Moscow, Russia – 28 February 2005 – Sistema (SSA.L), the largest private sector consumer services company in Russia and the CIS, today announced that it has increased its ownership in the Mezhregionalny Transit Telecom (“MTT”) and Moscow Bank for Reconstruction and Development (“MBRD”) operating companies.

Sistema has acquired an additional 5% equity stake in Mezhregionalny Transit Telecom, which operates a nationwide transit network providing telecommunications services and network interconnection for mobile and fixed line network operators throughout Russia, for a cash consideration of approximately US$ 6.4 million. This transaction has increased Sistema’s voting interest in MTT to 50% and Sistema will continue to report its share of earnings in MTT as an affiliate.

The company has also completed the purchase of a 13.33% equity stake in the Moscow Bank for Reconstruction and Development, which has over 4,715 corporate banking customers and also provides retail banking services through its local branches in Moscow and other major cities across Russia. The total consideration amounted to approximately US$ 10 million, including a cash payment of US$ 2.1 million and promissory notes in the amount of US$ 7.9 million. As a result of this transaction, Sistema’s voting interest in MBRD has increased to 98.9% of the company’s share capital.

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

Sistema Investor Relations                                                    Shared Value Limited

Andre Bliznyuk                                                                     Matthew Hooper

Tel: +7 095 730 1543                                                          Tel: +44 (0) 20 7321 5023

bliznyuk@sistema.ru                                                             sistema@sharedvalue.net

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Sistema is the largest private sector consumer services company in Russia and the CIS, with over 35 million customers. Sistema develops and manages market-leading businesses in selected service-based industries, including telecommunications, technology, insurance, banking, real estate, retail and media. Founded in 1993, the company reported revenues of US$ 4.1 billion for the first nine months of 2004 and total assets of US$ 7.7 billion as at September 30, 2004.  Sistema’s shares are listed under the symbol “SSA” on the London Stock Exchange, under the symbol “AFKS” on the Russian Trading System (RTS), and under the symbol “SUST” 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. 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.

This press release is not an offer for sale of any securities in the United States.  Any securities may not be offered or sold in the United Sates absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended.  Sistema has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the “Order”) and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as “relevant persons”).  Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Stabilization/FSA.

This press release is not a public offer or advertisement of securities in the Russian Federation, and is not an offer, or an invitation to make offers, to purchase any securities in the Russian Federation.