Moscow, Russia – 3 March 2005 – Sistema (SSA.LI), the largest private sector consumer services company in Russia and the CIS, today announced that it has increased its ownership in Telmos, a provider of unregulated fixed-line telephony services in Moscow.

Sistema has acquired an additional 20% equity stake in Telmos from Rostelecom for a cash consideration of approximately US$8.5 million. Prior to the transaction, Sistema owned 40% of Telmos directly and 40% through MGTS. Sistema, together with its subsidiary MGTS, now owns 100% of Telmos.

***

For further information, please visit www.sistema.ru or contact:

Sistema Investor Relations                                                        Shared Value Limited

Andre Bliznyuk                                                                         Matthew Hooper

Tel: +7 095 730 1543                                                              Tel. +44 (0) 20 7321 5023

bliznyuk@sistema.ru                                                                 sistema@sharedvalue.net

***

Sistema is the largest private sector consumer services company in Russia and the CIS, with over 35 million customers. Sistema develops and manages market-leading businesses in selected service-based industries, including telecommunications, technology, insurance, banking, real estate, retail and media. Founded in 1993, the company reported revenues of US$ 4.1 billion for the first nine months of 2004 and total assets of US$ 7.7 billion as at September 30, 2004.  Sistema’s shares are listed under the symbol “SSA” on the London Stock Exchange, under the symbol “AFKS” on the Russian Trading System (RTS), and under the symbol “CUCT” on the Moscow Stock Exchange (MSE).