Moscow, Russia - March 17, 2006 - Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, announced today that a number of certain minority shareholders of the company have entered into an agreement with Morgan Stanley for the sale of their shares of Sistema, constituting approximately 0.9% of the total number of shares outstanding. The selling shareholders include some directors and officers of Sistema.

Sistema, through one of its subsidiaries, subscribed for a total of 44,564 ordinary shares at the offer price (amounting to a total price of approximately $50 million). Sistema is considering establishing a share option programme for the top management of the company, and intends to use the acquired shares for such programme if it is established.

The selling shareholders have agreed to a 180 day lock-up period with respect to their remaining holdings.

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Sistema is the largest private sector consumer services company in Russia and the CIS, with over 50 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$ 5.4 billion for the first nine months of 2005, and total assets of US$ 12.1 billion as at September 30, 2005. 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 "SIST" on the Moscow Stock Exchange (MSE).