Moscow, Russian Federation — August 31, 2006 — Mobile Telesystems OJSC («MTS» — NYSE: MBT), the largest mobile phone operator in Russia and the CIS, advises that court action against the affiliated with MTS companies in the isle of Man will be vigorously defended.

MTS announces that three Isle of Man companies affiliated with MTS have each been named defendants in an action for approximately $25 million brought by Bitel LLC in the Isle of Man by virtue of a court summons dated August 16, 2006.

The action was apparently taken with the purpose of returning the dividend received by the three companies in the first quarter of 2005 from Bitel in the amount of approximately $25 million plus compensatory damages. The companies were not controlled by MTS at that period of time.

As announced in December 2005, MTS acquired a 51% stake in Tarino Limited. Tarino Limited was at that time the indirect owner, through its 100% owned subsidiaries in the Isle of Man (the defendants), of Bitel LLC, a Kyrgyz company holding a GSM 900/1800 license for the entire territory of Kyrgyzstan. On December 15, 2005, Bitel’s offices were seized using the decision of the Kyrgyz Supreme Court and currently MTS has no operational control over Bitel LLC.

MTS considers the seizure of Bitel LLC in Kyrgyzstan as being illegal, and thus the above court actions as vexatious, without grounds and initiated in breach of applicable law. MTS considers this a retaliatory reaction to its actions aimed at returning Bitel. MTS and its affiliated companies will defend the action and protect their rights vigorously.