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JSFC Sistema (SSA)

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Wednesday 14 May, 2008

JSFC Sistema

Statement re: Sistema Announces Unaudited Finan...

Sistema Investor Relations
Laila Simanova
Tel: +7 495 730 66 00
ir@sistema.ru
or
Head of International Press Office
Kirill Semenov
Tel: +7 495 730 71 88
ksemenov@sistema.ru
or
Shared Value Limited
Larisa Kogut-Millings
Tel: +44 (0) 20 7321 5037
sistema@sharedvalue.net
                  

  Sistema Announces Unaudited Financial Results for the Fourth Quarter and the
                          Year Ended December 31, 2007

Sistema (the 'Group') (LSE:SSA), the largest diversified public corporation in
Russia and the CIS, which manages fast growing companies operating in the
consumer services sector, today announced its unaudited consolidated US GAAP
financial results for the fourth quarter and the twelve months ended December
31, 2007.

FOURTH QUARTER HIGHLIGHTS

    --  Consolidated revenues up by 27.0% year on year to US$ 4.1 billion

    --  OIBDA up 48.5% year on year to US$ 1.5 billion and OIBDA margin of 36.1%

    --  Operating income up 42.5% year on year to US$ 903.6 million and
        operating margin of 22.1%

    --  Net income up to US$ 466.7 million

FULL YEAR HIGHLIGHTS

    --  Consolidated revenues up 33.5% year on year to US$ 13.7 billion

    --  OIBDA up 27.0% year on year to US$ 5.1 billion and OIBDA margin of 36.9%

    --  Operating income up 21.7% year on year to US$ 3.3 billion and operating
        margin of 23.9%

    --  Net income nearly doubled year on year to US$ 1.6 billion

    --  Total assets up 40.6% year on year to US$ 28.4 billion

Alexander Goncharuk, President and Chief Executive Officer, commented: 'The
Group has demonstrated strong results and performance against almost all of our
key indicators, including revenue and margin development. The results reflect
the consistent implementation of our strategy, which was revised in 2007. While
continuing to focus on strengthening the market leading positions of our
telecommunication assets, we also accelerated the development of our unlisted
businesses, which operate in the booming consumer services sectors of the
Russian economy. As a result, our non-public assets increased their overall
share of Group revenues. We consolidated our position as the largest private
sector consumer services company in Russia with significant growth potential and
high profitability levels. At the same time, we continued to expand our
footprint outside Russia. We have completed a number of strategic international
acquisitions and have successfully entered the fast-growing Indian market, which
offers immense growth opportunities in the telecommunications and other sectors.
The outperformance in 2007 and the forward dynamics enable us to be optimistic
about our prospects in 2008 and beyond'.

FINANCIAL SUMMARY(1)

-0-
*T
                                     Year on                     Year
(US$ millions)     4Q 2007 4Q 2006       Year  FY 2007  FY 2006    on
                                       Change                     Year
                                                                Change
------------------ ------- ------- ---------- -------- -------- ------
Revenues           4,087.4 3,218.6      27.0% 13,701.0 10,266.6  33.5%
OIBDA(2)           1,473.9   992.7      48.5%  5,050.4  3,977.1  27.0%
Operating income     903.6   634.1      42.5%  3,274.7  2,691.2  21.7%
Net income           466.7  2.9(3) + 1,000.0%  1,571.9 813.0(3)  93.3%
Basic and diluted
 earnings per
 share (US cent)         -       -          -     16.9      8.5  98.7%
*T

Sistema's consolidated revenues increased by 27.0% year on year in the fourth
quarter, and by 33.5% year on year in 2007. Sistema's full year results
reflected high levels of revenue growth in the Group's Banking, Retail, Real
Estate and Tourism segments and strong performance of the Telecommunications
segment. Non-telecommunications segments accounted for 32.2% of the Group
consolidated revenues in the fourth quarter and 28.2% for the full year 2007,
compared to 34.9% and 27.2% for the corresponding periods of 2006. The organic
year on year growth for 2007 (excluding businesses acquired or divested since
the end of the fourth quarter of 2006) was 29.9% and amounted to US$ 3.1
billion.

Group OIBDA increased by 48.5% year on year in the fourth quarter, and by 27.0%
year on year for the full year 2007. The Group's OIBDA margin increased from
30.8% to 36.1% in the fourth quarter, as a result of the robust performance of
MTS and the completion of certain projects in Sistema Hals. The Group's OIBDA
margin slightly decreased from 38.7% to 36.9% for the full year 2007 primarily
as a result of a US$ 155.7 million non-cash stock compensation expense to the
employees of the Group in 2007. MTS demonstrated a sustained growth of 30.8%
year on year in OIBDA in 2007 with an OIBDA margin of 51.2% as a result of the
continued increase in usage and ARPU levels in its Russian operations. Comstar
UTS' OIBDA increased by 80.9% for the full year 2007 with an OIBDA margin of
42.4% as a result of high consumer demand for the MGTS unlimited tariff plan for
regulated residential voice services introduced in February 2007, as well as the
revenue boost from fixed-to-mobile calls. Group OIBDA in 2007 was, however,
adversely impacted by operating losses in the Telecommunications Solutions and
Consumer Services and Products divisions of SITRONICS.

Group operating income was up 42.5% year on year in the fourth quarter, and by
21.7% year on year in 2007. The Group's operating margin was 22.1% in the fourth
quarter, compared to 19.7% a year ago. The Group's operating margin amounted to
23.9% in 2007, compared to 26.2% in 2006.

Depreciation and amortization expense was up 59.0% year on year to US$ 570.3
million in the fourth quarter, and increased by 38.1% year on year to US$
1,775.7 million for the full year 2007, following the 40.0% growth in the
depreciable and amortizable assets of the Group.

Selling, general and administrative expenses increased by 34.9% year on year to
US$ 775.0 million in the fourth quarter and rose by 34.5% year on year to US$
2,426.3 million for the full year 2007.

The effective tax rate was 29.4% for the year 2007, compared to 29.0% for the
year 2006.

The net income nearly doubled year on year in 2007 as a result of the Group's
strong operating performance and a US$ 521.9 million gain on the sale of ROSNO.
The Group reported a 98.7% year on year increase in basic and diluted earnings
per share from US cent 8.5 to US cent 16.9 for the full year 2007.

OPERATING REVIEW(4)

TELECOMMUNICATIONS

-0-
*T
                                Year on Year                   Year on
(US$ millions)  4Q 2007 4Q 2006        Change FY 2007  FY 2006   Year
                                                                Change
--------------- ------- ------- ------------- ------- -------- -------
Revenues        2,773.6 2,096.3         32.3% 9,842.6  7,475.6   31.7%
OIBDA           1,297.1   958.6         35.3% 4,983.5  3,625.6   37.5%
Operating
 Income           767.4   573.8         33.7% 3,344.0  2,377.4   40.7%
Net Income(5)     266.9 14.0(6)     +1,000.0% 1,190.9 667.0(6)   78.6%
*T

The Telecommunications segment, which comprises MTS, the largest mobile phone
operator in Russia and the CIS, and Comstar UTS, the leading fixed line
telecommunications operator in Russia and the CIS, demonstrated 32.3% year on
year revenue growth in the fourth quarter of 2007, and 31.7% for the full year
of 2007. The segment accounted for 71.8% of the Group's consolidated revenues in
2007 compared to 72.8% in 2006. MTS continued to be the main contributor to the
segment revenues and accounted for 83.5 % of the segment's revenue in 2007.

MTS added approximately 4 million subscribers during the fourth quarter of 2007
resulting in the total consolidated base of approximately 82.0 million customers
as at December 31, 2007. MTS generated 28.8% year on year revenue growth for the
fourth quarter from US$ 1,805.9 million to US$ 2,326.4 million. This growth
reflected an increase in average monthly service revenue per subscriber ('ARPU')
in Russia from US$ 8.5 in the fourth quarter of 2006 to US$ 10.0 in the fourth
quarter of 2007. Russian subscribers' monthly Minutes of Use (MOU) increased to
187 in the fourth quarter of 2007 from 133 in the fourth quarter of 2006. MTS'
revenues for the full year 2007 increased by 29.3% year on year to US$ 8,252.4
million from US$ 6,384.3 million. MTS' OIBDA, as a result of the robust ARPU
development combined with the organic growth of its subscriber base, rose by
26.2% year on year in the fourth quarter to US$ 1,126.9 million and by 30.8%
year on year in 2007 to US$ 4,223.4 million.

Comstar UTS generated 65.1% year on year revenue growth in the fourth quarter
and 39.5% year on year growth in 2007, from US$ 292.1 million to US$ 482.1
million and from US$ 1,120.2 million to US$ 1,562.4 million, respectively. This
growth reflected continued high consumer demand for the MGTS's unlimited tariff
plan for regulated residential voice services introduced in February 2007, the
revenue boost from fixed-to-mobile calls, the appreciation of the Russian Rouble
against the US dollar, and consolidation of the US$ 80.6 million revenues of
Digital Telephone Networks South (DTN) and Regional Technical Centre (RTC),
following the completion of the two acquisitions during the fourth quarter of
2007.

Comstar UTS' Moscow broadband subscriber base grew by 81% year on year in 2007
to 695,000 customers, including 651,000 residential subscribers. This growth was
driven primarily by the launch of MGTS's 'Broadband in every Home' campaign in
November and the active engagement of retail chains at the point of sale. The
new broadband strategy provides a significant competitive advantage and a
platform for delivering a range of value-added services. The number of
pay-television subscribers in Moscow increased by 47% year on year to 122,300
households.

Comstar UTS' OIBDA increased by 80.9% year on year to US$ 662.8 million in 2007,
following the significant increase in operating results. Comstar UTS' OIBDA
demonstrated almost a fivefold growth to US$ 194.2 million in the fourth quarter
of 2007, including the effect of US$ 62.1 million of non-comparable stock bonus
awards in the fourth quarter of 2006, or more than doubled year on year
excluding this non-recurring item.

Segment OIBDA was up 35.3% year on year in the fourth quarter and up 37.5% for
the full year 2007, with an increased combined OIBDA margin of 50.6% in 2007, up
from 48.5% in 2006. This increase in margin primarily reflected the improved
profitability of the business.

Segment's net income increased by 78.6% year on year in 2007 and rose by more
than 1,000% for the fourth quarter of 2007, including the non-recurring US$ 170
million, net of minority interests of US$ 150 million, Bitel write-off by MTS in
the fourth quarter of 2006. Prior to Bitel write-off net income increased by
158.6% and 57.6% for the fourth quarter and full year 2007, respectively.

In December 2007, Access Telecommunications Cooperatief U.A. acquired 46,232,000
Comstar UTS shares purchased from MGTS Finance S.A. at US$ 6.97 per share and
for a total cash consideration of US$ 322.2 million. The purchased shares
represent 11.06% of the total number of issued and outstanding Comstar UTS
shares.

In December 2007, MTS acquired 100% of Bashcell, a mobile phone operator in the
Volga region of Russia for US$ 38 million, including the assumption of US$ 32
million in debt.

In November 2007, Comstar UTS acquired Digital Telephone Networks South ('DTN'),
the largest alternative telecommunications operator in the Southern Federal
District of Russia, for a total cash consideration of approximately US$ 167.4
million. Comstar UTS also purchased a 87.5% stake in Regional Technical Centre,
an alternative fixed-line telecommunications operator in the Khanty-Mansi
Autonomous Area, for US$ 21.0 million.

TECHNOLOGY

-0-
*T
                            4Q    4Q  Year on                 Year on
(US$ millions)             2007  2006   Year  FY 2007 FY 2006    Year
                                       Change                   Change
------------------------ ------ ----- ------- ------- ------- --------
Revenues                  603.9 565.2    6.8% 1,619.6 1,610.7     0.6%
OIBDA                       5.3  63.0 (91.7%) (102.5)   172.5 (159.4%)
Operating (Loss) /
 Income                  (10.7)  54.8     N/A (158.9)   129.8      N/A
Net (Loss) / Income      (35.5)  29.0     N/A (176.8)    61.5      N/A
*T

The Technology segment comprises SITRONICS, a leading provider of
telecommunications, IT and microelectronic solutions in Russia and the CIS, with
a growing presence in other EEMEA emerging markets. SITRONICS' revenues were up
6.8% year on year in the fourth quarter and were stable year on year in 2007.
The Information Technology Solutions and Microelectronic Solutions divisions
continued to demonstrate a strong growth during the fourth quarter, partially
due to the robust demand in the Russian microelectronics market, which grew
approximately twice as fast as the global markets, as well as an increase in the
volume of government orders for research and development projects.

In addition to the contracts that were announced on December 6, 2007, SITRONICS
won over US$ 300 million of new business between the beginning of the fourth
quarter of 2007 and April 2008, which will be implemented in 2008 and future
years. These deals include the delivery of IT infrastructure to Warid Telecom in
Uganda, the deployment of a back-up emergency and disaster wireless
telecommunications network for Syrian public sector organizations, and the
provisioning of GMSC (Gateway Mobile Switching Centre) technology-based
equipment for MTS Ukraine.

The segment produced positive OIBDA of US$ 5.3 million in the fourth quarter of
2007, compared to positive OIBDA of US$ 63.0 million in the fourth quarter of
2006. The results were impacted by lower revenues in the Telecommunications
Solutions and Consumer Services and Products divisions, while the level of fixed
costs was maintained at the 2006 level, in line with the requirement to service
ongoing and new projects and with the expansion of the business in the Middle
East and Africa. SITRONICS' full year OIBDA was also impacted by a stock
compensation expense of US$ 30.3 million, as well as by a US$ 47.3 million
provision for receivables and supplier advances in the Consumer Services and
Products division that was flagged at the time of the third quarter results.

REAL ESTATE

-0-
*T
                                 4Q    4Q  Year on   FY    FY  Year on
(US$ millions)                  2007  2006   Year   2007  2006   Year
                                            Change              Change
------------------------------ ----- ----- ------- ----- ----- -------
Revenues                       244.7 121.8  100.9% 452.2 282.9   59.9%
OIBDA                          120.9  33.2  264.5%  56.7  93.1 (39.1%)
Operating Income               114.8  30.3  279.3%  41.9  86.0 (51.3%)
Net Income                      86.1  18.7  360.0%  26.6  52.7 (49.6%)
*T

Revenues in Sistema Hals, a leading Moscow-based real estate development,
management and investment company, doubled year on year in the fourth quarter
and increased by 59.9% for the full year 2007, primarily as a result of the
strong growth in the real estate development division. The real estate
development division's revenues grew from US$ 206.2 million in 2006 to US$ 356.0
million in 2007. The division completed and sold during the year the
'Sadovnicheskaya, 75', 'Kamenniy Ostrov', 'Yartsevskaya, 27v' and partially sold
the 'Dnepropetrovskaya', 'Nahimovskiy', 'Michurinskiy' and 'Rublevskoe highway'
residential developments.

The Asset Management division revenues increased by 67.2% year on year to US$
44.8 million in 2007, primarily due to continued growth in house sales and
rental revenues from single family houses. The 'Serebryany Bor' development
remained the most significant source of rental revenues for the full year 2007.

The Facility Management division revenues more than doubled year on year to US$
22.8 million for the full year 2007 primarily as a result of an increase in
revenues from Sistema Group companies.

The Project and Construction Management division revenues declined by 28.5% year
on year to US$ 28.6 million in 2007.

Segment OIBDA nearly quadrupled year on year in the fourth quarter, while OIBDA
declined by 39.1% for the full year 2007, largely as a result of the US$ 99.8
million in stock bonus and stock option awards given to the management and
members of the Board of Directors in June 2007 under the existing share option
program.

In December 2007, Sistema Hals signed two strategic partnership agreements
regarding joint ventures: with Saraya to develop a world class resort Kamelia on
the Black Sea in Sochi, and with Apsys to develop Leto City, a St.
Petersburg-based project. In accordance with signed agreements, a 50.0% stake in
Kamelia project was transferred to Saraya and a 50.0% stake in Leto project was
transferred to Apsys.

In December 2007, Sistema Hals signed a strategic partnership agreement with
Hebei Construction Group, a Chinese state-owned company, to jointly develop real
estate projects in Russia and sold a 50% stake in 'Kostyansky, 13' to Mirax
Group.

In October 2007, Sistema Hals acquired a land plot in the Khamovniki district in
the center of Moscow. The plot is expected to be redeveloped as an office and
residential complex with a total area of approximately 70,000 square meters.

Sistema Hals obtained a new independent valuation from C&WS&R which values its
share in projects and properties at US$ 3,746 million as at January 1, 2008, a
30% increase compared to the previous valuation on July 1, 2007.

BANKING

-0-
*T
                                 4Q    4Q  Year on   FY    FY  Year on
(US$ millions)                  2007  2006    Year  2007  2006   Year
                                            Change              Change
------------------------------ ----- ----- ------- ----- ----- -------
Revenues                       218.3  84.4  158.6% 488.8 228.2  114.2%
OIBDA                           29.4  20.4   43.8%  63.4  37.2   70.4%
Operating Income                25.8  19.0   36.2%  54.7  34.0   61.1%
Net Income                       7.8  19.0 (58.8%)  28.9  25.8   11.7%
*T

The Banking segment comprises the Moscow Bank for Reconstruction and Development
(MBRD), the East-West United Bank (EWUB) and Dalcombank which was consolidated
in the segment's operating results for the full year 2007, following the
acquisition of control in November 2007. The segment provides corporate and
retail banking services in Russia and Luxembourg. The segment revenues nearly
tripled year on year in the fourth quarter and more than doubled in 2007, as a
result of the strong growth of the segment's retail and corporate lending
portfolios and the above acquisition. The loan portfolio grew by 115.9% to US$
3.2 billion as at December 31, 2007, with Dalcombank contributing 23.9% of the
overall growth, compared to US$ 1.5 billion as at December 31, 2006, whilst
interest income received from retail and corporate lending increased by 114.9%
year on year, with Dalcombank accounting for 30.0% of this growth to US$ 416.3
million in 2007. Revenues from leasing activities more than doubled year on
year, and contributed US$ 27 million to the segment's revenues in 2007.

The segment's assets more than doubled to US$ 5.6 billion at the end of the
year. EWUB assets have quadrupled year on year as a result of the growth in
lending services.

The segment's retail business included 166 points of sales, including 74 points
of sales in Moscow and 92 points in 34 Russian regions in 2007. MBRD is pursuing
a dynamic regional expansion strategy to offer retail lending services through
opening of small format offices with minimal capital expenditure.

In December 2007, MBRD acquired the remaining 49% stake in East-West United
Bank, Luxemburg (EWUB) for a total cash consideration of Euro 31.0 million
(approximately US$ 44.6 million).

RETAIL

-0-
*T
                                 4Q    4Q  Year on   FY    FY  Year on
(US$ millions)                  2007  2006   Year   2007  2006   Year
                                            Change              Change
------------------------------ ----- ----- ------- ----- ----- -------
Revenues                       263.5 135.1   95.0% 597.2 335.3   78.1%
OIBDA                           45.1  23.6   90.9%  36.1  20.9   73.2%
Operating Income                40.7  19.9  104.7%  25.7  15.2   69.2%
Net Income                      29.6  13.1  126.4%   6.4   4.9   29.8%
*T

The Retail segment comprises Detsky Mir, the largest children's goods chain of
retail stores in Russia. Total revenues nearly doubled year on year in the
fourth quarter and increased by 78.1% year on year in 2007, whilst retail
revenues, which accounted for 85% of total revenues in 2007, have also nearly
doubled year on year to US$ 513.5 million.

The segment OIBDA increased by 90.9% year on year in the fourth quarter and by
73.2% year on year in 2007, despite the growing competition in the Russian
children's goods sector during the period.

In 2007, Detsky Mir was present in almost all Russian cities with a population
of over 1 million. The segment is focused on establishing its presence in
smaller Russian cities, as well as in Ukraine, Kazakhstan and Belarus.

The network of retail outlets grew by 30 stores to 95 in total as at December
31, 2007, while the aggregate retail space increased by 60% year on year to 174
thousand square meters. As at May 14, 2008, Detsky Mir's retail network numbered
99 retail outlets located in 48 Russian cities, with a total retail space of 181
thousand square meters.

MASS MEDIA

-0-
*T
                                 4Q    4Q  Year on   FY    FY  Year on
(US$ millions)                  2007  2006   Year   2007  2006   Year
                                            Change              Change
------------------------------ ----- ----- ------- ----- ----- -------
Revenues                        48.6  41.2   17.8% 137.0 106.7   28.4%
OIBDA                           13.0  13.6  (4.3%)  23.2  26.6 (12.8%)
Operating Income                 2.4  11.8 (79.8%)   2.0  15.4 (86.9%)
Net Income                       1.1   9.6 (88.5%)   2.1  13.5 (84.4%)
*T

The Mass Media segment, which comprises the Group's Pay-TV business, operating
under the brand name Stream-TV, as well as advertising, print and other media
operations, generated 17.8% and 28.4% year on year revenue growth in the fourth
quarter and for the full year 2007, respectively, primarily as a result of the
increase in Stream-TV and Internet ARPU and subscriber growth. Stream-TV's
revenues increased by 48.7% year on year to US$ 89.9 million in 2007. The
Stream-TV subscriber base increased by 16% year on year to 1.7 million
subscribers, while its Internet subscriber base has nearly doubled to 130,000
and IP-telephony users increased to 10,100 during this period. Combined
Stream-TV ARPU increased from US$ 2.9 in 2006 to US$ 3.1 in 2007, while Pay-TV
ARPU increased from US$ 3.9 to US$ 4.2 during this period. Internet ARPU
increased from US$ 13.4 in 2006 to US$ 15.0 in 2007. During the year Stream-TV
expanded its presence to 40 (37 in 2006) Russian cities in 22 (19 in 2006)
regions with a total coverage of 3.5 million households. The Maxima Group, an
advertising agency, which operates in Russia, Ukraine, Kazakhstan and Belarus,
contributed US$ 40.6 million to segment revenues in 2007.

Segment OIBDA declined 12.8% year on year in 2007 primarily as a result of an
ongoing restructuring program within the segment.

CORPORATE AND OTHER

-0-
*T
(US$ millions)           4Q    4Q  Year on Year                Year on
                        2007  2006        Change FY 2007   FY    Year
                                                          2006  Change
--------------------- ------ ----- ------------- ------- ----- -------
Revenues
 Radars and Aerospace  168.3 123.6         36.2%   375.0 249.5   50.3%
 Tourism                99.1 135.1       (26.7%)   374.0 271.3   37.8%
 Pharmaceuticals        10.6  39.4       (73.2%)    63.0  53.7   17.3%
 Healthcare Services    33.2   9.1        265.4%    79.1  21.0  277.2%
 Other                  74.4   3.9     +1,000.0%   113.8  60.0   89.7%
                      ------ ----- ------------- ------- ----- -------
Total                  385.6 311.1         23.9% 1,004.9 655.5    53.3
OIBDA
 Radars and Aerospace   17.1   7.1        140.8%    45.9  23.7   93.5%
 Tourism                 5.2   4.6         14.2%    28.0  21.1   33.1%
 Pharmaceuticals       (2.0) (2.3)             -   (1.3) (1.5)       -
 Healthcare Services     3.9   0.8        414.7%    10.7   3.1  247.2%
 Other                (66.8) (8.2)             - (155.2) 234.4       -
                      ------ ----- ------------- ------- ----- -------
Total                 (42.6)   2.0             -  (71.9) 280.8       -
*T

The Radars and Aerospace segment's revenues increased by 36.2% year on year in
the fourth quarter and by 50.3% year on year in 2007, as a result of an increase
in the volume of services performed under a number of government contracts. RTI
Systems' OIBDA more than doubled year on year in the fourth quarter and nearly
doubled for the full year 2007 with OIBDA margin expanding to 10.1% and 12.2%,
respectively, mainly due to the ongoing optimization of RTI Systems's
relationships with its subcontractors.

The Tourism segment's revenues decreased by 26.7% year on year in the fourth
quarter while revenue growth was 37.8% year on year in 2007, primarily as a
result of the strong performance of its tour operating division. The segment
delivered 53% sales turnover(7) growth year on year in 2007 to US$ 517 million,
as the tour operating division developed faster than the rest of the market,
particularly on routes to Turkey and Egypt. The tour operating division
accounted for 76.5% of the total segment revenues in 2007 compared to 65.8% in
2006. Segment OIBDA increased by 14.2% year on year in the fourth quarter and by
33.1% for the full year 2007, while OIBDA margin slightly decreased year on year
as a result of the robust growth of the tour operating division which has
inherently lower margins than other divisions of the segment. The segment
serviced 888,683 customers in 2007 compared to 602,500 in 2006. The hotel group,
which comprises 9 hotels, increased the total number of rooms by 7.7% to nearly
2,460 rooms as of December 31, 2007.

The Pharmaceuticals segment's revenues declined in the fourth quarter as a
result of factory's reconstruction, however, revenues increased by 17.3% year on
year in 2007. Segment OIBDA was impacted by the acquisition of Mapichem AG and
the increase in R&D expenses in the fourth quarter and for the full year 2007.

The Healthcare Services segment's revenues nearly quadrupled year on year in the
fourth quarter and more than tripled year on year in 2007. The segment, which
comprises the Medsi and Medsi-II clinics, American Hospital Group and
Medexpress, is developing into a leading private healthcare provider in Russia,
with comprehensive medical care and a chain of private clinics. In 2007, 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. As a result of these acquisitions, the network of
healthcare facilities has increased to 26 clinics in Moscow and the regions.
Segment OIBDA more than tripled year on year in 2007 as a result of the growth
in its operations.

Perm Motors Group was reclassified as a discontinued operation during the fourth
quarter of 2007 and was sold following the end of the reporting period.

FINANCIAL REVIEW

Net cash provided by operating activities decreased by 28.2% year on year
million in the fourth quarter to US$ 538.3 mainly due to an increase in working
capital. For the full year 2007 net cash provided by operating activities
increased by 35.1% year on year to US$ 2,857.7 million as a result of the growth
in the Group's operating profits.

Net cash used in investing activities totalled US$ 2,698.6 million in the fourth
quarter and US$ 5,753.9 million for the full year 2007, and included US$ 1,578.0
million and US$ 3,110.9 million of capital expenditure, respectively, compared
to US$ 673.6 million and US$ 2,386.4 million, for the corresponding periods of
2006. The Group spent US$ 1,459.1 million on the acquisition of businesses
during 2007, compared to US$ 631.4 million in 2006.

Cash flows from financing activities amounted to US$ 2,039.1 million in the
fourth quarter and US$ 3,243.7 million in 2007, compared to US$ 1,085.4 million
and US$ 3,289.4 million, respectively, for the corresponding periods of 2006.
Major sources of financing in the fourth quarter included a US$ 125.0 million
loan signed by SITRONICS with Dresdner Bank, US$ 345.0 million additional
syndicated loan facilities obtained by MTS, US$ 158.4 million drawn down by
Comstar UTS from the existing credit facility with Sberbank, US$ 155.5 million
of commercial paper issued by Sistema Hals, and US$ 200.0 million 5-year credit
line obtained by Sistema Hals from VTB.

The Group's cash balances increased to US$ 1,061.7 million as at December 31,
2007, compared to balance of US$ 501.7 million as at December 31, 2006. The
Group's net debt (short-term and long-term debt minus cash and cash equivalents)
increased to US$ 7,423.0 million as at December 31, 2007 compared to US$ 6,370.6
million as at December 31, 2006.

In December 2007, Sistema launched a put option program on Sistema Hals global
depository receipts. According to the program, the options may be exercised in
six months from the options purchase date. The total amount of the program is up
to US$ 50 million.

In December 2007, Sistema announced the launch of the long-term incentive
program for its employees. The program will encompass up to 110 top and middle
managers of Sistema. Participants will be entitled to exercise the rights
granted under all plans during the year following the expiration of a three-year
period from the execution date of the agreement.

In October 2007, Moody's Investor Services upgraded the corporate ratings of
Sistema from 'B1' to 'Ba3' with a positive outlook.

SIGNIFICANT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

Telecommunications

In February 2008, MTS acquired the remaining 9% stake in its subsidiary in Omsk
located in Central Siberia for US$ 16 million. As a result of this transaction,
MTS' ownership in the subsidiary increases to 100%. The subsidiary provides GSM
900/1800 services under the MTS brand and is one of the leading wireless service
providers in the Omsk region with a population of 2.1 million.

In March 2008, the Board of Directors of Comstar UTS approved the introduction
of a long-term incentive program for the Company's management team. The program
is set to run from April 1, 2008 with a two year vesting period. The eligible
program participants are determined by the Board of Directors every two years
starting from the launch of the program. A total of 151 managers will
participate in the scheme during 2008-2010.

In May 2008, MTS' Board of Directors approved amendments to the employee
motivation and retention program that was adopted in June 2007 with reward
periods extending through 2011. As amended, the program will involve a total of
10,207,751 phantom and actual American Depositary Receipts (ADRs). The amended
program increases the share of individual employee's compensation dependent upon
the level of investment appeal of the Company as judged by growth in share price
combined with dividend payout, or total shareholder return (TSR), as well as the
realization of key strategic goals. Program participants become eligible for
their awards upon reaching an annual TSR level of not less than 15%. Prior to
its amendment, the program included 3.6 million phantom ADRs as well as
performance-based monetary awards that were independent of the stock price.

Technology

In March 2008, SITRONICS acquired a 36% stake in Kvazar-Micro from Melrose
Holding Company for US$ 116.9 million. As a result of the transaction, SITRONICS
owns 87% of Kvazar-Micro and Melrose Holding Company owns a 3.07% stake in
SITRONICS.

Real Estate

In April 2008, Sistema-Hals sold 'Rochdelskaya, 22' development project in
Moscow. The project encompasses a 0.29 hectares land plot with gross building
area of approximately 13,000 square metres.

Banking

In February 2008, MBRD securitised part of its car loan portfolio. This deal
will provide the Bank with funding in the amount of RUB 1.5 billion. The Issuer
may increase the borrowing up to US$ 200 million in the next 12 months.
Bayerische Hypo- und Vereinsbank AG, a member of the UniCredit Group, was the
sole Arranger and Lead Manager for the Bank in this deal.

Corporate and Others

In January 2008, Sistema increased its stake in Shyam Telelink Ltd. from 10% to
51%. The additional shares were acquired for a total cash consideration of US$
46.7 million. At the same time, Shyam Telelink Ltd was awarded unified
telecommunication licenses for the provision of fixed-line and cellular services
in 21 Indian circles. Sistema guaranteed US$ 520 million of the total US$ 630
million to be paid for obtaining the licenses. In April 2008, Shyam Telelink
Ltd. received radio frequencies for building mobile networks in eleven Indian
circles, Andhra Pradesh, Tamil Nadu, Haryana, West Bengal, Himachal Pradesh,
Bihar, Uttar Pradesh and Chhattisgarh, North-East, Jammu and Kashmir, and Assam.
Together with radio frequencies already obtained in Rajasthan, Shyam Telelink
will be able to start building a full scale CDMA network in 12 Indian circles,
which will cover over half of the territory of India with a target population of
approximately 650 million people.

In January 2008, Sistema completed the acquisition of 50.5% additional shares in
Dalcombank for a cash consideration of approximately US$ 107.5 million. Sistema
now holds a 98.7% stake in Dalcombank.

In February 2008, Sistema completed integration of its Healthcare Services
division's assets into the 'Medsi Companies Group' Holding, 100% owned by
Sistema. Sistema transferred to Medsi Group its 20% stake in MedExpress, which
comprises 26 clinics in Moscow and the regions and an ambulance service; 100% of
American Hospital Group, a family clinic operating under the 'American Medical
Centers' brand for VIP clients and expatriates; and 53.3% of the Medsi clinic,
an out-patient clinic for adults. Sistema is also investing RUB 900 million (US$
36 million) to increase the capital of the holding. The additional share issue
of the Medsi Group totaled RUB 1.89 billion (US$ 77 million).

In March 2008, RTI Systems completed the sale of 100% in CJSC Sahles to CJSC
Saturn, a subsidiary of OPK Oboronprom, for a total cash consideration of US$
190 million. CJSC Sahles owns a 71.63% stake in OJSC Perm Motors Plant, as well
as controlling stakes in other entities which constitute the Perm Motors Group
('PMG'). PMG comprises 18 companies specializing in military and civil aviation
engine construction.

In March 2008, Sistema successfully placed its RUB 6 billion (approximately US$
251.6 million) corporate Bond issue. The annual interest rate for the first and
second coupon payments has been set at 9.45%. The Bonds mature in five years and
coupon payments will be made on a semi-annual basis.

In April 2008, Sistema repaid its US$ 350 million Eurobond issue. The Eurobond
issue was repaid upon its maturity in full using the Company's cash flows and
previously obtained debt financing.

In April 2008, Sistema Board of Directors recommended an annual dividend of RUB
2,512.5 million, (approximately US$ 106.4 million), for the year ended December
31, 2007 to holders of Sistema shares. The dividend, which amounts to a payment
of RUB 0.25 per share (approximately US$ 0.21 per Global Depositary Receipt), is
more than five times higher than the dividend paid for the same period of 2006.

Conference call information

Sistema management will host a conference call today at 9 am (New York time) / 2
pm (London time) / 3 pm (CET) / 5 pm (Moscow Time) to present and discuss the
fourth quarter results.

The dial-in numbers for the conference call are:

UK/International: + 44 20 8609 0582

US: + 1 866 928 1925

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

UK/International: + 44 20 8609 0289

US: + 1 866 676 5865

PIN number: 215397#

                                       ***

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

-0-
*T
Sistema Investor Relations          Shared Value Limited
Laila Simanova                      Larisa Kogut-Millings
Tel: +7 495 730 66 00               Tel: +44 (0) 20 7321 5037
ir@sistema.ru                       sistema@sharedvalue.net

Head of International Press Office
Kirill Semenov
Tel: +7 495 730 71 88
ksemenov@sistema.ru
*T

Sistema is the largest public diversified corporation in Russia and the CIS,
which manages fast growing companies operating in the consumer services sector
and has over 80 million customers. Sistema develops and manages market-leading
businesses in selected service-based industries, including telecommunications,
technology, banking, real estate, retail and media. Founded in 1993, the company
reported unaudited revenues of US$ 13.7 billion for the full year of 2007, and
total assets of US$ 28.4 billion as at December 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), under the symbol 'AFKC' on the
Moscow Interbank Currency Exchange (MICEX), 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.

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Amounts in thousands of U.S. dollars)

-0-
*T
                                                      2007        2006
                                               ----------- -----------

Sales                                         $ 13,227,990$ 10,062,445
Revenues from financial services                   472,965     204,145

                                               ----------- -----------
TOTAL REVENUES                                  13,700,955  10,266,590
                                               ----------- -----------

Cost of sales, exclusive of depreciation and
 amortization shown separately below           (5,860,382) (4,513,117)
Financial services related costs, exclusive of
 depreciation and amortization shown
 separately below                                (206,251)   (104,003)

                                               ----------- -----------
TOTAL COST OF SALES                            (6,066,633) (4,617,120)
                                               ----------- -----------

Selling, general and administrative expenses   (2,426,281) (1,803,294)
Depreciation and amortization                  (1,775,696) (1,285,873)
Provision for doubtful accounts                  (122,995)   (107,841)
Other operating expenses, net                    (255,734)   (183,445)
Equity in net income of investees                   66,019      91,805
Gain on disposal of interests in subsidiaries
 and affiliates                                    155,069     330,412

                                               ----------- -----------
OPERATING INCOME                                 3,274,704   2,691,234
                                               ----------- -----------

Interest income                                     81,085      65,439
Change in fair value of derivative instruments   (145,800)    (60,000)
Interest expense, net of amounts capitalized     (411,813)   (355,326)
Currency exchange and translation gain             294,307      69,334
Impairment loss on investment in Bitel                   -   (320,000)

                                               ----------- -----------
Income from continuing operations before
 income tax, equity in net income of energy
 companies in the Republic of Bashkortostan
 and minority interests                          3,092,483   2,090,681
                                               ----------- -----------

Income tax expense                               (991,632)   (789,227)
*T

-0-
*T
Minority interests                           (1,156,158)     (629,403)
Equity in net income of energy companies
 in the Republic of Bashkortostan, net of
 minority interest of $14,001 and $12,152,
 respectively                                    109,855       127,642

                                           ------------- -------------
Income from continuing operations              1,054,548       799,693
                                           ------------- -------------

Income from discontinued operations, net
 of income tax effect of $2,136 and
 $14,402, respectively                           (4,612)        13,311

Gain from disposal of discontinued
 operations, net of income tax effect of
 $148,809                                        521,963             -

                                           ------------- -------------
NET INCOME                                $    1,571,899$      813,004
                                           ============= =============

Weighted average number of common shares
 outstanding                               9,311,126,854 9,570,049,775

Earnings per share, basic and diluted, US
 cent                                               16.9           8.5
*T

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2007 AND 2006

(Amounts in thousands of U.S. dollars)

-0-
*T
                                                       2007       2006
                                                 ---------- ----------

ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                     $ 1,061,733$   501,706
  Short-term investments                            909,224    554,157
  Loans to customers and banks, net               2,764,763  1,290,082
  Accounts receivable, net                        1,383,731  1,069,706
  Prepaid expenses, other receivables and
  other current assets, net                         932,425    838,473
  VAT receivable                                    435,245    450,703
  Inventories and spare parts                       780,193    661,568
  Deferred tax assets, current portion              213,633    195,672
  Assets of discontinued operations                 545,863    946,866

                                                 ---------- ----------
     Total current assets                         9,026,810  6,508,933
                                                 ---------- ----------

NON-CURRENT ASSETS:
  Property, plant and equipment, net             10,412,636  7,412,468
  Advance payments for non-current assets           284,396    305,846
  Goodwill                                          860,019    504,166
  Licenses, net                                     730,636    452,372
  Other intangible assets, net                    1,665,969  1,222,676
  Investments in affiliates                       1,344,614  1,108,647
  Investments in shares of Svyazinvest            1,485,378  1,390,302
  Loans to customers and banks, net of current
   portion                                        1,468,088    464,490
  Debt issuance costs, net                           65,038     80,220
  Deferred tax assets, net of current portion       108,637     73,623
  Other non-current assets                          944,437    667,495

                                                 ---------- ----------
     Total non-current assets                    19,369,848 13,682,305

                                                 ---------- ----------
TOTAL ASSETS                                    $28,396,658$20,191,238
                                                 ========== ==========
*T

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2007 AND 2006

(Amounts in thousands of U.S. dollars)

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*T
                                                       2007       2006
                                                 ---------- ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                              $ 1,273,487$   868,378
  Bank deposits and notes issued, current
   portion                                        1,966,539    961,595
  Taxes payable                                     223,791    148,849
  Deferred tax liabilities, current portion          77,893     48,885
  Subscriber prepayments, current portion           598,014    552,997
  Derivative financial instruments                  140,563    184,316
  Accrued expenses and other current liabilities  1,491,822  1,009,888
  Short-term loans payable                          724,905  1,296,778
  Current portion of long-term debt               1,517,902    280,427
  Liabilities of the discontinued operations        396,132    869,534

                                                 ---------- ----------
     Total current liabilities                    8,411,048  6,221,647
                                                 ---------- ----------

LONG-TERM LIABILITIES:
  Long-term debt, net of current portion          6,241,937  5,296,017
  Subscriber prepayments, net of current portion    134,280    136,861
  Bank deposits and notes issued, net of current
   portion                                        1,266,925     65,200
  Deferred tax liabilities, net of current
   portion                                          428,030    287,125
  Postretirement benefits obligation                 42,370     16,391
  Deferred revenue                                  139,984    129,120

                                                 ---------- ----------
     Total long-term liabilities                  8,253,526  5,930,714
                                                 ---------- ----------

                                                 ---------- ----------
TOTAL LIABILITIES                                16,664,574 12,152,361
                                                 ---------- ----------

Minority interests in equity of subsidiaries      4,987,220  3,453,769

Commitments and contingencies                             -          -

Puttable shares of SITRONICS                         86,100     80,000

SHAREHOLDERS' EQUITY:
  Share capital (9,276,092,868 and 9,365,757,000
   shares issued and outstanding as of December
   31, 2007 and 2006, respectively, with par
   value of 0.09 Russian Rubles)                     30,057     30,057
  Treasury stock (373,907,132 and 284,243,000
   shares as of December 31, 2007 and 2006,
   respectively, with par value of 0.09 Russian
   Rubles)                                        (469,365)  (347,068)
  Additional paid-in capital                      2,439,069  2,196,475
  Retained earnings                               4,035,157  2,483,700
  Accumulated other comprehensive income            623,846    141,944

                                                 ---------- ----------
TOTAL SHAREHOLDERS' EQUITY                        6,658,764  4,505,108

                                                 ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $28,396,658$20,191,238
                                                 ========== ==========
*T

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Amounts in thousands of U.S. dollars)

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*T
                                                      2007        2006
                                               ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                       1,571,899     813,004

Adjustments to reconcile net income to net
 cash provided by operations:
Depreciation and amortization                    1,775,696   1,290,266
Gain from disposal of discontinued operations    (521,963)           -
Loss/(income) from discontinued operations           4,612           -
Minority interests                               1,156,158     641,480
Pre-acquisition operating cash flows of the
 acquired subsidiaries                            (60,981)           -
Equity in net income of investees                (175,874)   (219,447)
Deferred income tax benefit                       (87,635)   (108,140)
Change in fair value of derivative financial
 instruments                                       145,800      60,000
Bitel liability and investments write-off                -     320,000
Foreign currency transactions gain on non-
 operating activities                            (294,307)    (67,300)
Debt issuance cost amortization                     26,425      27,035
Non-cash compensation to employees of
 subsidiaries                                      155,732      90,778
Gain on disposal of interests in subsidiaries
 and affiliates                                  (155,069)   (330,412)
Gain on sale of real estate investments          (157,989)    (96,919)
Loss/(gain) on disposal of property, plant and
 equipment                                          20,070    (16,917)
Amortization of connection fees                   (81,536)    (91,094)
Provision for doubtful accounts receivable         122,995     122,827
Allowance for loan losses                           66,107      35,363
Inventory obsolescence expense                      53,714       3,748

Changes in operating assets and liabilities,
 net of effects from purchases of businesses:
Trading securities                                (48,767)   (147,034)
Loans to banks issued by the Banking segment     (847,891)   (422,031)
Insurance-related receivables                            -    (75,089)
Accounts receivable                              (184,139)   (388,246)
VAT receivable                                      16,476      45,720
Other receivables and prepaid expenses              14,035   (277,111)
Inventories                                      (229,594)      57,022
Accounts payable                                    75,467      80,402
Insurance-related liabilities                            -     261,553
Subscriber prepayments                             116,421     109,984
Taxes payable                                     (75,240)      14,738
Accrued expenses, subscriber prepayments and
 other liabilities                                 431,086     381,606
Postretirement benefit obligation                   25,979         174

                                               ----------- -----------
Net cash provided by operations                  2,857,687   2,115,960
                                               ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property, plant and
 equipment                                     (2,753,186) (1,766,148)
Payments for purchases of intangible assets      (309,300)   (599,390)
Payment for purchase of shares of Svyazinvest            - (1,300,000)
Payments for purchases of businesses, net of
 cash acquired                                 (1,459,149)   (631,401)
Proceeds from sale of subsidiaries, net of
 cash disposed                                     636,683     235,174
Payments for purchases of long-term
 investments                                     (154,000)   (399,048)
Payments for purchases of short-term
 investments                                     (693,340)   (568,179)
Payments for purchases of other non-current
 assets                                          (247,676)   (138,827)
Proceeds from sale of other non-current assets     203,442           -
Decrease/(increase) of cash deposited for
 acquisition of Intracom Telecom                    44,452    (46,100)
Increase in restricted cash                      (287,213)    (22,624)
Proceeds from sale of property, plant and
 equipment                                          58,440      32,302
Proceeds from sale of long-term investments         20,000      20,000
Proceeds from sale of short-term investments       328,600     449,039
Net increase in loans to customers of the
 Banking segment                               (1,141,701)   (581,631)

                                               ----------- -----------
Net cash used in investing activities          (5,753,948) (5,316,833)
                                               ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

(Principal payments on)/proceeds from short-
 term borrowings, net                            (621,820)     523,930
Net increase in deposits from customers of the
 Banking segment                                 1,662,882     341,677
Net decrease in promissory notes issued by the
 Banking segment                                  (69,237)    (24,905)
Proceeds from long-term borrowings, net of
 debt issuance costs                             2,540,329   2,260,070
Principal payments on long-term borrowings       (396,304)   (636,983)
Principal payments on capital lease
 obligations                                       (7,870)     (5,197)
Proceeds from capital transactions of
 subsidiaries                                      678,841   1,450,256
Proceeds from issuance of stock options              5,554           -
Proceeds from sale of treasury shares               16,383           -
Payments to purchase treasury stock              (161,709)   (347,068)
Payments to shareholders of subsidiaries         (385,374)   (262,419)
Dividends paid                                    (17,942)     (9,978)

                                               ----------- -----------
Net cash provided by financing activities        3,243,733   3,289,383
                                               ----------- -----------

Effect of foreign currency translation on cash
 and cash equivalents                              115,880      27,224

                                               ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS              463,352     115,734
                                               ----------- -----------
                                                                     -
CASH AND CASH EQUIVALENTS, beginning of year    598,381(1)     482,647
                                                                     -
CASH AND CASH EQUIVALENTS, end of year           1,061,733     598,381
*T

(1) - Including cash and cash equivalents of Rosno as of December 31, 2006 of
$96.7 millionSISTEMA JSFC AND SUBSIDIARIES

UNAUDITED SEGMENTAL BREAKDOWN

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Amounts in thousands of U.S. dollars)

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*T
For the year ended                                              Mass
 December 31, 2007   Telecommunications Technology   Banking    Media
-------------------- ------------------ ---------- --------- ---------

Net sales to
 external customers
 (a)                          9,833,604  1,351,300   472,965  104,887
Intersegment sales                8,965    268,304    15,882   32,150
Equity in net income
 of investees                    78,437       (66)         -   10,815
Interest income                  52,593     14,397         -      633
Interest expense              (194,890)   (39,884)         -  (3,698)
Net interest revenue
 (b)                                  -          -    63,383        -
Depreciation and
 amortization               (1,639,594)   (56,453)   (8,668) (21,163)
Operating
 income/(loss)                3,343,954  (158,918)    54,715    2,028
Income tax expense            (909,043)   (27,399)  (18,100)    (675)
Investments in
 affiliates                     438,198      1,176         -   19,060
Segment assets               16,302,090  1,887,360 5,622,534  508,939
Indebtedness (c)            (4,394,620)  (511,071) (655,632) (83,024)
Capital expenditures          1,836,830    234,483    77,121   76,139

(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
(d) - Excluding dividends received by the Corporate segment from the
 Group's subsidiaries in amount of US$ 378.9 million.

For the year ended             Real             Corporate
 December 31, 2007           Estate    Retail    and Other       Total
------------------------  --------- --------- ------------ -----------

Net sales to external
 customers (a)              382,245   597,196      958,758  13,700,955
Intersegment sales           69,953        28       21,882     417,164
Equity in net income of
 investees                      215         -      123,667     213,068
Interest income              14,272       106       77,789     159,790
Interest expense           (11,953)  (15,921)    (167,281)   (433,627)
Net interest revenue (b)          -         -            -      63,383
Depreciation and
 amortization              (14,872)  (10,494)     (24,452) (1,775,696)
Operating income/(loss)      41,855    25,637 (96,306) (d)   3,212,965
Income tax expense         (16,216)   (4,696)     (15,503)   (991,632)
Investments in
 affiliates                  29,724         -      854,291   1,342,449
Segment assets            1,770,030   496,978    4,181,561  30,769,492
Indebtedness (c)          (856,526) (182,799)  (1,801,072) (8,484,744)
Capital expenditures        692,869    94,336       99,162   3,110,940

(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
(d) - Excluding dividends received by the Corporate segment from the
 Group's subsidiaries in amount of US$ 378.9 million.
*T

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*T
For the year ended                                               Mass
 December 31, 2006    Telecommunications Technology   Banking    Media
--------------------- ------------------ ---------- --------- --------

Net sales to external
 customers (a)                 7,469,439  1,268,368   204,145   78,872
Intersegment sales                 6,150    342,366    24,046   27,834
Equity in net income
 of investees                     91,717        245         -    5,529
Interest income                   56,483     11,223         -      289
Interest expense               (200,424)   (32,235)         -    (727)
Net interest revenue
 (b)                                   -          -    26,792        -
Depreciation and
 amortization                (1,198,980)   (42,706)   (3,236) (11,155)
Operating income               2,377,358    129,809    33,971   15,447
Income tax expense             (645,042)   (40,847)   (8,276)  (2,575)
Investments in
 affiliates                      266,488          -         -    6,675
Segment assets                12,656,286  1,638,708 2,513,548  355,477
Indebtedness (c)             (3,908,943)  (505,333) (399,069) (17,693)
Capital expenditures           2,001,973    103,869    11,414   83,714

For the year ended December      Real           Corporate
 31, 2006                      Estate   Retail   and Other       Total
--------------------------- --------- -------- ----------- -----------

Net sales to external
 customers (a)                273,096  335,144     637,526  10,266,590
Intersegment sales              9,770      165      17,933     428,264
Equity in net income of
 investees                          -        -     139,637     237,128
Interest income                 4,454      863      30,780     104,092
Interest expense              (7,560)  (7,927)   (127,670)   (376,543)
Net interest revenue (b)            -        -           -      26,792
Depreciation and
 amortization                 (7,153)  (5,706)    (16,937) (1,285,873)
Operating income               85,974   15,152  263,882(d)   2,921,593
Income tax expense           (16,564)  (2,413)    (73,510)   (789,227)
Investments in affiliates           -        -     842,159   1,115,322
Segment assets                943,348  238,138   3,514,069  21,859,574
Indebtedness (c)            (359,727) (90,890) (1,590,640) (6,872,295)
Capital expenditures          134,738   32,341       3,874   2,371,923
*T

-0-
*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
(d) - Excluding dividends received by the Corporate segment from the
 Group's subsidiaries in amount of US$ 275.4 million.
*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:

-0-
*T
                                  4Q 2007  4Q 2006      2007      2006
-------------------------------- --------- ------- --------- ---------

 Operating Income                  903,565 634,141 3,274,702 2,691,234

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

 Depreciation and Amortization     570,294 358,565 1,775,696 1,285,873

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

 OIBDA                           1,473,859 992,706 5,050,398 3,977,107
*T

(1) ROSNO and Perm Motors Group are accounted for as a discontinued operation
for all periods presented. Thus, here and further, ROSNO's and Perm Motors
Group'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 and a reconciliation of OIBDA to their most directly comparable US GAAP
financial measures.

(3 )Includes US$ 170 million Bitel write-off by MTS in the fourth quarter of
2006, net of minority interests of US$ 150 million.

(4) 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 and may differ from respective standalone values due to certain
reclassifications and adjustments.

(5 )Here and further net income / (loss) for the segments are presented after
minority interest.

(6 )Includes US$ 170 million Bitel write-off by MTS in the fourth quarter of
2006, net of minority interests of US$ 150 million.

(7) Turnover comprised the fair value of the consideration received or to be
received for the sale of products and services in the framework of ordinary
business activities. Turnover was carried excluding value-added tax, returns,
discounts and price rebates and after elimination of intra-group sales.