Sistema Holds Annual Shareholder Meeting.

MOSCOW -- Sistema (LSE:SSA), the largest private sector consumer services company in Russia and the CIS, today held its annual general meeting of shareholders.

The company's shareholders:

--Approved a cash dividend of RUR 26.0 per share (equivalent of $0.91(a) per share or $0.018 per GDR) for the twelve months ended 31 December 2004. The total dividend payable amounts to RUR 250.9 million (US$ 8.75 million), which is equivalent to 2.1% of Sistema's US GAAP consolidated net income for 2004.

--Elected the Board of Directors, including

--Sergey Drozdov - Senior Vice President of Sistema

--Vladimir Evtushenkov, President and CEO of Sistema

--Alexander Goncharuk - CEO of KNC

--Alexander Gorbatovsky - independent director

--Vyacheslav Kopiev - non-executive director

--Vladimir Lagutin - CEO of Sistema Telecom

--Alexander Leiviman - CEO of Sistema Mass Media

--Nikolai Mikhailov - independent director

--Evgeny Novitsky - non-executive director

--Ron Sommer - independent director

--Dmitry Zubov - non-executive director

--Appointed Audit-Garantia-M and Deloitte & Touche as the company's auditors for 2005 in accordance with RAS and US GAAP, respectively

--Approved the Regulation on Shareholder Meetings and made a change to the Company's Charter introducing a 30-day notice period for shareholder meetings,

The meeting also approved Sistema's 2004 RAS accounts and elected the Audit Commission.

The Board of Directors held its first meeting on the same day and re-elected Evgeny Novitsky as Chairman, and Vyacheslav Kopiev and Dmitry Zubov as Deputy Chairmen of the Board of Directors.

Sistema is the largest private sector consumer services company in Russia and the CIS, with over 45 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$ 5.7 billion for the full year 2004, and total assets of US$ 8.8 billion as at December 31, 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).

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.

(a) According to the Russian Central Bank exchange rate of 28.67 RUR/$ as of June 30, 2005.

For further information, please visit www.sistema.com