Under the term of the contract, the first phase of a large multimedia project of AFK Sistema will be implemented. As a result the most advanced center of broadband multimedia services' aggregation will be created. Alcatel will deliver to Sistema Mass Media, Sistema's media arm its fully integrated Open Media Suite, the industry-leading middleware solution for delivery of rich media in a triple play service mix (voice, data, video). Additionally, Alcatel will provide integration, customization and installation services.

Alcatel is currently piloting with Sistema and targeting a mass-market commercial launch for early 2005.

The multimedia project implemented by Sistema Mass Media, is aimed at providing a wide range of users in Moscow and in the Russian regions with advanced broadband entertainment services, including interactive TV, video on demand, multimedia games, high-speed Internet access and e-commerce. The project will integrate all previous experience of Sistema's subsidiaries in the areas of production, aggregation and distribution of broadband content and multimedia services.

The Open Media Suite hardware/software solution in the multimedia project will enable Sistema, a new-generation service provider, to fully profit from the investment in their broadband access network and to open new opportunities for business in the broadband entertainment market. Its flexible, non-proprietary architecture based on open industry standards enables fast implementation of advanced technologies, thus increasing network efficiency and overall profitability of media services.

New generation multimedia services are based on broadband IP access and demand the most advanced technologies solutions," said Alexander Leiviman, General Director of Sistema Mass Media. "This new contract with Alcatel enables us, in the highly competitive environment of the Russian telecom market, to introduce new highly profitable services of interactive TV and video on demand".

"We are looking forward to the implementation of this project," said Alan Mottram, President of Alcatel's fixed solutions activities. "It will mark a new phase of introduction of broadband technologies and multimedia services in the Russian telecommunication market ".

The Alcatel Open Media Suite is an end-to-end portfolio of products and professional services. The portfolio encompasses user interface customization, integration with third party equipment such as set top boxes and digital video head ends, as well as the facilitation of negotiations with content owners and suppliers. Products include the 5950 Open Media Platform and Applications and the 5959 Open Media Content Management and Delivery system, including the 5959 Open Video Server.

About Sistema

Sistema JSFC, established in 1993, is the largest non-natural resource-based corporation in Russia. It actively manages a portfolio of direct investments in areas including telecommunications (Mobile TeleSystems (MTS), Moscow City Telephone Network (MGTS), Comstar United Telesystems and others), technology (NIIME and MIKRON, STROM telecom, Sitronics), insurance (ROSNO), real estate (Sistema-Hals), retail (Detsky Mir Group) travel services (Intourist), finance and securities (MBRD), and others. In 2003, the company reported sales of $3.76bn, with total assets exceeding $6.8bn.

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