Note 19: Operating Licenses

In connection with providing telecommunication services, the Group has been issued various operating GSM licenses by the Russian Ministry of Information Technologies and Communications. In addition to the licenses received directly from the Russian Ministry of Information Technologies and Communications, the Group has been granted access to various telecommunication licenses through acquisitions. In foreign subsidiaries, the licenses are granted by the local Communication authorities.

At December 31, 2007 and 2006, the recorded values of the Group’s telecommunication licenses were as follows:

Amortization expense for the years ended December 31, 2007, 2006 and 2005, amounted to $195.7 million, $211.3 million and $194.3 million, respectively.

As of December 31, 2007, operating licenses related to Tatarstan Republic and the majority of licenses related to Krasnodar, Adygeya and Northern Osetia were fully amortized and their respective cost and accumulated amortization were written off from the consolidated balance sheet.

Based on the cost of amortizable operating licenses existing at December 31, 2007, the estimated future amortization expenses are $148.1 million during 2008, $86.0 million during 2009, $78.8 million during 2010, $55.5 million during 2011, $42.0 million during 2012 and $255.2 million thereafter. The actual amortization expense reported in future periods could differ from these estimates as a result of new intangible assets acquisitions, changes in useful lives and other relevant factors.

In 2006, each of the Group’s licenses, except for the licenses covering the Moscow license area and Uzbekistan, contained a requirement for service to be commenced and for subscriber number and territorial coverage targets to be achieved by a specified date. In 2007, there were alterations in terms of licenses covering the Russian Federation. The requirements for subscriber numbers and territorial coverage targets were revoked. Instead, the targets were set for start date of service. Management believes that the Group is in compliance with all material terms of its licenses.

The Group’s operating licenses do not provide for automatic renewal. However, licenses that expired during the year ended December 31, 2007, were renewed. The cost to renew the licenses was not significant. The Group has limited experience with the renewal of its existing licenses. Management believes that licenses required for the Group’s operations will be renewed upon expiration.