Paris, September 17, 2004 – Alcatel (Paris: CGEP.PA and NYSE: ALA) and Sistema JFSC, the largest private non-natural resource-based corporation in Russia and an active player in the Russian telecommunications market, today announced signing a more than 5 million Euro contract to build a platform for the delivery of advanced multimedia services to Sistema's residential customers. The 2 companies announced a Memorandum of Understanding on September 8, 2004.

Under the term of the contract, the first phase of a large multimedia project of AFK Sistema will be implemented. As a result the most advanced center of broadband multimedia services’ aggregation will be created. Alcatel will deliver to Sistema Mass Media, Sistema's media arm its fully integrated Open Media Suite, the industry-leading middleware solution for delivery of rich media in a triple play service mix (voice, data, video). Additionally, Alcatel will provide integration, customization and installation services.

Alcatel is currently piloting with Sistema and targeting a mass-market commercial launch for early 2005.

The multimedia project implemented by Sistema Mass Media,  is aimed at providing a wide range of users in Moscow and in the Russian regions with advanced broadband entertainment services, including interactive TV, video on demand, multimedia games, high-speed Internet access and e-commerce. The project will integrate all previous experience of Sistema's subsidiaries in the areas of production, aggregation and distribution of broadband content and multimedia services.

 The Open Media Suite hardware/software solution in the multimedia project will enable Sistema, a new-generation service provider, to fully profit from the investment in their broadband access network and to open new opportunities for business in the broadband entertainment market. Its flexible, non-proprietary architecture based on open industry standards enables fast implementation of advanced technologies, thus increasing network efficiency and overall profitability of media services.

New generation multimedia services are based on broadband IP access and demand the most advanced technologies solutions,” said Alexander Leiviman, General Director of Sistema Mass Media. “This new contract with Alcatel enables us, in the highly competitive environment of the Russian telecom market, to introduce new highly profitable services of interactive TV and video on demand”.

"We are looking forward to the implementation of this project," said Alan Mottram, President of Alcatel's fixed solutions activities. "It will mark a new phase of introduction of broadband technologies and multimedia services in the Russian telecommunication market ".

The Alcatel Open Media Suite is an end-to-end portfolio of products and professional services. The portfolio encompasses user interface customization, integration with third party equipment such as set top boxes and digital video head ends, as well as the facilitation of negotiations with content owners and suppliers. Products include the 5950 Open Media Platform and Applications and the 5959 Open Media Content Management and Delivery system, including the 5959 Open Video Server.

About Sistema

Sistema JSFC, established in 1993, is the largest non-natural resource-based corporation in Russia. It actively manages a portfolio of direct investments in areas including telecommunications (Mobile TeleSystems (MTS), Moscow City Telephone Network (MGTS), Comstar United Telesystems and others), technology (NIIME and MIKRON, STROM telecom, Sitronics), insurance (ROSNO), real estate (Sistema-Hals), retail (Detsky Mir Group) travel services (Intourist), finance and securities (MBRD), and others. In 2003, the company reported sales of $3.76bn., with total assets exceeding $6.8bn. Additional information is available at https://www.sistema.ru

About Alcatel

Alcatel provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or to their employees. Alcatel leverages its leading position in fixed and mobile broadband networks, applications and services to bring value to its customers in the framework of a broadband world. With sales of EURO 12.5 billion in 2003, Alcatel operates in more than 130 countries.

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