Moscow, Russia – October 3, 2005 – Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, announced today that it has increased its stakes in five out of seven energy companies in the Republic of Bashkortostan in the Ural Mountains in which it had previously acquired minority shareholdings, for a total cash consideration of US$ 96.8 million. Following these two transactions, Sistema’s total investment in acquiring the stakes amounted to US$ 599.7 million.

Sistema has acquired additional voting stakes of 8.27% in OAO Novoil, 5.62% in OAO Ufimsky NPZ, 2.53% in OAO Ufaneftekhim, 3.10% in OAO ANK Bashneft and 4.97% in OAO Ufaorgsintez (the “Companies”).

Sistema also acquired a further 2.00% voting stake in Bashneft, while at the same time reaching an agreement to cancel the acquisition of a 10.08% stake in OAO Bashkirenergo. As a result, Sistema’s stake in Bashneft now amounts to 25.00%, and in OAO Bashkirenergo to 0%.

Sistema’s voting stake in OAO Novoil increased to 28.17%, in OAO Ufimsky NPZ to 25.52%, in OAO Ufaneftekhim to 22.43% and in OAO Ufaorgsintez to 24.87%. The transaction did not affect Sistema’s holdings in OAO Bashnefteproduct which stayed at 18.57%. By completing this transaction, Sistema reached the initially planned ownership levels in the aforementioned companies, and currently has no intention to further increase its shareholdings.

All six companies together comprise the majority of the energy sector in the region and are engaged in oil exploration and extraction, oil refining and petrochemical production. Taken as a whole, they are Russia’s third largest oil refiner. The Companies’ results are reported under Russian accounting standards and are not therefore comparable with Sistema’s consolidated accounts, which are reported according to US GAAP. The total market value of Sistema’s combined equity stake as calculated based on the RTS closing prices for Friday, September 30, 2005, stood at approximately US$ 1,223 million.