Acquisition of Kuban GSM, which has a subscriber base of almost 500,000 people, is consistent with MTS’ strategy for development in the regions. Today, MTS has licenses for the provision of mobile communications services in 48 regions of Russia. The company’s network operates in 31 regions with total population of about 69 million people. “We have acquired the fourth largest operator in the country, dominating in its region in terms of subscriber base and the technical development of its network,” noted Michael Smirnov, President of MTS."Therefore, I think today’s event is extremely important. This acquisition will result in the strengthening of the competitive positions of Kuban GSM on a regional level and of MTS on a country-wide level. “For us, the coming of MTS means not simply a change of owner. Integration of Kuban GSM into a unified MTS network will allow us to reach a totally new level of development,” Chairman of the Board of Directors of Kuban GSM Vladimir Gorbachev stated. “First, we become a part of federal network. Second, the coming of such a major company means investments and new opportunities which will allow us to upgrade our technical base and to improve the quality of services for our subscribers.” MTS acquired the shares from existing shareholders of Kuban GSM, including OJSC STC, individual shareholders and, LLC KubTelecom, which continues to own 49% of the outstanding shares of Kuban GSM. In addition, MTS and LLC KubTelecom have concluded an option agreement, providing MTS the right to buy from KubTelecom its remaining shares of Kuban GSM, at the market price for Kuban GSM shares, at any time until February 15, 2006. KubTelecom also has the right to put its remaining shares of Kuban GSM to MTS on the same terms. Also, MTS will subscribe for an additional 3,600 ordinary shares of Kuban GSM through a closed subscription approved by an Extraordinary General Meeting of shareholders of Kuban GSM on February 15, 2002, at a price of $14,000 per share. If MTS were to subscribe for these additional 3,600 shares, its stake in Kuban GSM would increase to approximately 63%. The deal will allow ??S to expand its influence on strategic and important regions of southern Russia: the Krasnodar region and the Republic of Adygea, with a total population of more than 5.5 million people. In addition, more than 5 million Russians visit this region during holidays. Kuban GSM covers more than 60% of the licensed territory of these regions, including the largest cities of the Black Sea region: Novorossisk, Anapa, Tuapse, Sochi, Adler, Dagomys, and Lazarevskoe. In 2001, almost 500,000 visiting roamers used services of Kuban-GSM. The activity peaked in August when more than 118,000 roamers, 65% of which were MTS subscribers, were registered in the network of the company. In 2001, CJSC “Kuban GSM” gained approximately $6.5 million from guest-roaming. According to expert estimations, in 2002 the number of roamers within Kuban-GSM network will increase to 600 — 700 thousand.