Financial highlights^**

Note: MTS’ net income for Q3 2001 was increased by $22 million as the Company recognised a correspondent deferred tax benefit due to the reduction in the statutory income tax from 35% to 24% that became effective from January 1, 2002. Net revenues in the third quarter 2002 were $388.5 million, an increase of 48% from $262.6 million reported for the same period last year and an increase of 23% from $316.3 million reported for the second quarter of 2002. ^* Measured in terms of number of subscribers. ^** Earnings before provision for income tax, interest, depreciation and amortisation (EBITDA) should not be considered in isolation as an alternative to net income, operating income or any other measure of performance under U.S. GAAP. We believe that EBITDA is a relevant measurement utilized by the cellular industry to assess performance that attempts to eliminate variances caused by the effects of differences in taxation, the amount and types of capital employed and depreciation and amortization policies. ^*** See Appendix 2 Net income for the third quarter 2002 was $84.3 million an increase of 8% from the $78.4 million reported for the third quarter 2001 and an increase of 30% from the $64.8 million reported for the second quarter of 2002. EBITDA in the third quarter 2002 was $205.9 million, an increase of 45% from the $142.0 million reported for the same period last year and an increase of 27% from the $162.0 million in the second quarter of 2002. EBITDA margin, or EBITDA divided by net revenues, for the third quarter 2002 was 53% compared to 54% for the third quarter 2001 and 51% for the second quarter of 2002. Commenting on the result, Mikhail Smirnov, President of MTS said: “The third quarter results of 2002 have once again highlighted MTS’ record of delivering growth in financial performance. We have continued to increase our net revenues while maintaining EBITDA margins. Our expansion into the regions continues and for the first time we have more subscribers in the regions than in the Moscow metropolitan area.”

Operational highlights

MTS’ subscriber base reached approximately 5.44 million active subscribers at the end of the third quarter of 2002, of which approximately 2.75 million live in the regions outside the Moscow license area. MTS had a 37.6% market share of the Russian mobile market at the end of September 30 according to AC&M-Consulting. MTS’ market share in Moscow was 43.3%, with approximately 2.69 million subscribers at September 30, 2002. As of today, MTS services approximately 6.22 million subscribers of which 3.30 million live in the regions outside of the Moscow licence area. The Company’s subscriber base in the city of St. Petersburg and the Leningrad region exceeded half a million during the third quarter to reach 720,000, a significant achievement considering the fact that MTS launched operations in the region in December 2001. The Company’s market share in the North West licence area (which includes the city of St. Petersburg) was at 26% at the end of the third quarter of 2002 according to AC&M-Consulting. MTS’ monthly average revenue per user (ARPU) increased from $25.0 in the second quarter to $25.2 in the third quarter of 2002. The main driver for ARPU was an increase in average monthly minutes of usage per user (MOU) from 167 minutes in Q2 2002 to 175 minutes in Q3 2002. MTS’ subscriber churn rate in the third quarter 2002 was 7.5%, down from 7.7% in the second quarter of the year. MTS’ capital expenditure during the nine months to September 30, 2002 amounted to $351.9 million, of which $117.8 million was invested during the third quarter of 2002. The Company’s capital expenditure in the Moscow licence area amounted to $165.7 million and $27.7 million, respectively.

New Marketing Initiatives

In line with MTS’ strategy for further growth, the Company announced a new brand and tariff plan targeted at the mass-market during November 2002. The “Jeans” brand with a pre-paid tariff plan was launched by MTS in Moscow and thirty-seven Russian regions. While “Jeans” is the brand used to target the mass market, MTS plans to retain the “MTS” brand for marketing to middle heavy users as well as corporate clients. MTS has also decided to introduce a different disconnection policy for its “Jeans” subscribers. A “Jeans” subscriber remains as a registered subscriber and is treated by the Company as an active subscriber if this individual or organisation has had a positive balance on its account at MTS at least once within the last 183 days. MTS’ management believes that the new disconnection policy for subscribers will help to increase customer loyalty and minimize the negative impact of a traditional seasonal outflow of customers after the summer period. At the same time, MTS is retaining its standard disconnection policy for subscribers to MTS’ tariff plans. An active MTS customer is a registered customer who has had a positive balance on his account at MTS at least once within the last 61 days.

Expansion Strategy

During the second half of 2002, MTS continued its expansion into regional markets in Russia and other countries of the former Soviet Union. The Company has started new operations in five regions of Russia with a total population of 9.6 million and acquired 100% ownership in three local GSM operators, Dontelecom (the Rostov region) Mobicom Barnaul CJSC (the Altai region) and Bit LLC (the Republic of Tyva, Sakhalin, Chukotka, and Republic of Kalmykia. These new acquisitions extended the Company’s footprint by 8.3 million people to 103.1 million, or approximately 72% of the country’s population. As part of its strategy to consolidate ownership in its subsidiary mobile phone operators, the Company has consolidated a 100% ownership in Telecom 900 CJSC, a holding company for equity stakes in three large regional mobile phone operators, Siberia Cellular Systems 900 CJSC (SCS 900), Uraltel CJSC, and Far East Cellular Systems 900 CJSC (FECS 900). MTS has also increased its ownership in Kuban GSM CJSC, the largest regional GSM company in Russia in terms of subscribers, from 51% to 60% through the purchase of a new share issue of the local operator. Kuban GSM currently services approximately 791,300 subscribers. Overall, in the second half of 2002 MTS spent approximately $63.6 million on acquisitions and consolidation of ownership in its subsidiaries. The second half of 2002 was also marked by the expansion of MTS into neighbouring countries. The Company’s joint venture in Belarus has commenced operations and today provides services to over 29,170 subscribers. In line with the Company’s strategy to exploit growth opportunities beyond Russia’s borders, MTS signed agreements in early December 2002 to purchase a majority ownership in UMC, a leading mobile phone operator in Ukraine that currently provides services to approximately 1.62 million people. Completion of the transaction is subject to a number of conditions, including approval by appropriate governmental authorities in Ukraine and the Russian Federation, as well as MTS corporate approvals.

Restatement of Financial Statements for Previously Reported Periods

MTS has restated its financial statements for the year and three months ended December 31, 2001 and for the first and second quarters of 2002 as a result of a review of its financial statements conducted by MTS management. The restatement relates to the allocation of the purchase price for MTS’ acquisitions of equity stakes in a number of local mobile phone operators in 2001 and in the first half of 2002. As a result of this review, MTS has restated approximately $72 million previously allocated to licenses to property, plant and equipment and other intangible assets. This reallocation has resulted in restatements of property, plant and equipment, licenses, depreciation and amortization expense and certain related items of our balance sheet and statement of operations as of and for the year ended December 31, 2001 and the six-month period ended June 30, 2002. Please see Appendix 1 and Appendix 2 for further detail regarding the effect of the restatement on our 2001 and first half of 2002 financial results. In addition, effective January 1, 2002 the Company adopted FAS 141, Business Combinations and FAS 142, Goodwill and Other Intangible Assets. As a result, MTS has reclassified $22 million of goodwill relating to its acquisition of Rosico CJSC in August 1998 as licenses. This reclassification resulted in a restatement of amortization expenses and deferred taxes for the six-month period ended June 30, 2002. The combined effect of the above changes is a decrease in the MTS’ reported net income of $1.5 million for the year ended December 31, 2001 and a decrease in reported net income of $3.0 million for the six months ended June 30, 2002. MTS’ financial results for the years ended December 31, 2000 and 2001 have been audited by its new independent auditor, Deloitte & Touche. The firm was appointed as MTS’ new auditors after MTS dismissed ZAO Arthur Andersen. MTS’ financial statements for the three months ended March 31, 2002 and the three and six months ended June 30, 2002 have been reviewed by Deloitte & Touche. Today, MTS will file with the Securities and Exchange Commission (US SEC) amended financial statements for the year and three months ended December 31, 2001 and the first and second quarters of 2002 on Forms 20-F/A, 6-K/A and 6-K.

Mobile TeleSystems consolidated balance sheets at December 31, 2001 and September 30, 2002

Mobile TeleSystems consolidated balance sheets at December 31, 2001 and September 30, 2002

Mobile TeleSystems consolidated statements of operations for the three months ended September 30, 2001 and 2002, and for the nine months ended September 30, 2001 and 2002

APPENDIX I

The restatement of MTS’ financial statements for the year ended December 31, 2001 relates primarily to a change in the allocation of the purchase price for the Company’s acquisitions of: an additional 4% stake in ReCom CJSC in April 2001; a 100% stake in Telecom XXI OJSC in May 2001; and an 81% stake in Telecom 900 CJSC in August 2001. As a result of a review of its financial statements by MTS management, MTS has restated approximately $21 million previously allocated to licenses to property, plant and equipment and other intangible assets. This reallocation has resulted in restatements of property, plant and equipment, licenses, depreciation and amortization expense and certain related items of our balance sheet and statement of operations as of and for the year ended December 31, 2001. Additionally, the Company has reclassified an impairment charge related to its investment in a joint venture with the government of Belarus from other expenses to impairment of investment, which is deducted in determining our net operating income in order to conform to the US GAAP presentation requirements. The effects of this restatement on our financial statements for the year ended December 31, 2001 were as follows (in thousands except per share amounts):

APPENDIX 2

In addition to the restatement of the Company’s financial statement for the year and three months ended December 31, 2002, MTS’ has restated its financial statements for the six months ended June 30, 2002. The restatement results primarily from a change in the purchase price allocation for the Company’s acquisitions of: an additional a 51% stake in Kuban GSM CJSC in March 2002; and a 100% stake in BM Telecom CJSC in May 2002. As a result of a review of its financial statements by MTS management, MTS has restated approximately $76 million previously allocated to licenses to property, plant and equipment and other intangible assets. This reallocation has resulted in restatements of property, plant and equipment, licenses, depreciation and amortization expense and certain related items of our balance sheet and statement of operations as of and for the six-month period ended June 30, 2002. In addition, effective January 1, 2002 the Company adopted FAS 141, Business Combination and FAS 142, Goodwill and Other Intangible Assets. As a result MTS has reclassified $22 million of goodwill relating to the Company’s acquisition of Rosico CJSC in August 1998 as licenses. s beginning January 1, 2002 goodwill was no longer amortized into income, this reclassification resulted in a restatement of amortization expenses for the six-month period ended June 30, 2002. The reclassification also resulted in restatement of the related deferred taxes balances for the period ended June 30, 2002. The effects of this restatement on financial statements for six months ended June 30, 2002 were as follows (in thousands except per share amounts):