OREANDA-NEWS. June 22, 2010. Mobile TeleSystems OJSC ("MTS" — NYSE: MBT), the leading telecommunications provider in Russia and the CIS, announces its unaudited US GAAP financial results for the three months ended March 31, 2010.

Key Financial Highlights of Q1 20101

·     Consolidated revenues up 23.2% y-o-y to USD 2,614 million

·     Consolidated OIBDA2 up 20.4% y-o-y to USD 1,154 million with 44.1% OIBDA margin

·     Consolidated net income of USD 381 million

·     Free cash-flow3 positive with USD 710 million for the first three months of 2010

Key Corporate and Industry Highlights

·     Agreement with Sberbank to lower the interest rates on RUB 59 billion in financing raised in August and September 2009

·     Agreement with Gazprombank to lower the interest rates on the EUR 100 million credit facility with maturity in September 2012, the facility in the amount of RUB 6.46 billion with maturity in September 2012 and the revolving credit line in the amount of EUR 100 million with maturity in September 2012; further renegotiation of terms on credit facilities in May

·     Securing of financing from the Bank of Moscow in the amount of RUB 22 billion

·     Voluntarily repayment of RUB 6 billion of Sberbank loan and EUR 413 million EBRD, NIB, EIB loan

·     Voluntary prepayment of the principal and loan interest amounts on facility A of USD 373.8 million and on facility B of €247.6 million of the syndicated loan agreement

·     Decision by the Moscow Interbank Currency Exchange (MICEX) to move the Company’s five outstanding ruble-denominated bonds from “B” and “V” quotation lists to the “A1” quotation list

·     American Depositary Receipt (ADR) ratio change from the 1 ADR per 5 common shares to 1 ADR per 2 common shares effective May 3, 2010

·     Repurchase of the series 01 ruble-denominated bond in the amount of RUB 7.1 billion and the series 02 ruble-denominated bond in the amount of RUB 6.3 billion in April

·     Publication of the BrandZ ranking in April, recognizing MTS among the most powerful brands in the world for the third year in a row with a value of USD 9.7 billion at the 72nd position

·     Announcement that Comstar-UTS, MGTS Finance S.A., a company controlled by Comstar, and OAO Rostelecom have concluded agreements involving the sale of the 25%+14 share of OAO Svyazinvest to OAO Rostelecom for RUB 26 billion in May

·     Recommendation by MTS’ Board of Directors (BoD) for the annual general meeting of shareholders to approve annual dividends of RUB 15.405 per ordinary MTS share (approximately USD 1.00 per ADR6) for the 2009 fiscal year, amounting to a total of RUB 30.70 billion (approximately USD 999.3 million or 99% of US GAAP net income or 75% of US GAAP net income adjusted for the non-cash impairment charges) and nomination a total of nine members for the election to the Company’s BoD

Commentary

Mr. Mikhail Shamolin, President and CEO of MTS, commented: ”Results for the first quarter have demonstrated the progress we are making in our markets by moving towards our strategic goals. MTS Group revenue in the first quarter increased more than 23% year over year in dollar terms, driven both by currency appreciation as well as positive growth in each of our markets of operation. Overall, increasing usage, greater adoption of data products, subscriber additions and our extension into new products and services continue to support our growth. While we do not yet see a distinct impact on our business from the improving economic environment, we continue to outperform our peers in our markets of operation and believe strongly that we can benefit most from an uptick in regional economic activity.”

Mr. Alexey Kornya, Vice President and CFO of MTS, added: “The Company’s OIBDA grew over 20% in dollar terms year-over-year in the first quarter of 2010, driven by growth in our markets of operation and the appreciation of our core currencies versus the US dollar. While our Group margin fell 1 percentage points year-over-year, this decline masks the improvements we have made in our core network business considering the impact of rising handset sales on our margin. In Russia, excluding our retail efforts, our mobile OIBDA margin improved 2.5 percentage points on better top line performance and improved operating efficiencies.”

Mr. Shamolin continued: “Since the end of the quarter, we continue to move forward with our strategic objectives. Integration with Comstar is proceeding as planned: we have initiated the rebranding process and have also brought to market the first truly convergent product. We continue to enhance our networks and have launched 3G services in Belarus and are actively developing our 3G network in Moscow. On the retail side of the business, with over 2,000 stores wholly owned and additional franchisees, we remain focused on improving the quality of our network. Overall, we continue to execute on our 3i Strategy, realizing goals in our integration with Comstar, developing networks to support universal internet access and seizing growth opportunities by bringing to market innovate products and services.”

1   Because Comstar-UTS was acquired from JSC Sistema, the majority owner of both MTS and Comstar, the acquisition was accounted for as a transaction between entities under common control. Similar to a pooling of interest, whereby the assets and liabilities of Comstar were recorded at Sistema's carrying value, MTS' historical financial information was recast to include the acquired entity for all periods presented. In addition, given the scale of the transaction, MTS has reallocated its headquarters' costs more equitably to its business units according to international practices.

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

3  See Attachment B for reconciliation of free cash-flow to net cash provided by operating activity.

4 17.31% is owned by Comstar directly with another 7.69% owned by MGTS Finance S.A., which is controlled by Comstar.

5 The dividend yield per share is 5.1%.

6 According to the Russian Central Bank exchange rate of 30.7193 RUB/USD as of May 11, 2010. The dividend amount is set in Russian rubles by the Board of Directors; U.S. dollar amounts provided for reference using the foreign exchange rates as of May 11, 2010.