OREANDA-NEWS. August 27, 2010. Moscow, Russian Federation – Mobile TeleSystems OJSC ("MTS" – NYSE: MBT), the leading telecommunications provider in Russia and the CIS, today announces its unaudited US GAAP financial results for the three months ended June 30, 2010.

Key Financial Highlights of Q2 20101

·     Consolidated revenues up 16.6% y-o-y to USD 2,772 million

·     Consolidated OIBDA2 up 11.7% y-o-y to USD 1,235 million with a 44.5% OIBDA margin

·     Consolidated net income of USD 354 million

·     Free cash-flow3 positive with USD 1.0 billion for the six months ended June 30, 2010

Key Corporate and Industry Highlights

·     Approval of the merger of MTS and Comstar-UTS by the respective Boards of Directors and launch of the Voluntary Tender Offer to acquire up to 9% of Comstar-UTS’ ordinary shares

·     Issuance of USD-denominated Loan Participation Notes in the amount of USD 750 million

·     Securing of financing from the Bank of Moscow in the amount of RUB 22 billion in April and further reduction of its annual interest rate from 10.25% to 8.99% in June

·     American Depositary Receipt (ADR) ratio change from 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, the series 02 ruble-denominated bond in the amount of RUB 6.3 billion and the series 03 ruble-denominated bond in the amount of RUB 179.5 million

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

·     Acquisition of a 100% stake in CJSC Multiregion (“Multiregion”), one of the leading groups of broadband and cable TV providers in the Russian regions

·     Securing of vendor financing in the amount of EUR 300 million backed by Finnvera

·     Approval of recommended dividend for FY 2009 of RUB 30.70 billion (USD 999.3 million) or RUB 15.40 per ordinary share (USD 1.00 per ADR5) by the Company’s Annual General Meeting of Shareholders

Commentary

Mr. Mikhail Shamolin, President and CEO of MTS, commented, “We demonstrated solid growth during the quarter as we continue to execute on our 3i Strategy. We saw strong seasonal drivers improve our quarterly results. For the Group, revenue in the second quarter increased more than 17% year over year to reach USD 2.8 billion dollars. We see good seasonal trends in rising voice and data usage, the healthy contribution from the sale of handsets and consumption of higher-value products like voice and data roaming and long distance.”

Mr. Alexey Kornya, Vice President and CFO of MTS, added: “For the period, Group OIBDA grew close to 12% year-over-year to reach USD 1.23 billion USD driven by top-line growth. Though we continue to see downward margin pressure from our retail operations in Russia, we are making good progress in developing our distribution channels, and our retail business will reach our profitability goals by the end of year. Our fixed business in Russia delivered a healthy OIBDA margin of 40.1%.”

Mr. Shamolin continued: “Given our growth in the first half of 2010 and more positive economic sentiment, we feel confident to raise our guidance for MTS Group to roughly 10% for 2010. This is predicated on:

·     Continued macroeconomic improvement;

·     The impact of retail on our top-line revenue growth;

·     Sustained increases in usage across all product lines and segments in our Russian business;

·     The impact of our recent acquisitions of Eurotel and Multiregion on our business;

·     Modest growth in Ukraine; and

·     The further development of our networks in our foreign subsidiaries.

Our guidance on Group OIBDA margin of 43 – 45% remains unchanged, while we expect CAPEX to remain 22-24% of sales.”