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5. Company Development Strategy

5. Company Development Strategy (Business Priorities)

MTS

OJSC's primary strategic goal is to maintain and strengthen its position as a leading telecom operator in all markets of presence. It is achieved by provision of the widest range of telecommunication services: mobile and fixed communication services, high-speed access to the Internet while en route and at home, cable television services, and vast choice of legal content. MTS OJSC seeks to maintain and strengthen its market position through investing in network development and developing new products and services, advanced technological solutions and enhancing the servicing system of its customers.

In October 2009 MTS OJSC adopted a new strategy which in many aspects is a logical continuation of the previous one while taking into account changes in the market. Acquisition of COMSTAR-UTS OJSC, prompt establishing of a proprietary retail network and launching the first on-line content platform Omlet.ru enabled the Company to go beyond the scope of the mobile communication market. MTS OJSC going beyond the scope of mobile telephony is an integral part of a new "3i" Strategy encompassing the following areas:

  • Integration — means creation of new communication channels and points of contact with customers including further development of proprietary monobrand distribution network. We intend to become an integrated player offering a full portfolio of products that comply with all needs of our customers on the basis of both wire and wireless communications. Networks and platforms created by the Company will enable to make an integrated and, therefore, unsurpassed customer experience.
  • Internet — means offering universal communication. Our customers believe that we will provide ever increasing access speed, therefore, operation of equipment and provision of services will increasingly frequently depend on the functionality of integrated mobile and fixed network. Our objective is to create infrastructure that will enable our customers to realize all advantages of modern technologies and that, in its turn, will create additional value for MTS OJSC. Following the strategy of the so called "intelligent pipe", we intend to offer the best content applications of this category, most advanced services in the market, make payments and, therefore, MTS OJSC will become closer to the customers.
  • Innovation — means provision of an opportunity to MTS OJSC to show up against the background of competitors by offering a set of products and services that competitors will not be able to reproduce. We will offer exclusive handsets, original service packages addressed to all buyers' segments, create the best customer experience in the market of using our products everywhere: at home, in the office, en route.

Completion of integration with COMSTAR-UTS OJSC means for the Company a higher growth rate and a bigger share in the Russian market of telecommunication services while satisfying needs and wishes of its customers. MTS OJSC seeks to significantly increase its revenues from convergent products and reduce total costs due to realization of synergy effects from integration with COMSTAR-UTS OJSC. It complies with the principles of efficiency and profitability that were laid down as a foundation of the Company's strategy for several years already.

Moreover, MTS OJSC still believes in the opportunity to develop the Group by expanding the geographical location of its presence in case interesting proposals arise. The Company estimates such projects both from the point of view of financial efficiency and from the point of view of its strategic priorities. The requirement for adopting a positive investment decision is ensuring at all times fulfillment of Company's obligations and maintaining optimum level of debt load.

In view of MTS OJSC's experience regarding ensuring growth and creation of value for its customers and shareholders, we believe that new objectives ofáour strategy will enable us to successfully develop theáCompany's business and remain a leading telecom operator in all markets of presence for a long time ináfuture.