SSA: JSFC Sistema: 1st Quarter Results

  SSA: JSFC Sistema: 1st Quarter Results

UK Regulatory Announcement

MOSCOW

              UNAUDITED FINANCIAL RESULTS FOR THE FIRST QUARTER

                             ENDED MARCH 31, 2013

Moscow, Russia – June 21, 2013 – Sistema JSFC (“Sistema” or the “Company”,
together with its subsidiaries, “the Group”) (LSE: SSA), the largest
publicly-traded diversified holding company in Russia and the CIS, today
announces its unaudited consolidated US GAAP financial results for the first
quarter ended March 31, 2013.

FIRST QUARTER HIGHLIGHTS

  *Consolidated revenues up 5.5% YoY to US$ 8.3 billion
  *OIBDA slightly down 0.8% YoY to US$ 2.0 billion, with an OIBDA margin of
    24.0%
  *Net income attributable to the Group of US$ 371.8 million
  *Net debt^1 at the Corporate Holding level amounted to US$ 1.5 billion as
    of March 31, 2013, compared to net cash of US$ 339.7 million as of March
    31, 2012.

KEY CORPORATE HIGHLIGHTS IN 1Q 2013 AND POST PERIOD

  *Sale of 25% and 24% in RussNeft to Bradinor Holdings Limited and Cromeld
    Management Limited, respectively, for a total cash consideration of US$
    1.2 billion. Transaction expected to be complete in the third quarter of
    2013.

  *MTS acquired a 25.095% stake in MTS Bank OJSC for RUB 5.09 billion through
    an additional share issuance by the bank.
  *The Board of Directors of SG-trans approved the company’s reorganisation,
    intended to separate SG-trans’ trading assets into a standalone business.
    Later, in April, Sistema sold 70% of its shares in SG-trans to Financial
    Alliance for RUB 12.0 billion. The price of the deal is based on the
    valuation of SG-trans, excluding SG-trading.
  *SSTL ended operations in 13 out of 22 circles and participated in a new
    licencing auction obtaining 8 technologically neutral licences in the 800
    Mhz band, with 3 carriers of 1.25 Mhz in each circle. SSTL’s total
    footprint now consists of 9 licences, including the previously unaffected
    Rajasthan licence.
  *Sistema successfully launched secondary placement of Series 03 Bonds
    raising RUB 10 billion.

Mikhail Shamolin, President and Chief Executive Officer of Sistema, commented:

“Substantial progress was made during the first quarter across our investment
portfolio. A key milestone was the resolution of SSTL’s licensing issues by
repositioning the company into a more focused data operator with a better
spectrum, lower capital requirements and a clearer path to breakeven. During
the reporting period and in recent weeks, we have delivered substantial return
on capital from our transportation investments. We began consolidating all our
rail investments, through which we expect to recoup more than 80% of our
initial SG-trans acquisition costs. However, a key event for us at the moment,
post reporting period, is the announced divestment of our stake in RussNeft.
The sale will generate US$ 1.2 billion in proceeds, and will deliver a
significant return on our original acquisition.

These operational successes, which are highly accretive and demonstrate our
ability to execute on our strategy, are matched by a solid financial
performance. At the Group holding level, we are reporting year-on-year growth
in revenues and stable OIBDA despite certain seasonal trends. Moreover, with a
step change increase in recommended dividends, as announced by the Board in
April, and an advancing deal pipeline, we are confident of generating
substantial value for our shareholders in 2013.”

Conference call information

Sistema’s management will host an analyst conference call today at 9 am
(London time) / 10 am (CET) / 12 pm (Moscow Time) to present and discuss the
first quarter results.

The dial-in numbers for the conference call are:

UK/ International: +44 208 515 2319

US: +1 480 629 9645

And quote the conference call title: “Sistema First Quarter 2013 Financial
Results”.

A replay of the conference call will be available on the Company’s website
www.sistema.com for 7 days after the event.

For further information, please visit www.sistema.com or contact:

Investor Relations       Public Relations
Evgeniy Chuikov           Yulia Belous
Tel: +7 (495) 692 11 00   Tel: +7 (495) 730 1705
ir@sistema.ru             pr@sistema.ru

                                              4Q 2012^2 Numbers
FINANCIAL                                     for 4Q 2012 are
SUMMARY                                       presented without
                                   Year-on-   one-offs; please    Quarter-on-
             1Q 2013  1Q 2012  Year      see Attachment A   Quarter
                                   Change     for                 Change
(US$                                          reconciliation to
millions)                                     US GAAP financial
                                              measures and
                                              definitions.
Revenues      8,345.6  7,912.9  5.5%      9,450.2            (11.7%)
OIBDA          2,007.1   2,023.5   (0.8%)     2,073.5             (3.2%)
Operating      1,193.7   1,199.0   (0.4%)     1,340.1             (10.9%)
income
Net income
attributable   371.8     380.9     (2.4%)     357.9               3.9%
to Sistema

GROUP OPERATING REVIEW

Sistema’s consolidated revenues were up 5.5% year-on-year in the first quarter
of 2013, mainly as a result of growth at MTS, Bashneft and Detsky mir. The
Group’s revenues decreased by 11.7% quarter-on-quarter, reflecting a decline
in sales at MTS, RTI and Bashneft.

Selling, general and administrative (SG&A) expenses increased by 11.2%
year-on-year, but were down 11.3% quarter-on-quarter to US$ 1,067.1 million in
the first quarter of 2013. The year-on-year increase was mainly due to higher
SG&A expenses at MTS and Bashneft in the reporting quarter. Depreciation,
depletion and amortisation expenses decreased by 1.3% year-on-year to US$
813.4 million.

The Group’s OIBDA remained stable year-on-year. Bashneft reported increased
export duties and higher transportation costs. while MTS’s profitability
expanded to a 43.9% OIBDA margin. OIBDA was down 3.2% quarter-on-quarter,
mainly due to the increased loan provisions at MTS Bank and seasonal sales
decline at Detsky mir. The Group’s OIBDA margin was 24.0% in the first quarter
of 2013, compared to 25.6% in the corresponding period of 2012 and 21.9% in
the fourth quarter of 2012.

Consolidated net income attributable to Sistema in the first quarter of 2013
decreased by 2.4% year-on-year, largely due to foreign exchange losses at MTS
and an increase in the loan provisions at MTS Bank. The Group reported a 3.9%
quarter-on-quarter increase in net income, primarily as a result of net income
growth at Bashneft.

OPERATING REVIEW^3

MTS

                                         Year-on-Year             Quarter-on-
(US$ millions)      1Q 2013  1Q 2012  Change        4Q 2012  Quarter
                                                                  Change
Revenues            3,053.1  3,013.8  1.3%          3,167.6  (3.6%)
OIBDA                1,339.0   1,247.5   7.3%           1,344.9   (0.4%)
Operating income     754.8     638.0     18.3%          813.1     (7.2%)
Net income
attributable to      225.0     272.2     (17.3%)        289.0     (22.1%)
Sistema

Despite the suspension of the company’s operations in Uzbekistan, MTS’
revenues increased by 1.3% year-on-year in the first quarter of 2013,
reflecting growth in voice and data consumption services. Revenues were down
3.6% quarter-on-quarter primarily as a result of seasonality factors. MTS’
subscriber base (including Belarus subscribers) totalled 101.8 million
customers as of March 31, 2013, demonstrating a 1.0% quarter-on-quarter
increase as a result of the resumed operations in Turkmenistan.

MTS reported a 7.3% year-on-year OIBDA increase, reflecting the company’s
revenue growth from data services and a decreased share of low-margin
distribution sales. The OIBDA margin reached 43.9% in the first quarter of
2013, compared to 41.4% and 42.5% in the first and fourth quarters of 2012,
respectively.

The average monthly service revenue per subscriber (ARPU) in Russia grew by
3.9% year-on-year to RUB 292 in the first quarter of 2013, compared to RUB 281
in the corresponding period of 2012. Russian subscribers’ monthly minutes of
use (MOU) increased by 9.9% to 310 minutes in the first quarter of 2013,
compared to 282 minutes in the first quarter of 2012.

In the fixed broadband business, the number of households passed reached 11.9
million at the end of the first quarter of 2013. The pay-TV customer base
totalled 2.9 million subscribers at the end of the reporting quarter, while
the number of broadband Internet subscribers stood at 2.3 million.

In March 2013, MTS acquired a 25.095% stake in MTS Bank OJSC for RUB 5.09
billion through an additional share issuance by the bank. The transaction was
concluded in accordance with the terms of an indicative offer between MTS, MTS
Bank and Sistema announced in October 2012.

In February 2013, MTS’ Extraordinary General Meeting of Shareholders elected
three new members to the company’s Board of Directors - Michel Combes, Thomas
Holtrop and Alexander Gorbunov. The EGM also approved MTS’ participation in
the National Payments Council Association.

In January 2013, Uzdunrobita FE LLC, MTS’s wholly-owned subsidiary in
Uzbekistan, filed a petition to declare bankruptcy in the Tashkent Commercial
Court. Uzdunrobita continues to defend its rights in accordance with the laws
of the Republic of Uzbekistan. MTS also reserves the right to use all legal
options in the international arena in order to claim damages incurred as a
result of an unwarranted attack on its subsidiary in Uzbekistan.

Bashneft

                                         Year-on-Year             Quarter-on-
(US$ millions)      1Q 2013  1Q 2012  Change        4Q 2012  Quarter
                                                                  Change
Revenues            4,128.8  3,923.1  5.2%          4,498.6  (8.2%)
OIBDA                689.8     835.1     (17.4%)        648.4     6.4%
Operating income     547.3     687.3     (20.4%)        511.0     7.1%
Net income
attributable to      307.3     328.4     (6.4%)         264.2     16.3%
Sistema

In the first quarter of 2013, Bashneft reported 5.2% year-on-year revenue
growth, mainly as a result of higher exports of oil products, particularly to
non-CIS countries. A 8.2% quarter-on-quarter decrease in revenues resulted
mainly from a decline in demand for oil products.

Bashneft’s OIBDA decreased by 17.4% year-on-year in the first quarter of 2013,
primarily due to an increase in export duties on oil products following a
shift of sales to non-CIS countries, and a rise in transportation volumes and
taxes. In the reporting quarter, OIBDA increased by 6.4% quarter-on-quarter,
which resulted from cost efficiency measures.

In the first quarter of 2013, Bashneft’s oil production increased by 0.1%
year-on-year to 3.8 million tonnes. The company sold 4.4 million tonnes of oil
and petrochemical products in the first quarter of 2013, a 2.3% year-on-year
increase, with exports amounting to 1.1 million tonnes of crude oil and 2.0
million tonnes of oil products.

Refining volumes from Bashneft’s refinery increased by 1.9% year-on-year in
the first quarter of 2013 and amounted to 5.2 million tonnes of crude oil. In
the reporting quarter, the average refining depth was 84.5% and light-product
yield amounted to 60.2%.

As of March 31, 2013, Bashneft operated a total of 470 petrol stations.

In March 2013, Bashneft completed the formation of an oilfield service company
based on LLC Bashneft-Service Assets, its wholly owned subsidiary. The newly
established oilfield service company provides a full range of services related
to drilling, workover of wells and manufacture of equipment, as well as
transportation and construction. A range of strategic options are being
considered for LLC Bashneft-Service Assets, including possible divestiture.

In February 2013, the Board of Directors of OJSC United Petrochemical Company,
subsidiary of Bashneft, appointed Kirill Tyurdenev as President.

In January 2013, Bashneft opened a new oil deposit located in the
Khasanovskoye licence area.

In January 2013, the Extraordinary Meeting of Shareholders of Bashneft
approved the decision to increase the number of members on the company’s Board
of Directors from 10 to 12. The number of independent directors on the Board
has also been increased.

Bashkirian Power Grid Company (BPGC)

                                  1Q      Year-on-Year   4Q       Quarter-on-
(US$ millions)         1Q 2013  2012   Change        2012    Quarter
                                                                  Change
Revenues               112.7    94.9   18.7%         91.5    23.2%
OIBDA                   50.0      31.2    60.5%          6.8      633.9%
Operating               36.8      19.9    85.1%          (5.1)    -
income/(loss)
Net income/(loss)
attributable to         23.1      5.2     339.7%         (3.7)    -
Sistema

Bashkirian Power Grid Company’s revenues grew by 18.7% year-on-year and by
23.2% quarter-on-quarter, mainly as a result of an increase in electricity
tariffs effective from January 1, 2013.

OIBDA demonstrated significant year-on-year and quarter-on-quarter growth in
the reporting quarter, following an increase in revenues and other income. The
OIBDA margin expanded to 44.4% in the first quarter of 2013, compared to 32.8%
and 7.5% in the first and fourth quarters of 2012, respectively.

In the first quarter of 2013, distribution grid losses decreased by 30.4
million kWh compared to the corresponding period of last year, as a result of
an increased number of installed electricity meters, and tests conducted to
detect non-contractual and non-metered consumption and control over
electricity meter readings. Transmission grid losses increased by 3.3 million
kWh year-on-year in the reporting quarter.

The effective transmission grid output reduced by 6.5% year-on-year in the
reporting quarter. However, the effective distribution power output was up
1.4% year-on-year as a result of organic growth in consumption, and measures
taken to reduce losses.

Sistema Shyam TeleServices Ltd. (SSTL)

                                         Year-on-Year             Quarter-on-
(US$ millions)      1Q 2013  1Q 2012  Change        4Q 2012  Quarter
                                                                  Change
Revenues            65.0     81.0     (19.7 %)      72.0     (9.7%)
OIBDA                (39.0)    (72.0)    -              (113.8)   -
Operating loss       (55.9)    (91.3)    -              (132.4)   -
Net loss
attributable to      (45.0)    (56.7)    -              (114.4)
Sistema

In the first quarter of 2013, SSTL’s revenues decreased by 19.7% year-on-year
and 9.7% quarter-on-quarter following the closure of the company’s operations
in 13 Indian circles. This decrease also reflects the overall uncertainties
that surrounded the licensing issue for most of the reporting quarter, as well
as the new regulatory requirements for customers’ registration. SSTL’s OIBDA
loss narrowed year-on-year and quarter-on-quarter as a result of the cost
optimisation programme and strict control over marketing and other expenses.
The company’s SG&A decreased by 32.4% year-on-year and by 18.6%
quarter-on-quarter.

SSTL’s total wireless (voice and data) subscriber base declined by 24.6%
year-on-year to 11.9 million customers as of March 31, 2013. Blended mobile
ARPU amounted to US$ 1.5 for the first quarter of 2013. The data card
subscriber base decreased by 12.3% quarter-on-quarter, but grew by 1.2%
year-on-year and amounted to 1.56 million subscribers.

Non-voice revenues from both data and VAS accounted for 35.7% of the company’s
total revenues in the first quarter of 2013.

In March 2013, SSTL participated in new spectrum auctions, acquiring licences
in eight circles, resulting in a nine circle footprint, including Rajasthan
circle.

Sistema Mass Media^4

                                 1Q       Year-on-Year   4Q       Quarter-on-
(US$ millions)        1Q 2013  2012    Change        2012    Quarter
                                                                  Change
Revenues              10.7     25.8    (58.7%)       22.9    (53.4%)
OIBDA                  (2.9)     10.8     -              7.8      -
Operating (loss)/      (5.7)     0.6      -              (2.7)    -
income
Net loss
attributable to        (4.9)     (1.4)    -              (3.0)    -
Sistema

Sistema Mass Media’s revenues decreased by 58.7% year-on-year and 53.4%
quarter-on-quarter in the first quarter of 2013, largely due to shifts in the
production schedule. SMM reported an OIBDA loss in the first quarter of 2013,
reflecting the decline in revenues.

In the first quarter of 2013, the Stream-TV subscriber base increased by 15.0%
year-on-year reaching 7.7 million subscribers. The RWS content library
amounted to 1,613 hours as of March 31, 2013.

During the reporting quarter, Stream signed a contract with Alcasar Group to
sell advertising opportunities for the channels “Hunting and Fishing”,
“Farmstead”, “Healthy TV”, “Retro”, “Pets”, “Psychology 21” and “Questions and
Answers”.

RTI

                                         Year-on-Year             Quarter-on-
(US$ millions)      1Q 2013  1Q 2012  Change        4Q 2012  Quarter
                                                                  Change
Revenues            505.6    477.2    5.9%          1,068.3  (52.7%)
OIBDA                2.9       21.4      (86.4%)        (49.8)    -
Operating loss       (20.9)    (2.7)     -              (74.9)    -
Net loss
attributable to      (12.6)    (13.2)    -              (87.0)    -
Sistema

RTI is comprised of four principal business units (“BU”) – Defence Solutions
BU, Comprehensive Security Systems BU, Microelectronics Solutions BU and
System Integration BU.

RTI revenues increased by 5.9% year-on-year in the first quarter of 2013,
reflecting the consolidation of NVision Group, but fell by 52.7%
quarter-on-quarter, mainly as a result of uneven revenue distribution
throughout the year. Year-on-year reduction in OIBDA in the first quarter of
2013 mainly resulted from the shift of contracts scheduled for later periods.

In March 2013, NVision Group and VimpelCom signed agreements for extended
maintenance of broadband access networks in the Ural, Siberia, North-West,
Central, South, and Moscow regions for five years. NVision Group will be
assigned to connect new subscribers and provide maintenance of broadband
access networks in all of these regions, excluding the Central region.

In January 2013, the Crisis Management Centre of Mordovia was opened in
Saransk. RTI participated in designing, supplying and setting up its
equipment.

Binnopharm

                         1Q      1Q      Year-on-Year             Quarter-on-
(US$ millions)          2013   2012   Change        4Q 2012  Quarter
                                                                  Change
Revenues                19.9   14.1   40.8%         20.1     (1.1%)
OIBDA                    4.1     1.6     162.1%         (3.8)     -
Operating income/        2.2     0.4     426.2%         (10.2)
(loss)
Net income/ (loss)
attributable to          1.4     0.7     100.7%         (9.1)     -
Sistema

Binnopharm’s revenues increased by 40.8% year-on-year in the first quarter of
2013, reflecting the increased production of biotech drugs and the higher
sales of Binnopharm’s own products. Revenues quarter-on-quarter were largely
stable.

In the first quarter of 2013, Binnopharm’s OIBDA demonstrated significant
growth year-on-year and quarter-on-quarter with the OIBDA margin reaching
20.6%, mainly as a result of an increase in high margin sales in the
distribution segment.

MTS Bank

                                          Year-on-Year   4Q       Quarter-on-
(US$ millions)       1Q 2013  1Q 2012  Change        2012    Quarter
                                                                  Change
Revenues             206.7    157.1    31.6%         211.1   (2.1%)
OIBDA                 (10.7)    11.9      -              53.4     -
Operating (loss)/     (15.6)    7.2       -              49.4     -
income
Net (loss)/ income
attributable to       (14.0)    3.0       -              46.8     -
Sistema

MTS Bank’s revenues increased by 31.6% year-on-year in the reporting quarter,
as a result of an increase in interest and commission income following the
development of the bank’s retail business. The loan portfolio from joint
projects with MTS grew by 22.6% quarter-on-quarter to US$ 287 million. In the
first quarter of 2013, MTS Bank reported an OIBDA loss, largely due to the
increased retail loan provisions following the growth in the loan portfolio to
individuals.

MTS Bank’s loan portfolio, excluding leases, decreased by 3.5% to US$ 5,222
million in the first quarter of 2013, compared to US$ 5,411 million in the
corresponding quarter of 2012. The interest income from retail and corporate
client transactions grew by 27.1% quarter-on-quarter and amounted to US$ 166.7
million.

In the first quarter of 2013, MTS Bank issued two million MasterCard cards,
including 1.3 million “MTS Money” cards.

In February 2013, MTS Bank launched a new product – instant loans – which can
be received in sales outlets of the bank’s partners.

Detsky mir

                                          Year-on-Year   4Q       Quarter-on-
(US$ millions)       1Q 2013  1Q 2012  Change        2012    Quarter
                                                                  Change
Revenues             222.3    173.9    27.8%         313.8   (29.2%)
OIBDA                 (15.1)    (14.8)    -              49.7     -
Operating (loss)/     (20.1)    (19.3)    -              44.7     -
income
Net (loss)/ income
attributable to       (14.7)    (15.4)    -              23.4     -
Sistema

Detsky mir’s revenues increased by 27.8% year-on-year in the first quarter of
2013, mainly as a result of regional store expansion and an increase in the
average bill. Revenue decline by 29.2% quarter-on-quarter was mainly a result
of seasonality factors. OIBDA was largely stable year-on-year, but fell in the
reporting quarter, reflecting a decrease in revenues. OIBDA remained stable
year-on-year due to additional rent expenses for new retail space and a new
incentive programme for the sales division.

The network of retail outlets amounted to 219 stores, including 21 Early
Learning Centre (ELC) franchised stores, located in 99 cities across Russia
and Kazakhstan. The aggregate retail space was 292,000 sq.m. as of March 31,
2013. In the first quarter of 2013, Detsky mir opened four new stores,
including one ELC store.

Intourist

                                         Year-on-Year             Quarter-on-
(US$ millions)      1Q 2013  1Q 2012  Change        4Q 2012  Quarter
                                                                  Change
Revenues            16.3     16.1     1.2%          24.1     (32.4%)
OIBDA                0.6       (3.7)     -              (17.2)    -
Operating loss       (1.4)     (5.9)     -              (20.2)    -
Net loss
attributable to      (2.7)     (4.0)     -              (14.6)    -
Sistema

Intourist’s revenues slightly increased year-on-year in the first quarter of
2013, but were down quarter-on-quarter due to seasonality effects. The company
reported positive OIBDA in the first quarter of 2013 compared to OIBDA loss in
the first and fourth quarters of 2012, mainly as a result of improvements in
the hotel business segment.

The number of tourists travelling through the Thomas Cook JV fell year-on-year
in the reporting quarter, mainly due to a decrease in package sales to travel
agencies. The number of rooms owned, managed and rented in the first quarter
of 2013 remained at the level of the fourth quarter of 2012.

Medsi

                         1Q                Year-on-Year   4Q      Quarter-on-
(US$ millions)          2013   1Q 2012  Change        2012   Quarter
                                                                  Change
Revenues                74.8   48.8     53.1%         81.9   (8.7%)
OIBDA                    10.0    5.3       87.2%          9.9     1.4%
Operating income         5.0     2.5       95.5%          6.7     (26.1%)
Net income/ (loss)
attributable to          0.6     (2.4)     -              4.0     (86.2%)
Sistema

Medsi demonstrated significant year-on-year revenue growth in the first
quarter of 2013, as a result of the integration with the assets of Medical
Centre for the Mayor and Government of Moscow (SUE). Revenue declined by 8.7%
quarter-on-quarter mainly due to seasonality factors. Medsi’s OIBDA almost
doubled year-on-year and was up 1.4% quarter-on-quarter in the first quarter
of 2013, largely as a result of the business expansion following the merger
with SUE.

In the reporting quarter, the number of patient visits and services provided,
excluding SUE assets, decreased by 11.0% and by 6.0% year-on-year,
respectively, due to the suspension of the health checks project across
commercial organisations and the relocation of some clinics. The average bill,
excluding SUE assets, increased by 15.0% year-on-year to RUB 1,400.

As of March 31, 2013, Medsi’s network consisted of 41 medical clinics and 76
first aid stations with a total floor space of healthcare facilities exceeding
190,000 sq.m.

CORPORATE

                                         Year-on-Year             Quarter-on-
(US$ millions)      1Q 2013  1Q 2012  Change        4Q 2012  Quarter
                                                                  Change
OIBDA^5 Here and
further, OIBDA and
net income (loss)
of the Corporate &
Other category are  (33.8)   (29.6)   -             (190.1)  -
shown without an
effect of
intragroup
dividends.
Net loss             (68.6)    (115.5)   -              (196.1)   -
Indebtedness         1,789.5   1,274.8   40.4%          1,646.8   8.7%

The Corporate segment comprises the companies that control and manage the
Company’s interests in its subsidiaries.

In February 2013, the Board of Directors of SG-trans, which is 100% owned by
Sistema, approved the company’s reorganisation, intended to separate SG-trans’
trading assets into a standalone business. Later, in April, Sistema sold 70%
of its shares in SG-trans to Financial Alliance for RUB 12.0 billion. The
price of the deal is based on the valuation of SG-trans, excluding SG-trading.

In February 2013, Sistema successfully completed a secondary placement of
Series 03 bonds with a par value of RUB 1,000. The bonds will mature on
November 24, 2016. The Series 03 bonds were placed at the price of 100.65% of
the nominal value, which corresponds to an effective yield to maturity of
8.75% per annum. The secondary placement raised RUB 10 billion at its nominal
value.

FINANCIAL REVIEW

Net cash provided by operations in the first quarter of 2013 decreased by 5.6%
year-on-year and by 10.0% quarter-on-quarter to US$ 1,180.5 million due to
changes in working capital.

Net cash used in investing activities totalled US$ 589.8 million in the
reporting quarter, compared to US$ 2,883.4 million in the corresponding period
of 2012.

The Group spent US$ 681.0 million on capital expenditure in the first quarter
of 2013, compared to US$ 749.1 million spent in the first quarter of 2012. A
9.1% year-on-year decrease in the Group’s CAPEX resulted from reduced CAPEX at
MTS. The Group also received US$ 579.8 million from decreasing banking assets
and spent US$ 602.7 million to increase short-term investments, whereas
proceeds from the sale of short-term investments totaled US$ 192.3 million.

Net cash outflow from financing activities amounted to US$ 257.1 million in
the first quarter of 2013, compared to US$ 124.3 million in the corresponding
quarter of 2012. The Group’s proceeds from borrowings in the reporting quarter
totalled US$ 1,368.1 million, whereas the principal payments on long-term and
short-term borrowings amounted to US$1,322.7 million.

The Group’s cash balances of continuing operations stood at US$ 2,012.7
million as of March 31, 2013 (excluding an amount of US$ 901.8 million which
comprises the Group’s banking activities) compared to US$ 1,576.8 million as
of March 31, 2012 (excluding an amount of US$ 1,118.3 million which comprises
the Group’s banking activities and cash and equivalents of discontinued
operations of US$ 91.2 million). The Group’s net debt (short-term and
long-term debt less cash and cash equivalents and highly liquid deposits)
amounted to US$ 13,472.8 million as of March 31, 2013, compared to US$
13,959.8 million as of March 31, 2012.

SIGNIFICANT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

MTS

In May 2013, MTS was named as one of the BRANDZ™ Top 100 Most Powerful Brands,
a ranking published by the Financial Times and Millward Brown Optimor, a
leading global market research and consulting firm.

In April 2013, the Board of Directors of MTS approved a new dividend policy,
which stipulates that for the calendar years 2013-2015, MTS aims to pay out a
minimum dividend distribution of an amount equal to at least 75% of Free Cash
Flow for the relevant financial period or, if greater, RUB 40.0 billion per
year. The Board also recommended that MTS begins to pay out dividends on a
semi-annual basis using interim and full year financial results.

In April 2013, the Tashkent Commercial Court declared Uzdunrobita FE LLC,
MTS’s wholly-owned subsidiary in Uzbekistan, bankrupt and has initiated
liquidation procedures. In accordance with the terms of local legal
liquidation procedures, Uzdunrobita’s CEO has been relieved of his duties, and
all powers regarding the oversight and governance of Uzdunrobita now rest with
the liquidation administrator. MTS reserves its rights to pursue all available
legal options both in Uzbekistan and internationally in order to claim damages
or seek any other available remedy in connection with the unlawful termination
of Uzdunrobita’s operations in Uzbekistan.

Bashneft

In May 2013, Fitch Ratings affirmed Bashneft’slong-termforeign and local
currency Issuer Default Ratings (IDR) at'BB' with revised outlooks
toPositive from Stable.

In April 2013, Bashneft’s Board of Directors set June 27, 2013 as the date for
the Annual General Meeting of its shareholders. The Board recommends the AGM
to approve the 2012 dividend payment of RUB 24 per ordinary registered share
and per preferred registered share.

RussNeft

In June 2013, Sistema signed two binding Sale Purchase Agreements with
Bradinor Holdings Limited (“Bradinor”) and Cromeld Management Limited
(“Cromeld”) for the sale by the Company of 25% and 24% stakes in OJSC Oil and
Gas Company RussNeft, respectively, for a total cash consideration of US$ 1.2
billion. The beneficial owners of Bradinor and Cromeld are Mikail Shishkhanov
and Felix Dlin, respectively. The completion of the transaction is expected in
the third quarter of 2013 and is subject to satisfaction of all conditions
precedent.

SSTL

In April 2013, Dmitry Shukov was appointed CEO of SSTL. Dmitry formerly held
senior management positions at Tele2 Russia and MTS.

Binnopharm

In April 2013, Binnopharm and Alium Group of Companies, a producer of infusion
solutions and blood substitutes, completed a deal that combines their assets.

In April 2013, Pavel Medvedev was appointed as the new Chief Executive Officer
of Binnopharm with immediate effect. Mr. Medvedev previously held the position
of Deputy CEO at the company.

Medsi

In May 2013, Alexei Chupin was appointed President of the Medsi Group of
companies.

Corporate

In May 2013, the Board approved the following new appointments to Sistema’s
Management Board with effect from June 1, 2013: Vsevolod Rozanov as Senior
Vice-President and Chief Financial Officer; Alexey Buyanov as First
Vice-President, Portfolio Manager; and Alexey Chupin appointed as
Vice-President, Portfolio Manager.

In May 2013, in line with the Company’s Long-Term Incentive Programme,
approximately 0.3% of ordinary shares of Sistema’s charter capital was granted
to certain members of Sistema’s management and its Board of Directors.

In April 2013, Sistema’s Board of Directors set the date for the Annual
General Meeting of Shareholders for June 29, 2013. The Board recommended the
AGM to set the total dividend payment on Sistema's shares for 2012 at RUB
9.264 billion, representing a payment of RUB 0.96 per ordinary share. The
total proposed dividend payment has been determined on the basis of Sistema's
full year 2012 US GAAP net income and the corporate centre's net gain from
disposal of assets in 2012. The Board recommended two new candidates to the
Board of Directors – Sergei Boev and Peter Mandelson – who will replace
Vyacheslav Kopiev and Evgeny Novitsky.

In April 2013, Sistema completed another stage of the planned reorganisation
and strategic integration of its transportation assets – SG-trans and
Financial Alliance LLC. At this stage of the reorganisation, Sistema sold 70%
of its shares in SG-trans to Financial Alliance for RUB 12.0 billion. The
price of the deal is based on the valuation of SG-trans, excluding SG-trading.
In addition, Sistema signed an agreement with Unirail Holdings Limited, its
partners in Financial Alliance, regarding Sistema’s sale of its 15% stake in
SG-trans for RUB 2.5 billion to Unirail in the second quarter of 2013. In
accordance with the agreement, Sistema and Unirail will form the parity
structure of ownership and management of railway assets by sharing the risks
and the initial investments of Sistema. Furthermore, the agreement reflects
the intention of both parties to sell 100% of SG-trading to a third party by
the fourth quarter of 2013 at a fair market price. If the deal is not
completed within the stated period, Unirailagrees to buy out up to 50% of
SG-trading from Sistema. According to the agreement, the final stage of the
restructuring of Sistema’s rail assets stipulates the merger of Financial
Alliance with SG-trans under the SG-trans brand.

                                     ***

For further information, please visit www.sistema.com or contact:

Investor Relations Public Relations

Evgeniy Chuikov Yulia Belous

Tel: +7 (495) 692 1100 Tel: +7 (495) 730 1705

ir@sistema.ru pr@sistema.ru

Sistema is the largest publicly-traded diversified holding company in Russia
and the CIS, which invests in and is a major shareholder of companies serving
over 100 million customers in the sectors of telecommunications, high
technology, oil and energy, radars and aerospace, banking, retail, mass-media,
tourism and healthcare services. Founded in 1993, the Company reported
revenues of US$ 8.3 billion for the first quarter of 2013, and total assets of
US$ 44.9 billion as at March 31, 2013. Sistema’s global depository receipts
are listed under the symbol “SSA” on the London Stock Exchange. Sistema’s
ordinary shares are listed under the symbol “AFKS” on the MICEX-RTS Stock
Exchange. Sistema was ranked number 315 in the 2011 edition of the Fortune
Global 500 list. Website: www.sistema.com

The Company is not an investment company, and is not and will not be
registered as such, under the U.S. Investment Company Act of 1940.

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Sistema. You can identify forward looking statements by terms
such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “will,”
“could,” “may” or “might” the negative of such terms or other similar
expressions. We wish to caution you that these statements are only predictions
and that actual events or results may differ materially. In addition, there is
no assurance that the new contracts entered into by our subsidiaries
referenced above will be completed on the terms contained therein or at all.
We do not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events. Many factors could cause the actual results to differ
materially from those contained in our projections or forward-looking
statements, including, among others, general economic conditions, our
competitive environment, risks associated with operating in Russia, rapid
technological and market change in our industries, as well as many other risks
specifically related to Sistema and its operations.

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012

(Amounts in thousands of U.S. dollars, except per share amounts)

                                               Three months ended
                                            
                                               March 31,
                                               2013            2012
                                                                             
Sales                                      $   8,142,087     $   7,762,475
Revenues from banking activities               203,520           150,424
                                                                
TOTAL REVENUES                                 8,345,607         7,912,899
                                                                             
Cost of sales, exclusive of depreciation       (3,159,907)       (3,116,377)
and amortization shown separately below
Cost related to banking activities,
exclusive of depreciation and                  (142,367)         (75,235)
amortization shown separately below
Selling, general and administrative            (1,067,091)       (959,533)
expenses
Depreciation, depletion and amortization       (813,395)         (824,473)
Transportation costs                           (222,264)         (179,616)
Impairment of long-lived assets other
than goodwill and provisions for other         (16,188)          (66,127)
assets
Provisions for claims                          43,561            (821)
Taxes other than income tax                    (1,729,753)       (1,516,248)
Other operating (expenses)/income, net         (50,856)          12,563
Equity in results of affiliates                6,346             11,956
                                                                
OPERATING INCOME                               1,193,693         1,198,988
                                                                             
Interest income                                47,816            74,434
Change in fair value of derivative             (650)             (602)
instruments
Interest expense, net of amounts               (327,223)         (352,002)
capitalized
Foreign currency transactions                  (30,192)          145,604
(losses)/gains
                                                                
Income from continuing operations before       883,444           1,066,422
income tax
                                                                             
Income tax expense                             (248,550)         (316,093)
                                                                
Income from continuing operations              634,894           750,329
                                                                             
(Loss)/income from discontinued                (4,873)           22,484
operations, net of income tax effect
                                                                
NET INCOME                                 $   630,021       $   772,813
                                                                             
Noncontrolling interest                        (258,201)         (391,907)
                                                                
NET INCOME attributable to Sistema JSFC    $   371,820       $   380,906
                                                                             
Income per share, basic and diluted,           4.04              4.08
U.S. cent

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF MARCH 31, 2013 AND DECEMBER 31, 2012

(Amounts in thousands of U.S. dollars, except share amounts)

                                          March 31,
                                                       December 31, 2012
                                          2013
                                                                             
ASSETS
                                                                             
CURRENT ASSETS:
Cash and cash equivalents             $   2,012,732    $   1,872,741
Short-term investments                    1,604,907        1,214,869
Assets from banking activities,
current portion (including cash and       3,672,658        4,342,984
cash equivalents of $901,787 and
$769,411)
Accounts receivable, net                  2,421,668        2,265,127
Other current assets                      1,749,912        1,678,992
VAT receivable                            582,722          611,097
Inventories and spare parts               1,899,076        1,814,022
Deferred tax assets, current              387,121          348,773
portion
Disposal group held for sale              95,098           105,327
                                                          
Total current assets                      14,425,894       14,253,932
                                                                             
NON-CURRENT ASSETS:
Property, plant and equipment, net        20,693,563       21,188,182
Advance payments for non-current          238,307          239,707
assets
Goodwill                                  1,659,598        1,699,881
Other intangible assets, net              2,635,345        2,211,266
Investments in affiliates                 1,497,353        1,482,721
Assets from banking activities, net       2,303,736        2,255,709
of current portion
Debt issuance costs, net                  110,546          155,895
Deferred tax assets, net of current       380,456          365,987
portion
Long-term investments                     258,082          269,180
Other non-current assets                  686,079          603,827
                                                          
Total non-current assets                  30,463,065       30,472,355
                                                          
TOTAL ASSETS                          $   44,888,959   $   44,726,287

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF MARCH 31, 2013 AND DECEMBER 31, 2012 (CONTINUED)

(Amounts in thousands of U.S. dollars, except share amounts)

                                          March 31,
                                                       December 31, 2012
                                          2013
                                                                             
LIABILITIES AND SHAREHOLDERS’
EQUITY
                                                                             
CURRENT LIABILITIES:
Accounts payable                      $   2,232,149    $   2,508,831
Liabilities from banking                  4,006,338        4,131,390
activities, current portion
Taxes payable                             916,365          764,683
Deferred tax liabilities, current         157,637          139,842
portion
Subscriber prepayments, current           540,284          615,651
portion
Accrued expenses and other current        2,983,932        2,908,468
liabilities
Short-term loans payable                  265,544          292,260
Current portion of long-term debt         2,226,283        2,909,729
Disposal group held for sale              67,969           73,132
                                                          
Total current liabilities                 13,396,501       14,343,986
                                                                             
LONG-TERM LIABILITIES:
Long-term debt, net of current            13,167,256       12,462,339
portion
Subscriber prepayments, net of            107,138          112,805
current portion
Liabilities from banking                  755,610          1,057,072
activities, net of current portion
Deferred tax liabilities, net of          2,091,954        2,046,603
current portion
Asset retirement obligation               229,556          228,627
Postretirement benefits obligation        79,354           89,038
Property, plant and equipment             82,563           88,380
contributions
Other long-term liabilities               614,728          250,599
                                                          
Total long-term liabilities               17,128,159       16,335,463
                                                          
TOTAL LIABILITIES                         30,524,660       30,679,449
                                                                             
Commitments and contingencies             -                -
                                                                             
Redeemable non-controlling                739,661          731,661
interests
                                                                             
SHAREHOLDERS’ EQUITY:
Share capital (9,650,000,000 shares
issued and 9,209,574,962 shares           30,057           30,057
outstanding with par value of 0.09
Russian Rubles)
Treasury stock (440,425,038 with          (501,109)        (501,109)
par value of 0.09 Russian Rubles)
Additional paid-in capital                2,893,032        2,882,819
Retained earnings                         7,461,292        7,111,088
Accumulated other comprehensive           (553,876)        (327,622)
loss
                                                          
Total Sistema JSFC shareholders’          9,329,396        9,195,233
equity
                                                                             
Non-redeemable noncontrolling             4,295,242        4,119,944
interests
                                                                             
TOTAL EQUITY                              13,624,638       13,315,177
                                                          
TOTAL LIABILITIES AND EQUITY          $   44,888,959   $   44,726,287

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012

(Amounts in thousands of U.S. dollars)

                                       Three months ended
                                                                    
                                       March 31,
                                       2013              2012
                                                                             
CASH FLOWS FROM
OPERATING ACTIVITIES:
                                                                             
Net income                     $       630,021         $       772,813
                                                                             
Loss/(income) from
discontinued operations,               4,873                   (22,484)
net of income tax effect
                                                                             
Income from continuing                 634,894                 750,329
operations
                                                                             
Adjustments to reconcile
net income to net cash
provided by operations:
Depreciation, depletion                813,395                 824,473
and amortization
Equity in results of                   (6,346)                 (11,956)
affiliates
Deferred income tax                    49,854                  22,026
expense
Foreign currency
transactions                           30,192                  (145,604)
losses/(gains)
Impairment of long-lived
assets other than                      16,188                  66,127
goodwill and provisions
for other assets
Provisions for claims                  (43,561)                821
Amortization of                        (15,364)                (7,785)
connection fees
Allowance for loan                     63,076                  6,830
losses
Dividends received from                9,865                   9,803
affiliates
Non-cash compensation to
employees of                           5,500                   2,251
subsidiaries
Other non-cash items                   49,334                  8,791
                                                                             
Changes in operating
assets and liabilities,
net of effects from
purchase of businesses:
Trading securities                     (4,149)                 40,549
Accounts receivable                    (240,393)               (353,987)
VAT receivable                         14,234                  (39,928)
Inventories and spare                  (131,133)               (348,330)
parts
Other current assets                   (127,793)               (200,846)
Accounts payable                       (220,030)               87,961
Subscriber prepayments                 (60,744)                (4,853)
Taxes payable                          171,923                 322,922
Accrued expenses and                   172,447                 199,848
other liabilities
                                                                             
Net cash provided by
operating activities of                1,181,389               1,229,442
continuing operations
Net cash provided by
operating activities of                (916)                   20,615
discontinued operations
                                                                             
Net cash provided by           $       1,180,473       $       1,250,057
operating activities

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012 (CONTINUED)

(Amounts in thousands of U.S. dollars)

                                               Three months ended
                                            
                                               March 31,
                                               2013            2012
                                                                             
CASH FLOWS FROM INVESTING ACTIVITIES:
                                                                             
Payments for purchases of property,            (566,161)         (651,716)
plant and equipment
Payments for purchases of intangible           (114,787)         (97,403)
assets
Purchase of investments in affiliated          (49,326)          -
companies
Payments for purchases of long-term            -                 (256,014)
investments
Payments for purchases of short-term           (602,736)         (1,295,468)
investments
Payments for purchases of other                (2,206)           (114,075)
non-current assets
(Increase)/decrease in restricted cash         (71,306)          50,621
Proceeds from sale of subsidiaries, net        -                 5,180
of cash disposed
Proceeds from sale of property, plant          42,788            -
and equipment
Proceeds from sale of long-term                -                 219,919
investments
Proceeds from sale of other non-current        1,863             5,178
assets
Proceeds from sale of short-term               192,340           197,601
investments
Net decrease/(increase) in loans to            579,766           (947,236)
customers and banks
                                                                             
Net cash used in investing activities      $   (589,765)     $   (2,883,413)
                                                                             
CASH FLOWS FROM FINANCING ACTIVITIES:
                                                                             
Principal payments on short-term               (28,689)          96,048
borrowings, net
Net (decrease)/increase in deposits from       (311,123)         502,978
customers of the banking division
Proceeds from sale of treasure stock           -                 73,083
Proceeds from long-term borrowings, net        1,368,112         1,009,568
of debt issuance costs
Principal payments on long-term                (1,293,994)       (1,879,934)
borrowings
Proceeds from capital transactions with        8,623             73,987
shares of existing subsidiaries
                                                                             
Net cash used in financing activities      $   (257,071)     $   (124,270)
                                                                             
Effect of foreign currency translation     $   (62,186)      $   220,300
on cash and cash equivalents
                                                                             
Net decrease in cash and cash              $   271,451       $   (1,537,326)
equivalents
                                                                             
Cash and cash equivalents at the
beginning of the period (including cash        2,643,068         4,322,708
of discontinued operations)
                                                                             
Cash and cash equivalents at the end of
the period (including cash of                  2,914,519         2,785,382
discontinued operations)
Cash and cash equivalents of
discontinued operations at the end of          -                 (90,282)
the period
                                                                             
Cash and cash equivalents of continuing    $   2,914,519     $   2,695,100
operations at end of the period *
                                                                             
* Cash and cash equivalents at the end
of the period comprised of the
following:
Non-banking activities                     $   2,012,732     $   1,576,827
Banking activity                               901,787           1,118,273
                                           $   2,914,519     $   2,695,100

SISTEMA JSFC AND SUBSIDIARIES

UNAUDITED SEGMENTAL BREAKDOWN FOR THE  THREE MONTHS ENDED MARCH 31, 2013 AND
2012

(Amounts in thousands of U.S. dollars)

For the three                                                                                 Total
months ended       MTS         Bashneft    SSTL       MTS Bank   RTI        Corporate  reportable  Other      Total
March 31, 2013                                                                                segment
                                                                                                              
Net sales to
external            3,046,789    4,126,903    64,991      203,520     382,268     10,608      7,835,079    510,528     8,345,607
customers ^(a)
Intersegment        6,271        1,848        -           3,224       123,361     8,321       143,025      28,076      171,101
sales
Equity in results   8,267        (4,230)      -           -           (4,441)     -           (404)        6,750       6,346
of affiliates
Net interest        -            -            -           (10,240)    -           -           (10,240)     -           (10,240)
expense ^(b)
Depreciation,
depletion and       570,933      142,527      16,868      4,857       23,811      4,445       763,441      49,954      813,395
amortization
Operating           768,105      547,291      (55,873)    (15,579)    (20,904)    (38,200)    1,184,840    15,859      1,200,699
income/(loss)
Interest income     18,196       39,734       1,625       -           2,766       17,246      79,567       4,729       84,296
Interest expense    141,202      83,480       33,838      -           26,118      41,235      325,873      31,228      357,101
Income tax          147,047      102,481      -           (1,479)     (19,307)    10,683      239,425      9,125       248,550
expense/(benefit)
Investments in      166,460      964,230      -           -           242,670     117,073     1,490,433    6,920       1,497,353
affiliates
Segment assets      15,589,935   15,614,153   1,177,525   6,424,631   3,471,274   2,204,154   44,481,672   4,426,648   48,908,320
Indebtedness ^(c)   7,155,410    4,001,690    853,343     -           1,476,215   1,789,457   15,276,115   382,968     15,659,083
Capital             402,091      192,371      -           6,591       10,210      11,651      622,914      58,034      680,948
expenditures ^(d)

For the three                                                                                 Total
months ended       MTS         Bashneft    SSTL       MTS Bank   RTI        Corporate  reportable  Other      Total
March 31, 2012                                                                                segment
                                                                                                              
Net sales to
external            3,012,436    3,920,002    80,975      150,424     361,148     9,290       7,534,275    378,624     7,912,899
customers ^(a)
Intersegment        1,365        3,087        -           6,791       116,087     8,615       135,945      7,630       143,575
sales
Equity in results   4,597        11,588       -           -           -           -           16,185       (4,229)     11,956
of affiliates
Net interest        -            -            -           2,698       -           -           2,698        -           2,698
expense ^(b)
Depreciation,
depletion and       594,600      147,791      19,278      4,760       24,132      3,289       793,850      30,623      824,473
amortization
Operating           652,860      687,275      (91,284)    7,186       (2,718)     (32,904)    1,220,415    (2,653)     1,217,762
income/(loss)
Interest income     28,824       42,202       1,810       -           3,104       33,708      109,648      32,403      142,051
Interest expense    160,713      87,385       41,527      -           17,247      37,811      344,683      27,177      371,860
Income tax          157,223      137,330      -           3,264       7,700       7,697       313,214      2,879       316,093
expense/(benefit)
Investments in      173,355      1,041,243    -           -           236,287     37,982      1,488,867    16,864      1,505,731
affiliates
Segment assets      16,562,600   16,140,203   1,001,790   7,254,842   2,668,116   3,280,763   46,908,314   4,491,161   51,399,475
Indebtedness ^(c)   8,080,246    4,390,893    1,354,808   -           1,262,231   1,274,755   16,362,933   345,517     16,708,450
Capital             463,278      73,177       39,082      4,691       29,824      8,797       618,849      130,270     749,119
expenditures ^(d)

a. Interest income and expenses of the MTS Bank are presented as revenues from
financial services and cost of financial services, correspondingly, in the
Group’s consolidated financial statements.

b. Represents the net interest result of banking activities. In reviewing the
performance of MTS Bank, the chief operating decision maker reviews the net
interest result, rather than the gross interest amounts.

c. Represents the sum of short-term and long-term debt.

d. Represents purchases of property, plant and equipment and intangible
assets.

Attachment A

Non-GAAP financial measures. This press release includes financial information
prepared in accordance with accounting principles generally accepted in the
United States of America, or US GAAP, as well as other financial measures
referred to as non-GAAP. The non-GAAP financial measures should be considered
in addition to, but not as a substitute for, the information prepared in
accordance with US GAAP.

Operating Income Before Depreciation and Amortization (OIBDA) and OIBDA
margin. OIBDA represents operating income before depreciation and
amortization. OIBDA margin is defined as OIBDA as a percentage of our net
revenues. Our OIBDA may not be similar to OIBDA measures of other companies;
is not a measurement under accounting principles generally accepted in the
United States and should be considered in addition to, but not as a substitute
for, the information contained in our consolidated statement of operations. We
believe that OIBDA provides useful information to investors because it is an
indicator of the strength and performance of our ongoing business operations,
including our ability to fund discretionary spending such as capital
expenditures, acquisitions of businesses and other investments and our ability
to incur and service debt. While depreciation and amortization are considered
operating costs under generally accepted accounting principles, these expenses
primarily represent the non-cash current period allocation of costs associated
with long-lived assets acquired or constructed in prior periods. Our OIBDA
calculation is commonly used as one of the bases for investors, analysts and
credit rating agencies to evaluate and compare the periodic and future
operating performance and value of companies. OIBDA can be reconciled to our
consolidated statements of operations as follows:

Operating income and OIBDA reconciliation

                          1Q 2013  1Q 2012  4Q 2012
Operating Income            1,193.7   1,199.0   967.5
One off items               -         -         372.6
Adjusted operating income   1,193.7   1,199.0   1,340.1
Depreciation, depletion
                            813.4     824.5     733.4
and amortization
Adjusted OIBDA              2,007.1   2,023.5   2,073.5

Net income reconciliation

                    1Q 2013  1Q 2012  4Q 2012
Net income            371.8     380.9     200.9
One off items         -         -         157.1
Adjusted net income   371.8     380.9     357.9

^1 Including highly liquid deposits.

^2 Numbers for 4Q 2012 are presented without one-offs; please see Attachment A
for reconciliation to US GAAP financial measures and definitions.

^3 Here and from hereon, the comparison of period to period revenues are
presented on an aggregated basis, excluding revenues from intra-segment
(between entities in the same segment) transactions, but before inter-segment
(between entities in different segments) eliminations, unless accompanied by
the word “consolidated”. Amounts attributable to individual companies, where
appropriate, are shown prior to both intra-segment and inter-segment
eliminations and may differ from respective standalone results due to certain
reclassifications and adjustments.

^4 Financial results of Stream.ru are included into SMM segment for all
periods presented.

^5 Here and further, OIBDA and net income (loss) of the Corporate & Other
category are shown without an effect of intragroup dividends.

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