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JSFC Sistema (SSA)

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Wednesday 17 September, 2008

JSFC Sistema

Half-yearly Report

JSFC Sistema
                  

 Sistema Announces Unaudited Financial Results For The Second Quarter Ended June
                                    30, 2008

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 second quarter ended June 30, 2008.

SECOND QUARTER HIGHLIGHTS

    --  Consolidated revenues up by 40.2% year on year to US$ 4.3 billion

    --  OIBDA up 39.9% year on year to US$ 1.5 billion and OIBDA margin of 35.2%

    --  Operating income up 32.4% year on year to US$ 919.5 million and
        operating margin of 21.5%

    --  Income from continuing operations more than doubled year on year to
        US$ 289.5 million

    --  Total assets up by 45.6% year on year to US$ 32.7 billion

Leonid Melamed, President and Chief Executive Officer, commented:

'The Group has delivered another quarter of healthy top line and OIBDA growth,
with an OIBDA margin of over 35%. Sistema also generated a 40% year on year
increase in operating cash flows. Income from continues operations more than
doubled year on year.

We remain focused on the unlocking of the substantial potential of the Group's
assets, executing on our strategic objectives branded '5X5 greater than 25', and
achieving a return on invested capital of over 25% within five years and beyond.

Our priorities are clear - firstly, we are optimizing the existing portfolio
structure. We have introduced key operating and financial targets for each of
our subsidiaries, with the management teams tasked with generating high levels
of revenue growth and customer acquisition, as well as creating and exploiting
sales and cost synergies, and enhancing profitability levels. We also engage
with best in class strategic partners as and when appropriate, both to benefit
from their expertise and accelerate the development of our businesses.

Secondly, our policy is only to invest in those projects with short to medium
term return on capital horizons, and to invest in the telecommunications and
fast growing consumer industries where we already have a proven track record.
Maintaining financial discipline is key to our success and is reflected in the
recent raising of the S&P credit ratings on Sistema and its largest
subsidiaries.

Finally, we are streamlining and simplifying the Group's management structures.
We have adopted a matrix model and formed three new industrial operating units -
'Telecommunications Assets', 'High Technologies and Industry', and 'Consumer
Assets' - and we seek to attract, develop and motivate the most talented and
hard-working managers in each segment. We are confident that these measures will
enable us to deliver and sustain greater returns for shareholders moving
forward.'

FINANCIAL SUMMARY(1)

-0-
*T
                                               Year          Quarter
(US$ millions)                2Q 2008 2Q 2007     on 1Q 2008       on
                                                Year          Quarter
                                              Change           Change
----------------------------- ------- ------- ------ ------- --------
Revenues                      4,280.4 3,053.5  40.2% 3,780.4    13.2%
OIBDA(2)                      1,506.0 1,076.7  39.9% 1,431.8     5.2%
Operating income                919.5   694.3  32.4%   869.1     5.8%
Income from continuing
 operations                     289.5   124.7 132.2%   388.6  (25.5%)
Basic and diluted earnings
 per share (US cent)              3.1     1.4 122.4%     4.2  (26.2%)
*T

Sistema's consolidated revenues increased by 40.2% year on year and 13.2%
quarter on quarter. Sistema's results in the second quarter reflected high
levels of revenue growth in the Group's Technology, Retail, Tourism and Banking
segments combined with a strong performance in the Telecommunications segment.
Non-telecommunications segments accounted for 29% of the Group consolidated
revenues in the second quarter, compared to 24% for the corresponding period of
2007 and 27% in the first quarter of 2008. The organic year on year growth for
the second quarter of 2008 (excluding businesses acquired or divested since the
end of the second quarter of 2007) was 35.8% and amounted to US$ 1.1 billion.

Group OIBDA increased by 39.9% year on year in the second quarter of 2008, as a
result of the growth in the Telecommunications, Banking, Tourism and Mass Media
segments. The Group's OIBDA margin remained flat year on year at 35.2% in the
second quarter of 2008. OIBDA rose by 5.2% quarter on quarter. MTS demonstrated
strong growth in OIBDA of 33.5% year on year in the second quarter of 2008 with
an OIBDA margin of 51.4% as a result of the continued increase in usage and ARPU
levels in its Russian operations. Comstar UTS OIBDA decreased by 6.1% year on
year in the second quarter with an OIBDA margin of 38.2% due to the impact of
the various regulatory changes introduced during the first half of the year.

Group operating income was up 32.4% year on year in the second quarter, and by
5.8% quarter on quarter. The Group's operating margin was 21.5% in the second
quarter of 2008, compared to 23.0% in the first quarter of 2008 and 22.7% in the
second quarter of 2007.

Depreciation and amortization expense was up 53.3% year on year and 4.2% quarter
on quarter to US$ 586.5 million in the second quarter, following the growth in
depreciable and amortizable assets of the Group.

Selling, general and administrative expenses increased by 84.7% year on year and
11.9% quarter on quarter to US$ 893.8 million in the second quarter as a result
of the corresponding growth of the business and the impact of inflation.

The effective tax rate was 29.4% for the second quarter of 2008, compared to
39.0% in the second quarter of 2007 and 25.8% in the first quarter of 2008. High
effective tax rate in the second quarter of 2007 resulted from the stock bonus
compensation paid by Sistema Hals.

Income from continuing operations more than doubled year on year to US$ 289.5
million in the second quarter as a result of the Group's strong operating
performance while declining 25.5% quarter on quarter impacted by weak results in
the Real Estate and Technology segments.

Net income more than doubled year on year from US$ 131.2 million to US$ 289.5
million in the second quarter of 2008.

The Group's basic and diluted earnings per share more than doubled year on year
from US cent 1.4 in the second quarter of 2007 to US cent 3.1 in the second
quarter of 2008.

OPERATING REVIEW(3)

TELECOMMUNICATIONS

-0-
*T
                                             Year on         Quarter
(US$ millions)               2Q 2008 2Q 2007    Year 1Q 2008       on
                                              Change         Quarter
                                                               Change
---------------------------- ------- ------- ------- ------- --------
Revenues                     3,032.6 2,318.6   30.8% 2,770.6     9.5%
OIBDA                        1,515.0 1,193.9   26.9% 1,372.5    10.4%
Operating Income               989.9   840.9   17.7%   860.7    15.0%
Net Income(4)                  410.2   353.4   16.1%   364.6    12.5%
*T

The Telecommunications segment comprises MTS, the largest mobile phone operator
in Russia and the CIS, Comstar UTS, the leading fixed line telecommunications
operator in Russia and the CIS, and Shyam Telelink Ltd. ('Shyam Telelink'), a
fixed and mobile services provider in India. The segment reported 30.8% year on
year revenue growth in the second quarter of 2008 and 9.5% quarter on quarter
increase. The segment accounted for 70.8% of the Group's consolidated revenues
in the second quarter of 2008. MTS continued to be the main contributor to the
segment revenues and accounted for 86.9% of the Telecommunications segment
revenues in the second quarter of 2008.

MTS added around 2 million subscribers during the second quarter of 2008
resulting in the total consolidated base of approximately 86.9 million customers
as at June 30, 2008. MTS generated 33.9% year on year revenue growth in the
second quarter from US$ 1,968.7 million to US$ 2,635.5 million. This growth
reflected an increase in average monthly service revenue per subscriber ('ARPU')
in Russia from US$ 9.3 in the second quarter of 2007 to US$ 11.0 in the second
quarter of 2008. Russian subscribers' monthly Minutes of Use (MOU) increased to
207 in the second quarter of 2008 from 151 in the second quarter of 2007. In the
second quarter of 2008 MTS' revenues increased by 10.8% quarter on quarter to
US$ 2,635.5 million from US$ 2,379.2 million.

MTS' OIBDA as a result of the robust ARPU development combined with the organic
growth of its subscriber base rose by 32.5% year on year and 14.8% quarter on
quarter to US$ 1,349.5 million in the second quarter. The OIBDA margin in the
second quarter remained stable year on year at 51.2% and increased from 49.4% in
the first quarter of 2008 as a result of continued improvements in management of
overhead costs.

Comstar UTS generated 10.1% year on year revenue growth in the second quarter,
from US$ 379.2 million to US$ 417.3 million. This increase reflected the mixed
effect of the ongoing growth of fixed-to-mobile voice traffic; the increased
scale of the regional business and consolidation of recently acquired businesses
(DTN, RTC and Interlink); the continued appreciation of the Russian Ruble; the
regulatory reduction in the price charged by MGTS for its unlimited monthly
tariff plan for residential voice services from US$ 16.1 (RUB 380) to US$ 14.6
(RUB 345) with effect from February 1, 2008; and the cancellation by the
Regulator of the US$ 25.4 (RUB 600) monthly interconnect service charge
applicable to 260,000 MGTS interconnect points with effect from March 1, 2008.
Comstar UTS' revenues remained stable quarter on quarter at US$ 417.3 million.
Comstar UTS' Moscow broadband subscriber base grew by 74% year on year in the
second quarter to 834,000 customers, including 783,000 residential subscribers.
This growth was driven primarily by the successful implementation of the first
stage of the revised broadband development strategy launched in September 2007.
The number of double-play (Internet & pay-TV) subscribers grew by 44% year on
year and 9% quarter on quarter to 146,000 and generated US$ 21.4 of ARPU.

Comstar UTS' OIBDA decreased by 6.1% year on year and 6.4% quarter on quarter to
US$ 159.3 million in the second quarter impacted by various regulatory changes
introduced during the first half of the year. As a result, the OIBDA margin
decreased to 38.2% in the second quarter compared to 44.7% in the corresponding
period of 2007 and 40.8% in the first quarter of 2008.

Segment OIBDA was up 26.9% year on year and 10.4% quarter on quarter.

Segment net income increased by 16.1% year on year in the second quarter of 2008
and by 12.5% quarter on quarter.

In June 2008, Sistema increased its stake in Shyam Telelink from 72.0% to 73.7%
as a result of its participation in the charter capital increase of Shyam
Telelink in the total amount of US$ 470.0 million with Sistema's contribution
being US$ 348.0 million.

In June 2008, Comstar UTS completed the acquisition of 100% of the share capital
of Interlink Group for a total cash consideration of RUB 200 million
(approximately US$ 8.5 million). The Group comprises Intersvyaz Service, the
alternative fixed-line telecommunications operator, and Inter-TV Media, the
cable TV operator, which operate under the unified brand 'Interlink' in Ryazan
and the Ryazan region.

In May 2008, MTS announced the commercial launch of its 3G network in St
Petersburg and followed by Sochi, Yekaterinburg, Kazan and Nizhny Novgorod. The
operator plans to launch 3G networks in over 10 cities during 2008 and in up to
40 Russian cities through 2009. MTS also holds 3G licenses in Uzbekistan and
Armenia, where the network will be launched as early as 2009.

In May 2008, Comstar UTS signed a strategic agreement with FON Wireless Ltd.
('FON'), a developer of a shared wireless internet access network based on Wi-Fi
technology. Under the terms of the agreement, Comstar UTS and FON will develop a
Wi-Fi internet access network. It will be created on the basis of the Comstar
UTS subscriber base in Moscow and will, therefore, enable the local customers to
join the worldwide FON network. Within the framework of the project, Comstar UTS
plans to establish 30,000 Wi-Fi access points in Moscow in 2008-2009.

TECHNOLOGY

-0-
*T
                                               Year on       Quarter
(US$ millions)                      2Q     2Q     Year   1Q        on
                                   2008   2007  Change  2008  Quarter
                                                               Change
-------------------------------- ------ ------ ------- ----- --------
Revenues                          481.0  327.5   46.9% 445.8     7.9%
OIBDA                              25.9 (27.0)       -  20.6    25.4%
Operating Income/(Loss)             7.5 (40.8)       -   5.3    41.5%
Net Loss                         (11.3) (38.5)       - (5.8)        -
*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
46.9% year on year and 7.9% quarter on quarter. The Information Technology
Solutions and Microelectronics Solutions divisions continued to perform strongly
during the reporting period, with the Telecommunications Solutions division
showing continued operating performance improvement in the second quarter.

Segment OIBDA increased by 25.4% quarter on quarter. The OIBDA results for 2008
included US$ 3.3 million of costs arising from the Group's stock option
programme in the first quarter and US$ 3.4 million in the second quarter of the
year. The OIBDA margin increased to 5.4% in the second quarter compared to 4.6%
in the first quarter of 2008 as a result of the growth in revenues and
improvement in management of operating costs.

REAL ESTATE

-0-
*T
                                               Year on       Quarter
(US$ millions)                     2Q  2Q 2007    Year   1Q        on
                                  2008          Change  2008  Quarter
                                                               Change
------------------------------- ------ ------- ------- ----- --------
Revenues                          85.5    95.3 (10.2%) 141.6  (39.6%)
OIBDA                            (4.5)  (98.0)       -  29.7        -
Operating (Loss)/ Income        (10.5) (101.2)       -  24.5        -
Net (Loss) / Income             (13.9)  (84.1)       -  21.0        -
*T

Revenues in Sistema Hals, a leading Moscow-based real estate development,
management and investment company, decreased by 10.2% year on year and 39.6%
quarter on quarter, primarily as a result of the decrease in sales activity.

Segment OIBDA loss decreased year on year in the second quarter largely as a
result of the US$ 99.8 million in stock bonus and stock option awards allocated
to the management and members of the Board of Directors in June 2007 under the
existing share option program.

BANKING

-0-
*T
                                                 Year        Quarter
                                      2Q    2Q     on    1Q        on
(US$ millions)                       2008  2007   Year  2008  Quarter
                                                               Change
                                                Change
----------------------------------- ----- ----- ------ ----- --------
Revenues                            190.9  94.1 102.9% 151.1    26.3%
OIBDA                                24.1   6.7 260.8%  36.2  (33.5%)
Operating Income                     17.6   5.2 236.9%  30.1  (41.6%)
Net Income                           11.8   5.5 113.9%  20.3  (41.8%)
*T

The Banking segment comprises the Moscow Bank for Reconstruction and Development
(MBRD), the East-West United Bank (EWUB) and Dalcombank. The segment provides
corporate and retail banking services in Russia and Luxembourg. The segment
revenues more than doubled year on year and increased by 26.3% quarter on
quarter, following the acquisition of Dalcombank and the robust growth of the
loan portfolio. The loan portfolio nearly doubled year on year and increased by
25% quarter on quarter to US$ 4.6 billion as at June 30, 2008. Interest income
received from retail and corporate lending increased by 76% year on year and
more than doubled quarter on quarter to US$ 292.8 million in the second quarter.
Revenues from leasing activities were up 77% year on year and 56% quarter on
quarter to US$ 20.7 million in the second quarter.

Segment OIBDA more than tripled year on year with OIBDA margin of 12.6% compared
to 7.1% in the corresponding period of 2007, as a result of the strong operating
performance of the segment and the consolidation of Dalcombank.

The segment's retail business included 206 points of sales, including 40 points
of sales in Moscow and 166 points in 40 Russian regions as at June 30, 2008.
MBRD is pursuing a dynamic regional expansion strategy to offer retail lending
services through the opening of small format offices with minimal capital
expenditure.

RETAIL

-0-
*T
                                              Year on        Quarter
(US$ millions)                     2Q     2Q     Year    1Q        on
                                  2008   2007  Change   2008 Quarter
                                                               Change
------------------------------- ------ ------ ------- ------ --------
Revenues                         184.6  105.5   75.0%  147.6    25.1%
OIBDA                            (9.8)  (7.3)       - (16.1)        -
Operating Loss                  (15.9)  (9.0)       - (20.4)        -
Net Loss                        (10.7) (12.3)       - (18.4)        -
*T

The Retail segment comprises Detsky Mir, the largest children's goods chain of
retail stores in Russia. Total revenues increased by 75.0% year on year and
25.1% quarter on quarter, whilst retail revenues accounted for 91.6% of total
revenues in the period and amounted to US$ 169.1 million.

Detsky Mir reported a net loss in the second quarter, which was largely due to
the continued significant expansion of the retail store network, and the fact
that the second quarter is a seasonally weak period of the year.

The network of retail outlets grew by 30 stores year on year to 104 in total as
at June 30, 2008, whilst the aggregate retail space increased by 43% year on
year to 189,000 square metres.

As at September 17, 2008, Detsky Mir's retail network consisted of 113 retail
outlets located in 57 Russian cities including one outlet based in Ukraine, with
total retail space of over 193,000 square metres.

MASS MEDIA

-0-
*T
                                               Year on       Quarter
(US$ millions)                       2Q    2Q     Year   1Q        on
                                    2008  2007  Change  2008  Quarter
                                                               Change
---------------------------------- ----- ----- ------- ----- --------
Revenues                            51.3  27.2   88.3%  45.1    13.6%
OIBDA                               12.3   2.9  326.6%  10.2    21.3%
Operating Loss                     (3.8) (0.2)       - (2.3)        -
Net Loss                           (6.8) (0.5)       - (1.3)        -
*T

The Mass Media segment, which comprises the Group's Pay-TV business, operating
under the brand name Stream-TV, as well as RWS, one of the leading Russian film
and video production companies acquired in the end of 2007, and other
advertising, print and media operations. The segment generated revenue growth of
88.3% year on year and 13.6% quarter on quarter. Revenues increased primarily as
a result of the robust development in Pay-TV and Internet subscriber bases,
which achieved 20% and 76% year on year growth, respectively, as well as the
acquisition of RWS. Stream-TV's revenues accounted for the majority of the
segment's results and increased nearly 9% quarter on quarter to US$ 30.9
million. The Pay-TV operator covered 3.6 million households in the second
quarter and was present in 42 cities and 22 regions. Stream-TV' subscriber base
was up by 2% quarter on quarter to 1.8 million subscribers, whilst its Internet
subscriber base has increased by 13% quarter on quarter to 163,000 subscribers
and IP-telephony users were up to 10,400 during the period. Combined Stream-TV
ARPU and Pay-TV ARPU both increased by 4% quarter on quarter to US$ 3.9 and US$
5.1, respectively, in the second quarter. Internet ARPU decreased slightly to
US$ 16.1 in the quarter.

Segment OIBDA more than quadrupled year on year and increased by 21.3% quarter
on quarter, following the strong growth in Stream-TV' subscriber base and
Stream-Content' services. The segment's OIBDA margin increased to 24.0% in the
second quarter compared to 22.5% in the first quarter and 10.6% in the
corresponding period of 2007.

Segment operating and net loss increased in the second quarter as a result of
the increase in depreciation and amortisation expense, following the
modernisation of the existing network.

CORPORATE AND OTHER

-0-
*T
(US$ millions)                                 Year on       Quarter
                                    2Q     2Q     Year   1Q        on
                                   2008   2007  Change  2008  Quarter
                                                               Change
-------------------------------- ------ ------ ------- ----- --------
Revenues
 Radars and Aerospace             107.6   56.7   89.9%  90.2    19.3%
 Tourism                          164.2  102.2   60.7%  72.7   125.8%
 Pharmaceuticals                   11.2   17.8 (36.8%)  14.1  (20.4%)
 Healthcare Services               31.4   24.1   30.3%  26.8    16.8%
 Other                             35.6   13.8  158.0%  32.7       9%
-------------------------------- ------ ------ ------- ----- --------
Total                             350.0  214.6   63.1% 236.5     148%
OIBDA
 Radars and Aerospace              13.5    9.1   49.1%  14.2   (4.8%)
 Tourism                           13.3    6.1  118.3%   1.8   625.5%
 Pharmaceuticals                  (3.5)  (0.8)       - (1.8)        -
 Healthcare Services                1.7    3.1 (45.8%)   2.7  (38.7%)
 Other                           (22.9) (33.8)       -  13.5        -
-------------------------------- ------ ------ ------- ----- --------
Total                               2.1 (16.3)       -  30.4        -
*T

The Radars and Aerospace segment revenues increased by 89.9% year on year and by
19.3% quarter on quarter as a result of an increase in the volume of services
performed under a number of government contracts. Segment OIBDA increased by
49.1% year on year while it decreased 4.8% quarter on quarter following the
delay in completion of a number of projects.

The Tourism segment revenues increased by 60.7% year on year and more than
doubled quarter on quarter, primarily as a result of the strong performance of
its tour operating division. The segment's sales turnover(5) more than doubled
year on year in the second quarter to US$ 379.4 million, as a result of
continued growth in the tour operating division and an increase in sales of
leased hotel accommodations in Turkey. Segment OIBDA more than doubled year on
year and increased more than six times quarter on quarter following the
continued dynamic growth of retail network and expansion in the highly
competitive outbound travel market. The segment serviced 217,000 customers in
the second quarter of 2008 compared to 186,000 in the corresponding period of
2007. The hotel group, which comprises 10 hotels, increased the total number of
rooms by 35% year on year to nearly 3,247 rooms as at June 30, 2008.

The Pharmaceuticals segment revenues declined 36.8% year on year and 20.4%
quarter on quarter as a result of lower sales volume of drugs at Binnofarm
during the quarter. The segment reported an OIBDA loss in the quarter due to the
temporary shutdown of the production facility, which remains under
reconstruction.

The Healthcare Services segment revenues increased by 30.3% year on year and
16.8% quarter on quarter following strong growth in the number of patients and
services provided. Segment OIBDA decreased by 45.8% year on year and 38.7%
quarter on quarter as a result of increased overhead costs in relation to the
opening of new medical clinics.

FINANCIAL REVIEW

Net cash provided by operating activities increased by 24.4% year on year and by
22.1% quarter on quarter to US$ 1,073.5 million in the second quarter of 2008
mainly due to the positive changes in the working capital.

Net cash used in investing activities totalled US$ 1,840.8 million in the second
quarter of 2008, with US$ 1,101.1 million spent on capital expenditure compared
to US$ 1,130.2 million in the first quarter of 2008 and US$ 477.9 million for
the second quarter of 2007. The Group spent US$ 243.8 million on the acquisition
of businesses in the second quarter, including US$ 185.0 million spent on
purchase of 22.7% stake in Shyam Telelink.

Net cash received from financing activities amounted to US$ 1,577.3 million in
the second quarter of 2008, compared to US$ (56.8) million for the corresponding
period of 2007 and US$ 732.4 million in the first quarter. Major changes in the
sources of financing in the second quarter included US$ 1.0 billion increase in
deposits received from the Banking segment's customers; RUB 10 billion bond
(approximately US$ 426.3 million) issued by MTS; US$ 250.0 million in proceeds
from short-term loans signed with Gazprombank and Standard bank; US$ 251.9
million received by JSFC Sistema out of US$ 613.3 million syndicated
multi-tranche loan facility signed with ABN AMRO, US$ 130.0 million proceeds
from additional share issue in Shyam Telelink, US$ 58.2 million proceeds from
the notes issued by MBRD; and US$ 50.0 million loan received by Intourist from
HSBC; repayments of US$ 310 million bond issued by Sistema Finance and a US$
525.3 million loan obtained by Shyam Telelink.

The Group's cash balances stood at US$ 1,855.4 million as at June 30, 2008,
compared to balances of US$ 829.2 million and US$ 1,061.9 million as at June 30,
2007 and March 31, 2008, respectively. The Group's net debt (short-term and
long-term debt minus cash and cash equivalents) was US$ 7,263.9 million as at
June 30, 2008 compared to US$ 5,697.4 million and US$ 7,803.7 million as at June
30, 2007 and March 31, 2008, respectively.

SIGNIFICANT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

Telecommunications

In August 2008, Standard & Poor's Rating Services raised MTS's long term credit
rating from 'BB-' to 'BB' with a Positive outlook.

In August 2008, Standard & Poor's Rating Services raised the long-term corporate
credit rating of Comstar UTS and its subsidiary, MGTS, from 'BB-' to 'BB' with a
Stable outlook. The 'ruAA' Russia national scale ratings for Comstar UTS and
MGTS were also confirmed.

In August 2008, Shyam Telelink received radio frequencies in the CDMA 800 MHz
range in three additional Indian circles of Delhi, Mumbai and Punjab, with a
population of over 62 million people. As a result, Shyam Telelink now has
spectrum in 22 Indian circles, covering 28 administrative states and 7 union
territories with a population of approximately 1.1 billion people.

In August 2008, Comstar UTS has received the access codes for provision of
inter-city and international long distance telephony services from the Russian
Ministry of Information Technologies and Communications.

In August 2008, Access Telecommunications Cooperatief U.A. ('Access', previously
known as 2711 Centerville Cooperatief U.A.) has initiated the process of
exercising its put option to sell 46,232,000 Comstar UTS shares to MGTS Finance
S.A. The Option Interest represents 11.06% of the total number of issued and
outstanding Comstar UTS shares. The transaction is expected to be completed, by
means of the transfer of rights and payment, within 60 business days from August
25, 2008.

In July 2008, Mikhail Shamolin, President and Chief Executive Officer of MTS,
joined the Board of the GSM Association (GMSA), the global trade association for
the mobile industry.

In July 2008, the Board of Directors of Shyam Telelink appointed Mr. Vsevolod
Rozanov as President and CEO of the Company.

In July 2008, Comstar UTS has acquired 100% stake in LLC 'Strategy', the owner
of CJSC Ural Telephone Company ('UTC'), a leading alternative telecommunications
operator in Ekaterinburg and the Sverdlovsk region, for a total cash
consideration of RUB 1.0 billion (approximately US$ 43.4 million).

Real Estate

In August 2008, Sistema Hals added the Danilovsky Fort Business Centre, located
on Novodanilovskaya Embankment in Moscow, to its asset management portfolio.

In July 2008, Sistema Hals announced the results of an independent valuation of
its project portfolio carried out by Cushman & Wakefield Stiles & Riabokobylko
(C&WS&R). As at July 1, 2008 Sistema Hals stake in properties and projects was
valued at US$ 3.8 billion

In July 2008, Moody's Investors Service has confirmed Sistema Hals' foreign
currency credit rating of B1 with a Stable outlook.

In July 2008, Sistema Hals has completed the first phase of construction of the
RWS - St Petersburg Film Studio. The new studio will be managed by Russian World
Studios, one of the leading Russian film and video production companies.

In July 2008, the Board of Directors of Sistema Hals has approved two 5-year
bond issues for a total of RUB 5 billion (approximately US$ 200 million).
Raiffeisenbank and Renaissance Capital are acting as Arrangers of the issues.

Retail

In July 2008, JSC Detsky Mir - Center has signed a 5-year syndicated loan
agreement with EBRD for US$ 50 million. The loan proceeds will finance the
expansion of the retail network in 2008.

In July 2008, JSC Detsky Mir - Center has signed a US$ 20 million trade finance
agreement with Deutsche Bank Russia.

Corporate

In August 2008, Standard & Poor's rating agency (S&P) has upgraded Sistema's
corporate rating from 'BB-' to 'BB' level with a Stable outlook. The senior
unsecured rating has also been upgraded to 'BB'.

In July 2008, Sistema adopted a matrix model and formed three new operating
units: Telecommunications Assets, headed by Vitaly Savelyev, First Vice
President of Sistema; Consumer Assets, led by Felix Evtushenkov, Vice President
of Sistema; High Technologies and Industry, headed by Sergey Boyev, Vice
President of Sistema, in addition to functional divisions. These units will be
responsible for the management of Sistema's subsidiaries.

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
second quarter results.

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*T
The dial-in numbers for the conference call are:
UK/International: +44 20 8515 2301
US: +1 480 629 1990
*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 7154 2833
US: +1 303 590 3030

PIN number: 391961#
*T

                                       ***

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

-0-
*T
Sistema Investor Relations          Shared Value Limited
Pavel Kim                           Larisa Kogut-Millings
Tel: +7 495 692 22 88               Tel: +44 (0) 20 7321 5010
ir@sistema.ru                       sistema@sharedvalue.net
*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 100 million customers. Sistema develops and manages market-leading
businesses in selected service-based industries, including telecommunications,
technology, banking, real estate, retail, media, tourism and healthcare. Founded
in 1993, the company reported unaudited revenues of US$ 4.3 billion for the
second quarter of 2008, and total assets of US$ 32.7 billion as at June 30,
2008. 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 SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(Amounts in thousands of U.S. dollars)

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*T
                         Three months ended       Six months ended
                       ----------------------- -----------------------
                        June 30,    June 30,    June 30,    June 30,
                          2008        2007        2008        2007
---------------------------------------------- ----------- -----------

Sales                 $  4,095,881$  2,963,868$  7,733,214$  5,594,331
Revenues from
 financial services        184,478      89,663     327,577     165,156

                       ----------- ----------- ----------- -----------
TOTAL REVENUES           4,280,359   3,053,531   8,060,791   5,759,487
                       ----------- ----------- ----------- -----------

Cost of sales,
 exclusive of
 depreciation and
 amortization shown
 separately below      (1,722,346) (1,361,887) (3,216,017) (2,566,789)
Financial services
 related costs,
 exclusive of
 depreciation and
 amortization shown
 separately below         (90,771)    (37,312)   (145,898)    (68,641)

                       ----------- ----------- ----------- -----------
TOTAL COST OF SALES    (1,813,117) (1,399,199) (3,361,915) (2,635,430)
                       ----------- ----------- ----------- -----------

Selling, general and
 administrative
 expenses                (893,820)   (541,369) (1,692,471)   (931,558)
Depreciation and
 amortization            (586,520)   (382,417) (1,149,253)   (749,444)
Provision for doubtful
 accounts                 (35,637)    (30,485)    (65,931)    (54,242)
Other operating
 expenses, net            (57,367)   (124,951)    (68,656)    (88,441)
Equity in net income
 of investees               25,578      54,574      47,251      57,790
Gain on disposal of
 interests in
 subsidiaries and
 affiliates                      -      64,570      18,759      64,570

                       ----------- ----------- ----------- -----------
OPERATING INCOME           919,476     694,254   1,788,575   1,422,732
                       ----------- ----------- ----------- -----------

Interest income             17,126      23,029      38,495      43,781
Change in fair value
 of derivative
 instruments                   149    (40,000)      14,518    (26,500)
Interest expense, net
 of amounts
 capitalized             (103,466)   (111,878)   (222,505)   (211,841)
Currency exchange and
 translation gain           38,888      31,638     235,680      63,461

                       ----------- ----------- ----------- -----------
Income from continuing
 operations before
 income tax, equity in
 net income of energy
 companies in the
 Republic of
 Bashkortostan and
 minority interests        872,173     597,043   1,854,763   1,291,633
                       ----------- ----------- ----------- -----------

Income tax expense       (286,592)   (256,092)   (553,027)   (478,023)
Minority interests       (374,662)   (265,155)   (744,578)   (536,344)
Equity in net income
 of energy companies
 in the Republic of
 Bashkortostan, net of
 minority interests of
 US $25,411, US
 $6,679, US $33,759
 and US $11,025,
 respectively               78,595      48,909     120,978      70,430

                       ----------- ----------- ----------- -----------
Income from continuing
 operations                289,514     124,705     678,136     347,696
                       ----------- ----------- ----------- -----------

Income/(loss) from
 discontinued
 operations, net of
 income tax
 benefit/(expense) of
 US$ 6,630, US$
 (5,391) and US$
 (8,827), respectively           -       6,483     (4,194)       7,443

Gain from disposal of
 discontinued
 operations, net of
 income tax effect of
 US$ 280 and US$
 148,809, respectively           -           -       2,053     521,963

                       ----------- ----------- ----------- -----------
NET INCOME            $    289,514$    131,188$    675,995$    877,102
                       ----------- ----------- ----------- -----------

Earnings per share,
 basic and diluted
(US cent per share):           3.1         1.4         7.3         9.4
*T

SISTEMA JSFC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007

(Amounts in thousands of U.S. dollars)

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                                                 June 30,   December
                                                      2008        31,
                                                                 2007
                                                ---------- ----------

ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                    $ 1,855,416$ 1,061,733
  Short-term investments                         1,020,296    909,224
  Loans to customers and banks, net              3,318,853  2,764,763
  Accounts receivable, net                       1,535,468  1,383,731
  Prepaid expenses, other receivables and
  other current assets, net                      1,368,360    932,425
  VAT receivable                                   336,423    435,245
  Inventories and spare parts                      963,487    780,193
  Deferred tax assets, current portion             286,692    213,633
  Assets of the discontinued operations                  -    545,863

                                                ---------- ----------
     Total current assets                       10,684,995  9,026,810
                                                ---------- ----------

NON-CURRENT ASSETS:
  Property, plant and equipment, net            11,794,538 10,412,636
  Advance payments for non-current assets          331,717    284,396
  Goodwill                                       1,162,896    860,019
  Licenses, net                                  1,343,182    730,636
  Other intangible assets, net                   1,847,647  1,665,969
  Investments in affiliates                      1,560,435  1,336,522
  Investments in shares of Svyazinvest           1,549,215  1,485,378
  Loans to customers and banks, net of current
   portion                                       1,688,116  1,468,088
  Debt issuance costs, net                          90,987     65,038
  Deferred tax assets, net of current portion      147,107    108,637
  Other non-current assets                         538,235    952,529

                                                ---------- ----------
     Total non-current assets                   22,054,075 19,369,848

                                                ---------- ----------
TOTAL ASSETS                                   $32,739,070$28,396,658
                                                ========== ==========
*T

SISTEMA JSFC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

AS OF JUNE 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007

(Amounts in thousands of U.S. dollars, except share amounts)

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*T
                                                   June 30,  December
                                                       2008        31,
                                                                  2007
                                                 ---------- ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                              $ 1,614,428$ 1,273,487
  Bank deposits and notes issued, current
   portion                                        2,547,230  1,966,539
  Taxes payable                                     392,142    223,791
  Deferred tax liabilities, current portion          80,773     77,893
  Subscriber prepayments, current portion           603,112    598,014
  Derivative financial instruments                   74,000    140,563
  Accrued expenses and other current liabilities  2,271,946  1,491,822
  Short-term loans payable                        1,507,724    724,905
  Current portion of long-term debt               1,475,198  1,517,902
  Liabilities of the discontinued operations              -    396,132

                                                 ---------- ----------
     Total current liabilities                   10,566,553  8,411,048
                                                 ---------- ----------

LONG-TERM LIABILITIES:
  Long-term debt, net of current portion          6,556,856  6,106,937
  Subscriber prepayments, net of current portion    138,525    134,280
  Bank deposits and notes issued, net of current
   portion                                        1,871,258  1,401,925
  Deferred tax liabilities, net of current
   portion                                          540,504    428,030
  Postretirement benefits obligation                 45,826     42,370
  Deferred revenue                                  149,466    139,984

                                                 ---------- ----------
     Total long-term liabilities                  9,302,435  8,253,526
                                                 ---------- ----------

                                                 ---------- ----------
TOTAL LIABILITIES                                19,868,988 16,664,574
                                                 ---------- ----------

Minority interests in equity of subsidiaries      5,277,810  4,987,220

Commitments and contingencies                             -          -

Puttable shares of SITRONICS                         89,150     86,100

SHAREHOLDERS' EQUITY:
  Share capital (9,650,000,000 shares issued;
   9,278,328,668 and 9,276,092,868 shares
   outstanding as of June 30, 2008 and December
   31, 2007, respectively, with par value of
   0.09 Russian Rubles)                              30,057     30,057
  Treasury stock (371,671,332 shares as of June
   30, 2008 and 373,907,132 shares as of
   December 31, 2007 with par value of 0.09
   Russian Rubles)                                (466,345)  (469,365)
  Additional paid-in capital                      2,439,069  2,439,069
  Retained earnings                               4,612,266  4,035,157
  Accumulated other comprehensive income            888,075    623,846

                                                 ---------- ----------
TOTAL SHAREHOLDERS' EQUITY                        7,503,122  6,658,764

                                                 ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $32,739,070$28,396,658
                                                 ========== ==========
*T

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(Amounts in thousands of U.S. dollars)

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*T
                                                  Six months ended
                                               -----------------------
                                                June 30,    June 30,

                                                  2008        2007
                                               ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                    $    675,995$    877,102

  Adjustments to reconcile net income to net
   cash provided by operations:
     Depreciation and amortization               1,149,253     751,489
     Gain/(loss) on disposals of property,
      plant and equipment                         (11,077)       2,922
     Loss/(gain) from disposal of discontinued
      operations                                     2,141   (521,963)
     Income of discontinued operations                   -     (6,483)
     Currency exchange and translation gain
      from non-operating activities              (235,680)    (63,964)
     Gain on disposal of long term investments    (30,091)           -
     Gain on disposal of interests in
      subsidiaries and affiliates                 (18,759)    (64,570)
     Non-cash compensation to employees             16,738      97,966
     Minority interests                            744,578     547,369
     Equity in net income of investees           (168,229)   (139,251)
     Deferred income tax expense/(benefit)        (94,190)       2,883
     Debt issuance cost amortization                11,724      18,027
     Change in fair value of derivative
      financial instruments                       (14,518)      26,500
     Amortization of connection fees              (31,664)    (44,590)
     Provision for doubtful accounts
      receivable                                    65,931      52,763
     Recovery of allowance/(allowance) for
      loan losses                                  (9,372)      14,286
     Inventory obsolescence expense                  4,382      27,677

  Changes in operating assets and liabilities,
   net of effects from purchase of businesses:
     Trading securities                           (90,355)   (157,450)
     Loans to banks                                310,968   (136,610)
     Accounts receivable                         (171,826)    (69,897)
     Insurance-related receivables                                   -
     Prepaid expenses, other receivables and
      other current assets                       (417,992)   (144,825)
     VAT receivable                                 98,822      45,142
     Inventories and spare parts                 (173,968)    (99,447)
     Accounts payable                               59,320    (59,965)
     Insurance-related liabilities                                   -
     Taxes payable                                 168,030    (96,334)
     Subscriber prepayments                         41,007    (10,094)
     Dividends received                              8,132
     Accrued expenses and other current
      liabilities                                   43,997     248,871
     Postretirement benefits obligation              3,456       (311)
                                               ----------- -----------

        Net cash provided by operations       $  1,936,753$  1,097,243
                                               ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment   (1,580,043)   (733,916)
  Purchases of intangible assets                 (501,477)   (129,886)
  Purchases of businesses, net of cash
   acquired                                      (947,055)   (386,387)
  Proceeds from disposals of interests in
   subsidiaries and affiliates,
  net of cash disposed                             224,784     636,683
  Purchases of long-term investments              (32,788)    (26,318)
  Proceeds from sale of long-term investments       30,091      20,000
  Purchases of other non-current assets           (94,726)   (121,006)
  Proceeds from sale of other non-current
   assets                                          120,817       5,548
  Decrease in restricted cash                      340,221      44,452
  Purchases of short-term investments            (167,220)   (411,338)
  Proceeds from sale of short-term investments     147,516      47,946
  Proceeds from sale of property, plant and
   equipment                                        49,318      12,361
  Net increase in loans to customers           (1,075,714)   (466,288)
                                               ----------- -----------

        Net cash used in investing activities $(3,486,276)$(1,508,149)
                                               ----------- -----------
*T

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(Amounts in thousands of U.S. dollars)

-0-
*T

                                                   Six months ended
                                                 ---------------------
                                                  June 30,   June 30,

                                                    2008       2007
                                                 ----------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on short-term borrowings,
   net                                               712,266 (546,549)
  Net increase in deposits from customers            986,261   380,000
  Net increase in bank debt securities issued         74,063    43,782
  Debt issuance costs                                  (807)   (3,860)
  Proceeds from long-term borrowings, net of
   debt issuance costs                             2,207,320   878,457
  Principal payments on long-term borrowings     (1,800,541) (321,350)
  Principal payments on capital lease
   obligations                                       (2,852)   (8,021)
  Purchases of treasury stock                              - (136,235)
  Proceeds from sale of treasure stock                 3,020         -
  Proceeds from capital transactions of
   subsidiaries                                      131,000   356,463
                                                 ----------- ---------

        Net cash provided by financing
         activities                             $  2,309,730$  642,687
                                                 ----------- ---------

Effects of foreign currency translation on cash
 and cash equivalents                           $     33,476$    2,227

INCREASE IN CASH AND CASH EQUIVALENTS           $    793,683$  234,008

CASH AND CASH EQUIVALENTS, beginning of the
 period                                            1,061,733   598,381
                                                 ----------- ---------

CASH AND CASH EQUIVALENTS, end of the period    $  1,855,416$  832,389
                                                 =========== =========

CASH PAID DURING THE PERIOD FOR:
  Interest, net of amounts capitalized          $  (152,216)$(230,332)
  Income taxes                                     (606,100) (664,977)
*T

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED SEGMENTAL BREAKDOWN

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(Amounts in thousands of U.S. dollars)

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*T
For the six months          Telecommu-                        Mass
ended June 30, 2008          nications  Technology  Banking    Media
--------------------------- ----------- ---------- --------- ---------

Net sales to external
 customers (a)                5,798,737    783,682   327,577   83,073
Intersegment sales                4,452    143,144    14,424   13,356
Depreciation and
 amortization               (1,036,941)   (33,771)  (12,626) (28,569)
Interest income                  32,392      2,254         -       87
Interest expense              (112,999)   (16,767)         -  (4,598)
Net interest revenue(b)               -          -    56,248        -
Operating income/(loss)       1,850,554     12,751    47,738  (6,096)
Income tax
 (expense)/benefit            (470,296)   (15,081)  (13,062)  (1,285)
Segment assets               18,895,254  2,179,687 6,962,684  587,797
Indebtedness(c)             (4,378,459)  (704,190) (680,948) (89,394)
Capital expenditures          1,444,073    140,858     4,094   36,618

(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$ 535.2 million.

For the six months         Real               Corporate
ended June 30, 2008       Estate     Retail    and Other     Total
---------------------   ----------- --------- ----------- -----------

Net sales to external
 customers (a)              160,899   331,732     575,091   8,060,791
Intersegment sales           66,527        17   11,503(d)     253,423
Depreciation and
 amortization              (11,131)  (10,431)    (15,784) (1,149,253)
Interest income               5,851       189      38,504      79,277
Interest expense           (21,433)   (9,190)    (81,278)   (246,265)
Net interest
 revenue(b)                       -         -           -      56,248
Operating
 income/(loss)               14,041  (36,350)      16,711   1,899,349
Income tax
 (expense)/benefit         (17,073)    13,212    (49,442)   (553,027)
Segment assets            2,225,215   588,505   5,489,245  36,928,387
Indebtedness(c)         (1,041,737) (211,339) (2,433,711) (9,539,778)
Capital expenditures        295,748    17,630     142,503   2,081,524

(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$ 535.2 million.
*T

-0-
*T
For the six months          Telecommu-                        Mass
ended June 30, 2007          nications  Technology  Banking    Media
--------------------------- ----------- ---------- --------- --------

Net sales to external
 customers (a)                4,380,876    551,525   165,156   42,980
Intersegment sales                4,511     86,794     8,763   11,198
Interest income                  23,701     10,744         -      610
Interest expense              (101,929)   (28,484)         -  (1,532)
Net interest revenue(b)               -          -    17,152        -
Depreciation and
 amortization                 (691,223)   (27,147)   (2,632)  (6,758)
Operating income/(loss)       1,584,013   (65,716)    14,520    1,158
Income tax
 (expense)/benefit            (437,359)    (2,070)   (5,539)    (387)
Segment assets               14,224,350  1,709,113 3,289,492  382,345
Indebtedness(c)             (3,808,409)  (424,120) (396,892) (32,396)
Capital expenditures            564,406     55,657    59,308   17,963

For the six months          Real              Corporate
ended June 30, 2007        Estate    Retail    and Other     Total
------------------------- --------- --------- ----------- -----------

Net sales to external
 customers (a)               71,349   192,368     355,233   5,759,487
Intersegment sales           58,422        15   26,631(d)     196,334
Interest income              12,524        24      35,862      83,465
Interest expense            (3,200)   (6,144)    (81,534)   (222,823)
Net interest revenue(b)           -         -           -      17,152
Depreciation and
 amortization               (6,054)   (3,763)    (11,867)   (749,444)
Operating income/(loss)    (97,057)  (16,076)      32,623   1,453,465
Income tax
 (expense)/benefit         (10,241)       334    (22,761)   (478,023)
Segment assets            1,013,538   343,746   4,885,751  25,848,335
Indebtedness(c)           (363,849) (176,160) (1,634,734) (6,836,560)
Capital expenditures         99,278    43,925      32,763     873,300
*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$ 351.5 million.

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
                               April-    April-
                                June      June    Jan-June  Jan-June
                                 2008     2007       2008      2007
----------------------------- --------- --------- --------- ---------

 Operating Income               919,476   694,254 1,788,575 1,422,732

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

 Depreciation and
  Amortization                  586,520   382,417 1,149,253   749,444

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

 OIBDA                        1,505,996 1,076,671 2,937,828 2,172,176
*T

(1) ROSNO and Perm Motors Group are accounted for as discontinued operations 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) 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.

(4 )Here and further net income / (loss) for the segments are presented after
the Group's minority interests attributable to the segments.

(5) Turnover comprises the total proceeds from all service agreements, including
agency agreements.