares and the interest in PeterStar represented
thereby, pursuant to this Agreement. From time to time after the date hereof,
without further consideration, News America will, at its own expense, execute
and deliver such documents to PLD as PLD may reasonably request in order more
effectively to vest in PLD good title to the Holdings Shares. From
                                      A-10
<PAGE>   51
 
time to time after the date hereof, without further consideration, PLD will, at
its own expense, execute and deliver such documents to News America or its
designee (which may include C&W) as News America or such designee may reasonably
request in order more effectively to consummate the sale, assignment, transfer
and delivery of (a) the New PLD Shares pursuant to this Agreement and (b) the
PLD Interest and the Holdings Shares pursuant to the Stock Purchase Agreement.
 
     5.5. Public Statements.  The parties shall consult with each other prior to
issuing any public announcement, statement or other disclosure with respect to
this Agreement or the transactions contemplated hereby and shall not issue any
such public announcement, statement or other disclosure prior to such
consultation. Notwithstanding the foregoing, the parties may make public
announcements, statements or other disclosures with respect to this Agreement
and the transactions contemplated hereby without such consultation to the extent
and under the circumstances in which the parties are legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process, or by order of a court or tribunal of competent
jurisdiction) to do so, or in order to comply with applicable rules or
requirements of any stock exchange, government department or agency or other
regulatory authority, or as required by any securities law or regulation or
other legal requirement, in any such case in circumstances where such
consultation would not be practicable.
 
     5.6. Consents and Approvals.
 
          (a) PLD and News America shall cooperate with each other and (i)
     promptly prepare and file all necessary documentation, (ii) effect all
     necessary applications, notices, petitions and filings and execute all
     agreements and documents, (iii) use all reasonable efforts to obtain all
     necessary permits, consents, approvals and authorizations of all
     governmental bodies and (iv) use all reasonable efforts to obtain all
     necessary Permits, consents, approvals and authorizations of all other
     parties, in the case of each of the foregoing clauses (i), (ii) and (iii),
     necessary or advisable to consummate the transactions contemplated by this
     Agreement or required by the terms of any note, bond, mortgage, indenture,
     deed of trust, license, franchise, permit, concession, contract, lease or
     other instrument to which PLD, Holdings, PeterStar or News America or any
     of their subsidiaries are a party or by which any of them is bound. PLD
     shall have the right to review and approve in advance all characteristics
     of the information relating to PLD or PeterStar; and each of PLD and News
     America shall have the right to review and approve in advance all
     characterizations of the information relating to the transactions
     contemplated by this Agreement which appear in any filing made in
     connection with the transactions contemplated hereby. The parties hereto
     agree that they will consult with each other with respect to the obtaining
     of all such necessary Permits, consents, approvals and authorizations of
     all third parties and governmental bodies. Each of PLD and News America
     shall designate separate counsel with respect to all applications, notices,
     petitions and filings (joint or otherwise) relating to this Agreement and
     the transactions contemplated hereby on behalf of PLD, on the one hand and
     News America on the other hand, with all governmental bodies.
 
          (b) The parties hereto shall consult with each other prior to
     proposing or entering into any stipulation or agreement with any foreign or
     United States governmental authority or agency or any third party in
     connection with any foreign or United States governmental consents and
     approvals legally required for the consummation of the transactions
     contemplated hereby and shall not propose or enter into any such
     stipulation or agreement without the other party's prior written consent,
     which consent shall not be unreasonably withheld.
 
     5.7. Supplements to Schedules.  PLD, on the one hand, and News America, on
the other hand, shall have the right from time to time prior to the Closing to
supplement or amend its Schedules with respect to any matter hereafter arising
which if existing or known at the date of this Agreement would have been
required to be set forth or described in such Schedules. Any such supplemental
or amended disclosure shall be deemed to have cured any breach of any
representation or warranty made in this Agreement for purposes of Article IX,
but will not be deemed to have cured any such breach made in this Agreement and
to have been disclosed as of the date of this Agreement for purposes of
determining whether or not the conditions set forth in Article VI hereof have
been satisfied.
 
                                      A-11
<PAGE>   52
 
     5.8. Completion of Ancillary Agreements.  Each party will use reasonable
efforts to take or cause to be taken, all action, and do or cause to be done all
things reasonably necessary or advisable to perform their respective obligations
under, in the case of PLD, the CIBBV Exchange Agreement and, in the case of News
America, the Stock Purchase Agreement, each in the form as executed on the date
hereof.
 
                                   ARTICLE VI
 
                               CLOSING CONDITIONS
 
     6.1. Conditions to Each Party's Obligations to Effect the Transactions
Contemplated Hereby.  The respective obligations of each party to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
 
          (a) The waiting period under the HSR Act applicable to the
     consummation of the transactions contemplated hereby shall have expired or
     been terminated;
 
          (b) No preliminary or permanent injunction or other order or decree by
     any federal, state, local or foreign court which prevents the consummation
     of the transactions contemplated hereby shall have been issued and remain
     in effect (each party agreeing to use its reasonable best efforts to have
     any such injunction, order or decree lifted) and no statute, rule or
     regulation shall have been enacted by any federal, state, local or foreign
     government or governmental agency which prohibits the consummation of the
     transactions contemplated hereby;
 
          (c) All foreign and United States federal, state and local government
     consents and approvals required for the consummation of the transactions
     contemplated hereby shall have become Final Orders (a "Final Order" means a
     final order after all opportunities for rehearing are exhausted (whether or
     not any appeal thereof is pending)) and shall not be subject to terms and
     conditions; and
 
          (d) If so required, a resolution shall have passed at the annual
     meeting of stockholders (or, if applicable, at any special meeting of
     stockholders) of PLD, convened after proper notice to and/or waiver of such
     notice by the stockholders, with a quorum of the stockholders present or
     represented, to approve the transaction contemplated hereby.
 
     6.2. Conditions to Obligations of News America.  The obligation of News
America to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
 
          (a) There shall not have occurred and be continuing any event or
     events, either individually or in the aggregate, which would have a
     material and adverse effect on the property, business, operations,
     prospects or condition (financial or otherwise) of PLD;
 
          (b) PLD shall have performed and complied with in all material
     respects the covenants and agreements contained in this Agreement required
     to be performed and complied with by it at or prior to the Closing Date,
     and the representations and warranties of PLD set forth in this Agreement
     shall be true and correct in all material respects as of the date of this
     Agreement and as of the Closing Date as though made at and as of the
     Closing Date;
 
          (c) News America and C&W shall have closed the transactions
     contemplated by the Stock Purchase Agreement simultaneously with the
     transactions contemplated hereby;
 
          (d) News America and PLD shall have executed and delivered a Director
     Nomination Agreement containing terms and conditions satisfactory to News
     America and PLD and such agreement shall be in full force and effect;
 
          (e) The common stock of PLD shall be quoted on The Nasdaq Stock
     Market, and no action shall have been taken or shall be pending or
     threatened in respect of the delisting of the common stock of PLD from
     eligibility for such quotation;
 
                                      A-12
<PAGE>   53
 
          (f) News America shall have received a certificate from an authorized
     officer of PLD, dated the Closing Date, to the effect that to the officer's
     knowledge, the conditions set forth in Section 6.2(a) and (b) have been
     satisfied; and
 
          (g) News America shall have received an opinion from E. Clive
     Anderson, Senior Vice President and General Counsel of PLD, dated the
     Closing Date and satisfactory in form and substance to News America and its
     counsel, substantially to the effect that:
 
             (i) PLD is a corporation duly organized, validly existing and in
        good standing under the laws of the State of Delaware and has the
        corporate power and authority to execute and deliver this Agreement and
        to consummate the transactions contemplated hereby; and the execution
        and delivery of this Agreement and the consummation of the transactions
        contemplated hereby have been duly authorized by requisite corporate
        action taken on the part of PLD;
 
             (ii) this Agreement has been executed and delivered by PLD and is a
        valid and binding obligation of the PLD enforceable against it in
        accordance with its terms, except (A) that such enforcement may be
        subject to bankruptcy, insolvency, reorganization, moratorium or other
        similar laws now or hereafter in effect relating to creditors' rights,
        and (B) that the remedy of specific performance and injunctive and other
        forms of equitable relief may be subject to certain equitable defenses
        and to the discretion of the court before which any proceeding therefore
        may be brought; and
 
             (iii) the issuance and sale of the New PLD Shares to News America
        pursuant to this Agreement are not required to be registered under the
        Securities Act.
 
     As to any matter contained in such opinion which involves the laws of any
jurisdiction other than the Federal laws of the United States or the laws of the
State of New York, such counsel may rely upon opinions of counsel admitted in
such other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion may
expressly rely as to matters of fact upon certificates furnished by PLD and
appropriate officers and directors of each of PLD and PeterStar and by public
officials.
 
     6.3. Conditions to Obligations of PLD.  The obligations of PLD to effect
the transaction contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
 
          (a) News America shall have performed and complied with in all
     material respects the covenants and agreements contained in this Agreement
     required to be performed and complied with by it at or prior to the Closing
     Date, and the representations and warranties of News America set forth in
     this Agreement shall be true and correct in all material respects as of the
     date of this Agreement and as of the Closing Date as though made at and as
     of the Closing Date;
 
          (b) PLD shall have received stock certificates representing all of the
     Holdings Shares, duly endorsed in blank or accompanied by duly executed
     instruments of transfer, together with any other documents that are
     necessary to transfer to PLD good and marketable title to the Holdings
     Shares;
 
          (c) News America and C&W shall have closed the transactions
     contemplated by the Stock Purchase Agreement, including the purchase by
     News America from C&W of the Holdings Shares;
 
          (d) PLD and C&W shall have closed the transactions contemplated by the
     CIBBV Purchase Agreement, including the purchase by PLD of the CIBBV
     shares;
 
          (e) PLD shall have received from special Bermuda counsel to C&W a
     reliance letter dated the Closing Date to the effect that PLD may rely on
     such counsel's opinion to News America in connection with the Stock
     Purchase Agreement and assuming that News America transfers to PLD the
     Holdings Shares with the same quality of title that News America received
     from C&W, PLD will be the beneficial and registered holder of the Holdings
     Shares upon the consummation of the transactions contemplated hereby;
 
                                      A-13
<PAGE>   54
 
          (f) PLD shall have received a certificate from an authorized officer
     of News America, dated the Closing Date, to the effect that to the
     officer's knowledge, the conditions set forth in Section 6.3(a) have been
     satisfied; and
 
          (g) PLD shall have received an opinion from Skadden, Arps, Slate,
     Meagher & Flom LLP, special counsel to News America, dated the Closing Date
     and satisfactory in form and substance to PLD and its counsel,
     substantially to the effect that:
 
             (i) News America is a corporation organized and in good standing
        under the laws of the State of Delaware and has the power and authority
        to execute and deliver this Agreement and to consummate the transactions
        contemplated hereby; and the execution and delivery of this Agreement
        and the consummation of the transactions contemplated hereby have been
        duly authorized by requisite action taken on the part of News America;
        and
 
             (ii) this Agreement has been executed and delivered by News America
        and is a valid and binding obligation of News America, enforceable
        against it in accordance with its terms, except (A) that such
        enforcement may be subject to bankruptcy, insolvency, reorganization,
        moratorium or other similar laws now or hereafter in effect relating to
        creditors' rights, and (B) that the remedy of specific performance and
        injunctive and other forms of equitable relief may be subject to certain
        equitable defenses and to the discretion of the court before which any
        proceeding therefore may be brought.
 
     As to any matter contained in such opinion which involves the laws of any
jurisdiction other than the Federal laws of the United States or the laws of the
State of New York, such counsel may rely upon opinions of counsel admitted in
such other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion may
expressly rely as to matters of fact upon certificates furnished by News America
and appropriate officers and directors of News America and by public officials.
 
                                  ARTICLE VII
 
                              REGISTRATION RIGHTS
 
     7.1. Registration on Request.
 
          (a) Request.  Upon the written request of News America or any
     permitted successor or assign requesting that PLD effect the registration
     under the Securities Act of all or part of any of the PLD Interest that is
     not registered under the Securities Act, the New PLD Shares or any other
     security of PLD owned, from time to time, by News America which is
     registrable under the applicable laws of the United States (the
     "Registrable Securities") and specifying the intended method of disposition
     thereof, PLD will, subject to the terms of this Agreement, use its best
     efforts to effect the registration under the Securities Act of the
     Registrable Securities which PLD has been so requested to register for
     disposition in accordance with the intended method of disposition stated in
     such request; provided, that the request for registration pursuant to this
     Section 7.1 shall relate to the intention to dispose of not less than 25%
     of the Registrable Securities then owned by News America or its
     subsidiaries or affiliates or permitted successors or assigns. For purposes
     of this Article VII, the term "News America" shall include, as the context
     requires, all holders of Registrable Securities.
 
          (b) Registration Statement Form.  Registrations under this Section 7.1
     shall be on such appropriate registration form of the SEC (i) as shall be
     selected by PLD and as shall be reasonably acceptable to News America and
     (ii) as shall permit the disposition of such Registrable Securities in
     accordance with the intended method or methods of disposition specified in
     the request for such registration. If, in connection with any registration
     under Section 7.1 which is proposed by PLD to be on Form S-3 or any similar
     short form registration statement which is a successor to Form S-3, the
     managing underwriters, if any, shall advise PLD in writing that in their
     opinion the use of another permitted form is of material importance to the
     success of the offering, then such registration shall be on such other
     permitted form.
                                      A-14
<PAGE>   55
 
          (c) Expenses.  PLD shall pay all Registration Expenses in connection
     with only one (1) registration effected in accordance with this Section
     7.1; provided, however, that if at or prior to the fifth anniversary of the
     date of this Agreement News America, its affiliates and subsidiaries, and
     any permitted successors and assigns, collectively own more than 50% of the
     aggregate Registrable Securities subject to this Agreement (such number to
     take account of any stock splits, dividends, combinations or other
     adjustments affecting any of the Registrable Securities), then the holders
     of Registrable Securities shall be entitled to one (1) additional
     registration effected in accordance with this Section 7.1 in respect of
     which PLD shall pay all Registration Expenses.
 
          (d) Effective Registration Statement.  A registration requested
     pursuant to this Section 7.1 shall not be deemed to have been effected (i)
     unless a registration statement with respect thereto has become effective,
     provided that a registration which does not become effective after PLD has
     filed a registration statement with respect thereto solely by reason of the
     refusal to proceed of News America (other than a refusal to proceed based
     upon the advice of counsel relating to a matter with respect to PLD) shall
     be deemed to have been effected by PLD at the request of News America
     unless News America shall have elected to pay all Registration Expenses in
     connection with such registration, (ii) if, after it has become effective,
     such registration becomes subject to any stop order, injunction or other
     order or requirement of the SEC or other governmental agency or court for
     any reason, or (iii) the conditions to closing specified in the purchase
     agreement or underwriting agreement entered into in connection with such
     registration are not satisfied, other than by reason of some act or
     omission by News America.
 
          (e) Selection of Underwriters.  If a requested registration pursuant
     to this Section 7.1 involves an underwritten offering, the managing or lead
     underwriter or underwriters thereof shall be selected by News America and
     shall be acceptable to PLD, which shall not unreasonably withhold its
     acceptance of any such underwriters.
 
          (f) Notwithstanding anything to the contrary contained herein, PLD
     shall be entitled to postpone for a reasonable period of time (but in no
     event more than 120 days) the filing of a registration statement if, at the
     time it receives a request for such registration, (i) PLD reasonably
     determines, on the basis of written advice to such effect from outside
     counsel or an investment banking firm representing PLD, that such
     registration and the offering and sales thereunder by News America would
     materially interfere with any financing, acquisition, corporate
     reorganization or other material transaction or development involving PLD
     or any of its subsidiaries, and promptly gives News America notice of such
     determination, (ii) PLD would be required to undergo a special interim
     audit or to prepare and file with the SEC sooner than would otherwise be
     required pro forma or other financial statements.
 
     7.2. Incidental Registration.
 
          (a) Right to Include Registrable Securities. If PLD at any time
     proposes to register any of its securities under the Securities Act (other
     than by a registration on Form S-8, or any successor form thereto, relating
     to a stock option plan, stock purchase plan, managing directors' plan,
     savings or similar plan and other than pursuant to Section 7.1), whether or
     not for sale for its own account, it will each such time give prompt
     written notice to News America of its intention to do so and of News
     America's rights under this Section 7.2. Upon the written request of News
     America made within 20 days after the receipt of any such notice (which
     request shall specify the Registrable Securities intended to be disposed of
     by News America and the intended method of disposition thereof), PLD will,
     subject to the terms of this Agreement, use its best efforts to effect the
     registration under the Securities Act of all Registrable Securities which
     PLD has been so requested to register by News America, to the extent
     requisite to permit the disposition (in accordance with the intended
     methods thereof as aforesaid) of the Registrable Securities so to be
     registered, by inclusion of such Registrable Securities in the registration
     statement which covers the securities which News America proposes to
     register, provided that if, at any time after giving written notice of its
     intention to register any securities and prior to the effective date of the
     registration statement filed in connection with such registration, PLD
     shall determine for any reason either not to register or to delay
     registration of such securities, PLD may, at its election, give written
     notice of such determination to News America and, thereupon, (i) in the
     case of a determination not to
                                      A-15
<PAGE>   56
 
     register, shall be relieved of its obligation to register any Registrable
     Securities in connection with such registration (but not from its
     obligation to pay the Registration Expenses in connection therewith),
     without prejudice, however, to the rights of News America to request that
     such registration be effected as a registration under Section 7.1, and (ii)
     in the case of a determination to delay registering, shall be permitted to
     delay registering any Registrable Securities, for the same period as the
     delay in registering such other securities. Except for the shares
     registered pursuant to this Section 7.2, no registration effected under
     this Section 7.2 shall relieve PLD of its obligation to effect any
     registration upon request under Section 7.1, nor shall any such
     registration hereunder be deemed to have been effected pursuant to Section
     7.1. PLD will pay all Registration Expenses in connection with each
     registration of Registrable Securities requested pursuant to this Section
     7.2.
 
          (b) Priority in Incidental Registrations.  If (i) a registration
     pursuant to this Section 7.2 involves an underwritten offering of the
     securities so being registered, whether or not for sale for the account of
     PLD, to be distributed (on a firm commitment basis) by or through one or
     more underwriters of recognized standing under underwriting terms
     appropriate for such a transaction, (ii) the Registrable Securities so
     requested to be registered for sale for the account of holders of
     Registrable Securities are not also to be included in such underwritten
     offering (either because PLD has not been requested so to include such
     Registrable Securities pursuant to Section 7.4(b) or, if requested to do
     so, is not obligated to do so under Section 7.4(b), and (iii) the managing
     underwriter of such underwritten offering shall inform PLD and News America
     of its belief that the distribution of all or a specified number of such
     Registrable Securities concurrently with the securities being distributed
     by such underwriters would interfere with the successful marketing of the
     securities being distributed by such underwriters (such writing to state
     the basis of such belief and the approximate number of such Registrable
     Securities which may be distributed without such effect), then PLD may,
     upon written notice to News America, reduce the number of such Registrable
     Securities the registration of which shall have been requested by News
     America so that the resultant aggregate number of such Registrable
     Securities so included in such registration shall be equal to the number of
     shares stated in such managing underwriter's letter.
 
     7.3. Registration Procedures.  If and whenever PLD is required to effect
the registration of any Registrable Securities under the Securities Act as
provided in Sections 7.1 and 7.2, PLD shall, as expeditiously as possible:
 
          (i) prepare and (in the case of a registration pursuant to Section
     7.1, such filing to be made within 60 days after the request of News
     America) file with the SEC the requisite registration statement to effect
     such registration (including such audited financial statements as may be
     required by the Securities Act or the rules and regulations promulgated
     thereunder) and thereafter use its best efforts to cause such registration
     statement to become and remain effective, provided however that PLD may
     discontinue any registration of its securities which are not Registrable
     Securities (and, under the circumstances specified in Section 7.2(a), its
     securities which are Registrable Securities) at any time prior to the
     effective date of the registration statement relating thereto, provided
     further that before filing such registration statement or any amendments
     thereto, PLD will furnish to the counsel selected by the holders of
     Registrable Securities which are to be included in such registration copies
     of all such documents proposed to be filed, which documents will be subject
     to the review of such counsel;
 
          (ii) prepare and file with the SEC such amendments and supplements to
     such registration statement and the prospectus used in connection therewith
     as may be necessary to keep such registration statement effective and to
     comply with the provisions of the Securities Act with respect to the
     disposition of all securities covered by such registration statement until
     the earlier of such time as all of such securities have been disposed of in
     accordance with the intended methods of disposition by the seller or
     sellers thereof set forth in such registration statement or (i) in the case
     of a registration pursuant to Section 7.1, the expiration of 180 days after
     such registration statement becomes effective, or (ii) in the case of a
     registration pursuant to Section 7.2, the expiration of 90 days after such
     registration statement becomes effective;
 
                                      A-16
<PAGE>   57
 
          (iii) furnish to News America and each underwriter, if any, of the
     securities being sold such number of conformed copies of such registration
     statement and of each such amendment and supplement thereto (in each case
     including all exhibits), such number of copies of the prospectus contained
     in such registration statement (including each preliminary prospectus and
     any summary prospectus) and any other prospectus filed under Rule 424 under
     the Securities Act, in conformity with the requirements of the Securities
     Act, and such other documents, as News America and underwriter, if any, may
     reasonably request in order to facilitate the public sale or other
     disposition of the Registrable Securities owned by News America;
 
          (iv) use its best efforts to register or qualify all Registrable
     Securities and other securities covered by such registration statement
     under such other securities laws or blue sky laws of such jurisdictions in
     the United States as News America and any underwriter of the securities
     being sold by News America may reasonably request, to keep such
     registrations or qualifications in effect for so long as such registration
     statement remains in effect, and take any other action which may be
     reasonably necessary or advisable to enable News America and any such
     underwriter to consummate the disposition in such jurisdictions of the
     securities owned by News America, except that PLD shall not for any such
     purpose be required to qualify generally to do business as a foreign
     corporation in any jurisdiction wherein it would not but for the
     requirements of this subdivision (iv) be obligated to be so qualified, to
     subject itself to taxation in any such jurisdiction or to consent to
     general service of process in any such jurisdiction;
 
          (v) use its best efforts to cause all Registrable Securities covered
     by such registration statement to be registered with or approved by such
     other governmental agencies or authorities as may be necessary to enable
     News America to consummate the disposition of such Registrable Securities;
 
          (vi) furnish to News America a signed counterpart, addressed to News
     America and the underwriters, if any, of:
 
             (x) an opinion of counsel for PLD, dated the effective date of such
        registration statement (or, if such registration includes an
        underwritten public offering, an opinion dated the date of the closing
        under the underwriting agreement), reasonably satisfactory in form and
        substance to News America and its counsel and covering such matters as
        are customarily covered in opinions of issuer's counsel in transactions
        of this sort, and
 
             (y) a "comfort" letter (or, in the case News America does not
        satisfy the conditions for receipt of a "comfort" letter specified in
        Statement on Auditing Standards No. 72, an "agreed upon procedures"
        letter), dated the effective date of such registration statement (and,
        if such registration includes an underwritten public offering, a letter
        of like kind dated the date of the closing under the underwriting
        agreement), signed by the independent public accountants who have
        certified PLD's financial statements included in such registration
        statement, covering substantially the same matters with respect to such
        registration statement (and the prospectus included therein) and, in the
        case of the accountants' letter, with respect to events subsequent to
        the date of such financial statements, as are customarily covered in
        opinions of issuer's counsel and in accountants' letters delivered to
        the underwriters in underwritten public offerings of securities (with,
        in the case of an "agreed upon procedures" letter, such modifications or
        deletions as may be required under Statement on Auditing Standards No.
        35) and, in the case of the accountants' letter, such other financial
        matters, and, in the case of the legal opinion, such other legal
        matters, as News America (or the underwriters, if any) may reasonably
        request;
 
          (vii) notify News America and the managing underwriter or
     underwriters, if any, promptly and confirm such advice in writing promptly
     thereafter:
 
             (v) when the registration statement, the prospectus or any
        prospectus supplement related thereto or post-effective amendment to the
        registration statement has been filed, and, with respect to the
        registration statement or any post-effective amendment thereto, when the
        same has become effective;
 
                                      A-17
<PAGE>   58
 
             (w) of any request by the SEC for amendments or supplements to the
        registration statement or the prospectus or for additional information;
 
             (x) of the issuance by the SEC of any stop order suspending the
        effectiveness of the registration statement or the initiation of any
        proceedings by any Person for that purpose;
 
             (z) of the receipt by PLD of any notification with respect to the
        suspension of the qualification of any Registrable Securities for sale
        under the securities or blue sky laws of any jurisdiction or the
        initiation or threat of any proceeding for such purpose; and
 
          (viii) notify News America at any time when a prospectus relating
     thereto is required to be delivered under the Securities Act, upon PLD's
     discovery that, or upon the happening of any event as a result of which,
     the prospectus included in such registration statement, as then in effect,
     includes an untrue statement of a material fact or omits to state any
     material fact required to be stated therein or necessary to make the
     statements therein not misleading in the light of the circumstances then
     existing, and at the request of News America promptly prepare and furnish
     to News America and each underwriter, if any, a reasonable number of copies
     of a supplement to or an amendment of such prospectus as may be necessary
     so that, as thereafter delivered to the purchasers of such securities, such
     prospectus shall not include an untrue statement of a material fact or omit
     to state a material fact required to be stated therein or necessary to make
     the statements therein not misleading in the light of the circumstances
     then existing;
 
          (ix) use its best efforts to obtain the withdrawal of any order
     suspending the effectiveness of the registration statement at the earliest
     possible moment; and
 
          (x) otherwise use its best efforts to comply with all applicable rules
     and regulations of SEC, and make available to its security holders, as soon
     as reasonably practicable, an earnings statement covering the period of at
     least twelve months, but not more than eighteen months, beginning with the
     first day of PLD's first full calendar month after the effective date of
     such registration statement, which earnings statement shall satisfy the
     provisions of Section 11(a) of the Securities Act and Rule 158 thereunder,
     and will furnish to News America at least five business days prior to the
     filing thereof a copy of any amendment or supplement to such registration
     statement or prospectus and shall not file any thereof to which News
     America shall have reasonably objected on the grounds that such amendment
     or supplement does not comply in all material respects with the
     requirements of the Securities Act or of the rules or regulations
     thereunder.
 
     PLD will not file any registration statement or amendment thereto hereunder
or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the registration statement) to which News America shall reasonably object,
provided that PLD may file such document in a form required by law or upon the
advice of its counsel.
 
     News America agrees by acquisition of such Registrable Securities that,
upon receipt of any notice from PLD of the occurrence of any event of the kind
described in subdivision (viii) of this Section 7.3, it will forthwith
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until its receipt
of the copies of the supplemented or amended prospectus contemplated by
subdivision (viii) of this Section 7.3 and, if so directed by PLD, will deliver
to PLD (at PLD's expense) all copies, other than permanent file copies, then in
its possession of the prospectus relating to such Registrable Securities current
at the time of receipt of such notice. In the event PLD shall give any such
notice, the period mentioned in paragraph (ii) of this Section 7.3 shall be
extended by the length of the period from and including the date when News
America shall have received such notice to the date on which each such seller
has received the copies of the supplemented or amended prospectus contemplated
by paragraph (viii) of this Section 7.3.
 
     7.4. Provision of Information; Transfer of Shares After Registration.
 
          (a) News America shall, prior to the filing of any Registration
     Statement pursuant to this Agreement, provide PLD in writing with such
     information specified in Item 507 of Regulation S-K under
                                      A-18
<PAGE>   59
 
     the Securities Act and any other similar information reasonably requested
     by PLD for use in connection with such Registration Statement or any
     related prospectus or preliminary prospectus. News America shall promptly
     furnish to PLD all information required to be disclosed in order to make
     the information previously furnished to PLD not materially misleading.
 
          (b) News America agrees that it will not effect any disposition of the
     Registrable Securities that would constitute a sale within the meaning of
     the Securities Act except as contemplated in the Registration Statement or
     as otherwise in compliance with applicable securities laws, including,
     without limitation, to the extent applicable, the prospectus delivery
     requirements of the Securities Act.
 
     7.5. Indemnification.
 
          (a) Indemnification by PLD.  In the event of any registration of any
     securities of PLD under the Securities Act, PLD will, and hereby does agree
     to, indemnify and hold harmless News America against any losses, claims,
     damages or liabilities, joint or several, to which News America or any
     director or officer of News America or underwriter or controlling person
     may become subject under the Securities Act or otherwise, insofar as such
     losses, claims, damages or liabilities (or actions or proceedings, whether
     commenced or threatened, in respect thereof) arise out of or are based upon
     any untrue statement or alleged untrue statement of any material fact
     contained in any registration statement under which such securities were
     registered under the Securities Act, any preliminary prospectus, final
     prospectus or summary prospectus contained therein, or any amendment or
     supplement thereto, or any omission or alleged omission to state therein a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading. Such indemnification shall be subject to
     customary terms and provisions governing indemnification in transactions of
     this type; provided, however, that PLD shall not be liable in any such case
     to the extent that such loss, claim, damages or liability arises out of, or
     is based upon (i) an untrue statement of a material fact made in such
     Registration Statement, or any omission of a material fact required to be
     stated therein or necessary to make the statements therein, in light of the
     circumstances under which they were made, not misleading, made in reliance
     upon and in conformity with written information furnished to PLD by or on
     behalf of News America specifically for use in preparation of such
     Registration Statement, (ii) the failure of News America to comply with the
     covenants and agreements contained in Sections 7.3 or 7.4(a) hereof
     respecting sale of the Registrable Securities or (iii) any untrue statement
     of a material fact, or any omission of a material fact required to be
     stated therein or necessary to make the statements therein, in light of the
     circumstances under which they were made, not misleading, in any prospectus
     that is corrected in any subsequent prospectus that was delivered to News
     America prior to the pertinent sale or sales by News America.
 
          (b) Indemnification by News America.  PLD may require, as a condition
     to including any Registrable Securities in any registration statement filed
     pursuant to Section 7.3, that PLD shall have received an undertaking
     satisfactory to it from News America of such Registrable Securities, to
     indemnify and hold harmless (in the same manner and to the same extent as
     set forth in subdivision (a) of this Section 7.5) PLD, each director of PLD
     each officer of PLD and each other person, if any, who controls PLD within
     the meaning of the Securities Act, with respect to (i) any statement or
     alleged statement in or omission or alleged omission from such registration
     statement, any preliminary prospectus, final prospectus or summary
     prospectus contained therein, or any amendment or supplement thereto, if
     such statement or alleged statement or omission or alleged omission was
     made in reliance upon and in conformity with written information furnished
     to PLD through an instrument duly executed by News America specifically
     stating that it is for use in the preparation of such registration
     statement, preliminary prospectus, final prospectus, summary prospectus,
     amendment or supplement, (ii) the failure of News America to comply with
     the covenants and agreements contained in the last paragraph of Section 7.3
     or in Section 7.4(a) hereof respecting sale of the Registrable Securities
     or (iii) any untrue statement of a material fact, or any omission of a
     material fact required to be stated therein or necessary to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading, in any prospectus that is corrected in any subsequent
     prospectus that was delivered to News America prior to the pertinent sale
     or sales by News America.
 
                                      A-19
<PAGE>   60
 
                                  ARTICLE VIII
 
                          TERMINATION AND ABANDONMENT
 
     8.1. Termination.
 
          (a) This Agreement may be terminated at any time prior to the Closing
     Date, by mutual written consent of News America and PLD.
 
          (b) This Agreement may be terminated by News America, on the one hand,
     or PLD, on the other hand, if the transactions contemplated hereby shall
     not have been consummated on or before June 30, 1998; provided, however,
     that the right to terminate this Agreement pursuant to this Section 8.1(b)
     shall not be available to any party whose failure to perform any of its
     covenants or obligations under this Agreement has been the cause of or
     resulting in the failure of the transactions contemplated by this Agreement
     to occur on or prior to the aforesaid date.
 
          (c) This Agreement may be terminated by either News America, on the
     one hand, or PLD, on the other hand, if (i) any governmental or regulatory
     body, the consent of which is a condition to the obligations of PLD and
     News America to consummate the transactions contemplated hereby, shall have
     determined not to grant its consent and all appeals of such determination
     shall have been taken and have been unsuccessful, or (ii) any court of
     competent jurisdiction shall have issued an order, judgment or decree
     permanently restraining, enjoining or otherwise prohibiting the
     transactions contemplated hereby and such order, judgment or decree shall
     have become final and nonappealable.
 
          (d) This Agreement may be terminated by News America, on the one hand,
     or PLD, on the other hand, if there has been a material violation or breach
     of any agreement, representation or warranty contained in this Agreement
     which violation or breach has not been waived by the non-breaching party.
 
     8.2. Procedure and Effect of Termination.  In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby by either
or both of the parties pursuant to Section 8.1, written notice thereof shall
forthwith be given by the terminating party to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto without prejudice
to any claims of a party to this Agreement arising prior to the date of such
termination in respect of any breach of any representation, warranty or
agreement contained in this Agreement and provided that (a) the provisions of
Sections 5.4 and Article X (except for section 10.4) hereof shall survive such
termination, and (b) that regardless of such termination the provisions of
Article IX hereof shall continue with respect to any such claims. If this
Agreement is terminated as provided herein all filings, applications and other
submissions made pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other person to which they were made.
 
                                   ARTICLE IX
 
                  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
 
     9.1. Survival of Representations.  All representations, warranties and
agreements made by PLD or News America in this Agreement shall survive the
Closing until one (1) year after the Closing.
 
     9.2. Statements as Representations.  PLD's Written Disclosure Materials and
any statements contained herein made by News America shall be deemed
representations and warranties within the meaning of Section 9.1 hereof.
 
     9.3. PLD's Indemnification of News America.  Subject to the conditions of
this Article VIII, PLD hereby agrees that it shall indemnify, defend and hold
harmless News America and any parent, subsidiary and affiliate of News America
(collectively, the "News America Group") from and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs
and expenses, including, without limitation, interest, penalties and attorneys'
fees and expenses (collectively, "Damages"), asserted against, resulting to,
imposed upon or incurred by any of News America Group, directly or indirectly,
arising out of or
 
                                      A-20
<PAGE>   61
 
resulting from a breach of any representation, warranty or agreement of PLD
contained in or made pursuant to this Agreement or any facts or circumstances
constituting such a breach (collectively, "News America's Indemnifiable
Claims"); provided, however, that the indemnification obligation of PLD with
respect to any inaccuracy in any of the representations or warranties made by
PLD in this Agreement shall arise only in the event that PLD had knowledge of
such inaccuracy on or before the Closing; provided, further, that for purposes
of this Agreement "knowledge" shall mean knowledge on the part of any member of
management of PLD or knowledge of such circumstances that would lead a person
not negligent to investigate and, more likely than not, obtain actual knowledge.
 
     9.4. News America's Indemnification of PLD.  Subject to the conditions of
this Article VIII, News America hereby agrees that it shall indemnify, defend
and hold harmless PLD and any parent, subsidiary and affiliate of PLD
(collectively, the "PLD Group") from and against all Damages asserted against,
resulting to, imposed upon or incurred by any of the PLD Group, directly or
indirectly, arising out of or resulting from a breach of any representation,
warranty or agreement of News America contained in or made pursuant to this
Agreement or any facts or circumstances constituting such a breach ("PLD
Indemnifiable Claims"; PLD's Indemnifiable Claims and News America's
Indemnifiable Claims are collectively referred to herein as the "Indemnifiable
Claims"); provided, however, that the indemnification obligation of News America
with respect to any inaccuracy in any of the representations or warranties made
by News America in this Agreement shall arise only in the event that News
America had knowledge of such inaccuracy on or before the Closing; provided,
further, that for purposes of this Agreement "knowledge" shall mean knowledge on
the part of any member of management of News America or knowledge of such
circumstances that would lead a person not negligent to investigate and, more
likely than not, obtain actual knowledge.
 
     9.5. Conditions of Indemnification.  The obligations and liabilities of PLD
under Section 9.3 or News America under Section 9.4, respectively, with respect
to Indemnifiable Claims resulting from the assertion of liability by third
parties shall be subject to the following terms and conditions:
 
          (a) The member of the News America Group or the PLD Group, as the case
     may be, asserting the existence of an Indemnifiable Claim (the "Indemnified
     Party") will give notice of any such Indemnifiable Claim to the party from
     whom Indemnification is sought (the "Indemnifying Party"), and the
     Indemnifying Party shall undertake the defense thereof by representation of
     their choosing, and will consult with the Indemnified Party concerning such
     defense during the course thereof.
 
          (b) In the event that the Indemnifying Party within a reasonable time
     after notice of any Indemnifiable Claim, fails to defend, the Indemnified
     Party against which such Indemnifiable Claim has been asserted will (upon
     further notice to the Indemnifying Party) have the right to undertake the
     defense, compromise or settlement of such Indemnifiable Claim on behalf of
     and for the account and risk of the Indemnifying Party.
 
          (c) Anything in this Section 9.5 to the contrary notwithstanding, (i)
     if there is a reasonable probability that an Indemnifiable Claim may
     materially and adversely affect the Indemnified Party other than as a
     result of money damages or other money payments, the Indemnified Party
     shall have the right to defend, compromise or settle such Indemnifiable
     Claim, and (ii) the Indemnifying Party shall not, without the Indemnified
     Party written consent, settle or compromise any Indemnifiable Claim or
     consent to entry of any judgment in respect thereof, unless (A) the
     Indemnifying Party delivers to the Indemnified Party in advance its written
     agreement satisfactory to the Indemnified Party which provides that amounts
     paid and incurred or to be incurred by the Indemnified Party in connection
     with such Indemnifiable Claim shall be repaid promptly by the Indemnifying
     Party to the Indemnified Party (subject to the limitations of this Article
     VIII), and (B) such settlement, compromise or consent includes as an
     unconditional term thereof the giving by the claimant or the plaintiff to
     the Indemnified Party and/or such member, as the case may be, a release
     from all liability in respect to such Indemnifiable Claim.
 
     9.6. Cushion.  The provisions for indemnity contained in Section 9.3 and
Section 9.4 hereof shall only be effective with respect to an Indemnifiable
Claim (or, if more than one Indemnifiable Claim is asserted, with respect to all
Indemnifiable Claims) to the extent the amount (or aggregate amount, in the case
of more
                                      A-21
<PAGE>   62
 
than one Indemnifiable Claim) of damages sustained in connection therewith
exceeds One Hundred Thousand dollars (USD$100,000), but to the extent that the
amount or amounts of damages in respect of Indemnifiable Claims exceeds
$100,000, the indemnity provisions hereunder shall apply to all such damages,
without regard to the $100,000 level.
 
     9.7. Limitation of Liability.  Anything in this Agreement to the contrary
notwithstanding, the liability of an Indemnifying Party to indemnify an
Indemnified Party against any damages sustained in connection with any
Indemnifiable Claim shall be limited to Indemnifiable Claims as to which written
notice shall have been given to the Indemnifying Party on or prior to the
earlier of the first anniversary date of the Closing Date or public release of
audited financials of PLD covering the fiscal year ended December 31, 1998,
whether or not the Indemnified Party has actually settled or incurred any
expense with respect to such Damages. Furthermore, anything in this Agreement to
the contrary notwithstanding, if such Indemnifiable Claim relates to a
representation or warranty made by (a) News America, the amount of liability
shall be limited to $100,000 and (b) PLD, the amount of liability shall be
converted to PLD Common Stock and issued to News America at the same rate/value
as the PLD shares issued to News America by PLD pursuant to Section 1.1 hereof,
provided that the amount of liability of PLD shall be limited to twenty million
U.S. dollars ($20,000,000). In the event that the rules of any stock exchange
upon which the PLD Common Stock is then traded, or any interdealer quotation
system upon which quotations for the PLD Common Stock are then available, shall
not permit the issuance of PLD Common Stock without either the approval of
shareholders of PLD or the receipt of some other approval, then in satisfaction
of its liability to indemnify pursuant to this Article IX, PLD shall issue the
maximum number of shares of PLD Common Stock as can then be issued in accordance
with such rules, and shall issue in respect of the remainder of such liability
shares of preferred stock having such terms and conditions as may be agreed upon
between News America and PLD, such preferred stock to be convertible into PLD
Common Stock at such time as any requisite shareholder or other approval is
obtained.
 
     9.8. Remedies Cumulative.  The remedies provided herein shall be cumulative
and shall not preclude the assertion by News America or PLD of any other rights
or the seeking of any other remedies against the other party, as the case may
be.
 
     9.9. Assignment of Certain Representations, Warranties and Indemnification
Obligations.  In lieu of making any representations or warranties with respect
to the Holdings Shares being sold to and exchange with PLD hereunder, News
America hereby assigns to the benefit of PLD, its successors and assigns, the
representations, warranties and agreements made by C&W in the Stock Purchase
Agreement with respect to the Holdings Shares and its indemnification
obligations under such agreement, and agrees that PLD has the right to rely upon
such representations, warranties and agreements, and enforce such
indemnification obligations, as fully as if it were a party to the Stock
Purchase Agreement. PLD acknowledges and agrees that its sole recourse with
respect to the Holdings Shares is to seek indemnification from C&W with respect
thereto and further agrees that News America shall have no liability therefor.
 
                                   ARTICLE X
 
                            MISCELLANEOUS PROVISIONS
 
     10.1. Amendment and Modification.  Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement
signed by all of the parties hereto.
 
     10.2. Waiver of Compliance; Consents.  Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
 
     10.3. Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified, on the next Business Day after delivery to a recognized
overnight courier service, upon confirmation of receipt of a facsimile
transmission, or five days after deposit with the United States Post Office, by
registered or certified mail (return receipt requested), postage
                                      A-22
<PAGE>   63
 
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice; provided that notices of a change
of address shall be effective only upon receipt thereof):
 
        If to PLD, to:
 
        PLD Telekom Inc.
        680 Fifth Avenue
        24th Floor
        New York, New York 10019
        Facsimile: (212) 262-8870
        Attention: James Hatt
 
        If to News America, to:
 
        News America Incorporated
        1211 Avenue of the Americas
        New York, New York 10036
        Facsimile: (212) 768-2029
        Attention: General Counsel
 
        (with a copy to:
 
        Skadden, Arps, Slate, Meagher & Flom LLP
        919 Third Avenue
        New York, New York 10022
        Facsimile: (212) 735-2000
        Attention: Alan G. Straus, Esq.)
 
     10.4. Assignment.  This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law without the prior written consent of the
other party, nor is this Agreement intended to confer upon any other person
except the parties hereto any rights or remedies hereunder; provided, however,
that (a) PLD will have the right, at any time at or prior to the Closing, to
designate in writing, in accordance with applicable law, one or more of its
Affiliates to purchase, in whole or in part, the Holdings Shares on the terms
set out in this Agreement, and PLD shall remain jointly and severally liable
with its designee(s) under this Agreement following such designation, (b) News
America will have the right, at any time at or prior to the Closing, to
designate in writing, in accordance with applicable law, one or more of its
affiliates to purchase, in whole or in part, the New PLD Shares on the terms set
out in this Agreement, and News America shall remain jointly and severally
liable with its designee(s) under this Agreement following such designation and
(c) News America shall have the right, at its sole discretion, to assign to ZAO
LogoVAZ ("LogoVAZ") its rights to purchase one-half of the New PLD Shares (and,
if such rights are exercised, such rights shall be exercised by News America and
LogoVAZ concurrently as to the entire portion of the New PLD Shares); provided,
that it shall be a condition to any assignment under clauses (b) or (c) hereof
that the assignee represent and warrant to PLD as to the matters set forth in
Section 4.6, and otherwise agrees to be bound by the terms of this Agreement as
if such assignee had been a party to this Agreement.
 
     10.5. Confidentiality.  Each of the Parties hereto will hold, and will use
its reasonable, good faith efforts to cause its respective shareholders,
partners, members, directors, officers, employees, accountants, counsel,
consultants, agents and financial or other advisors (collectively "Agents") to
hold, in confidence all information (whether oral or written), including this
Agreement and the documents contemplated herein, concerning the transactions
contemplated by this Agreement furnished to such Party by or on behalf of any
other Party in connection with such transactions, unless legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process, or by order of a court or tribunal of competent
jurisdiction, or in order to comply with applicable rules or requirements of any
stock exchange, government department or agency or other regulatory authority,
or by requirements of any securities
                                      A-23
<PAGE>   64
 
law or regulation or other legal requirement) to disclose any such information
or documents, and except to the extent that such information or documents can be
shown to have been (a) previously known on a nonconfidential basis by such
Party, (b) in the public domain through no fault of such Party or (c) acquired
by such Party on a nonconfidential basis from sources not known by such Party to
be bound by any obligation of confidentiality in relation thereto.
Notwithstanding the foregoing provisions of this Section 10.5, each Party may
disclose such information to its Agents in connection with the transactions
contemplated by this Agreement or any of the other ancillary Agreements so long
as such Agents are informed by such Party of the confidential nature of such
information and are required by such Party to treat such information
confidentially, and to certain governmental agencies in connection with the
procurement of the governmental authorizations contemplated by this Agreement.
The obligation of each Party to hold any such information in confidence shall be
satisfied if such Party exercises the same care with respect to such information
as it would take to preserve the confidentiality of its own similar information.
If this Agreement is terminated, each Party will, and will use its reasonable,
good faith efforts to cause its respective Agents, to destroy or deliver to the
other Party, upon request, all documents and other materials, and all copies
thereof, obtained by such Party or on its behalf from the other Party hereto in
connection with this Agreement that are subject to such confidence.
 
     10.6. Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (regardless of the laws that
might otherwise govern under applicable New York principles of conflicts of law)
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
 
     10.7. Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
 
     10.8. Interpretation.  The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used in this Agreement, (a) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a governmental entity or any department or
agency thereof, (b) the term "subsidiary" when used in reference to any other
person shall mean any corporation of which outstanding securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person and (c) the
terms "affiliate" and "parent" shall have the meanings set forth in Rule 12b-2
of the Exchange Act.
 
     10.9. Entire Agreement.  This Agreement, including the documents, schedules
and certificates referred to herein, embody the entire agreement and
understanding of the parties hereto in respect of the transactions contemplated
by this Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein or therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such transactions.
 
     IN WITNESS WHEREOF, PLD and News America have caused this agreement to be
signed by their respective duly authorized officers as of the date first above
written.
 
                                          NEWS AMERICA INCORPORATED
 
                                          By: /s/ JOHN NALLEN
                                            ------------------------------------
                                            Name: John Nallen
                                            Title:
 
                                          PLD TELEKOM INC.
 
                                          By: /s/ JAMES R.S. HATT
                                            ------------------------------------
                                            Name: James R.S. Hatt
                                            Title:  President and Chief
                                                Executive Officer
 
                                      A-24
<PAGE>   65



                                PLD TELEKOM INC.

           SPECIAL AND ANNUAL MEETING OF STOCKHOLDERS, AUGUST 13, 1998

     The undersigned hereby appoints James R.S. Hatt and Simon Edwards, or
either one of them acting singly, with full power of substitution, the proxy or
proxies of the undersigned to attend the Special and Annual Meeting of
Stockholders of PLD Telekom Inc. to be held on August 13, 1998, and any
adjournments thereof, to vote all shares of stock that the undersigned would be
entitled to vote if personally present in the manner indicated below and on the
reverse side, and on any other matters properly brought before the meeting or
any adjournments thereof, all as set forth in the July 22, 1998 proxy statement.

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

                  THIS PROXY IS CONTINUED ON THE REVERSE SIDE,
                     PLEASE DATE, SIGN AND RETURN PROMPTLY.
<PAGE>   66
                PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR
          BLACK INK THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
                        PROPOSAL 1 AND FOR ALL NOMINEES.

1.       Approval of the Asset Exchange Agreement, dated April 19, 1998, between
         PLD Telekom Inc. and News America Incorporated, and the transactions
         contemplated thereby. 
               FOR [  ]           AGAINST [  ]        ABSTAIN  [  ]


2.       ELECTION OF THE FOLLOWING NOMINEES AS DIRECTORS: Dr. Boris Antoniuk,
         Edward Charles Dilley, Simon Edwards, James R.S. Hatt, Gordon Humphrey,
         Gennady Kudriavtsev, Dr. Vladimir Kvint, I. Martin Pompadur, Julian
         Rawle and David M. Stovel. 
         FOR ALL NOMINEES [  ]                    WITHHOLD FOR ALL NOMINEES [  ]

         WITHHOLD FOR THE FOLLOWING ONLY: (WRITE THE NAMES OF THE NOMINEE(S)
         IN THE SPACE BELOW)

         -----------------------------------------------------------------------

3.       To vote on such other matters that may properly come before the
         meeting. I plan to attend the meeting: Yes  [  ]      No [  ]

      THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
    AND ANNUAL MEETING, PROXY STATEMENT AND ANNUAL REPORT OF PLD TELEKOM INC.



                                    Dated                           , 1998  
                                          --------------------------        
                                                                            
                                    --------------------------------------  
                                                 Signature                  
                                                                            
                                    --------------------------------------  
                                          Signature if held jointly         
                                    
                                    (Signature should be exactly as name or
                                    names appear on this proxy. If stock is held
                                    jointly, each holder should sign. If signing
                                    is by attorney, executor, administrator,
                                    trustee or guardian, please give full
                                    title.)



   THIS PROXY WILL BE VOTED FOR THE ABOVE MATTERS AND FOR ALL NOMINEES UNLESS
 OTHERWISE INDICATED, AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS
                      PROPERLY BROUGHT BEFORE THE MEETING.



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