MTS’ Board of Directors approved amendments to the employee motivation and retention program that was adopted in June 2007 with reward periods extending through 2011.

As amended, the program will involve a total of 10,207,751 phantom and actual American Depositary Receipts (ADRs). A portion of the ADRs will come from the unrealized part of the previously announced program. All payments for phantom ADRs will be made in cash. The actual ADRs used in the option program will come from the shares repurchased by the Company as part of its previously announced share buyback program providing it with an opportunity to create an ADR reserve for its corporate needs, one of which being the options program.

The amended program increases the share of individual employee’s compensation dependent upon the level of investment appeal of the Company as judged by growth in share price combined with dividend payout, or total shareholder return (TSR), as well as the realization of key strategic goals. Program participants become eligible for their awards upon reaching an annual TSR level of not less than 15%.

Prior to its amendment, the program included 3.6 million phantom ADRs as well as performance-based monetary awards that were independent of the stock price.

The number of participants and the vesting periods have not been changed. As previously announced, up to 420 top- and mid-level current and future managers, representing various functions within each of the six countries in which MTS operates, will be eligible to participate in the program. Reward periods for the phantom program will extend through 2011, while vesting periods could last up to two years.

“We are expanding the existing employee remuneration program in order to further strengthen the tie between employee and shareholder interests and the Company’s development strategy. The program’s main features have not changed with the amendments aimed at better motivating employees, as well as attracting the best professionals, and setting higher goals for management,” commented Chairman of the Remuneration and Appointments Committee of the MTS Board of Directors, Mr. Paul Ostling.

“Despite the expansion of the remuneration program, we are confident that growth of operations and increasing efficiency levels will allow us to reach the 50% OIBDA margin in 2008,” highlighted MTS’ Chief Financial Officer, Mr. Vsevolod Rozanov.