OREANDA-NEWS. December 21, 2010. Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the leading telecommunications provider in Russia and the CIS, announces that the MTS Board of Directors has approved the transaction to acquire 100% of Sistema Telecom LLC (“Sistema Telecom”), a non-operating subsidiary of JSFC Sistema (“Sistema” – LSE: SSA), based on the recommendation received from the Special Committee of Independent Directors to the Board (“Special Committee”). Earlier, the Company received the necessary approvals from the Federal Antimonopoly Service.

The valuation of Sistema Telecom was conducted by ING Bank, an independent financial advisor to the Special Committee. Based on the results of the valuation, ING Bank provided a fairness opinion to the Special Committee. Ernst & Young was charged by MTS to provide due diligence services, while Latham & Watkins served as legal counsel to the Special Committee.

The transaction will be completed following approval by Sistema’s Extraordinary General Shareholder Meeting. The acquisition is expected to close by year’s end.

The acquisition price is RUB 11.59 billion (USD 379.01 million1). In addition, MTS will assume debt considerations totaling RUB 1.80 billion (USD 58.93 million), which include the settlement of RUB 1.35 billion (USD 44.04 million) in debts between MTS subsidiaries and Sistema Telecom.

Sistema Telecom’s key assets at the time of the acquisition will consist of: a 45% stake in TS-Retail, where MTS previously held a controlling 55% interest; certain promissory notes previously issued by MTS2 in the amount of RUB 2.00 billion (USD 65.50 million); and property rights in respect of the group of trademarks, including the distinctive “egg” trademarks of MTS, Comstar-UTS and MGTS3.