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Mobile TeleSystems

September 26, 2001

Mobile TeleSystems launches its network in Nizhny Novgorod

Moscow, Russian Federation — 26 September 2001 — Mobile TeleSystems OJSC (NYSE: MBT), Russia’s largest GSM 900/1800 mobile operator, today announced the launch of its operations in Nizhny Novgorod. Thus, the MTS network now operates in 25 of Russia’s regions.

Commenting on the event, Mikhail Smirnov, President of Mobile TeleSystems OSJC, said: “MTS’ entry into Nizhny Novgorod once again demonstrates our adherence to developing a well thought through pan-Russian network. Due to its advantageous geographical position, high level of industrial development and dense population, Nizhny Novgorod has become the third most important region for us in terms of its economic potential after Moscow and St. Petersburg. Nizhny Novgorod currently has three home-grown mobile operators, but the overall number of subscribers remains less than 2% of the total population. We believe it is our entrance into the region that will give the local mobile market a vital boost, and will drive penetration in the region closer to 12% in the near future”.

In Nyzhny Novgorod MTS installed an integrated GSM 900/1800 network on the base of equipment produced by Lucent Technologies to execute its operations. A modern switch center with an initial capacity of up to 50,000 subscribers and 48 base stations have been installed into the network. This ensures full coverage of the city of Nizhny Novgorod, a number of important industrial district centers, as well as the Moscow-Nizhny Novgorod federal highway.

The next stage of MTS’ network development in the Nizhny Novgorod region will see a substantial enhancement of radio subsystems and subsequent coverage of the whole region by 2003.

MTS will be able to offer subscribers in Nizhny Novgorod tariff plans with both federal (pre-fix 902) and direct local numbers.

MTS subscribers in Nizhny Novgorod will also benefit from MTS’ single tariff policy, which has become possible due to MTS’ well-developed unified network. In addition to the flexible tariff policy, which provides specific subscriber groups with various tariff plan options, one of MTS’ advantages is the ability to charge local rates for calls made to MTS subscribers in almost all other MTS regions. Taking into account the fact that MTS’ subscriber base is over 2.3 million people living in 25 of Russia’s regions, this is a way to reduce the cost for long distance calls for MTS subscribers. Due to the network’s developed infrastructure, MTS can now offer its subscribers in Nizhny Novgorod substantially lower rates for long distance calls made to fixed line phones in the European part of Russia, particularly in Moscow and the Moscow region. Moreover, Nizhny Novgorod is being integrated into MTS’ intra-network roaming area, which means reduced roaming rates in more remote MTS’ regions.

Mikhail Smirnov stressed: “We have no fear of the competition. In fact, we are looking forward to the challenge. Our experience, flexible tariff policy, commitment to the highest level of service for our subscribers and a well-known trade mark make it possible for us to strive for at least 40% of the regional market within the next couple of years with three active GSM operators in the market”.

The key element of MTS’ strategy is developing its own distribution network and opening “all in one” customer care centers, where people can obtain all the necessary information on tariff structures best suited for their specific needs, address problems like billing disputes or technical disfunctions, and purchase handsets, activate new services and pay for mobile services. The first “all in one” service center in Nizhny Novgorod was opened on September 26, 2001. Three more similar centers are to be opened in Nizhny Novgorod and the surrounding region in the near future.

Information on the Nizhny Novgorod region

The Nizhny Novgorod region is located in the central part of European Russia, near the confluence of the Volga and Oka rivers. The region’s territory is 74,800 square km, which accounts for almost 3% of Russia’s overall territory. The region comprises 47 administrative districts, 25 towns, 69 settlements, and 4,600 villages.

At the year-end of 2000, the population of the Nizhny Novgorod region was 3,600,000. Such a density is among the highest in Russia.

Over 80% of the local GDP is produced by the regional industry. Machinery construction, metallurgy, oil and gas, chemical and energy enterprises have the highest weighting in the general production volume.

The advantageous geographical position of Nizhny Novgorod, its traditional function as a trade and transit center and its strategic importance has led to the creation of a highly developed transport infrastructure. The length of sailable water routes is over 1,000 km, the length of motorways surpasses 14,000 km (the network density is five times higher than that of an average network elsewhere in the Russian Federation) and the length of railroads is over 1,000 km. Due to extensive water routes, Nizhny Novgorod has access to the Baltic, Black and Caspian seas, the sea of Azov and the White sea.

For further information contact:

Eva Prokofieva
tel: +7 (095) 104-49-38

Investor Relations department
tel: +7 (095) 766-01-03
Fax: +7 (095) 766-01-00

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 MTS, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. 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 conform them to actual results. We refer you to the documents MTS files from time to time with the U.S. Securities and Exchange Commission, including our most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, potential fluctuations in quarterly results, our competitive environment, dependence on new service development and tariff structures; rapid technological and market change, acquisition strategy, risks associated with telecommunications infrastructure, risks associated with operating in Russia, volatility of stock price, financial risk management, and future growth subject to risks.

Mobile TeleSystems OJSC (NYSE: MBT) is Russia’s leading GSM 900/1800 mobile cellular operator. MTS has GSM 900/1800 licenses to provide mobile cellular telephony services in 46 regions of the Russian Federation, covering 86 million people or 56% of the country’s population. MTS network has operations in 25 regions, which cover more than 54 million people or 37% of the population of the Russian Federation.

Additional information about MTS can be found on MTS’s website at




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