OREANDA-NEWS. On May 30, 2007 Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, announced that its subsidiary, Mobile TeleSystems OJSC ("MTS"), will record a charge to non-operating expenses for the year ended December 31, 2006 in relation to a US$ 170 million put option held by Nomihold Securities Inc. ("Nomihold").  Sistema will record a corresponding charge in its financial statements for the year ended December 31, 2006, reported the press-centre of  Sistema.

As announced previously by the Company, individual shareholders of Sistema have agreed to assist MTS Finance, a wholly owned subsidiary of MTS, in defending its rights in its on-going dispute with Nomihold.  Nomihold is seeking to compel MTS Finance through arbitration proceedings to purchase from Nomihold a 49% stake in Tarino Limited, the former indirect owner of Kyrgyz GSM operator Bitel, for US$ 170 million pursuant to an option agreement. The matter is currently pending, and MTS Finance is vigorously contesting this action and has asked the arbitration tribunal to dismiss Nomihold's claim.  In the event that the arbitration decision regarding the US$ 170 million put option is unfavorable to MTS Finance, shareholders of Sistema have agreed to make a capital contribution to MTS Finance of up to US$ 170 million.

Notwithstanding the guarantee, MTS, in agreement with its auditor, believes that it should presently record the charge and include this as a liability in its financial statements for the year ended December 31, 2006, and provide disclosure pending the resolution of this legal matter. Accordingly, Sistema, in agreement with its auditor, believes that a corresponding charge should be included in its financial statements for the year ended December 31, 2006. The impact on Sistema's financial results for the year ended December 31, 2006 is summarized below.