Moscow, Russia - 17 September, 2008 - Sistema (the "Group") (LSE: SSA), the largest diversified public corporation in Russia and the CIS, which manages fast growing companies operating in the consumer services sector, today announced its unaudited consolidated US GAAP financial results for the second quarter ended June 30, 2008.

SECOND QUARTER HIGHLIGHTS

• Consolidated revenues up by 40.2% year on year to US$ 4.3 billion
• OIBDA up 39.9% year on year to US$ 1.5 billion and OIBDA margin of 35.2%
• Operating income up 32.4% year on year to US$ 919.5 million and operating margin of 21.5%
• Income from continuing operations more than doubled year on year to US$ 289.5 million
• Total assets up by 45.6% year on year to US$ 32.7 billion

Leonid Melamed, President and Chief Executive Officer, commented:

 "The Group has delivered another quarter of healthy top line and OIBDA growth, with an OIBDA margin of over 35%. Sistema also generated a 40% year on year increase in operating cash flows. Income from continues operations more than doubled year on year.

We remain focused on the unlocking of the substantial potential of the Group's assets, executing on our strategic objectives branded ‘5X5>25', and achieving a return on invested capital of over 25% within five years and beyond.

Our priorities are clear - firstly, we are optimizing the existing portfolio structure. We have introduced key operating and financial targets for each of our subsidiaries, with the management teams tasked with generating high levels of revenue growth and customer acquisition, as well as creating and exploiting sales and cost synergies, and enhancing profitability levels. We also engage with best in class strategic partners as and when appropriate, both to benefit from their expertise and accelerate the development of our businesses.  

Secondly, our policy is only to invest in those projects with short to medium term return on capital horizons, and to invest in the telecommunications and fast growing consumer industries where we already have a proven track record.  Maintaining financial discipline is key to our success and is reflected in the recent raising of the S&P credit ratings on Sistema and its largest subsidiaries.

Finally, we are streamlining and simplifying the Group's management structures. We have adopted a matrix model and formed three new industrial operating units - ‘Telecommunications Assets', ‘High Technologies and Industry', and ‘Consumer Assets' - and we seek to attract, develop and motivate the most talented and hard-working managers in each segment. We are confident that these measures will enable us to deliver and sustain greater returns for shareholders moving forward."

Conference call information

Sistema management will host a conference call today at 9 am (New York time) / 2 pm (London time) / 3 pm (CET) / 5 pm (Moscow Time) to present and discuss the second quarter results.

The dial-in numbers for the conference call are:
UK/International: +44 20 8515 2301
US: +1 480 629 1990
        
A replay will then be available for 7 days after the conference call. To access the replay, please dial:
UK/International: +44 20 7154 2833
US: +1 303 590 3030       

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