November 16, 2005

1
Presentation to Investors on Q2 Results

• November 16, 2005

2
Disclaimer
OJSC MegaFon (MegaFon) has obtained the
information in this presentation from sources it
believes to be reliable. Although MegaFon has
taken all reasonable care to ensure that the
information herein is accurate and correct,
MegaFon makes no representation or warranty,
express or implied, as to the accuracy,
correctness or completeness of such information.
Furthermore, MegaFon makes no representation or
warranty, express or implied, that its future
operating, financial or other results will be
consistent with results implied, directly or
indirectly, by such information or with MegaFons
past operating, financial or other results. Any
information herein is as of the date of this
presentation and may change without notice.
MegaFon undertakes no obligation to update the
information in this presentation. In addition,
information in this presentation may be condensed
or incomplete, and this presentation may not
contain all material information in respect of
MegaFon. This presentation also contains
forward-looking statements that relate to,
among other things, MegaFons plans, objectives,
goals, strategies, future operations and
performance. Such forward-looking statements may
be characterized by words such as anticipates,
estimates, expects, projects, believes,
intends, plans, may, will and should
and similar expressions but are not the exclusive
means of identifying such statements. Such
forward-looking statements involve known and
unknown risks, uncertainties and other important
factors that could cause MegaFons operating,
financial or other results to be materially
different from the operating, financial or other
results expressed or implied by such statements.
Although MegaFon believes the basis for such
forward-looking statements to be fair and
reasonable, MegaFon makes no representation or
warranty, express or implied, as to the fairness
or reasonableness of such forward-looking
statements. Furthermore, MegaFon makes no
representation or warranty, express or implied,
that the operating, financial or other results
anticipated by such forward-looking statements
will be achieved. Such forward-looking
statements represent, in each case, only one of
many possible scenarios and should not be viewed
as the most likely or standard scenario. MegaFon
undertakes no obligation to update the
forward-looking statements in this presentation.
3
Highlights

• Operational Highlights
• 13.5 mn subscribers at YE 2004 (120(1)), and
  18.1mn at H105 (99.7(1))
• Steady subscriber market share and improving
  revenue share
• Financial Highlights
• FY 2004
• 1.5 bn revenue - 82 increase yoy
• 621 mn EBITDA - 72 increase yoy
• Aggregate accrual capex of 970 mn
• Secured international credit rating and launched
  debut Eurobond
• H1 2005
• 1.0 bn revenue, 66 increase over H104
• 458 mn EBITDA, 71 increase over H104
• EBITDA margin of 44.7, 1.1 better than H104
• Recent Developments
• Over 1 bn debt financing closed Q205
• Freed up more than 350 mn of asset
  collateralized
• By end of Oct 2005 subscribers over 21.6mn

Note (1) year-on-year comparison.
4
Russian Mobile Market Continues Rapid Expansion

• As of October 05, mobile (SIM card) penetration
  in Russia nearly 80
• This year, average monthly growth of Russian
  mobile new subs (SIM cards) over 4 million per
  month. Record month of subscriber adds occurred
  in December 2004 due to heavy multiple SIM card
  promotions by some operators

5
Subscriber Growth Continues to Exceed Consensus
Forecast
60 mln
Average Current Estimate of RenCap and ROMIR
Monitoring

• Industry analysts continue to underestimate
  mobile market growth and penetration in Russia.
  However, such high growth is partly attributed to
  increasing multiple SIM card users
• Estimated individual subscribers (adjusting for
  multiple SIM card usage) are significantly lower,
  leaving significant room for further continuing
  expansion in real mobile subscribers

6
Solid Operational Dynamics and Improving
Percentage of Revenue
Subscribers(1) (000)
Russian Subscribers Market Share
Source Advanced Communications and Media
Consulting
Note (1) Russian subscribers
Evolution of ARPU
Majors Revenue Share
Source Companies reports
7
Steadying Growing Revenue Share
8
Increasing National Presence
Subscriber regional distribution
Subscriber regional split H1 2005
Q104/Q105
Q205/Q105
20
130
16
142
56
8
FY 2004
H1 2005
Regional Growth
Q3 2004
71 132 mn 92
75 135 mn 94
No. of Regions Covered Population Covered of
total population Regions added
69 128 mn 89

• Amur
• Krasnoyarsk

• Magadan(1)
• Kamchatka(1)
• Republic of Sakha
• Tomsk

Note (1) Served through alliances with other
operators.
9
Positive Operational Dynamics 2-Month SAC
Payback
MOU
ARPU
Churn
SAC(1) /Payback
Note (1) Includes all sales and marketing
expenses including advertising
10
Continued Revenue Growth and Improving
Profitability
Revenue (mn)
EBITDA (mn)
Net Income (mn)
11
Solid 2004 and H1 2005 Results
Year Ending 31 December
6 Months Ending 30 June
(US million)
2002
2004
2003
H1 2005
H1 2004

Revenues

401

815

1,480

620

1,025

Growth

103.9

102.9

81.7

88.5

65.3

EBITDA

138

362

621

268

458

Margin

34.5

44
.5

42.0

43.2

44.7

Operating Income

44

216

364

161

271

Margin

10.9

26.6

24.6

25.9

26.4

Net
Income

26

99

172

102

187

Cash Flow
from
88

270

514

200

369

Operations

(1)

Cash
Capex

(230)

(365)

(653)

(306)

(500)

Net Cash Used in
(222)

(439)

(605)

(270)

(499)

Investing Activities

Net Cash Flow from
140

210

359

88

64
.
(2)
/(to) Financing


(308)
(523)
(970)
vs Accrual Capex
(391)
(566)
Note (1) Reflects actual cash outlay for capital
expenditure. Excludes capex directly funded
through ECA financings, equipment received under
capital leases, and change in
accounts payable to equipment suppliers. See
reconciliation of cash vs accrual capex in
appendix. (2) Excludes ECA financing
and capital lease obligations, as prescribed
under US GAAP
12
Capex(1) is Scalable
Capex(1) overview

• Greater of capex funded internally
• Capex is committed on a region by region basis
  and is therefore, to a large extent, modular
• In unfavourable market conditions capex can be
  scaled back or postponed
• Capex distribution / trends
• 2004 Four regions (North West, Moscow, Volga and
  South) accounted for around two thirds of the
  total capex
• 2005 Estimated at 1.2 billion
• Thereafter Capex next year estimated at 1
  billion and will be distributed more evenly as
  new regions such as the Urals, Siberia and the
  Far East increase their subscriber count

Note (1) Accrual capital expenditure for the
period (includes cash capex and capex financed
through vendor/ECA financing, equipment received
under capital leases, and change in accounts
payable to equipment suppliers). Also please
refer to footnotes on prior page and
reconciliation in appendix.
13
Consistent Funding Strategy and Conservative
Financial Policies

• Development of an integrated and optimal funding
  strategy balancing domestic and international
  sources
• Domestic sources provide relatively inexpensive
  funds in inflation adjusted terms, less covenant
  restrictions, simpler documentation, and better
  match with ruble revenue generation
• International lenders provide larger financings
  and longer tenors
• Access to international capital markets
• Continue to develop relationships with
  international investor community
• Work on improving international credit ratings

• Conservative financial policies and levels of
  leverage, that would equate to investment grade
  ratings in Western markets
• Consolidated net debt not to exceed 2.75x EBITDA,
  but multiple is expected well below this limit
• EBITDA not to fall below 4 - 5x net interest
  expense, but expected level is well above this
  threshold
• Lower asset collateral
• Maintain flexibility in capex deployment, to
  match the growth in subscriber base and market
• No dividend payments are expected in the near
  future
• ROI gt 20-25 after tax for investment
  opportunities

14
Strong Credit Metrics Even Under Conservative
Methodology
Key Financials
Q1 2005
Q2 2005
1,482
1,209
Total Debt (1)
277
552
1,226
112
1,224
- Ex Sub Debt (3)
261
435
802 (3)
847 (3)
1,131 (3)
1,045
EBITDA
138
362
621
206
253
EBITDA Margin
34.5
44.5
42.0
44.7
44.7
21
Total Debt/ EBITDA
2.0
1.5
2.0
1.7 (4)
1.8 (4)
1.5 (4)
1.4 (3)
11.3
Note (1) Total Debt includes short- and
long-term debt, capital lease obligations and
shareholders loans but excludes derivative
instruments. Also includes AP to equipment
suppliers of 198.2M, which were
classified in financials as long term debt
because they were subsequently replaced by
Hermes2 and Finnvera2 financing. (2)
Net Debt is total debt less cash and short term
investments. (3) Net Debt less
subordinated shareholders loans of 92.6M.
Adjustment made beginning yearend 2004 since
clear subordination occurred only late 2004 and
early 2005. (4) Total Debt/ EBITDA and
Net Debt/EBITDA Q1 and Q2 2005 figures are for
the twelve months ending on March 31st and June
30th 2005.
15
Strong Balance Sheet and Credit Metrics
Total Debt (1) (mn)
Net Debt (ex sub debt) (2) / EBITDA
1,482
(3)
(3)
Secured vs. Unsecured Debt (4)
EBITDA / Net Interest Expense (mn)
NBV of asset collateral well below 10 of Total
Debt
(4)
Note (1) Total Debt includes short- and
long-term debt, capital lease obligations and
shareholders loans but excludes derivative
instruments. (2) Net Debt is total debt
less cash and short term investments and
subordinated shareholders loan of 92.6M.
(3) Total Debt/ EBITDA and Net Debt/EBITDA Q2
2005 figures are for the twelve months ending on
June 30 2005. (4) Q2 2005 unsecured
is adjusted for release of asset pledges on ECA
and NEC debt which occurred in June-Sept 2005.
includes recent pay-down of 50M of Volga loan
16
Continuing to Deliver on Our Strategic Objectives
Create a nationwide, Russian-focused operator
with a strong market position in key macro-regions
Achieve rapid customer growth primarily through
organic expansion
Provide uniform, consistent and seamless network
and customer service
Further diversify capital base and develop
relationship with investors
Position as a value-for-money operator while
capitalizing upon our strong brand
Profitable growth with ROIC in excess of cost of
capital
17
Focus in 2006

• Increase customer loyalty and decrease churn
• Stabilize average price per minute and manage
  ARPU erosion
• Continue efforts to centralize functions and
  internal processes
• Overcome minority shareholders concerns to
  complete merger of all operating subsidiaries
  into parent
• Expand coverage, improve service quality and
  introduce new value added services
• Launch operations in remaining regions of Siberia
  and Far East
• Target cash flow break-even in 2006

18
Appendices
19
Appendix 1 Reconciliation of Accrual vs Cash
Capex