15 August 2006

MOSCOW, RUSSIAN FEDERATION — AUGUST 15, 2006 — MOBILE TELESYSTEMS OJSC («MTS» — NYSE: MBT), THE LARGEST MOBILE PHONE OPERATOR IN RUSSIA AND THE CIS, ANNOUNCES THE APPROVAL BY THE BOARD OF DIRECTORS (BOD) OF THE NEW MANAGEMENT STRUCTURE.

On August 14, 2006, MTS’ BoD unanimously approved the new management structure of the Company that was proposed by the President and CEO of MTS, Leonid Melamed. The BoD entrusted him with taking all the necessary steps in implementing the new management structure.

The new management structure includes:

• Division of the Corporate Center into the Corporate Center of the MTS Group and three Business units

  • Business unit «MTS Russia» with a transfer of the operational management function over ten macro-regions in the Russian Federation under its responsibility;
  • Business unit «UMC,» MTS’ subsidiary in Ukraine (from January 1, 2007);
  • Business unit «Foreign subsidiaries» that will include JV MTS in Belarus, Uzdunrobita in Uzbekistan and Barash Communications Technologies, Inc. in Turkmenistan
• The management of the Business units will be responsible to the Corporate Center for completing set targets of the P&L. Therefore, macro-regions in Business unit «MTS Russia,» regions of the Business unit «UMC» and foreign companies in Business unit «Foreign subsidiaries» are responsible to the management of the Business units for the results (P&L indicators) of the operations of their subdivisions;
• Changing of the functions of the Corporate Center of the MTS Group that will now be responsible on the Group level for: developing strategy and implementing the investment policy; managing the brand; setting operational and functional procedures, as well as standards and KPIs for all Business units; controlling the timely completion of the business plan by all subdivisions of the Company; making large-scale purchases of media resources, equipment and IT-products in the interests of the Group as a whole.

President and CEO of MTS, Leonid Melamed, highlighted: «The Board of Directors recently approved the amended strategy of the Company. In order for its implementation, we needed to optimize the management structure and to increase the effectiveness of the management model. The management structure that was approved yesterday by the Board of Directors provides for an efficient division of the management functions into strategic and operational ones, and the creation of a transparent and simple structure to increase motivational levels of the managers of the subdivisions for achieving results (as set out in the business plan of the Company and its subdivisions that was approved by the Board of Directors). As business expands, this structure and management system is easily replicated.»

The optimization of the organizational structure will translate into management cost reductions and a headcount decrease for the Group. Specifically, the personnel size of the Corporate Center will be reduced from 1,750 to 966 employees. The optimization of personnel levels in other subdivisions of the Company will be announced at the beginning of September.

Sergey Schebetov, MTS’ Chairman of the BoD, commented: «The optimization of the employee headcount is just one of the positive effects of the change in the organizational structure. The new structure allows to clearly allocate responsibility, to make transparent the distribution of resources and to further improve control over budget execution.»