OREANDA-NEWS. May 20, 2010. Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the leading telecommunications provider in Russia and the CIS, and X5 Retail Group N.V., Russia’s largest retailer in terms of sales (Pyaterochka, Perekrestok and Karusel retail chains), concluded an agreement to create a mobile virtual network operator (MVNO) on the basis of the MTS’ mobile radio-telephone network. Subscription to its services will start in Perekrestok and Karusel stores of Moscow and Moscow region by end of summer 2010.

Under the agreement, MTS will dedicate a pool of available phone numbers and provide X5 subscribers with a full package of GSM services, including voice communication and standard services such as roaming, mobile Internet, SMS and MMS. X5 Retail Group N.V. will provide the services under its private label, set the tariffs, attract and service subscribers and ensure in-store information support for the offering. Customers will be able to sign up and receive their branded SIM card in all Perekrestok and Karusel stores in Moscow and Moscow region.

X5’s MVNO platform will be automatically linked to the loyalty bonus system of the retail chains, enabling subscribers to exchange points accumulated under Perekrestok and Karusel loyalty bonus programs for mobile services. The MVNO will have its own website for customer information in addition to a dedicated call center phone number.

Alexander Popovskiy, Head of Business Unit “MTS Russia” said:

“According to the international experience, MVNO projects are only successful if they create benefits for everyone involved into these projects - mobile and virtual operators and clients. Our project with X5 will allow us to attract new customers, the retailer will gain loyal customers that will become a part of the unique bonus program and save on their mobile communications costs. Large retailers, such as X5, have substantial customer traffic, which enables them to successfully promote mobile services. We believe that cooperation of mobile operators and retailers is the most efficient MVNO model. MTS was one of the first Russian mobile operators to launch an MVNO with a retail chain, and our partnership with X5, Russia’s largest retailer in terms of sales, is the next step in developing retail MVNO projects in Russia”, commented Aleksander Popovskiy, Head of Business Unit “MTS Russia”.

Lev Khasis, CEO of X5 Retail Group, commented:

“Branded mobile services are a great opportunity to expand our offering and differentiate our formats with an exciting new customer experience. Enabling customers to link mobile services to their store loyalty cards is a first in Russia that will deliver significant savings and convenience. We are confident about the successful development of this business in partnership with MTS, Russia’s leading telecommunications provider with a proven experience in implementing MVNO projects.”