Operational Review

Strong Top and Bottom Line Performance in 2007

MTS’ strong financial performance and improved operating indicators in 2007 were the result of the successful execution of the Company’s corporate strategy by the management team. The adoption of the 3+2 strategy in 2007 has enabled MTS to fulfill its objectives relating to:

• Capturing growth in MTS’ core markets
• Creating value in developing markets
• Developing mobile broadband in the Company’s markets of operation
• Maintaining cost efficiency and further developing our Group

The introduction of the 3+2 strategy was strengthened by the continued success of MTS’ rebranding campaign, as well as the development of new marketing approaches and a more customer-centric strategy.

MTS’ total consolidated revenues were up by 29% year-on-year in 2007, amounting to $8.25 billion. Key drivers for revenue growth during the year included:

• Continued growth in voice usage
• Increasing usage of messaging services
• Further adoption of data service and content

A focus on cost efficiency through the Group organization enabled MTS to achieve an OIBDA margin of 51.2% for the full year.

For 2008, MTS intends to deliver revenue growth of at least 25% and to maintain an OIBDA margin of above 50% through effective cost management in its key markets.