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3. Company's position inátheámobile communications market

3. Company's position in the 
mobile communications market

As

of December 31, 2010, MTS OJSC held licenses for 82 regions of the Russian Federation. Subsidiaries of MTS OJSC in the CIS operate in Ukraine (Pr JSC MTS UKRAINE), the Republic of Uzbekistan (Foreign Enterprise UZDUNROBITA LLC), Turkmenistan (Corporation Barash Communications Technologies, Inc.), the Republic of Armenia (K-Telecom CJSC) and the Republic of Belarus (MTS Joint LLC). MTS has a licensed area that encompasses over 230 million.

In Russia mobile services are provided by the three federal operators — MTS OJSC, Megafon OJSC and Vympelcom OJSC as well as several dozens smaller regional telecom companies using different cellular communications standards: GSM, NMT 450 and CDMA–1x, UMITS (3G). According to AC&M, as of December 31, 2010, wireless penetration in Russia reached 151.0%, and the total number of customers reached 219,3 million. By the number of customers MTS OJSC holds the leading position in Russia with a 32.6% market share, Megafon OJSC and Vymplecom OJSC market shares total 25.8% and 23.7% accordingly. MTS OJSC and its subsidiaries and affiliated companies in Russia collectively had 71.4 million customers as of December 31, 2010.

By the end of Q4, 2010 MTS OJSC's licenses covered 82 of the 83 regions in the Russian Federation. Thus, MTS OJSC directly or through its subsidiaries holds licenses for practically all of the Russian Federation territory, with the exception of the Penza Region. Megafon OJSC holds licenses for all 83 subjects of the Russian Federation, Vympelcom OJSC holds licenses for 76 regions. All three federal operators hold 3G licenses for the entire Russian Federation.

Russia's largest markets of mobile services (by the number of customers) are Moscow and the Moscow Region and St. Petersburg and the Leningrad Region. According to AC&M, wireless penetration in Moscow and the Moscow Region was 201.1% at December 31, 2010. The total number of customers of all operators in Moscow and the Moscow Region is estimated at 32.4 million, with the share of MTS OJSC reaching 38.6%.

Wireless penetration in St. Petersburg and the Leningrad Region, according to AC&M, was 203.3%, at December 31, 2010 with total customers number of 12.9 mln. MTS market share is at 31.0%.

The most important regional market (apart from Moscow and St. Petersburg) is the Krasnodar Territory (including the Republic of Adygeya), where the number of mobile subscribers at December 31, 2010 as estimated by AC&M, surpassed 9,3 million and penetration was 181.4%. In addition, there are 5 regions of the Russian Federation where the number of subscribers of telecom operators exceeded 5 million: the Republic of Tatarstan, the Republic of Bashkortostan, the Samara Region, the Rostov Region, the Chelyabinsk Region, while in the Sverdlovsk Region the number of subscribers reached 6.7 million.

According to the results for Q4, 2010, the subsidiaries and affiliated companies of MTS OJSC in the CIS countries had the following numbers of customers: 18.2 million in Ukraine (Pr JSC MTS UKRAINE), 8.8 million in the Republic of Uzbekistan (Foreign Enterprise UZDONROBITA LLC), 2.4 million in Turkmenistan* (Corporation Barash Communication Technologies, Inc.), 2.1 million in the Republic of Armenia (K-Telekom CJSC), 4.7 million in the Republic of Belarus (MTS Joint LLC, which is not consolidated in the MTS Group financial statements).

* Data on the number of customers in Turkmenistan as at December 21, 2010.