(1) qibs that are qps (each as defined below) or (2

outstanding indebtedness since a number of our loan agreements require us to maintain material mobile licensesnecessary to carry on our business.Our licenses are granted for specified periods and they may not be extended or replaced upon expiration.Most of our licenses are granted for specified terms, and we can give you no assurance that any license willbe renewed upon expiration. Our super-regional GSM licenses in Russia will expire in 2012 and 2013, our territorialGSM licenses in Russia will expire in various years from 2011 to 2015 and our mobile licenses in the CIS will expirein various years from 2013 to 2021. Our 3G license in Russia will expire in 2017. Most of our fixedtelecommunications licenses expire in various years from 2011 to 2015. If renewed, our licenses may containadditional obligations, including payment obligations, or may cover reduced service areas or scope of service.As a rule, the expiration date of frequency permissions for most of our mobile communications andradio-relay line base stations exceeds the validity period of communications service licenses. We cannot predictwhether we will be able to obtain extensions of our frequency permissions and whether these extensions will beformalized and granted by the regulatory agency in a timely manner and without any significant additional costs. Itis possible that upon expiration of frequency permissions the frequency bands currently in use by us will be whollyor partly re-allocated in favor of other communications technologies and/or other communications operators,requiring that we coordinate the use of our frequencies with the other license holders and/or experience a loss ofquality in our network.If our licenses for provision of telecommunications services or frequency allocations are not renewed, ourbusiness could be materially adversely affected. For more information, please see the section of this prospectusentitled “Our Company—Licenses—Mobile Telecommunications Licenses.”We face uncertainty regarding payments for frequency allocations under the terms of some of our licenses.At present we make payments for radio-frequency spectrum use under decrees of the Russian federalgovernment. As a whole, the fees for all available frequency assignments have been significant. At the same time,today’s system of payment for radio-frequency spectrum use is not in line with the Russian federaltelecommunications law and we expect that this payment system will be changed eventually. As a result, wecannot assure you that the fees we pay for radio-frequency spectrum use will not increase, and such an increasecould negatively affect our financial results. For more information, please see the section of this prospectus entitled“Regulation of Telecommunications.”Our ability to provide telecommunications services would be severely hampered if our access to local andlong distance line capacity was limited or if the commercial terms of our interconnect agreements weresignificantly altered.Our ability to secure and maintain interconnect agreements with other wireless and local, domestic andinternational fixed-line operators on cost-effective terms is critical to the economic viability of our operations.Interconnection is required to complete calls that originate on our respective networks but terminate outside of ourrespective networks, or that originate from outside our networks and terminate on our respective networks. Asignificant increase in our interconnect costs as a result of new regulations or commercial decisions by otherfixed-line operators or a lack of available line capacity for interconnection could have a material adverse effect onour ability to provide services. We also cannot exclude the possibility of further increase of interconnect costs incase of increase of the Ruble inflation rate.We face uncertainty regarding our frequency allocations, equipment permits and network registration, andwe may experience limited spectrum capacity for providing wireless services.We have in the past been unable to obtain frequency allocations necessary to test or expand our networks.For example, our applications for GSM-900 frequencies in five regions within the Urals super-region and eightregions in the Northwest super-region were denied. Further, we were denied a grant of GSM-900, GSM-1800frequencies in the Far East super-region and E-GSM frequencies throughout all of Russia by Russia’s State RadioFrequency Commission, or the SRFC. Although our company received frequencies in three regions within the FarEast super-region through tenders conducted in 2007, our company was denied frequencies for eight other regionswithin the Far East super-region. The Federal Antimonopoly Service, or FAS, has declared that the terms of thesetenders violated Russian antimonopoly law and, together with our company, filed a lawsuit challenging the results31