Calls on Morgan Stanley to reconsider sale

October 9, 2007, Moscow - AFK Sistema, the largest private sector consumer services company in Russia and the CIS with US$ 5.9 billion in revenues for the first half of 2007, announced that Mobile TeleSystems (MTS), Sistema's mobile telecommunications subsidiary, previously warned Telenor, the Norwegian telecoms company, and Vimpelcom, the Russian mobile telecommunications operator, in which Telenor has a major stake, with respect to Vimpelcom's potential acquisition of Sky Mobile. Sistema stated that MTS issued its warning based on the fact that in its view Sky Mobile incorporates the misappropriated assets of Kyrgyztan's market leading mobile telephone operator, Bitel LLC ("Bitel").

Sistema stated that:

• MTS entered into agreements to acquire a 51% interest in Bitel in 2005.

• The Bitel interests were unlawfully seized and transferred by entities controlled by Altimo, and virtually all of Bitel's assets were subsequently transferred to Sky Mobile in 2006.

• As a recent decision by a tribunal of the London Court of International Arbitration demonstrates, the interests in Bitel were never transferred to KMIC (the first company in the chain of suspicious and apparently orchestrated transactions that ultimately led to the purported transfer of all Bitel's assets to Sky Mobile). In addition, the LCIA tribunal decision did not order the transfer of Bitel's interests to KMIC, Altimo or any other entity. In light of this, there is no legal basis for any of the subsequent transfers to other purported purchasers of Bitel. Therefore the purported transfer of Bitel's assets and brand to Sky Mobile is also without any legal basis. Accordingly, any purchaser of Sky Mobile or its assets will be purchasing the assets without any legal basis and will face significant legal risks.

• MTS through its subsidiaries has also brought a claim in the Isle of Man against, among others, Altimo and Sky Mobile, over the wrongful appropriation of Bitel and the laundering of the Bitel assets to Sky Mobile.

• It follows that any subsequent purchasers of Bitel's interests and/or assets cannot have any rights with respect to ownership interest in Bitel or its assets. The purchase of such interests and/or assets is therefore fraught with material legal risks related to litigation.

• The tender for the sale of Sky Mobile, launched in September of 2007, is being managed by Morgan Stanley. Sistema calls on Morgan Stanley to consider whether it is appropriate for it to manage the sale of assets which are under serious dispute and subject to pending international litigation.

Alexander Goncharuk, President and CEO of Sistema, commented: "We find it highly surprising that a company whose assets were obtained in an illegitimate manner can be offered for sale by such major and well-respected international investment bank as Morgan Stanley. Interestingly, this same investment bank offered MTS the opportunity to buy back the assets that have been misappropriated from it.  We urge Vimpelcom, Telenor and others to consider carefully whether participating in a tender of this nature is proper."