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JSFC Sistema (SSA)

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Wednesday 16 May, 2007

JSFC Sistema

Final Results

JSFC Sistema
                  Sistema Announces Financial Results for the Fourth Quarter and Twelve Months
Ended December 31, 2006

Sistema (LSE: SSA), the largest private sector consumer services company in
Russia and the CIS, today announced its unaudited consolidated US GAAP financial
results for the fourth quarter and full year ended December 31, 2006.

FOURTH QUARTER HIGHLIGHTS

    --  Consolidated revenues up 56.4% year on year to US$ 3.4 billion

    --  OIBDA up 52.5% year on year to US$ 1.0 billion

    --  Operating income up 68.3% year on year to US$ 640.2 million

    --  Net income down 7.0% year on year to US$ 93.2 million

    --  US$ 432.1 million raised through successful initial public offering and
        listing on London Stock Exchange of Sistema Hals in November 2006

    --  Acquisition of a blocking stake of 25% plus one share in Svyazinvest for
        US$ 1.3 billion in December 2006

    --  Bitel write-off by MTS in the amount of US$ 150 million

FULL YEAR HIGHLIGHTS

    --  Consolidated revenues up 43.1% year on year to US$ 10.9 billion

    --  OIBDA(1) up 36.0% year on year to US$ 4.0 billion

    --  Operating income up 41.3% year on year to US$ 2.7 billion

    --  Net income up 69.0% year on year to US$ 903.3 million

    --  Total consolidated assets up 53.8% year on year to US$ 20.1 billion

    --  Earnings per share up 67.4% year on year to US$ 94.4

    --  US$ 1,060.0 million raised through successful initial public offering
        and listing on London Stock Exchange of Comstar UTS in February 2006

Alexander Goncharuk, President and Chief Executive Officer of Sistema,
commented: 'Sistema Group companies delivered solid operational results in 2006.
We have expanded margins while maintaining high growth rates in our non-telecom
businesses. Our operational performance was supplemented by a number of sizable
transactions, including the strategic acquisition of a 25 per cent plus one
share stake in Svyazinvest, IPOs of Comstar UTS and Sistema Hals. We have made
significant efforts to realign our Group telecom operations and focus our
priorities on consistently delivering on our targets in the future'.

FINANCIAL SUMMARY

The reported financial results of Sistema are presented in the following
summary. They include three items, two of which were in Comstar UTS, for the
fourth quarter and the full year which are not comparable to the previous
reporting periods and impact Sistema in the fourth quarter of 2006. The first
item was the non-recurring US$ 62.3 million stock bonus awards to employees of
Comstar UTS, which impacted the Group's OIBDA. The second item was a non-cash
charge of US$ 60.0 million, which arose from the revaluation in Comstar UTS of
the put and call option issued in connection with the acquisition of a 25% plus
one share stake in State Telecommunications Investment Company 'Svyazinvest' on
December 11, 2006. The third item, write-off of MTS' investment in Bitel,
impacted the Group's net income for both the fourth quarter and the full year by
a US$ 79.7 million (net of minority interest).

-0-
*T
(US$ millions)             Q4 06      Q4 05      Year on    FY 06      FY 05      Year on
                                                  Year                             Year
                                                  Growth                           Growth
Revenues                     3,401.6    2,175.3       56.4%  10,862.8    7,593.5       43.1%
OIBDA                        1,000.5      656.2               4,023.5    2,958.4
OIBDA Margin                    29.4%      30.2%      52.5%      37.0%      39.0%      36.0%
Operating income               640.2      380.4               2,733.2    1,933.8
Operating Margin                18.8%      17.5%      68.3%      25.2%      25.5%      41.3%
Net income                      93.2      100.2                 903.3      534.4
Net income Margin                2.7%       4.6%      -7.0%       8.3%       7.0%      69.0%
*T

OPERATING REVIEW

Sistema's consolidated revenues increased by 56.4% year on year in the fourth
quarter to US$ 3.4 billion and by 43.1% to US$ 10.9 billion in 2006, as a result
of solid performance by the Group's Telecommunications segment and steady growth
of the Group's non-telecommunications operations. The non-telecommunications
businesses accounted for 38.4% of Group consolidated revenues in the fourth
quarter and 31.2% in 2006, compared to 26.5% and 22.4% for the corresponding
periods of 2005. The organic year on year growth in 2006 (excluding businesses
acquired or divested since the end of the fourth quarter of 2005) was 34.3% and
amounted to US$ 2.6 billion.

Group OIBDA increased by 52.5% year on year in the fourth quarter, and by 36.0%
year on year from US$ 3.0 billion to US$ 4.0 billion in 2006. The Group's OIBDA
margin decreased slightly from 30.2% to 29.4% in the fourth quarter as a result
of non recurring items recorded in Comstar UTS's results, as explained above.
MTS has shown a particular robust growth with OIBDA margin expanding by 4
percentage points in the fourth quarter year on year. Group OIBDA margin in 2006
declined slightly from 39.0% to 37.0% as a result of the increase of the share
of low-marginal businesses, primarily Sitronics, stock bonus awards by Comstar
UTS and slight decrease in OIBDA margin of Telecommunications segment due to the
impact of the introduction of the new regulation on long distance traffic,
introduction of Calling Party Pays and change in settlements with operators.

Group operating income was up 68.3% year on year in the quarter from US$ 380.4
million to US$ 640.2 million, and by 41.3% from US$ 1.93 billion to US$ 2.73
billion in 2006. The operating margin in the fourth quarter was 18.8%, compared
to 17.5% a year ago and was 25.2% in 2006, compared to 25.5% in 2005.

Consolidated depreciation and amortization expense was up by 30.6% year on year
in the quarter and by 25.9% in 2006, following the growth in the Group's
depreciable asset base; the previously announced revision of the estimated
remaining useful life of MGTS analogue equipment; the depreciation and
amortization charges arising from the purchase of the increased shareholding in
MGTS; and the currency translation effect of a weakening US dollar on MGTS's
rouble denominated depreciation and amortization charges.

Selling, General and Administrative expenses rose by 33.5% for the quarter and
by 42.6% in 2006, from US$ 485.6 million to US$ 648.0 million and from US$ 1.4
billion to US$ 2.0 billion, respectively. US$ 62.3 million in the quarter and
US$ 153.0 million in 2006, included in SG&A expense, reflects the value of
non-cash compensation received by employees.

The effective tax rate increased from 28.8% to 32.9% in 2006, as a result of
foreign exchange gains on non-rouble denominated debt and the effects of the
stock bonus awards and the option revaluation charge in Comstar, as well as the
write-off of the investment in Bitel, which are not tax-deductible.

The increase in minority interest reflects changes both in net income of the
Group and the share of ownership in the Group's companies.

Net income in the fourth quarter was down year on year to US$ 93.2 million from
US$ 100.2 million. In 2006, the net income growth was 69.0% from US$ 534.4
million to US$ 903.3 million.

The weighted average number of shares outstanding increased from 9,475,980 in
2005 to 9,570,050 in 2006.

Telecommunications(2)

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                   2,096.3    1,598.3       31.2%   7,475.6    5,892.9       26.9%
OIBDA                        942.3      682.0       38.2%   3,576.3    2,922.5       22.4%
Operating Income             606.8      425.6       42.8%   2,377.4    1,933.3       23.0%
Net Income                   137.3      142.2      (3.4)%     757.2      677.6       11.7%
*T

The Telecommunications segment, which comprises MTS and Comstar UTS, reported
31% year on year revenue growth to US$ 2.1 billion in the fourth quarter of 2006
and 26.9% year on year increase to US$ 7.5 billion for the full year. The
segment accounted for 61.6% of the Group's consolidated revenues in the quarter,
compared to 73.5% a year ago. The growth was primarily organic with the
exception of US$ 23.0 million revenue contribution from newly acquired
businesses in Comstar UTS (DG Tel and Technologic Systems in Ukraine, Cornet and
Callnet in Armenia, and Astelit) and MTS (Dagtelecom). MTS continued to be the
main contributor to the segment revenues and accounted for 95.0% of the
segment's year on year growth in the quarter.

MTS added 5.3 million subscribers during the fourth quarter of 2006 as a result
of the organic growth in its business, and reported 35.5% year on year revenue
growth for the period from US$ 1.3 billion to US$ 1.8 billion. The mobile
operator added 14.7 million subscribers during 2006. Revenues in 2006 increased
by 27.4% year on year to US$ 6.4 billion from US$ 5.0 billion. MTS results for
the fourth quarter of 2006 showed a year on year increase in average monthly
service revenue per subscriber ('ARPU') for the Russian customer base from US$
7.4 to US$ 8.5.

Comstar UTS generated 7.9% year on year revenue growth in the fourth quarter and
23.4% growth in 2006, from US$ 270.7 million to US$ 292.1 million and from US$
907.6 million to US$ 1.1 billion, respectively, reflecting robust growth in
organic revenues, as well as US$ 25.8 million contribution received by MGTS from
the federal budget for the discounts granted to certain categories of
residential subscribers of MGTS prior to January 1, 2005 and US$ 32.9 million
from the introduction of CPP ('Calling Party Pays') on July 1, 2006. Data and
internet services to residential users of the alternative segment were up 30.6%
year on year.

Segment OIBDA was up 38.2% year on year in the quarter and up 22.4% in 2006,
with OIBDA margin of 45.0% in the fourth quarter and 48.0% in 2006, resulting
from significant improvements in operations of MTS after the restructuring
program introduced by the current management in May 2006. MTS' OIBDA in the
fourth quarter increased by 48.0% year on year from US$ 621.3 million to US$
919.8 million(3). OIBDA in 2006 increased by 25.8% from US$ 2.6 billion to US$
3.2 billion. OIBDA margin was nearly flat year on year at 51% despite revenue
growth of 27.4% in 2006. Comstar UTS reported a 9.3% increase in OIBDA (before
non-recurring US$ 62.1 million stock bonus awards) from US$ 89.1 million to US$
97.4 million in the quarter and a 19.5% increase in 2006, from US$ 358.8 million
to US$ 428.6 million.

The segment net income decreased 3.4% in the fourth quarter and increased 11.7%
year on year to US$ 137.3 million in the fourth quarter and US$ 757.2 million in
2006, and included US$ 79.7 million (net of minority interest) write-off of
investment in Bitel by MTS in the fourth quarter.

In December 2006, Comstar UTS announced the acquisition of a blocking stake
25.0% plus one share in Svyazinvest from Mustcom Limited for a total
cash consideration of US$ 1.3 billion. In April, 2007, the EGM of Svyazinvest
elected Sergei Shchebetov (Chairman of the Board of Directors of Comstar UTS)
and Anton Abugov (First Vice President and Head of Strategy and Development at
Sistema) to the Board of Directors of Svyazinvest.

Technology(4)

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                     565.2      308.4       83.3%   1,610.7      961.1       67.6%
OIBDA                         63.0        4.9    1,190.2%     172.5      155.6       10.9%
Operating Income              54.8        0.4   14,081.5%     129.8      143.5       -9.6%
Net Income                    29.0        5.8        397%      61.5       60.7        1.2%
*T

The Technology segment of Sistema, which is represented by SITRONICS, generated
83.3% revenue growth year on year to US$ 565.2 million in the fourth quarter and
67.6% increase year on year to US$ 1.6 billion in 2006, and accounted for 16.0%
and 14.2%, respectively, of Group revenues in 2006, compared to 13.7% and 12.0%,
respectively, for the same periods of 2005.

In June 2006, SITRONICS acquired 51.0% of Intracom Telecom, a provider of
advanced telecommunications solutions and services for fixed and wireless
operators, primarily in the Eastern Europe and Middle East.

In February 2007, SITRONICS completed its Initial Public Offering on the London
Stock Exchange The net proceeds of the offering to SITRONICS totaled US$ 356.4
million.

Real Estate

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                     121.8       42.9        184%     282.9       78.4        261%
OIBDA                         33.1        1.3      2,446%      93.1       12.5        645%
Operating Income              30.3        2.0      1,415%      86.0       10.4        726%
Net Income                    18.7        0.9      1,978%      52.7        2.3      2,191%
*T

The Real Estate segment, which is represented by Sistema Hals, reported almost
four-fold revenue growth year on year to US$ 282.9 million in 2006. Its revenues
nearly tripled year on year to US$ 121.8 million in the fourth quarter. The real
estate development division remained one of the primary growth drivers of the
segment and accounted for 72% of total segment's revenues compared to 52% in
2005. This growth in revenues in 2006 resulted primarily from the sale of
'Pokrovka 40' project, which is a mixed-use Class A office and hotel complex in
the center of Moscow, for US$ 83.7 million, 'Yartsevskaya 27' project, a
residential development in Moscow, for US$ 26.3 million. Additionally, Sistema
Hals recognized US$62.4 million in revenues from the partial completion of the
Siemens Tower project. Sistema Hals's project construction management division
contributed US$ 22.2 million increase in revenues compared to 2005. The asset
management division increased revenues by 80% year on year to US$ 27 million in
2006 primarily as a result of an increase in the number of sold houses within
the asset restructuring program and the growth in rental revenue.

The segment's OIBDA increased twenty five times year on year to US$ 33.2 million
in the fourth quarter and increased almost eight-fold year on year to US$ 93.1
million from US$ 12.5 million a year ago.

In November 2006, an IPO of Sistema Hals raised US$432.1 million from on London
Stock Exchange, valuing the company at US$ 2.1 billion.

Insurance

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                     194.4      121.1         61%     638.6      408.9         56%
Gross Premiums Written       196.1      111.3         76%     794.9      463.4         72%
Net Premiums Earned          167.9      102.4         64%     571.5      364.8         57%
Net Income                     3.7        0.2      1,750%      27.1       19.7         38%

Key Ratios
Loss ratio                    54.5%      57.1%                 54.6%      55.6%
Expense Ratio                 47.4%      44.3%                 41.2%      39.5%
Combined Ratio               101.9%     101.4%                 95.7%      95.0%
*T

The Insurance segment, which included ROSNO for the full reporting period,
increased revenues by 61% year on year to US$ 194.4 million in the fourth
quarter and by 56% year on year in 2006. The growth was primarily driven by
significant increase in motor vehicle insurance premiums. Gross premiums written
(GPW) increased by 76% year on year to

US$ 196.1 million in the fourth quarter and by 72% year on year to US$ 794.9
million in 2006. Voluntary medical insurance premiums were up 56%, automotive
insurance premiums increased by 115%, and non-life insurance premiums rose by
34% in the fourth quarter. The operations of new joint venture VTB-ROSNO added
US$ 17.4 million to GPW and US$ 10.3 million in revenue in 2006.

Allianz-ROSNO Asset Management increased its assets under management year on
year from US$ 434.6 million to US$ 476.9 million in the fourth quarter, which
was primarily driven by strong growth in third party funds.

Banking(5)

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                      58.8       29.5         99%     202.6      106.8         90%
OIBDA                          7.4        3.7        100%      24.2       14.3         69%
Operating Income               6.2        3.2         94%      21.2       12.7         67%
Net Income                     7.8        3.6        116%      14.7        8.8         67%
*T

The Banking segment of the Group is represented by the Moscow Bank for
Reconstruction and Development (MBRD) and its subsidiaries. The segment revenues
nearly doubled year on year to US$ 58.8 million in the fourth quarter and
increased by 90% to US$ 228.2 million in 2006. The bank's loan portfolio grew
153% year on year and interest income received from the retail banking
operations grew to US$ 25.3 million in 2006. The bank increased its interest
income from non-Group clients following the expansion of its retail business to
13 branches and 108 mini-offices. The leasing activities contributed US$ 13.7
million to the segment's revenue in 2006.

The bank's profitability more than doubled in the fourth quarter of 2006 to
US$7.8 million and increased by 67% to US$ 14.7 million in 2006.

In December 2006, MBRD purchased 2.0% share in East-West United Bank (EWUB) from
Vneshtorgbank ('VTB') for a total cash consideration of $0.8 million, increasing
the Group's ownership in EWUB to 51.0%.

Retail

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                     135.1      104.9         29%     335.3      208.0         61%
OIBDA                         23.7        6.1        289%      20.9       12.1         73%
Operating Income              19.9        5.7        249%      15.2       10.4         46%
Net Income                    13.1        3.1        323%       4.9        3.8         29%
*T

The Retail segment of the Group, which includes Detsky Mir, the specialist
children's goods retailer and wholesale trader, increased its revenues by 29%
year on year in the fourth quarter to US$ 135.1 million and by 61% year on year
to US$ 335.3 million in 2006. The segment added 29 retail stores during the
year, which contributed US$ 42.9 million, or 12.8 %, to total revenues in 2006.
Wholesale operations accounted for US$ 49.0 million, or 36% of total revenues,
in the fourth quarter of 2006 and for US$ 62.5 million, or 19% of the full year
revenues.

The segment's net income improved dramatically in the fourth quarter to US$ 13.1
million with a net income margin of 9.7%. Following the period of expansion the
retail network of Detsky Mir is represented by 69 stores in 34 Russian cities
(as at 30 April, 2007), compared to 36 stores in 16 cities as at the end of
2005.

Media

-0-
*T
(US$ millions)            Q4 2006    Q4 2005    Year on    FY 2006    FY 2005    Year on
                                                  Year                             Year
                                                 Growth                           Growth
------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Revenues                      41.2       12.1        241%     106.7       52.4        104%
OIBDA                         13.6       10.7         27%      26.6       11.6        129%
Operating Income              11.8        8.7         36%      15.4        7.1        117%
Net Income                     9.6        5.7         69%      13.5        2.5        440%
*T

The Media segment, which operates in Pay-TV, advertising, print and other media
sectors, doubled its revenues year on year to US$ 106.7 million in 2006, while
revenues increased more than threefold to US$ 41.2 million in the fourth quarter
of this year. United Cable Network, the largest provider of Pay TV services in
Russia, which was acquired in February 2006, contributed US$ 45.5 million in
revenues in 2006.

The segment's operating income increased by 36% year on year to US$ 11.8 million
in the fourth quarter primarily due to gain from disposal of 'Literaturnaya
Gazeta', the Russian newspaper, in the amount of US$ 3.2 million. United Cable
Network contributed US$ 2.2 million to the segment's operating income in 2006.

FINANCIAL HIGHLIGHTS

Net cash provided by operating activities was up 18.0% year on year to US$ 2.1
billion in 2006. The increase in the Group's operating cash flows was primarily
related to the growth in the profitability of its operations.

Net cash used in investing activities was US$ 5.4 billion for the full year of
2006, and included capital expenditures of US$ 2.4 billion for the full year of
2006, compared to US$ 2.5 billion a year ago. The Group spent US$ 631.4 million
for the full year of 2006 on purchases of businesses.

Cash flow from financing activities amounted to US$ 3.3 billion for the full
year of 2006, which primarily reflected proceeds of US$ 1.5 billion received
from the initial public offering of Comstar UTS, which took place in February
2006, and the initial public offering of Sistema-Hals, which took place in
November 2006.

The Group's net debt amounted to US$ 6.3 billion at the end 2006, compared to
US$ 3.9 billion as at December 31, 2005. The Group's increase in borrowings
included the US$ 675 million loan facility arranged by Comstar UTS with ABN AMRO
N.V., US$ 285 million of consolidated debt as a result of the acquisition of
Intracom Telecom, US$ 160 million received from the bond offering of MBRD in
March and June 2006, and US$ 200 million raised by the SITRONICS Finance from
the bond placement in February 2006, as well as additional financing attracted
by MTS.

The Group's net cash balance amounted to US$ 543.4 million at the end of 2006,
compared to US$ 482.6 million as at December 31, 2005.

In February 2007, Standard & Poor's (S&P) Ratings Services revised its outlook
on Sistema to positive from stable. At the same time the 'BB-' long-term
corporate credit rating on the company was reaffirmed.

ACQUISITIONS AND DISPOSALS

In December 2006, Comstar UTS announced the acquisition of a blocking stake 25%
plus one share in Telecommunication Investment Joint Stock Company (Svyazinvest)
from Mustcom Limited for a total cash consideration of US$ 1.3 billion. The
Company arranged a US$ 675 million six month loan facility with ABN AMRO Bank
N.V. in connection with this transaction. The interest rate was fixed at 1.2%
above LIBOR. The term of the loan can be extended to twelve months.

In December 2006, Comstar UTS announced that it has reached an agreement with
Intracom Holdings (ASE:INTRK) to subscribe to a 51% stake in Hellas On Line SA
(HoL) for a cash consideration of EUR 47.9 million. The closing of the
transaction, which is subject to certain conditions precedent including approval
of Greek regulatory authorities, is expected during the first half of 2007.

In October 2006, Comstar announced the acquisition of two telecom operators in
Kiev, Ukraine - DG Tel and Technologic Systems - through its local subsidiary
Comstar - Ukraine for a total cash consideration of US$ 4.7 million; the
acquisition of Astelit, an alternative fixed-line operator, for US$ 7.8 million
and the acquisition of Unitel for a total cash consideration of US$ 4.8 million.
Unitel is an alternative wireless fixed-line telecommunications company serving
customers in the Moscow region.

In August 2006, the Group acquired a 81.25% stake in ZAO Sahles, the owner of
controlling stakes in the entities that together comprise the Perm Motors Group,
for US$ 122 million. Perm Motors is one of Russia's largest manufacturers of jet
aircraft engines and industrial turbines. The Group did not obtain control over
operating activities of the acquired companies and therefore they were not
consolidated as of the end of 2006.

In July 2006, MTS acquired a 75% controlling stake in Dagtelecom from Glaxen
Corp. for US$ 14.7 million. Dagtelecom is the GSM-900 mobile services provider
with 1.7 million subscribers in the Republic of Dagestan, in the south
of Russia, with a population of approximately 2.6 million people.

In July 2006, the Group disposed of Glorely, a subsidiary holding 35% interest
in Sistema-Invest, the owner of the Group's energy companies in the Republic of
Bashkortostan, for a total cash consideration of US$ 201.0 million.

In June 2006, SITRONICS acquired 51% voting stake in Intracom Telecom, a
provider of telecommunications solutions and services in the Eastern Europe and
Middle East, for a total cash consideration of US$ 150.6 million, including US$
43.9 million payable upon the completion of due diligence. Additionally,
SITRONICS entered into a put agreement to acquire the remaining 49% of Intracom
Telecom. The exercise period of the put option is 36 months following a 24
months period post the acquisition date.

In March - October 2006, Sistema purchased in a series of transactions 2.9% of
its total shares outstanding for a total cash consideration of US$ 347.1
million. Sistema plans to establish a share option programme for the top
management of the Company. The acquired shares are intended for the funding of
this programme, and may also be used in connection with certain future
acquisitions.

In March 2006, Intourist purchased a 20% equity interest in Cosmos Hotel for
approximately US$ 20.8 million. It now has a controlling interest in Cosmos
Hotel of 64.1%.

In February, March and October 2006, Comstar UTS completed several transactions
on acquisition of MGTS' common stock under unconditional purchase offers. As a
result of these transactions, Comstar UTS purchased 11.3% of voting and 9.4% of
total shares of MGTS for a total cash consideration of $181.4 million,
increasing its ownership interest and voting interest in MGTS to 55.7%.

In February 2006, Sistema Mass Media and ECU GEST acquired 90% and 10%,
respectively, of JIR Broadcast and JIR Inc., the owners of 100% of United Cable
Networks, for a total cash consideration of US$ 145.9 million. UCN is a Pay-TV
and broadband service provider with 724,000 subscribers in 17 metropolitan areas
across the Russian Federation.

SIGNIFICANT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

In March 2007, Sistema-Hals announced the results of an independent valuation of
its real estate property and projects. According to the valuation carried out by
Cushman and Wakefield Styles & Riabokobylko (C&WS&R), the value of the
Sistema-Hals stake in the property and projects increased by 35% in the period
from June 30, 2006 to January 1, 2007.

In March 2007, Comstar sold its 45% equity stake in ZAO Metrocom, an alternative
fixed-line telecommunications operator based in St. Petersburg, to ├▒losed
joint-stock company MST. The shares were sold for a total cash consideration of
US$ 20 million. Comstar acquired the stake in September 2005 for US$ 12.2
million in cash. The sale was in line with Comstar's intention to have
controlling stakes in all of its operations and Comstar is evaluating other
means of expanding its operations in the St. Petersburg area.

In February 2007, Sistema completed the sale of a 49.2% stake in ROSNO to
Allianz, Sistema's strategic partner in ROSNO, for a total cash consideration of
US$ 750.0 million, resulting in a gain from disposal of US$ 591.8 million.
Sistema remains a shareholder in ROSNO with a 2.8% stake in the subsidiary.

Conference call information

The conference call will be hosted at 9.00 am (ET) / 2.00 pm (UK time) / 3.00 pm
(CET) / 5.00 pm (Moscow Time) on Wednesday, 16 May 2007.

The dial-in numbers for the conference call are:

UK +44 20 7138 0835

US +1 718 354 1172

International +44 20 7138 0835

A replay number will be available for 7 days after the conference call. To
access the replay, please dial:

UK +44 20 7806 1970

US +1 718 354 1112

International +44 20 7806 1970

The replay access number is 4913597#


For further information, please visit www.sistema.com or contact:

-0-
*T
Sistema Investor Relations     Shared Value Limited
Victor Kurilo                  Larisa Kogut-Millings
Tel: +7 495 629 2741           Tel. +44 (0) 20 7321 5037
kurilo@sistema.ru              sistema@sharedvalue.net
*T

Sistema is the largest private sector consumer services company in Russia and
the CIS, with over 75 million customers. Sistema develops and manages
market-leading businesses in selected service-based industries, including
telecommunications, technology, insurance, banking, real estate, retail and
media. Founded in 1993, the company reported revenues of US$ 10.9 billion for
the full year of 2006, and total assets of US$ 20.1 billion as at December 31,
2006. Sistema's shares are listed under the symbol 'SSA' on the London Stock
Exchange, under the symbol 'AFKS' on the Russian Trading System (RTS), and under
the symbol 'SIST' on the Moscow Stock Exchange (MSE).

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Sistema. You can identify forward looking statements by terms
such as 'expect,' 'believe,' 'anticipate,' 'estimate,' 'intend,' 'will,'
'could,' 'may' or 'might' the negative of such terms or other similar
expressions. We wish to caution you that these statements are only predictions
and that actual events or results may differ materially. We do not intend to
update these statements to reflect events and circumstances occurring after the
date hereof or to reflect the occurrence of unanticipated events. Many factors
could cause the actual results to differ materially from those contained in our
projections or forward-looking statements, including, among others, general
economic conditions, our competitive environment, risks associated with
operating in Russia, rapid technological and market change in our industries, as
well as many other risks specifically related to Sistema and its operations.

SISTEMA JSFC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

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US$ million                                       Jan-Dec     Jan-Dec     Oct-Dec     Oct-Dec
                                                   2006        2005        2006        2005
                                                ----------- ----------- ----------- -----------

Sales                                           10,054,552   7,143,386   3,137,828   2,079,734
Revenues from financial services                   808,230     450,163     263,785      95,582

TOTAL REVENUES                                  10,862,782   7,593,549   3,401,613   2,175,316

Cost of sales, exclusive of depreciation and
 amortization shown separately below            (4,510,874) (2,877,169) (1,548,968)   (919,340)
Financial services related costs, exclusive of
 depreciation and amortization shown separately
 below                                            (563,230)   (342,018)   (176,443)    (83,477)

TOTAL COST OF SALES                             (5,074,104) (3,219,187) (1,725,411) (1,002,817)

Selling, general and administrative expenses    (2,016,227) (1,414,313)   (648,006)   (485,577)
Depreciation and amortization                   (1,290,266) (1,024,592)   (360,241)   (275,763)
Other operating expenses, net                     (171,544)    (71,392)    (61,010)    (42,809)
Equity in net income of investees                   92,196      54,446      13,270          65
Net gain on disposal of interests in
 subsidiaries and affiliates                       330,412      15,326      20,011      11,989

OPERATING INCOME                                 2,733,249   1,933,837     640,226     380,404

Interest income                                     65,439      66,132      17,659       9,275
Change in fair value of derivative financial
 instruments                                       (60,000)          -     (60,000)          -
Interest expense, net of amounts capitalized      (355,326)   (225,684)    (98,217)    (35,792)
Currency exchange and translation loss              67,300     (13,913)     61,379         499
Impairment loss on investment in Bitel            (150,000)          -    (150,000)          -

Income before income tax and minority interests  2,300,662   1,760,372     411,047     354,386

Income tax expense                                (803,429)   (512,993)   (208,523)   (108,901)

Equity in net income of energy companies in the
 Republic of Bashkortostan                         139,794      23,587     (11,514)     23,587

Income before minority interests                 1,637,027   1,270,966     191,010     269,072

Minority interests                                (733,736)   (740,514)    (97,806)   (172,841)

Income from continuing operations before
 extraordinary gain                                903,291     530,452      93,204      96,231

Extraordinary gain                                       -       3,956           -       3,956

NET INCOME                                         903,291     534,408      93,204     100,187

Weighted average number of common shares
 outstanding                                     9,570,050   9,475,980

Earnings per share, basic and diluted                 94.4        56.0
----------------------------------------------- ----------- ----------- ----------- -----------
*T

SISTEMA JSFC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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US$ '000                                            December 31,   December 31,
                                                        2006           2005
                                                    -------------  -------------

ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                        $     543,381  $     482,647
  Short-term investments                                 998,989        594,196
  Loans to customers and banks, net                    1,289,832        451,395
  Insurance-related receivables                          233,400        149,589
  Accounts receivable, net                             1,069,706        442,643
  Prepaid expenses, other receivables and
  other current assets, net                              985,055        567,544
  VAT receivable                                         450,703        495,191
  Inventories and spare parts                            661,568        482,909
  Deferred tax assets, current portion                   195,672        123,681

                                                    -------------  -------------
     Total current assets                              6,428,306      3,789,795
                                                    -------------  -------------

Property, plant and equipment, net                     7,453,054      5,876,124
Advance payments for non-current assets                  385,281        233,761
Investments in affiliates                              1,108,647        914,203
Investments in shares of Svyazinvest                   1,390,302              -
Other investments                                        122,500        150,000
Goodwill                                                 514,460        330,932
Licenses, net                                            477,054        615,042
Other intangible assets, net                           1,205,039        886,272
Loans to customers and banks, net of current
 portion                                                 464,490        117,107
Debt issuance costs, net                                  80,220         82,662
Deferred tax assets, net of current portion               73,623         33,472
Other non-current assets                                 428,508         61,480

                                                    -------------  -------------
     Total non-current assets                         13,703,178      9,301,055

                                                    -------------  -------------
TOTAL ASSETS                                       $  20,131,484  $  13,090,850
                                                    =============  =============
*T

SISTEMA JSFC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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US$ '000                                            December 31,   December 31,
                                                        2006           2005
                                                    -------------  -------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                 $     868,378  $     594,816
  Bank deposits and notes issued, current portion        920,369        459,629
  Insurance-related liabilities                          721,192        412,328
  Taxes payable                                          150,894        125,474
  Deferred tax liabilities, current portion               52,714         28,149
  Subscriber prepayments, current portion                508,558        472,673
  Derivative financial instruments                       184,316              -
  Accrued expenses and other current liabilities         896,314        517,451
  Short-term loans payable                             1,297,168        637,769
  Current portion of long-term debt                      262,140        523,530

                                                    -------------  -------------
     Total current liabilities                         5,862,043      3,771,819
                                                    -------------  -------------

LONG-TERM LIABILITIES:
  Long-term debt, net of current portion               5,314,304      3,209,311
  Subscriber prepayments, net of current portion         136,861        163,897
  Bank deposits and notes issued, net of current
   portion                                                65,200         37,200
  Deferred tax liabilities, net of current portion       290,115        237,916
  Postretirement benefits obligation                      16,391         16,217
  Deferred revenue                                       129,120        125,700

                                                    -------------  -------------
     Total long-term liabilities                       5,951,991      3,790,241
                                                    -------------  -------------

                                                    -------------  -------------
TOTAL LIABILITIES                                     11,814,034      7,562,060
                                                    -------------  -------------

Minority interests in equity of subsidiaries           3,626,453      2,295,147

Commitments and contingencies                                  -              -

Puttable shares of SITRONICS                              80,000              -

SHAREHOLDERS' EQUITY:
  Share capital (9,365,757 and 9,650,000 shares
   issued and outstanding as of December 31, 2006
   and 2005, respectively, with par value of 90
   Russian Rubles)                                        30,057         30,057
  Treasury stock (284,243 shares with par value of
   90 Russian Rubles as of December 31, 2006)           (347,068)             -
  Additional paid-in capital                           2,196,475      1,479,743
  Retained earnings                                    2,589,589      1,696,276
  Accumulated other comprehensive income                 141,944         27,567

                                                    -------------  -------------
TOTAL SHAREHOLDERS' EQUITY                             4,610,997      3,233,643

                                                    -------------  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY         $  20,131,484  $  13,090,850
                                                    =============  =============
*T

SISTEMA JSFC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

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                                                                           2006           2005
                                                                   -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                        $     903,291  $     534,408
  Adjustments to reconcile net income to net cash provided by
   operations:
     Extraordinary gain                                                       -         (3,956)
     Depreciation and amortization                                    1,290,266      1,024,592
     (Gain)/Loss on disposals of property, plant and equipment          (16,917)        15,638
     Impairment loss on investment in Bitel                             150,000              -
     Non-cash compensation to employees                                  90,778              -
     Profit recognized by the percentage-of-completion method on
      real estate developed for sale                                    (96,919)        (2,195)
     Gain on disposal of interests in subsidiaries and affiliates      (330,412)       (15,326)
     Minority interests                                                 733,736        740,514
     Equity in net income of investees                                 (231,990)       (78,033)
     Deferred income tax benefit                                       (108,140)      (105,920)
     Debt issuance cost amortization                                     27,035         16,341
     Change in fair value of a derivative financial instrument           60,000              -
     Amortization of connection fees                                   (106,430)       (75,955)
     Provision for doubtful accounts receivable                         122,827         59,564
     Allowance for loan losses                                           35,363         62,054
     Inventory obsolescence expense                                       1,013         10,875

  Changes in operating assets and liabilities, net of effects
   from purchase of businesses:
     Trading securities                                                (147,034)      (306,567)
     Loans to banks                                                    (422,031)        86,254
     Insurance-related receivables                                      (75,089)       (47,837)
     Accounts receivable                                               (388,246)      (181,033)
     Prepaid expenses, other receivables and other current assets      (277,111)      (338,073)
     VAT receivable                                                      45,720       (149,192)
     Inventories and spare parts                                         59,757       (198,249)
     Accounts payable                                                    80,402        311,936
     Insurance-related liabilities                                      261,553        127,255
     Taxes payable                                                       14,738          6,566
     Subscriber prepayments                                             125,320        164,412
     Accrued expenses and other liabilities                             314,006        130,053
     Postretirement benefits obligation                                     174          4,704
                                                                   -------------  -------------

        Net cash provided by operations                               2,115,660      1,792,830
                                                                   -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                         (1,766,148)    (2,087,101)
  Purchases of intangible assets                                       (599,390)      (372,552)
  Purchases of businesses, net of cash acquired                        (631,401)      (540,404)
  Proceeds from disposals of subsidiaries, net of cash disposed         235,174         12,862
  Purchases of long-term investments                                 (1,699,048)      (796,990)
  Proceeds from sale of long-term investments                            20,000         13,053
  Purchases of other non-current assets                                (138,827)        (8,134)
  Purchases of short-term investments                                  (623,179)      (839,516)
  Proceeds from sale of short-term investments                          449,039        662,847
  Proceeds from sale of property, plant and equipment                    32,302          4,179
  Cash deposited for acquisition of Intracom Telecom                    (46,100)             -
  Increase in restricted cash                                           (22,624)        (5,269)
  Net increase in loans to customers                                   (581,631)      (319,174)
                                                                   -------------  -------------

        Net cash used in investing activities                        (5,371,833)    (4,276,199)
                                                                   -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings, net                              523,930        408,707
  Net increase in deposits from customers                               341,677        112,663
  Net increase in bank promissory notes issued                          (24,905)        50,511
  Proceeds from grants                                                        -          3,360
  Proceeds from capital transactions of subsidiaries                  1,450,256              -
  Proceeds from long-term borrowings, net of debt issuance costs      2,287,294      1,340,784
  Principal payments on long-term borrowings                           (636,983)      (526,852)
  Principal payments on capital lease obligations                        (5,197)        (4,468)
  Payments to shareholders of subsidiaries                             (262,419)      (198,333)
  Dividends paid                                                         (9,678)        (8,752)
  Purchase of treasury stock                                           (347,068)             -
  Proceeds from issuance of common stock, net of issuance costs               -      1,284,649
                                                                   -------------  -------------

        Net cash provided by financing activities                 $   3,316,907  $   2,462,269
                                                                   -------------  -------------

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                  $      60,734  $     (21,100)
CASH AND CASH EQUIVALENTS, beginning of the year                        482,647        503,747
                                                                   -------------  -------------
CASH AND CASH EQUIVALENTS, end of the year                        $     543,381  $     482,647
                                                                   =============  =============
*T

SISTEMA JSFC AND SUBSIDIARIES

SEGMENTAL BREAKDOWN FOR THE FULL YEAR 2006, 2005 (UNAUDITED)

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*T
For the Year ended      Tele-commu-   Tech-                          Mass      Real             Corporate
 December 31, 2006       nications    nology   Insurance  Banking     Media   Estate    Retail   and Other     Total
----------------------- ----------- ---------- --------- ---------- -------- --------- -------- ----------- -----------

Net sales to external
 customers (a)           7,469,439  1,268,368   604,220    204,010   78,872   273,096  335,144     629,635  10,862,784
Intersegment sales           6,150    342,366    34,412     24,181   27,834     9,770      165      17,933     462,811
Income from equity
 affiliates                 91,717        245       391          -    5,529         -        -     138,945     236,827
Interest income             56,483     11,223         -          -      289     4,454      863      30,780     104,092
Interest expense          (200,424)   (32,235)        -          -     (727)   (7,560)  (7,927)   (127,670)   (376,543)
Net interest revenue
 (b)                             -          -    34,578     26,792        -         -        -           -      61,370
Depreciation and
 amortization           (1,198,980)   (42,706)   (4,393)    (3,236) (11,155)   (7,153)  (5,706)    (16,937) (1,290,266)
Operating income         2,377,358    129,809    42,015     33,971   15,447    85,974   15,152     310,648   3,010,374
Income tax expense        (645,042)   (40,847)  (14,202)    (8,276)  (2,575)  (16,564)  (2,413)    (73,510)   (803,429)
Income before minority
 interests and
 extraordinary gain      1,448,668     68,854    25,779     25,837   14,672    64,068    6,432     337,692   1,992,002
Investments in
 affiliates                266,488          -         -          -    6,675         -        -     842,408   1,115,571
Segment assets          12,656,286  1,638,708   946,831  2,513,548  355,477   943,348  238,138   3,514,069  22,806,405
Indebtedness (c)        (3,908,943)  (505,333)   (1,317)  (399,069) (17,693) (359,727) (90,890) (1,590,640) (6,873,612)
Capital expenditures     2,001,973    103,869    14,440     11,414   83,714   134,738   32,341       3,874   2,386,363

(a) - Interest income and expenses of the Insurance and Banking segments are presented as revenues from financial
 services in the Group's consolidated financial statements.
(b) - The Banking segment derives a majority of its revenue from interest. In addition, management primarily relies on
 net interest revenue,
not the gross revenue and expense amounts, in managing that segment. Therefore, only the net amount is disclosed.
(c) - Represents the sum of short-term and long-term debt, including vendor financing, and capital lease obligations
*T

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For the Year ended December Tele-commu-  Tech-                         Mass      Real            Corporate
 31, 2005                    nications   nology  Insurance  Banking     Media   Estate   Retail   and Other    Total
--------------------------- ----------- -------- --------- ---------- -------- -------- -------- ---------- -----------

Net sales to external
 customers (a)               5,892,232  665,680   371,936     78,228   26,137   73,552  207,972    277,812   7,593,549
Intersegment sales                 651  295,453    36,924     28,557   26,291    4,896       36      5,782     398,590
Income from equity
 affiliates                     66,382       16       239      1,231        -        -        -     10,165      78,033
Interest income                 32,386      715         -          -      260      660      148     43,874      78,043
Interest expense              (148,681) (10,155)        -          -   (1,393)  (5,702)  (2,266)   (81,126)   (249,323)
Net interest revenue (b)             -        -         -     13,046        -        -        -          -      13,046
Depreciation and
 amortization                 (989,210) (12,044)   (4,373)    (1,555)  (4,540)  (2,104)  (1,618)    (9,148) (1,024,592)
Operating income/(loss)      1,933,269  143,517    28,417     12,722    7,070   10,399   10,445    (63,012)  2,082,827
Income tax expense            (444,975) (31,705)  (11,175)    (3,967)  (1,174)  (4,248)  (2,712)   (13,037)   (512,993)
Income/(loss) before
 minority interests and
 extraordinary gain          1,352,892  101,892    19,679      8,755    3,814    2,315    5,649   (111,582)  1,383,414
Investments in affiliates      214,259        -         -     17,749      469    2,397        -    679,329     914,203
Segment assets               9,268,693  553,165   564,775  1,134,962   81,905  331,793  146,284  2,052,771  14,134,348
Indebtedness (c)            (3,076,414) (96,537)     (955)  (150,000) (13,807) (38,977) (45,488)  (948,432) (4,370,610)
Capital expenditures         2,339,371   30,512     8,417      5,170   28,423   18,571    8,971     44,882   2,484,317

(a) - Interest income and expenses of the Insurance and Banking segments are presented as revenues from financial
 services in the Group's consolidated financial statements.
(b) - The Banking segment derives a majority of its revenue from interest. In addition, management primarily relies on
 net interest revenue,
not the gross revenue and expense amounts, in managing that segment. Therefore, only the net amount is disclosed.
(c) - Represents the sum of short-term and long-term debt, including vendor financing, and capital lease obligations
*T

Attachment A

Non-GAAP financial measures. This press release includes financial information
prepared in accordance with accounting principles generally accepted in the
United States of America, or US GAAP, as well as other financial measures
referred to as non-GAAP. The non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the information prepared in accordance
with US GAAP.

Operating Income Before Depreciation and Amortization (OIBDA) and OIBDA margin.
OIBDA represents operating income before depreciation and amortization. OIBDA
margin is defined as OIBDA as a percentage of our net revenues. Our OIBDA may
not be similar to OIBDA measures of other companies; is not a measurement under
accounting principles generally accepted in the United States and should be
considered in addition to, but not as a substitute for, the information
contained in our consolidated statement of operations. We believe that OIBDA
provides useful information to investors because it is an indicator of the
strength and performance of our ongoing business operations, including our
ability to fund discretionary spending such as capital expenditures,
acquisitions of mobile operators and other investments and our ability to incur
and service debt. While depreciation and amortization are considered operating
costs under generally accepted accounting principles, these expenses primarily
represent the non-cash current period allocation of costs associated with
long-lived assets acquired or constructed in prior periods. Our OIBDA
calculation is commonly used as one of the bases for investors, analysts and
credit rating agencies to evaluate and compare the periodic and future operating
performance and value of companies within the wireless telecommunications
industry. OIBDA can be reconciled to our consolidated statements of operations
as follows:

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                                             Oct-Dec   Oct-Dec   Jan-Dec     Jan-Dec
                                               2006      2005      2006       2005
--------------------------------------------------------------------------------------

 Operating Income                             640,225  403,991  2,733,248   1,959,424

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

 Depreciation and Amortization                360,241  275,641  1,290,266   1,024,592

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

 OIBDA                                      1,000,466  679,754  4,023,514   2,982,016
*T

(1) OIBDA is defined as operating income before depreciation and amortization.
See Attachment A for this statement for the whole definition of OIBDA and a
reconciliation of OIBDA to operating income.

(2) Here and further, in the comparison of period to period results of
operations, in order to analyze changes, developments and trends in revenues by
reference to individual segment revenues, revenues are presented on an
aggregated basis, which is revenues after elimination of intra-segment (between
entities in the same segment) transactions, but before inter-segment (between
entities in different segments) eliminations, unless accompanied by the word
'consolidated'. Amounts attributable to individual companies, where appropriate,
are shown prior to both intra-segment and inter-segment eliminations.

(3) Here and further, MTS and Comstar UTS OIBDA are shown on consolidated basis
and differ from respective standalone OIBDA values owing to certain
consolidation reclassifications and adjustments.

(4) Here and further, SITRONICS' and Sistema Hals' financial results are shown
on consolidated basis and differ from respective standalone values owing to
certain consolidation reclassifications and adjustments.

(5) The results of Banking segment are shown excluding the operating results and
effects of acquisition of control over the operations of East-West United Bank
in December 2006.