Moscow, Russia – August 2, 2005 – Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, today announced that the company’s Board of Directors has approved a formal dividend policy. The policy is aimed at guiding the Board in determining the amount of dividend payments, and outlines the company’s methodology, as well as its obligations related to the payment procedure and disclosure.

The target payout level was set at approximately 2% of the company’s consolidated US GAAP net income. Sistema’s new dividend policy reflects the company’s commitment to maintaining a dividend history whilst at the same time reinvesting for the company’s high capital expenditure requirements in the medium term. The company paid a dividend equivalent to approximately 1.3% of its consolidated net income for the year 2003, and has approved a dividend equivalent to approximately 2.1% of consolidated net income for the year 2004.

In adopting the new dividend policy, the Board of Directors expects that it will stay in force over the next three years. The full text of the new dividend policy is available on Sistema’s website www.sistema.com.