07 October 2004

The total number of cellular subscribers in Russia reached 59 mln as of September 30, 2004, which is a record monthly increase of 3.4 mln users. Total of 22.8 mln subscribers joined Russian cellular networks this year. Current mobile services penetration in the country is at 41% while it was only 25% in December 2003 and 21% in September 2003.

Russian Mobile Subscribers

Mobile Subscribers	September 30, 2004	August 31, 2004
Total Russia	59,040,000	55,630,000
Penetration	40.7%	38.3%
Moscow	14,852,613	14,333,793
Penetration	87.4%	84.4%
St.Petersburg	5,028,259	4,830,395
Penetration	79.3%	76.2%
Subscribers outside Moscow and St.Pete	39,159,128	36,465,812
Penetration	32.1%	29.9%

MTS has the largest market share in Russia, though Vimpelcom is catching up agressively, mainly thanks to successful sales in regions. Vimpelcom has the largest number of regional networks in operation - 72 compared to 63 of MTS (excluding CIS subsidiaries) and 69 of MegaFon.

Russian Cellular Market Breakdown, September 2004

Russian Net Additions, September 2004

Top 10 Mobile Operators

#	Company	September 30, 2004	August 31, 2004
1	MTS	27,600,000	26,440,000
	Moscow	6,700,000	6,535,000
	Ukraine (UMC)	5,530,000	5,267,000
	Belarus	970,000	895,150
	Uzbekistan	260,000	244,200
2	Vimpelcom	20,550,000	18,470,000
	Moscow	6,645,000	6,430,000
	Kazakhstan	676,500	647,000
3	MegaFon	11,487,353	10,508,263
	Moscow	1,448,832	1,312,901
	Tajikistan	28,000	26,593
4	Uralsvyazinform	1,778,000	1,709,000
5	SMARTS Group	1,600,400	1,555,000
6	Sibirtelecom	759,800	735,100
7	N.Novgorod Cellular	523,300	503,720
8	Ekaterinburg Cellular Communications	326,713	315,840
9	New Telephone Company	211,605	180,920
10	Skylink	182,000	180,100

Moscow and St.Petersburg

Moscow License Area

Despite the overall subscriber increase in Russia in September compared to August, net adds in Moscow, the Russia's largest market, decreased slightly. We believe one of the reasons for that is that more and more families purchase mobile phones for their children in August, before the start of the school year, thus accelerating August sales to a more than usual level.

Moscow Market Breakdown September 30, 2004 Note: Skylink's (MCC) market share is less than 0.5% as of September 2004

Net Additions in Moscow, September 2004

St.Petersburg and Leningrad Region

St.Petersburg market demonstrated impressive growth. In our view that was mainly thanks to the resolution of the Vimpelcom's numbering capacity problem which ceased the market development for the company in August. In September Vimpelcom outperformed competitors in St.Pete attracting more than 75 thsd new users.

St. Petersburg Market Breakdown September 30, 2004

Net Additions in St.Petersburg September 2004

Beyond Russia

Vimpelcom finalised the acquistion of KaR-Tel (K-mobile), 2nd largest operator in Kazakhstan. That brought 670,000 subscribers in to Vimpelcom portfolio.

MTS' unconsolidated subsidiary in Belarus became the market leader in September. The company started operations in the country in June 2002 while its major rival, GSM operator Velcom, works since April 1999. MTS was a leader in terms of net additions for last 17 months in a row (!) and finally won the largest market share.

Operations of MTS' daughter company in Ukraine (UMC) have also been quite impressive. Monthly net adds were above 200,000 for last 6 months and the company has been outperforming its major competitor, Telenor-controlled, Kyivstar for 9 months in terms of net adds.

13 September 2004

Despite the traditional August slowdown in mobile sales observed in previous years, the last summer month of 2004 brought as many as 3.1 mln new subscribers, outperforming record July 2004 sales. The subscriber net additions were also 1.5 mln (!) higher than a year ago. Penetraton in the country is growing steadily. According to our estimates it has reached 38.3% as of August 31, 2004 (36.2% in July 2004 and 19.6% in August 2003).

Russian Mobile Subscribers

Mobile Subscribers	August 31, 2004	July 31, 2004
Total Russia	55,630,000	52,520,000
Penetration	38.3%	36.2%
Moscow	14,333,793	13,759,384
Penetration	84.4%	81.0%
St.Petersburg	4,830,395	4,684,195
Penetration	76.2%	73.9%
Subscribers outside Moscow and St.Pete	36,465,812	34,076,421
Penetration	29.9%	28.0%

Vimpelcom revs up sales both in Moscow and in the regions encouraged by the resolution of the numbering capacity problem. MTS keeps leading positions in the Moscow License Area. Impressive net adds in Moscow demonstrated by MegaFon should be attributed to introduction of a new tariff whereby customers are being charged for connection only rather than actual air-time used.

Russian Cellular Market Breakdown, August 2004

Russian Net Additions, August 2004

Top 10 Mobile Operators

#	Company	August 31, 2004	July 31, 2004
1	MTS	26,440,000	24,937,500
	Moscow	6,535,000	6,350,000
	Ukraine (UMC)	5,267,000	4,960,000
	Belarus	895,150	817,500
	Uzbekistan	244,200	230,000
2	Vimpelcom	18,470,000	17,300,000
	Moscow	6,430,000	6,204,000
3	MegaFon	10,508,263	9,758,995
	Moscow	1,312,901	1,145,484
	Tajikistan	26,593	25,300
4	Uralsvyazinform	1,709,000	1,617,500
5	SMARTS Group	1,555,000	1,491,000
6	Sibirtelecom	735,100	710,175
7	N.Novgorod Cellular	503,720	453,000
8	Ekaterinburg Cellular Communications	315,840	304,906
9	New Telephone Company	180,920	203,543
10	Skylink	180,100	178,100

Moscow and St.Petersburg

Moscow License Area

Moscow Market Breakdown August 31, 2004

Net Additions in Moscow, August 2004

St.Petersburg and Leningrad Region

So far Vimpelcom failed to fully capitalise on additional numbering capacity in St.Petersburg. The operator increased the churn in order to free numbers for new customers, while MTS and MegaFon performed quite well in the city, signing 45 thsd and 70 thsd net additional subscribers respectively.

St. Petersburg Market Breakdown August 31, 2004

Net Additions in St.Petersburg August 2004

Beyond Russia

Steady cellular growth is observed in the rest of CIS markets where cellular boom either just started or is to start within the next 6 to 12 months.

Vimpelcom has won the tender for the 2nd largest Kazakhstan operator KaR-Tel . The acquisition deal is to be closed shortly and probably already in September we will add KaR-Tel subscribers to Vimpelcom statistics. That will bring 600+ thsd users under Vimpelcom umbrella.

MTS is about to outnumber its major competitor Velcom in Belarus. MTS has been leading in net additions since April 2003 and finished August with 48% market share. The difference between the two market leaders is just 5,000 subscribers (Velcom had 900 thsd subscribers at the end of August according to Mforum.ru). The remaining 4% of the market is being held by BelCel - NMT/CDMA-450 operator in Belarus. The announcement of the tender results for the 3rd GSM national license may also give a new momentum to the cellular market development in the Republic.

05 August 2004

Cellular subscriptions soared in July setting new net additions record. Subscriber additions totaled 3.05 mln, 16.3 mln YTD increase or 25.64 mln growth (95%) from July 2003. Total number of cellular customers in the country reached almost 53 mln. Russian cellular penetration stood at 36.2% as of 31 July 2004 (18.5% in July 2003).

Moscow alone brought 360k new customers or 12% of the overall Russian additions. Vimpelcom adopted a stricter churn policy in the Moscow License Area. The company reduced deactivation period of inactive (with zero balance) subscribers from 5 to 4 months, which resulted in modest net additions for the second month in a row. MTS attracted over 230k new customers in July and returned the leadership in Moscow that was lost to Vimpelcom back in January 2002. MegaFon signed up more than 110k net new users - record high result for the company on the Moscow market.

Vimpelcom was the leader in St Petersburg net sales, and attracted the largest number of subscribers in other regions (outside Moscow and St.Petersburg). MegaFon outperfomed our expectations and is to reach 10 mln subscribers already in August.

Russian Mobile Subscribers

Mobile Subscribers	July 31, 2004	June 30, 2004
Russia	52,520,000	49,470,000
Penetration	36.2%	34.1%
Moscow	13,759,384	13,397,720
Penetration	81.0%	78.9%
St.Petersburg	4,684,195	4,425,304
Penetration	73.9%	69.8%

Russian Cellular Market Breakdown, July 2004

Russian Net Additions, July 2004

Beyond Russia

On 16 July 2004 MTS announced an acquisition of Uzdunrobita - leading GSM/AMPS operator of Uzbekistan. The deal was closed on August 2, 2004 and we plan to start consolidation of Uzdunrobita's subsciber numbers in MTS starting August 2004. Currently Uzdunrobita serves around 224,000 subscribers.

Very tough net additions race has been observed in Ukraine. So far MTS (UMC) leads the market with Kyivstar following it closely. The competition may intensify further as DCC and WellCOM roll-out nation-wide networks and get into the hunt for low-budget customers.

In Belarus MTS is close to win the leadership from the incumbent GSM operator - Velcom. MTS started providing service in Belarus in June 2002. Acceleration of cellular development in the country is also expected after the 3rd GSM player comes into arena (based on the tender that is currently under way). However, the majority of CIS contries are still lagging far behind Russia both in terms of the growth rates and penetration levels.

Put together all CIS cellular players had ~65 mln (including Russia) customers as of 30 June 2004 with Russia and Ukraine serving 76% and 13% subscribers respectively.

Top 10 Mobile Operators

#	Company	July 31, 2004	June 30, 2004
1	MTS	24,937,500	23,534,000
	Moscow	6,350,000	6,120,000
	Ukraine (UMC)	4,960,000	4,634,000
	Belarus	817,500	744,700
2	Vimpelcom	17,300,000	16,300,000
	Moscow	6,204,000	6,183,000
3	MegaFon	9,758,995	9,046,320
	Moscow	1,145,484	1,035,405
	Tajikistan	25,300	24,180
4	Uralsvyazinform	1,617,500	1,492,600
5	SMARTS Group	1,491,000	1,410,000
6	Sibirtelecom	710,175	677,800
7	N.Novgorod Cellular	453,000	451,834
8	Ekaterinburg Cellular Communications	304,906	294,231
9	Skylink	184,000	183,550
10	New Telephone Company	180,920	160,886

Moscow and St.Petersburg

Moscow License Area

Moscow Market Breakdown June 30, 2004

Net Additions in Moscow, June 2004

St.Petersburg and Leningrad Region

St. Petersburg Market Breakdown June 30, 2004

Net Additions in St.Petersburg June 2004