Moscow, Russia - October 16, 2006 - Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, announced today that a number of certain minority shareholders of the company have entered into an agreement with Credit Suisse for the sale of their shares of Sistema, constituting approximately 1.9% of the total number of shares outstanding.  Selling shareholders include certain directors and officers of Sistema.

Sistema, through one of its subsidiaries, subscribed to a total of 167,131 ordinary shares at the offer price, which constitute 1.73% of the offered stock. The total subscription was in the amount of approximately US$ 207 million. Sistema plans to establish a share option programme for the top management of the company. The acquired shares are intended for the funding of this programme and  may also be used in connection with certain future acquisition activity.

The selling shareholders have agreed to a 90-day lock-up period with respect to their remaining holdings.