Moscow, Russia - February 01, 2007 - On Feb. 1, 2007, Standard & Poor's Ratings Services revised its outlook on Russia's leading industrial and consumer services conglomerate, Sistema (JSFC), to positive from stable.  

At the same time the 'BB-' long-term corporate credit rating on the company was affirmed. 

The outlook revision reflects the company's positive performance trend improving corporate structure; and increasingly prudent approach to financial policy and balance sheet management.

Sistema's revenue and EBITDA generation are growing robustly, while operating profitability remains fairly sound, with EBITDA margins expected to average between 35% and 40% in the near to medium term. The continuing solid performance of Sistema's core telecommunications subsidiaries is complemented by accelerating growth of its other key businesses, particularly Sitronics, whose share of Sistema's total revenues should expand upward 20% in the near term.

Sistema's corporate structure continues to improve, with increasing liquidity of its core operating assets, most of which have completed their IPOs, boosting their self-sufficiency in pursuing further business growth.

The positive outlook reflects Standard & Poor's opinion that Sistema's ability to continue its favorable performance, while increasing cash flow diversification and improving corporate structure, all combined with controlled financial risk exposure and improving visibility of the company's financial policy, could justify an upgrade in the near term.