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Mobile TeleSystems

August 16, 2001

Mobile TeleSystems OJSC expands in Eastern Russia

MTS' Nationwide Standing Strengthened by Acquisition of Telecom-900
Moscow, Russian Federation — August 16, 2001 — Mobile TeleSystems OJSC (NYSE: MBT), Russia’s largest mobile operator, today announced it has completed the acquisition of 81% of shares in Telecom-900 CJSC for US$27 million.

The acquisition of Telecom-900 CJSC brings MTS’ license territory up to 46 regions of Russia with a combined population of 84 million people, or 56% of the country’s total population. The Telecom-900 acquisition is in line with MTS’ strategy of expanding its pan-Russian network and further strengthens the company’s ambition to become a nationwide mobile operator.

Commenting on the acquisition, Mikhail Smirnov, President of Mobile TeleSystems OJSC, said: “The regional expansion race is on, and MTS is leading it. We don’t just talk about regional expansion, we already have operational integrated networks throughout Russia, providing services to more than a third of all mobile subscribers in this country. We didn’t create a brand name overnight, we have earned it through years of experience and dedication.”

Telecom-900 owns a controlling stake in Russia’s largest operators in the Urals, Siberia and the Far East: Siberian Cellular Systems — 900 CJSC (51%), Uraltel CJSC (53,17%) and Far East Cellular Systems — 900 CJSC (60%). The combined subscriber base of the three operators is 117,000 customers, whilst the combined population of the three operators’ license areas is almost nine million people.

Siberian Cellular Systems-900 CJSC provides GSM 900/1800 mobile services in the Novosibirsk region, with a market share of 65%. The company’s subscriber base is 60,000 people.

Uraltel CJSC has a GSM-900 license to operate in the city of Ekaterinburg and the Sverdlovsk region. With 40,000 subscribers, it is the leading operator in the region.

Far East Cellular Systems-900 CJSC currently handles 17,000 subscribers in the Khabarovsk region, which represents 49% of all mobile users in this region. The company’s network covers the territory of Khabarovsk and its suburbs.

“We believe that the first entrant will win the regional battle,” — emphasized Mikhail Smirnov. — “MTS was the first Russian mobile company to fully understand the significance of regional expansion and take the risk of a trend setter. The addition of every new region for us means the beginning of network construction or upgrading right after legal formalities are completed. We are confident in the economic potential of our new regions. Given the professionalism of the MTS team and our experience to-date, we are ready to take these regional companies to a totally new operating level”.

By the end of 2001 the switching capacity in Novosibirsk will be expanded to handle 120,000 subscribers. The installation of new base stations will expand the coverage territory further into the suburbs of the city and provide cellular communications along the main federal highways to the borders of the region.

The network of Far East Cellular Systems-900 will not only cover Khabarovsk, but also another major city in the region, Komsomolsk-upon-Amur, and the highway and railroad towards Vladivostok (up to the borders of the region).

Uraltel will increase its switching capacity and expand the coverage area in the fourth quarter of the year 2001.

Post acquisition, all three operators will provide GSM cellular services in their respective regions under the “Mobile TeleSystems (MTS)” trademark. The “MTS” trademark will be introduced and promoted only after a technical inspection and an upgrade are completed. A coordinated marketing strategy will be applied in all three regions.

MTS is currently integrating all regional networks into the main MTS network.

For further information contact:

Press Secretary
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 56% of the country’s population. It has commenced operations in 24 regions covering more than 50 million people. Information about MTS’s activities and services can be found on MTSs website at




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