Fitch Ratings, the international rating agency, has today upgraded Sistema Joint Stock Financial Corp's ("Sistema") Senior Unsecured foreign and local currency ratings to 'B+' from 'B'. Following the upgrade the Outlook is Stable.

The upgrades reflect Sistema's improved ability to upstream cash through dividends from its key subsidiary, MTS, the leading mobile operator in Russia and CIS.

An upgrade of Sistema's ratings also takes into account the improving financial performance that has surpassed the agency's expectations. The company's operating income before depreciation and amortisation ("OIBDA") margin rose to 44.7% for the first nine months of 2004, largely driven by the performance of MTS. Fitch notes that Sistema has consolidated some of its operating assets during the past year, most notably its alternative telecom businesses, and improved its strategic focus to seven key industries: telecoms, insurance, technology, media, banking, retail and real estate. These actions have had a positive impact on its credit rating profile. The corporation has been also rated by Standard & Poor's (B)  and Moody’s Investors Service (B1).