Moscow, Russian Federation — September 29, 2006 — Mobile Telesystems OJSC («MTS» — NYSE: MBT), the largest mobile phone operator in Russia and the CIS, announces that it has received on September 28, 2006, a decision of the tax inspection for the years 2003 and 2004. The Company does not agree with the findings.

In the decision that was the result of the tax inspection of the Company's financial statements for the years 2003 and 2004, MTS is asked to pay an additional RUR 1,283,659,826 in taxes (including RUR 307,937,287 in fines and penalties), which is approx. $47.9 million (including approx. $11.5 million in fines and penalties).

The taxes initially amounted to RUR 1,141,973,457 (approx. $42.6 million), not including fines and penalties, but after considering the Company's arguments the amount was reduced to RUR 975,722,538 (approx. $36.4 million), not including fines and penalties.

According to the tax authorities, the majority of the additional taxes are due to an incorrect calculation for the following items:

• Settlements with content providers for value-added services offered to subscribers;
• Foreign exchange taxable gains;
• Interconnect settlements.

MTS does not agree with the tax claims indicated in the decision and intends to defend its position in court in accordance with the existing Russian laws and does not expect significant negative financial effects for the Company.