OREANDA-NEWS. May 27, 2011. Mobile TeleSystems OJSC (“MTS” - NYSE: MBT), the leading telecommunications provider in Russia and the CIS, today announces its unaudited US GAAP financial results for the three months ended March 31, 2011.

Key Financial Highlights of Q1 2011

Consolidated revenues down 2.0% q-o-q to USD 2,934 million

Consolidated OIBDA down 2.9% q-o-q to USD 1,126 million with 38.4% OIBDA margin

Consolidated net income of USD 322 million

Free cash-flow positive with USD 621 million for the first three months of 2011 Key Corporate and Industry Highlights

Appointment of Andrei Dubovskov, former Head of Business Unit MTS Ukraine, as President and CEO of MTS

Completion of share buyback in March 2011 related to the statutory merger of Comstar with MTS

Conversion of Comstar ordinary shares into MTS ordinary shares on April 1, 2011 and subsequent completion of the statutory merger of Comstar with MTS

Continued acquisitions of regional fixed operators with a purchases of alternative operators in Kurgan and Altai Krai for RUB 435.0 million and RUB 545.8 million respectively

Annual dividend recommendation by the MTS Board of Directors of RUB 14.54 per ordinary MTS share (approximately USD 1.04 per ADR for the 2010 fiscal year, amounting to a total of RUB 30.05 billion (approximately USD 1.08 billion or 78% of US GAAP net income)

Receipt of GSM 900 MHz license in Penza region giving MTS full 2G coverage in Russia

MTS' brand has been named as one of the BRANDZ™ Top 100 Most Powerful Brands with the 80th position and a brand value of USD 10.9 billion

Commentary

Andrei Dubovskov, President and CEO of MTS, commented, "Group revenue for the quarter increased 12% year-over-year to reach USD 2.93 billion on the back of strong subscriber additions and growth in data traffic and handset revenues. Revenues in Russia - including mobile, fixed and handset and equipment sales - increased 14% year-over-year to RUB 74.3 billion."

Alexey Kornya, MTS Vice President and Chief Financial Officer, said, "In the first quarter, Group OIBDA declined by 3% year-over-year to USD 1.1 billion with the OIBDA margin for the period reaching 38.4%. Our Russia OIBDA margin increased sequentially from 37.7% to 39.1% in Q1 2011. The improvement is mainly attributable to the growing share of higher-margin data traffic revenues on the back of our modem sales push and expanding 3G networks."

Mr. Dubovskov added, "With the completion of the Comstar merger, we can now focus on the broader optimization of our business. Operationally, we can concentrate on rationalizing headcount to eliminate redundancies. We can also begin to examine asset disposals like real estate in our fixed line business in order to lower costs. For the customer, we can move ahead with critical steps in integrating our business, including convergent billing, so as to further improve our customer experience, increase loyalty and drive future growth."