Confidential 1 JSFC SISTEMA SITRONICS Overview. Confidential 2 JSFC SISTEMA Telecommunication Solutions 26% 2005 Revs IT Solutions 49% 2005 Revs Consumer.

Confidential

1JSFC SISTEMA

SITRONICS Overview

Confidential

2JSFC SISTEMA

Telecommunication Solutions

26% 2005 Revs

IT Solutions

49% 2005 Revs

Consumer Electronics

13% 2005 Revs

EMS

6% 2005 Revs

• Largest technology company in CIS and Eastern Europe• Based in Zelenograd (the Soviet “Silicon Valley”), inherited soviet scientific and R&D

potential in the field of electronics• Headquartered in Moscow, with operations throughout EMEA, CEE, CIS & Russia• Provider of intellectual and technology solutions in the field of:

Telecommunication Solutions; IT Solutions; Microelectronic Solutions; Consumer Electronics; Electronics Manufacturing Services;

• Majority owned by SISTEMA (77% shares), representing 13% of its aggregated revenues for 2005 and being the fastest-growing business segment in its portfolio.

• Exceptional growth over the past few years.• More than 4500 R&D staff, developers and programmers.• Exports to 60 countries (Europe, MEA, North America, South East Asia)

SITRONICS Introduction

Microelectronic Solutions

6% 2005 Revs

SITRONICS Revenue and OIBDA (mln. USD)

96

488

955

4610155

0

200

400

600

800

1000

1200

2003A 2004A 2005A

Sales OIBDA

SITRONICS is the largest high tech company in Central and Eastern Europe

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EMS

• Benefit from government support• Exploit advantageous geographic locations:• Prague (production of technologically advanced

goods)• Zelenograd (heart of Russia)• Romania (cost effective mass-market production)• JV with foreign companies entering Russian

market.

SITRONICS Strategy

Strategic goal: To become one of the leading players in the field of High-Tech.

Telecommunication Solutions

• INTRACOM and STROM Telecom integration in one company• Strategic alliances in the field of NGN development and

marketing (Cisco, Motorola)• Focus on intellectual services and solutions (billing, CRM, NGN) • Post IPO M&A to gain access to new markets and technologies

(Radio Access, OSS/BSS)

IT Solutions

• Prioritized consulting development• Priority to develop software outsourcing potential• Strengthen international strategic relationships (IBM, Oracle, Intel, etc.)• M&A in CIS (Ukraine, Byelorussia) in order to access new markets and

resources• M&A in Europe/USA to access new customers

Microelectronic Solutions

• Developing 0.13-0.18 micron technology -- targeting domestic orders in biometric IDs, defence, smart cards, RFID.

• Focus on complete value-added chain coverage (chip production, packaging, smart cards)

• Design centre set-up (fabless)• Relocation of obsolete production to VZPP.

Consumer Electronics

• Focus on mobile digital and video products.

• Establish own R&D (design, software and technical solutions development)

• Combination of low costs attributable to developing markets with access to competences of the developed markets • Transition of knowledge and competences from developed markets to developing ones

Group strategic goals and strategy

• Leadership in fast growing markets RF/CIS/CEE/Middle East and Africa

• Accumulation of R&D and scientific capacity of the Soviet heritage• Access to customer bases and technologies through M&A

SITRONICS product portfolio allows it to tap into successive waves of growth

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Strategic Goal:

• To become one of leading players in the production of telecommunication HW and SW in the EMEA region.

Key existing capabilities:

• Existing, proven technology base, well coordinated R&D team and product portfolio.

• Complex and large scale implementation experience (MTS, MGTS)

Key elements of growth:

• Strategic alliances in the area of development and market-launch of joint solutions (CISCO, MOTOROLA, SIEMENS)

• Increasing market demand for NGN and Billing/CRM solutions

• High performing Sales network using synergies with acquired Intracom Telecom

• M&A delivering extended sales channels, customer base and complementary product lines

SITRONICS Telecommunication Solutions – Overview

Key Products / :Solutions

Key Markets:

History:

Strengths:

Opportunities:

• Fixed / Mobile network solutions• OSS/BSS, Billing and CRM• NGN• Wireline /wireless access & transmission equipment• Content Delivery Network• Terminal devices• System integration & Outsourcing

• Russia, Ukraine, CIS, CEE, Middle East, Africa, USA.

• Strom Telecom (acquired in 2002). Founded in 1993 in the Czech Republic on the basis of Tesla.• Intracom Telecom (acquired in 2006). Founded in 1977 in Greece

• Experience working for clients with significant subscriber base• Advanced R&D Department and own IP products• Sound & well developed product line• Strategic partnerships with Motorola, Cisco and Ericsson

• Leverage extensive experience with SISTEMA/OTE/Vodafone Group customers and convert into major external customer acquisition/references

• Develop strong partnership with industry leaders• Combine product capability, low cost profile and sound financial position to grow external market-share

Highlights

Key competitive advantage lies in its strong experience in implementation of telecom equipment and billing systems for companies with significant subscriber base

Strategy

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Ukraine 66%

Russia34%

Rebalancing the business portfolio• Prioritized consulting development• Priority to develop software outsourcing potential• Maintain current market share in distribution business

Regional expansion• Expansion of presence – the only pan-CIS SI company• Target acquisition of branded system integrators to gain

access to new markets• Expand off-shore software programming to serve European

and US clientsResearch & Development

• Expand resource facilities in CIS’ largest science centres - Kiev, Dubna and Novosibirsk

Tapping synergies with Sistema• Secure corporate IT contracts in the telecom, insurance and

other industries

SITRONICS IT Solutions - Overview

SITRONICS 51% owned subsidiary Kvazar-Micro is one of the biggest IT companies in Russia, CIS and Eastern Europe

Revenue Breakdown (2005)

• One of the largest IT Solutions companies in CIS/CEE• Established 1990 as Kvazar-Micro• Sitronics owns 51% of Kvazar-Micro

• Systems integration, Software development and outsourcing, VAS, BPO• PC Distribution

• Russia, Ukraine, CIS, Western Europe• Russian and Ukrainian IT markets are among fastest growing IT markets in the

world

• CIS/CEE IT markets are expected to grow faster than IT markets of Western Europe and America (15-25 % vs. 5% annually for the next 4-5 years)

• Russia and Ukraine have the 3rd and 5th largest number of certified IT professionals in the world

Ukraine 42%

Russia 41%

East Europe

5%

Other 12%

Distribution 78% of sales

System Integration22% of sales

Highlights Strategy

Brief overview:

Main businessactivities:

Key Markets and Market Trends:

Growth Rates of Eastern Europe IT Markets

4.0%

4.7%

5.3%

10.0%

10.4%

12.0%

16.6%

Japan

W. Europe

N. America

MEA

Asipac

Latam

CEE

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SITRONICS Microelectronic Solutions - Overview

Sales Breakdown

• Designs, manufactures and distributes semiconductor products and components• Incorporates smart cards production facilities• The business has some of the most advanced mass-production facilities in the CIS (0.8µ - 2µ)• In-house R&D department• Anticipated transition to new technology (0.18µ - 0.13µ, on 8’’ wafers) and continued product

diversification

• Production of microchips on wafers (secondary power supply sources in accordance with the bipolar technology)

• Production of packaged microchips• Production of flexible microchip modules

(Planned for 2006) • Production of microchips for e-passports

(Planned for 2007)• Production of smart cards (the full spectrum) and related solutions

• 0.13-0.18 μ technology transfer project with STM• Microchip packaging project with Infineon• JV in the field of Smart cards production with G&D

Regional By Segment

SITRONICS is the leading Russian company in the microelectronics segment providing a base for establishing the newest technologies for manufacturing of microelectronic components

Highlights StrategyEnhance position as CIS/CEE largest semiconductor manufacturerKey strategic actions:• Launch new technology (0.18µ - 013µ), targeting sim-cards

market and government orders in the field of biometric ID+s and defence contractors

• Sustainable growth of the smart cards business in the field of SIM cards, financial, transportation and RFID cards

• Diversification into high margin, complementary businesses (smart cards, flexible microchips packaging, power electronics production )

• Further development of the design centre, Introduction of a full range of ASIC-vendor services

• Develop scientific/technological partnership with Russia’s top companies (RAO UES, Russian Railways, etc.)

• Retain current market share in power management device through enhancing cost efficiency

Brief overview:

Main businessactivities:

Projects with industry leaders:

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SITRONICS Consumer Electronics and EMS - Overview

Growth Opportunities

Highlights StrategyBrief overview:

Main products:

Key markets:

• Mid-market brand sells consumer electronics under the SITRONICS brand with main focus on mobile devices and Video products

• The largest and most technologically advanced electronics manufacturing sites located in Russia, Czech Republic, Greece and Romania.

• Offers facilities for end-to-end OEM production.• State-of-the-art assembly sites• Clean room class 100,000• Qualified R&D staff• Extensive quality control and ERP system• World renowned strategic partners and clients

• SITRONICS CE main product lines include: – TV/Video products (LCD TVs, DVD and HTH, Set-top-boxes) – Portable/Mobile (Mobile Phones, Portable Digital Electronics,

• Russia & Ukraine

• Become leading provider of EMS services in CIS (market share ≥15-20%) by offering a wide variety of complex services from logistics to manufacturing.

• Focus on mobile digital and video products. • Establish own R&D (design, software and technical solutions

development)• Exploit advantageous geographic locations:

– Prague (production of technologically advanced goods)– Zelenograd (heart of Russia)– Romania (cost effective mass-market production)

• JV with foreign companies entering Russian market.

Manufacturing and Research Expertise• Capitalize on technology innovations by setting up engineering

R&D centers in partnership with leading international companies.

Modern manufacturing capacity, extensive R&D expertise and strong brand awareness make SITRONICS one of the top Consumer Electronics companies in Russia

• Secure government orders• Further development of own R&D capabilities and design center• Product line diversification by increase in value-added Hi-Tech

products• Strategic partnerships with the leading brands to attain full

loading of assembling facilities• To become manufacturing and logistics hub for our clients on

their way to Europe

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Thank you!