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JSFC Sistema (SSA)

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Tuesday 10 July, 2007

JSFC Sistema

1st Quarter Results



    Sistema Announces Financial Results for Three Months Ended March 31, 2007

Sistema (the 'Group') (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 three months ended March 31, 2007.

FIRST QUARTER HIGHLIGHTS

    --  Consolidated revenues up 44% year on year to US$ 2.7 billion

    --  OIBDA up 58% year on year to US$ 1.1 billion with increased margin of
        40.5%

    --  Operating income up 87% year on year to US$ 728.5 million with increased
        margin of 27%

    --  Net income up more than five fold year on year to US$ 745.9 million

    --  US$ 356.4 million raised through SITRONICS initial public offering in
        February 2007

    --  Completion of sale of 49.2% stake in ROSNO insurance joint venture for
        US$ 750 million in February 2007

Alexander Goncharuk, President and Chief Executive Officer, commented: 'The 44%
revenue growth generated in the first quarter of 2007 demonstrates our solid
performance across all business lines, and particularly in the
telecommunications segment. The non-telecommunications businesses now account
for almost a quarter of total revenues. We have successfully combined this
growth with a more than five fold year on year increase in net income, which
reflects our focus on maximizing shareholder value creation through improved
operational performance and selective asset realizations. Specifically, we have
been able to realize our investment in ROSNO through the sale of our 49.2% stake
for US$ 750 million. The IPO of SITRONICS was another important milestone in the
development of our Group. We are well positioned for continued growth in all of
our business areas and remain focused on enhancing our competitive position and
profitability in each segment.'

FINANCIAL SUMMARY(1)

-0-
*T
(US$ millions)                  Q1 07   Q1 06 Year on   Q4 06 Quarter
                                                Year               on
                                               Growth          Quarter
                                                                Change
Revenues                      2,706.0 1,882.4   43.8% 3,218.6   -15.9%
OIBDA(2)                      1,095.5   692.7           992.7
OIBDA Margin                    40.5%   36.8%   58.2%   30.8%    10.4%
Operating income                728.5   388.9           634.1
Operating Margin                26.9%   20.7%   87.3%   19.7%    14.9%
Net income                   745.9(3)   129.5          2.9(4)
Net income Margin               27.6%    6.9%  476.1%    0.1%        -
*T

OPERATING REVIEW

Sistema's consolidated revenues increased by 44% year on year in the first
quarter of 2007 as a result of the healthy performance by the Group's
Telecommunications and non-telecommunications operations. The
non-telecommunications businesses accounted for 24% of Group consolidated
revenues in the first quarter, compared to 19% for the corresponding period of
2006. The organic year on year growth in the first quarter (excluding businesses
acquired or divested since the end of the first quarter of 2006) was 38%.

Group OIBDA increased by 58% year on year in the first quarter and by 10%
quarter on quarter compared to the fourth quarter of 2006. The Group's OIBDA
margin increased from 36.8% in the first quarter of 2006 to 40.5% in the first
quarter of 2007. MTS showed particularly strong growth and expanded its OIBDA
margin by 5.4 percentage points year on year to 51.9%, as a result of improving
efficiency levels. Comstar's adjusted(5) OIBDA margin was up quarter on quarter
from an underlying level of 33% in the fourth quarter of 2006 to 40%, due to the
positive effect of the introduction of new tariffs at MGTS and the benefits of
the restructuring on Comstar Moscow's margin. The first quarter profitability
levels were however adversely impacted by the delaying of some key projects at
SITRONICS until later in 2007.

Group operating income was up 87% year on year and by 15% quarter on quarter.
The Group operating margin increased in the first quarter to 26.9%, from 20.7% a
year ago, and from 19.7% in the fourth quarter of 2006.

Consolidated depreciation and amortization expenses increased by 21% year on
year from US$ 303.8 million to US$ 367.0 million due to the growth in the
Group's fixed and intangible asset base over the past twelve months, and the
previously announced accelerated depreciation of analogue equipment by MGTS.

Selling, general and administrative expenses rose by 32% year on year from US$
339.6 million to US$ 447.7 million, due to the growth in advertising expenses in
the telecommunications businesses and the overall increase in wage expenses.

The effective tax rate decreased from 40.2% in the first quarter of 2006 to
32.0% in the first quarter of 2007, largely as a result of the change in the
functional currency of MTS with effect from January 1, 2007. The change
eliminated the difference between the accounting treatment of foreign exchange
gains on MTS' US Dollar-denominated debt under US GAAP and the Russian tax code.

Sistema's share in the net income of the affiliated Bashkir oil companies
amounted to US$ 21.5 million in the first quarter of 2007.

The growth in net income before US$ 99.4 million of discontinued operations
resulted from the organic growth in the telecommunications segment and was
partly offset by the decrease in net income reported by the technology segment.
The sale of the Group's stake in ROSNO contributed an additional US$ 522.9
million of net proceeds after tax to the total net income for the first quarter
of 2007. As a result, net income increased more than five fold year on year.

Telecommunications(6)

-0-
*T
(US$ millions)                   Q1 07   Q1 06 Year on   Q4 06 Quarter
                                                 Year               on
                                                Growth         Quarter
                                                                Change
------------------------------ ------- ------- ------- ------- -------
Revenues                       2,067.1 1,534.2     35% 2,096.3     -1%
OIBDA                          1,081.4   708.2     53%   942.3     15%
Operating Income                 743.1   404.9     84%   606.8     23%
Net Income                       227.3   128.6     77% 69.8(7)    226%
*T

The Telecommunications segment, which comprises MTS, the largest mobile phone
operator in Russia and the CIS, and Comstar UTS, the leading combined
telecommunications operator in the CIS, generated 35% year on year revenue
growth in the first quarter of 2007. The segment accounted for 76% of the
Group's consolidated revenues in the quarter, compared to 81% a year ago. The
growth was primarily organic, with the exception of US$ 5.7 million of revenue
generated by businesses acquired after the end of the first quarter of 2006 by
Comstar (DG Tel and Technologic Systems in Ukraine, Cornet and Callnet in
Armenia, and Astelit in Russia) and MTS (Dagtelecom). MTS continued to be the
main contributor to the segment revenues and accounted for 84% of the segment's
year on year growth in the quarter.

MTS added 1.3 million subscribers during the quarter and had 74.2 million
subscribers by the end of the first quarter of 2007. The Company generated 35%
year on year revenue growth to US$ 1.7 billion, which reflected a year on year
increase in average monthly service revenue per Russian subscriber ('ARPU') from
US$ 6.6 to US$ 8.2. Russian subscribers' monthly Minutes of Use (MOU) increased
by 14% year on year to 134. MTS' consolidated OIBDA rose by 51% year on year to
US$ 0.9 billion, largely as a result of optimized marketing and advertising
spending. MTS was also able to decrease the cost of customer acquisition on a
sequential basis in the first quarter, with subscriber acquisition costs (SAC)
falling from US$ 29.1 in the fourth quarter of 2006 to US$ 26.2 in the first
quarter of 2007.

Comstar UTS generated 32% year on year revenue growth to US$ 328.9 million,
reflecting healthy organic revenue growth driven by the high customer demand for
the unlimited tier of the tariff plans introduced by MGTS from February 2007,
the positive impact of the introduction of 'Calling Party Pays', and the healthy
development of the Comstar Direct broadband Internet and double-play offerings.
Comstar Direct announced in April that it had become the first operator in
Moscow to pass the 400,000 subscriber milestone, and increased its subscriber
base by 11% quarter on quarter. Comstar UTS reported a 23% year on year increase
in OIBDA to US$ 133.9 million in the first quarter.

Segment OIBDA was up 53% year on year, with an increased combined OIBDA margin
of 52.3% in the first quarter, up from 46.2% a year ago and 45.0% in the fourth
quarter of 2006. This increase in margin primarily reflected the increased
operating profitability at MTS as a result of the restructuring program
implemented from May 2006. Segment net income for the first quarter increased by
77% year on year.

MTS provided updated guidance for the full year 2007 in May. MTS stated that it
expects its revenues to grow by no less than 22% in 2007 and its OIBDA margin
for the full year to be at least 50%. MTS announced in April 2007 that it had
been awarded third generation (3G) licenses for the entire territory of Russia
and Uzbekistan. MTS is currently forecasting capital expenditure of up to US$ 1
billion up until the end of 2009 on network deployment and the commercial launch
of 3G services.

Technology

-0-
*T
(US$ millions)                                    Q1 07 Q1 06 Year on
                                                                Year
                                                               Growth
------------------------------------------------- ----- ----- -------
Revenues                                          310.8 239.6     30%
OIBDA                                             -11.6  21.0       -
Operating Income                                  -24.9  19.7       -
Net Loss/Income                                   -23.0   5.6       -
*T

The Technology segment comprises SITRONICS, which is a leading provider of
telecommunications, IT and microelectronic solutions in Russia and the CIS, with
a growing presence in other EEMEA emerging markets. SITRONICS generated 30% year
on year revenue growth in the first quarter and accounted for 11% of Group
revenues for the quarter, compared to 9% for the same period of 2006.

SITRONICS reported a negative OIBDA and a net loss in the first quarter. The
first quarter profitability levels were adversely impacted by the deferral of
some key customer projects until later in 2007. The increase in the cost base
was due to the higher level of fixed costs following the scaling up of
operations, the increase in research and development costs related to new
products that were due to be implemented during the period but have been
delayed, and the ongoing expansion into the Middle East and Africa.

The Company's revenue streams are largely dependent on scale contracts which
tend to weight more to the second half of the year and SITRONICS has won a
number of new public and private sector contracts during the first half of 2007.
In addition, the delayed MGTS and MTS projects are now expected to commence
during the second half of 2007 and run into 2008. New contracts have been
secured with the Russian Federal Agency of Industry, Wateen Telecom in Pakistan,
Telecom Srbija in Serbia, CALLAX in Germany, BTC Mobile in Bulgaria, a World
Bank-funded project in Ukraine, and National Machinery Import & Export
Corporation in China.

SITRONICS completed its Initial Public Offering on the London Stock Exchange in
February 2007 and raised US$ 356.4 million of net proceeds.

Real Estate

-0-
*T
(US$ millions)                                       Q1   Q1  Year on
                                                      07   06   Year
                                                               Growth
--------------------------------------------------- ---- ---- -------
Revenues                                            34.5 15.7    119%
OIBDA                                                7.0  0.3       -
Operating Income                                     4.1 -0.4       -
Net Income/Loss                                      4.7 -5.8       -
*T

Revenues for the Real Estate segment, which comprises Sistema Hals, a leading
Moscow-based real estate development, management and investment company, more
than doubled year on year in the first quarter. The Segment's OIBDA margin
increased from 2% in the first quarter of 2006 to 20% in the first quarter of
2007, primarily due to the growth of revenue from operating activities and a
decrease in operating expenses. The net loss in the first quarter of 2006 was
therefore reversed into a net profit in the first quarter of 2007. The real
estate development division remained one of the primary growth drivers of the
business and accounted for 46% of segment revenues for the quarter, compared to
37% for the corresponding period of 2006. The growth in revenues primarily
resulted from the construction of the Siemens Tower project, Yartsevskaya, 27V,
a residential building with 29,910 square meters of gross built area (GBA),
located in the western part of Moscow, and the sale of land plots at Avrora
residential development in the Moscow region. Additionally, Sistema Hals
recognized US$ 3.5 million in revenues from the partial completion of the
Siemens Tower project. Revenues in the project construction management division
more than doubled year on year to US$ 8.9 million in the first quarter of 2007.
The asset management division increased revenues by 81% year on year to US$ 6.4
million in the first quarter of 2007, primarily as a result of an increase in
the number of houses sold within the asset restructuring program and the growth
in rental revenues.

Sistema Hals announced the results of an independent valuation of its real
estate property and projects in March 2007. The valuation was carried out by
Cushman and Wakefield Styles & Riabokobylko (C&WS&R), and indicated that the
value of the Sistema Hals portfolio had increased by 35% between June 30, 2006
and January 1, 2007 to US$ 2.0 billion.

Sistema Hals signed an agreement with the X5 Retail Group, Russia 's largest
grocery retailer, in March 2007 for the opening of branches of the Perekrestok
supermarket chain in two of Sistema Hals retail & leisure centers in Moscow and
in several regional malls.

Banking

-0-
*T
(US$ millions)                                       Q1   Q1  Year on
                                                      07   06   Year
                                                               Growth
--------------------------------------------------- ---- ---- -------
Revenues                                            79.8 44.1     81%
OIBDA                                               10.5  9.0     16%
Operating Income                                     9.3  8.7      7%
Net Income                                           4.4  5.9    -27%
*T

The Banking segment comprises the Moscow Bank for Reconstruction and Development
(MBRD), which provides corporate and retail banking services in Russia, and its
subsidiaries. Segment revenues almost doubled year on year in the first quarter.
The bank's loan portfolio grew by 59% year on year to US$ 1.6 billion as at
March 31, 2007 and interest income received from the retail banking operations
increased to US$ 13.9 million in the first quarter of 2007. The bank increased
its interest income from non-Sistema clients following the expansion of its
retail business with the opening of 5 mini-offices in the first quarter of 2007.
The bank's retail network included a total of 13 branches and 112 mini-offices
as at the end of the quarter. Leasing activities contributed US$ 6.1 million to
the segment's revenue in the first quarter of 2007.

Retail

-0-
*T
(US$ millions)                                       Q1   Q1  Year on
                                                      07   06   Year
                                                               Growth
--------------------------------------------------- ---- ---- -------
Revenues                                            86.9 56.0     55%
OIBDA                                               -5.0 -2.9       -
Operating Income                                    -7.0 -3.1       -
Net Loss                                            -8.5 -5.0       -
*T

The Retail segment comprises Detsky Mir, one of the largest children's goods
retail store chains in Russia. Total revenues grew by 55% year on year, whilst
retail revenues, which accounted for 89% of total revenues in the period,
increased by 149% year on year to US$ 77.0 million. Wholesale and rental
revenues represented the remaining share of total revenues.

Detsky Mir reported a net loss in the quarter, which was largely due to the
significant expansion of the retail store network undertaken in the fourth
quarter of 2006 and the fact that the first quarter is a seasonally weaker
period of the year.

The first quarter saw a significant expansion in the network of retail outlets,
which increased by 28 stores to 67 in total, while the aggregate retail space
doubled year on year to 117 thousand square meters.

Additionally, 7 new outlets were added to the retail store network since the end
of the quarter. As at July 10, 2007, Detsky Mir's retail network consisted of 74
retail outlets, with total retail space of 133 thousand square meters, located
in 36 Russian cities.

Media

-0-
*T
(US$ millions)                                       Q1   Q1  Year on
                                                      07   06   Year
                                                               Growth
--------------------------------------------------- ---- ---- -------
Revenues                                            26.9 19.8     36%
OIBDA                                                5.0  3.7       -
Operating Income                                     1.3  0.1       -
Net Loss                                            -0.2 -1.7       -
*T

The Media segment, which comprises the Group's pay-TV, advertising, print and
other media operations, generated 36% year on year revenue growth in the first
quarter. Stream-TV, one of the largest providers of pay-TV services in Russia,
which was acquired in February 2006, contributed US$ 19.2 million in revenues
for the first quarter of 2007, compared to US$ 12.1 million in the first quarter
of 2006.

The Stream-TV subscriber base grew by 4% quarter on quarter to 1.66 million
subscribers by the end of the quarter, including 1.56 million pay-TV customers,
86,000 Internet and 9,700 telephony subscribers. The Maxima Group, an
advertising agency, which operates in Russia, Ukraine, Kazakhstan and Belarus,
contributed US$ 7.4 million to segment revenues, primarily due to the growth in
its Ukrainian subsidiary and the increase in print advertising revenues.

The increase in segment operating income reflected the growth in the subscriber
base and Stream-TV ARPU.

Corporate and Other

-0-
*T
(US$ millions)                                     Q1 07  Q1  Year on
                                                           06   Year
                                                               Growth
-------------------------------------------------- ----- ---- -------
Revenues
 Radars and Aerospace                               70.3 21.4    229%
 Tourism                                            48.6 26.0     87%
 Pharmaceuticals                                    17.2  1.1  1,464%
 Healthcare Services                                 5.4  3.5     54%
 Other                                               8.5  7.5     13%
                                                   ----- ---- -------
Total                                              150.0 59.5    152%
OIBDA
 Radars and Aerospace                               12.4  1.7       -
 Tourism                                             6.4  0.3       -
 Pharmaceuticals                                     3.5  0.5       -
 Healthcare Services                                 0.4  0.9       -
 Other                                              -9.6  2.5       -
                                                   ----- ---- -------
Total                                               13.1  5.9       -
*T

Revenues for the Radars and Aerospace division, which comprises Concern RTI
Systems, more than tripled year on year in the quarter while OIBDA increased
more than six times year on year, as a result of an increase in the volume of
services performed under a number of government contracts. OIBDA margin
increased to 17.6% in the first quarter compared to 7.9% in the first quarter of
2006. Concern RTI Systems is a supplier of strategic missile defense systems, as
well as information, communication and navigation systems for a number of
Russian Ministries and Federal Agencies. RTI Systems deployed an early-warning
space control radar in Lechtusi, near St. Petersburg, during the first quarter,
and also completed the testing of the coastal over-the-horizon surface wave
radar.

The Tourism division's revenues almost doubled year on year in the first quarter
of 2007 and the OIBDA margin rose year on year to 13.2% from 1.2% in the same
period of 2006. The core tour operator business is complemented by a hotel
business, a chain of retail outlets and transportation services. Intourist
served over 100,000 tourists in the first quarter of 2007.

The Pharmaceuticals division's revenues for the first quarter of 2007 increased
almost 16 times and OIBDA rose 7 times year on year in the quarter, reflecting a
number of strategic transactions.

The Healthcare Services division's revenues increased 54.3% year on year. The
division, which comprises the Medsi and Medsi-II clinics, is developing into a
leading private healthcare provider in Russia with comprehensive medical care
and a chain of private clinics. Medsi acquired the American Hospital Group, a
leading medical centre for expatriates, located in Moscow, as well as
MedExpress, a chain of private healthcare facilities in Russia, after the end of
the quarter. As a result of these acquisitions, the network of healthcare
facilities has increased to over 20.

EQUITY IN NET INCOME OF ENERGY COMPANIES

The results of Sistema's participation in the equity of Bashkir Oil companies,
which comprise exploration, refining and trading operations, are included in the
'Equity in net income of energy companies in the Republic of Bashkortostan' line
in the consolidated statements of operations. Sistema's share in the net income
of the affiliated companies amounted to US$ 21.5 million in the first quarter of
2007. Sistema actively participates in the development of these assets by
holding three seats on each of the Boards of Directors of the companies.

FINANCIAL REVIEW

Net cash provided by operating activities declined year on year to US$ 214
million in the first quarter of 2007 from US$ 240 million in the first quarter
of 2006 largely as a result of an increase in the portfolio of trading
securities.

Net cash used in investing activities totaled US$ 378.0 million for the first
quarter of 2007 and included US$ 404.0 million of capital expenditure, compared
to US$ 864.7 million and US$ 393.8 million for the corresponding period of 2006,
respectively. The decrease in net cash used in investing activities resulted
primarily from the disposal of the Rosno stake in the first quarter of 2007. The
Group spent US$ 39.0 million on the acquisition of businesses during the first
quarter of 2007 as described in the Acquisitions and Disposals section later in
this press release, compared to US$ 321 million in the first quarter of 2006.

Cash flow from financing activities amounted to US$ 703 million for the quarter,
which primarily reflects the net proceeds from the IPO of SITRONICS in February.

Group cash balances totaled US$ 1.1 billion at the end of the period, compared
to US$ 502 million at December 31, 2006. Group net debt (debt minus cash and
cash equivalents) amounted to US$ 5.8 billion as at March 31, 2007, compared to
US$ 6.3 billion as at December 31, 2006. The proceeds from the sale of ROSNO and
from the IPO of SITRONICS have improved the cash position of the Group.

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

ACQUISITIONS AND DISPOSALS

Telecommunications

In March 2007, Comstar sold its 45% equity stake in ZAO Metrocom, an alternative
fixed-line telecommunications operator based in St. Petersburg, to closed
joint-stock company MCT. The shares were sold for a total cash consideration of
US$ 20 million.

Technology

In March 2007, SITRONICS acquired 3.3% of ordinary shares in VZPP-Micron from
BIPOLYAR LLC. As a result, SITRONICS now owns 100% of VZPP-Micron. VZPP-Micron
is a producer of electronic power supply control components for customers in
Russia and overseas, and is part of SITRONICS Microelectronic Solutions
division.

Real Estate

In March 2007, Sistema Hals acquired a 67.58% stake in the KAMELIYA Health
Resort in the city of Sochi, which is currently being renovated as a
multifunctional complex that will include a 5-star hotel, luxury apartments and
a full internal infrastructure.

Insurance

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 net gain from the disposal of US$ 521.9
million. Sistema remains a minority shareholder in ROSNO with a 2.8% stake.

Media

Sistema Mass Media has finalised the acquisition of a 26% stake in JSC 'Digital
Broadcasting' - previously Sistema Mass Media had owned 74% of the share capital
of the company. As a result of the deal, Sistema Mass Media has consolidated its
shareholding in the company, which is working to become a key player in mobile
broadcasting in DVB-H format.

Treasury Shares

In February 2007, Sistema purchased an additional 0.48% of its own stock.
Sistema acquired in total 284,243 ordinary shares (2.95% of outstanding shares)
for US $347.3 million. The acquired shares are intended for the funding of share
option program for the top management and may also be used in connection with
certain future acquisition activities.

SIGNIFICANT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

Telecommunications

In June 2007, the Annual General Meeting of shareholders ('AGM') of MTS approved
the payment of annual dividend of RUR 9.67 per ordinary share (approximately US$
1.87 per ADR) for the year ended December 31, 2006, amounting to a total of RUR
19.3 billion (US$ 747.4 million). Dividends are due to be paid before the end of
2007. The AGM elected the new Board of Directors, including two independent
directors. Following the AGM, the Board elected Mr. Alexey Buyanov, Senior Vice
President, Chief Financial Officer of Sistema, as Chairman of the Board and Mr.
Sergey Drozdov, Senior Vice President, Head of Property of Sistema, as Vice
Chairman of the Board.

In June 2007, MTS acquired the remaining 26% stake in Uzdunrobita, the leading
mobile operator in Uzbekistan, from a private investor for $250 million. As a
result of this transaction, MTS' ownership stake in Uzdunrobita has increased to
100%.

In June 2007, MTS announced that its Board of Directors approved an employee
remuneration program. The employee motivation and retention program consists of
two parts: a performance-based monetary award and a phantom share program based
upon MTS' American Depositary Receipts (ADRs). It will apply to up to 420 top-
and mid-level managers.

In June 2007, the MGTS AGM approved an annual dividend of approximately RUR 1.3
billion, or approximately US$ 51.5 million, for the year ended December 31,
2006, to holders of MGTS shares as at the record date of May 12, 2007. The
dividends of RUR 8.75 per ordinary share (approximately US$ 0.34), and of RUR
39.77 per preferred share (approximately US$ 1.54), are due to be paid by the
end of 2007.

The Comstar AGM approved annual dividends of approximately RUR 62.7 million, or
approximately US$ 2.4 million, for the year ended December 31, 2006, to be paid
to holders of Comstar's shares as at the record date of May 17, 2007. The
dividends of RUR 0.15 per ordinary share, or approximately US$ 0.0058 per Global
Depositary Receipt, are due to be paid within 60 days of the AGM approval.

In June 2007, Comstar signed a 5-year ruble-denominated credit facility for RUR
26 billion (approximately US$ 1 billion) at a fixed annual interest rate of 7.6%
with the Savings Bank of the Russian Federation (Sberbank). The credit line is
expected to be used to finance Comstar's investment in the development of its
telecommunications network development and the refinancing of existing loan
facilities.

In June 2007, MGTS received preliminary approval from the Federal Service for
Tariffs (FST) for the optimized structure of its combined tier of tariff plans
for regulated voice services.

In June 2007, Comstar announced the appointment of Sergey Pridantsev as
President and Chief Executive Officer with effect from June 13, 2007. Mr.
Pridantsev is the former General Director of CenterTelecom, a provider of
fixed-line telecommunications services in the Central Federal District of
Russia.

In June 2007, Comstar announced acquisition of a 25% minority stake in its
Ukrainian subsidiary, Comstar-Ukraine for a total cash consideration of US$ 0.9
million. Following the closing of this transaction, Comstar became the 100%
owner of Comstar-Ukraine.

In April 2007, the Extraordinary General Meeting of Svyazinvest shareholders
elected Sergei Shchebetov (Chairman of the Comstar Board of Directors) and Anton
Abugov (First Vice President and Head of Strategy and Development at Sistema) to
the Svyazinvest Board of Directors.

Real Estate

In June 2007, Sistema Hals announced the adoption of a stock option program for
members of its Board of Directors and Management Board. The program will provide
both stock options and stock bonuses. Stock options entitle participants to
acquire a specific number of shares in Sistema Hals, at a price determined and
agreed in advance. Stock bonuses come in the form of shares granted to
participants free of charge in return for their contribution to the development
of the company.

Technology

In June 2007, SITRONICS announced the approval by its AGM of the Company's
annual report and annual financial statements for 2006, as well as the
allocation of 5% of the Company's net profit to set up a reserve fund. The AGM
also approved the proposal of the Board of Directors not to pay an annual
dividend for the year ended December 31, 2006.

On June 29, 2007, SITRONICS through its 100% owned subsidiary Sitronics Finance
S.A. redeemed US$ 200 million of outstanding Eurobond Notes due 2009.

Banking

In May 2007, the Moscow Bank for Reconstruction and Development signed an
agreement with the Dresdner Bank for a US$ 50 million credit line for 2 years.

Corporate & Other

In June 2007, Sistema announced results of its AGM. The AGM approved an annual
dividend of RUR 48.0 per ordinary share, or approximately US$ 1.9 per GDR, for
the year ended December 31, 2006. The dividends of RUR 463.2 million or
approximately US$ 17.9 million, represents approximately 2% of Sistema's US GAAP
consolidated net income for the full year 2006, and is due to be paid within 60
days of the date of AGM approval on June 30, 2007.

In June 2007, Sistema announced that it intends to purchase its own stock
through a wholly owned subsidiary Sistema Finance Investments at a price of US$
1,350 per share for a total amount of up to US$ 150 million. The acquired shares
are intended for the funding of this share option program and may also be used
in connection with certain future acquisition activities.

Conference call information

Sistema management will host a conference call today at 10 am (New York time) /
3 pm (London time) / 4 pm (CET) / 6 pm (Moscow Time) to present and discuss the
first quarter results.

The dial-in numbers for the conference call are:

-0-
*T
UK/International:   + 44 20 7138 0836
US:                 + 1 718 354 1172
*T

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

-0-
*T
UK/International:   + 44 20 7806 1970
US:                 + 1 718 354 1112

PIN number: 8074290#
*T

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

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Sistema Investor Relations     Shared Value Limited
Laila Simanova                 Larisa Kogut-Millings
Tel: +7 495 629 2741           Tel. +44 (0) 20 7321 5037
ir@sistema.ru                  sistema@sharedvalue.net

Sistema Public Relations
Kirill Semenov
Tel: +7 495 730 7188
ksemenov@sistema.ru
*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$ 2.7 billion for the
first quarter of 2007, and total assets of US$ 21.6 billion as at March 31,
2007. 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. In addition, there is
no assurance that the new contracts entered into by our subsidiaries referenced
above will be completed on the terms contained therein or at all. 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.

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SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of U.S. dollars)
---------------------------------------------------------------------
                                    Jan - Mar   Jan - Mar Oct - Dec
                                        2007       2006       2006
                                    ----------- --------- -----------

Sales                                 2,630,463 1,845,084   3,138,455
Revenues from financial services         75,493    37,289      80,183

TOTAL REVENUES                        2,705,956 1,882,373   3,218,638

Cost of sales, exclusive of
 depreciation and amortization
 shown separately below             (1,147,397) (803,622) (1,548,968)
Financial services related costs,
 exclusive of depreciation and
 amortization shown separately
 below                                 (31,329)  (20,908)    (37,943)

TOTAL COST OF SALES                 (1,178,726) (824,530) (1,586,911)

Selling, general and administrative
 expenses                             (447,695) (339,608)   (608,115)
Depreciation and amortization         (367,026) (303,784)   (358,565)
Other operating expenses, net          (23,757)  (42,209)    (64,095)
Equity in net income of investees        36,511    16,658      13,178
Net gain on disposal of interests
 in subsidiaries and affiliates           3,216         -      20,011

OPERATING INCOME                        728,479   388,900     634,141

Interest income                          20,752    17,902      17,659
Interest expense, net of amounts
 capitalized                           (99,963)  (74,643)    (98,217)
Change in fair value of derivative
 financial instruments                   13,500         -    (60,000)
Currency exchange and translation
 gain                                    31,821    27,665      62,260
Bitel liability and investments
 write-off                                    -         -   (320,000)

Income before income tax and
 minority interests                     694,589   359,824     235,843

Income tax expense                    (221,931) (144,746)   (207,031)

Equity in net income/(loss) of
 energy companies in the Republic
 of Bashkortostan                        21,521    57,185    (11,514)

Income before minority interests        494,179   272,263      17,298

Minority interests                    (271,188) (148,633)    (16,206)

Income from continuing operations
 before extraordinary gain              222,991   123,630       1,092

Income from discontinued operations         960     5,848       1,825

Gain on disposal of discontinued
 operations                             521,963         -           -

NET INCOME                              745,914   129,478       2,917
*T

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SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands of U.S. dollars)
----------------------------------------------------------------------
                                                 March 31,  December
                                                    2007        31,
                                                               2006
                                                 ---------- ----------

ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                     $ 1,138,649$   501,706
  Short-term investments                            966,442    554,157
  Loans to customers and banks, net               1,602,870  1,290,082
  Accounts receivable, net                          966,139  1,069,706
  Prepaid expenses, other receivables and
  other current assets, net                       1,031,229    917,551
  VAT receivable                                    408,721    450,703
  Inventories and spare parts                       711,678    661,568
  Deferred tax assets, current portion              193,409    195,672
  Assets of discontinued operations                       -    946,866

                                                 ---------- ----------
     Total current assets                         7,019,137  6,588,011
                                                 ---------- ----------

Property, plant and equipment, net                7,970,522  7,412,468
Advance payments for non-current assets             321,894    305,846
Investments in affiliates                         1,155,376  1,108,647
Investments in shares of Svyazinvest              1,390,302  1,390,302
Other investments                                   122,500    122,500
Goodwill                                            519,030    504,166
Licenses, net                                       450,211    452,372
Other intangible assets, net                      1,202,211  1,222,676
Loans to customers and banks, net of current
 portion                                            650,751    464,490
Debt issuance costs, net                             78,960     80,220
Deferred tax assets, net of current portion          93,956     73,623
Other non-current assets                            571,375    465,917

                                                 ---------- ----------
     Total non-current assets                    14,527,088 13,603,227

                                                 ---------- ----------
TOTAL ASSETS                                    $21,546,225$20,191,238
                                                 ========== ==========
*T

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SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands of U.S. dollars)
----------------------------------------------------------------------
                                                 March 31,  December
                                                    2007        31,
                                                               2006
                                                 ---------- ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                              $   936,755$   868,378
  Bank deposits and notes issued, current
   portion                                        1,084,396    961,595
  Taxes payable                                     181,670    148,849
  Deferred tax liabilities, current portion          66,791     48,885
  Subscriber prepayments, current portion           477,317    552,997
  Derivative financial instruments                  170,816    184,316
  Accrued expenses and other current liabilities  1,097,607    988,810
  Short-term loans payable                        1,504,651  1,296,778
  Current portion of long-term debt                 277,328    280,427
  Liabilities of discontinued operations                  -    869,534

                                                 ---------- ----------
     Total current liabilities                    5,797,331  6,200,569
                                                 ---------- ----------

LONG-TERM LIABILITIES:
  Long-term debt, net of current portion          5,198,544  5,296,017
  Subscriber prepayments, net of current portion    127,645    136,861
  Bank deposits and notes issued, net of current
   portion                                          129,154     65,200
  Deferred tax liabilities, net of current
   portion                                          288,183    287,125
  Postretirement benefits obligation                 16,352     16,391
  Deferred revenue                                  130,712    129,120

                                                 ---------- ----------
     Total long-term liabilities                  5,890,590  5,930,714
                                                 ---------- ----------

                                                 ---------- ----------
TOTAL LIABILITIES                                11,687,921 12,131,283
                                                 ---------- ----------

Minority interests in equity of subsidiaries      4,072,794  3,459,245

Commitments and contingencies                             -

Puttable shares of SITRONICS                         80,000     80,000

SHAREHOLDERS' EQUITY:
  Share capital (9,650,000 shares issued and
   9,365,757 outstanding with par value of 90
   Russian Rubles)                                   30,057     30,057
  Treasury stock (284,243 shares with par value
   of
  90 Russian Rubles)                              (347,068)  (347,068)
  Additional paid-in capital                      2,428,972  2,196,475
  Retained earnings                               3,241,600  2,499,302
  Accumulated other comprehensive income            351,949    141,944

                                                 ---------- ----------
TOTAL SHAREHOLDERS' EQUITY                        5,705,510  4,520,710

                                                 ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $21,546,225$20,191,238
                                                 ========== ==========
*T

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SISTEMA JSFC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED MARCH 31,
 2007, 2006 (UNAUDITED)
(Amounts in thousands of U.S. dollars)
----------------------------------------------------------------------
                                                        2007      2006
                                                   --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                        $  745,914$  129,478
  Adjustments to reconcile net income to net cash
   provided by operations:
     Depreciation and amortization                   367,026   304,805
     (Gain)/Loss on disposals of property, plant
      and equipment                                  (1,257)     (600)
     Profit recognized by the percentage-of-
      completion method on real estate developed
      for sale                                       (9,963)   (2,800)
     Gain from discontinued operations             (522,923)         -
     Gain on disposal of interests in subsidiaries
      and affiliates                                 (3,216)         -
     Currency exchange and translation gain         (31,821)  (23,085)
     Minority interests                              271,188   154,678
     Equity in net income of investees              (58,032)  (73,798)
     Deferred income tax benefit                    (15,552)  (37,129)
     Debt issuance cost amortization                   6,830     6,500
     Change in fair value of a derivative
      financial instrument                          (13,500)         -
     Amortization of connection fees                (23,533)  (23,086)
     Provision for doubtful accounts receivable       28,745    37,610
     Allowance for loan losses                           995         -
     Inventory obsolescence expense                        -     4,644

  Changes in operating assets and liabilities, net
   of effects from purchase of businesses:
     Trading securities                            (236,462)  (93,577)
     Loans to banks                                (219,665) (139,775)
     Insurance-related receivables                         -  (49,651)
     Accounts receivable                              74,824 (188,304)
     Prepaid expenses, other receivables and other
      current assets                               (127,050)    29,062
     VAT receivable                                   41,982    36,543
     Inventories and spare parts                    (40,146)  (55,054)
     Accounts payable                                 40,413  (63,539)
     Insurance-related liabilities                         -   119,643
     Taxes payable                                 (115,989)    35,122
     Subscriber prepayments                         (61,363)    31,696
     Accrued expenses and other liabilities          116,429   100,309
     Postretirement benefits obligation                 (39)       265
                                                   --------- ---------

        Net cash provided by operations              213,835   239,957
                                                   --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment       (332,657) (320,034)
  Purchases of intangible assets                    (71,360)  (73,812)
  Purchases of businesses, net of cash acquired     (39,000) (320,698)
  Proceeds from disposals of subsidiaries, net of
   cash disposed                                     636,683         -
  Purchases of long-term investments                 (5,479)         -
  Proceeds from sale of long-term investments         20,000         -
  Purchases of other non-current assets            (105,551)         -
  Purchases of short-term investments              (212,306) (124,965)
  Proceeds from sale of short-term investments        10,973   109,705
  Proceeds from sale of property, plant and
   equipment                                           1,357       662
  Net increase in loans to customers               (280,629) (135,507)
                                                   --------- ---------

        Net cash used in investing activities      (377,969) (864,649)
                                                   --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from/(principal payments on) from
   short-term borrowings, net                        208,800 (113,725)
  Net increase/(decrease) in deposits from
   customers                                          70,954  (14,427)
  Net increase in bank promissory notes issued       157,027    22,732
  Proceeds from capital transactions of
   subsidiaries                                      356,463 1,032,917
  Proceeds from long-term borrowings, net of debt
   issuance costs                                     76,950   452,264
  Principal payments on long-term borrowings       (159,112)  (84,572)
  Principal payments on capital lease obligations    (7,713)   (1,504)
  Purchase of treasury stock                               -  (50,892)
                                                   --------- ---------

        Net cash provided by financing activities $  703,369$1,242,793
                                                   --------- ---------

  Effect of exchange rate changes on cash and cash
   equivalents                                         1,033       934

INCREASE IN CASH AND CASH EQUIVALENTS             $  540,268$  619,035
CASH AND CASH EQUIVALENTS, beginning of the period   598,381   482,647
                                                   --------- ---------
CASH AND CASH EQUIVALENTS, end of the period      $1,138,649$1,101,682
                                                   ========= =========
*T

SISTEMA JSFC AND SUBSIDIARIES

SEGMENTAL BREAKDOWN FOR THREE MONTHS ENDED MARCH 31 2007, 2006 (UNAUDITED)

(Amounts in thousands of U.S. dollars)

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                              Tele-
For the three months          commu-     Tech-              Mass
ended March 31, 2007         nications   nology   Banking   Media
--------------------------- ---------- --------- --------- -------

Net sales to external
 customers (a)               2,064,895   282,227    75,500  20,357
Intersegment sales               1,856    28,596     4,339   6,587
Income from equity
 affiliates                     38,312        13         -   2,060
Interest income                 10,485     5,565         -      46
Interest expense              (50,850)   (8,907)         - (1,230)
Net interest revenue (b)             -         -    10,468       -
Depreciation and
 amortization                (338,234)  (13,338)   (1,174) (3,712)
Operating income               743,132  (24,928)     9,294   1,317
Income tax expense           (205,039)   (1,726)   (4,422)    (37)
Income/(loss) before
 minority interests            494,236  (26,468)     4,873   (285)
Investments in affiliates      301,285         -         -   8,748
Segment assets              13,688,740 1,982,743 3,439,731 371,916
Indebtedness (c)             3,867,884   586,878   438,598  26,028
Capital expenditures           309,420    16,281     4,246   7,158

                                            Corporate
For the three months         Real              and
ended March 31, 2007        Estate  Retail    Other     Total
--------------------------- ------- ------- --------- ----------

Net sales to external
 customers (a)               30,705  86,846   145,426  2,705,956
Intersegment sales            3,797       7     4,603     49,785
Income from equity
 affiliates                       -       -       -60     40,325
Interest income               7,157    -164    14,462     37,551
Interest expense            (2,121) (2,715)  (40,057)  (105,880)
Net interest revenue (b)          -       -         -     10,468
Depreciation and
 amortization               (2,883) (2,041)   (5,643)  (367,025)
Operating income              4,109 (7,029)     7,410    733,305
Income tax expense          (3,803) (1,228)  (11,770)  (228,025)
Income/(loss) before
 minority interests           9,591 (8,528)   (2,829)    470,590
Investments in affiliates     2,628       -   858,122  1,170,783
Segment assets              967,347 298,990 4,056,517 24,805,984
Indebtedness (c)            363,891 138,423 1,556,717  6,978,419
Capital expenditures         60,802   6,512    16,071    420,490
*T

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                              Tele-
For the three months          commu-    Tech-              Mass
ended March 31, 2006         nications  nology   Banking   Media
--------------------------- ---------- -------- --------- -------

Net sales to external
 customers (a)               1,531,486  171,015    37,289  16,288
Intersegment sales               2,695   68,546     6,834   3,480
Income from equity
 affiliates                     16,690        7         -       -
Interest income                11,347,      836         -       -
Interest expense              (48,430)  (3,850)         -   (560)
Net interest revenue (b)             -        -   (9,032)       -
Depreciation and
 amortization                (303,251)  (1,275)     (326) (3,519)
Operating income/(loss)        404,917   19,688     8,706     132
Income tax expense           (109,219) (14,191)   (2,411)   (836)
Income/(loss) before
 minority interests            272,918   42,656     6,295 (1,765)
Investments in affiliates      222,215        -    17,749     487
Segment assets               10,894817  884,099 1,552,524 257,456
Indebtedness (c)             3,121,238  240,763   210,000 219,490
Capital expenditures           355,031   12,879     6,000   8,356

                                            Corporate
For the three months         Real              and
ended March 31, 2006        Estate  Retail    Other     Total
--------------------------- ------- ------- --------- ----------

Net sales to external
 customers (a)               13,384  56,003    56,908  1,882,373
Intersegment sales            2,365       5     2,615     86,540
Income from equity
 affiliates                       -       -      (39)     16,658
Interest income                  67     995       459     13,704
Interest expense            (1,458) (1,422)  (22,742)   (78,462)
Net interest revenue (b)          -       -         -    (9,032)
Depreciation and
 amortization                 (612)   (230)   (4,385)  (313,598)
Operating income/(loss)       (351) (3,100)     1,502    431,494
Income tax expense          (1,554)   (339)  (16,196)  (144,746)
Income/(loss) before
 minority interests         (6,023) (4,588)  (23,402)    286,091
Investments in affiliates       960       -   706,824    948,235
Segment assets              418,063 154,541  2,169744 16,331,244
Indebtedness (c)            214,857  73,043 1,596,912  5,676,303
Capital expenditures          6,054     127     3,733    392,180
*T

(a) - Interest income and expenses of the Banking segment 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

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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                                         Jan-March Jan-March  Oct-Dec
                                            2007      2006     2006
---------------------------------------- -----------------------------

 Operating Income                          728,479   388,900   634,141

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

 Depreciation and Amortization           (367,026) (303,784) (358,565)

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

 OIBDA                                   1,095,505   692,684   992,706
*T

(1) ROSNO is accounted for as a discontinued operation for all periods
presented. Thus, here and further, ROSNO's financial results are excluded from
all the captions presenting the Group's consolidated results from continuing
operations.

(2) See Attachment A for definitions and reconciliation of OIBDA and OIBDA
margin to their most directly comparable US GAAP financial measures.

(3) During the three months ended March 31, 2007, the Group's investments in
Svyazinvest and Permskie Motory were recorded at cost, due to the unavailability
of financial information for the respective period.

(4) Net income for the three months ended December 31, 2006 includes a charge to
non-operating expenses of US$ 170 million, net of minority interest of US$ 150
million, related to the Bitel liability and investment write-offs.

(5) Adjusted for the impact of the US$ 62.1 million stock bonus awards in the
three months ended December 31, 2006.

(6) 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 the 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. SITRONICS' and Sistema Hals' financial results may differ from
respective standalone values due to certain reclassifications and adjustments.

(7) Net income for the three months ended December 31, 2006 includes charges to
non-operating expenses of US$ 170 million, net of minority interest of US$ 150
million, related to the Bitel liability and investment write-offs.