OREANDA-NEWS. Mobile TeleSystems OJSC (“MTS” - NYSE: МВТ), the leading telecommunications provider in Russia and the CIS, today announces its unaudited US GAAP financial results for the three months and full year ended December 31,2013.

Key Financial Highlights of Q4 2013 and FY 2013

Consolidated Group revenues increased 5% y-o-y to RUB 398 billion

Mobile service revenue In Russia rose 7% y-o-y to RUB 273 billion

Data traffic revenue In Russia grew 43% y-o-y to RUB 47 billion

Consolidated OIBDA' of RUB 45 billion Increased 8% y-o-y to RUB 175 billion with 43.9% OIBDA margin

Consolidated net Income2 of RUB 20 billion In Q4 2013 and a net Income of RUB 80 billion In FY 2013

Free cash-flow from continuing operations3 grew 52% to RUB 69 billion for FY 2013

Key Corporate and Industry Highlights

Launched LTE networks In Pskov Region, Kirov Region, North Ossetla-Alanla, Khabarovsk Krai, Udmurtla, Zabalkalsky Krai, Amur Krai, Rostov region, Kaluga region, Novosibirsk region, Tatarstan and St. Petersburg

Launched sales of IPhone 5s/5c In the MTS retail network

Through Its MGTS subsidiary, MTS divests non-core real estate assets through sale of 51% stake In Business Nedvlzhlmost CJSC for RUB 3.2 billion

Changed the terms of credit agreements with Sberbank for two non-revolving lines of credit In the amount of RUB 80 billion

Redeemed remaining amount of Series 01 ruble-denominated bond

Repurchased Series 03 ruble-denominated bonds In the amount of approximately RUB 3.9 billion

Paid out semi-annual dividends of RUB 5.22 per ordinary MTS share (RUB 10.44 per ADR) amounting to the total of RUB 10.8 billion on the basis of the Company's H1 2013 financial and operating results

Announced new 3D Strategy: Data, Differentiation, Dividends

Concluded a credit facility with Citibank Europe PLC and Swedish Export Credit Corporation for up to USD 300 million4 supported by Sweden's Exportkredltnamnden (EKN)

Outlook for FY2014

MTS expects revenue growth for the Group of 3-5% for 2014; key factors may Include:

Growth In data revenues through higher penetration of smartphones and data-enabled devices

Development of retail product platform and sales of tablets and handsets

Growth In broadband/pay TV markets In Russia

MTS sees above 2% OIBDA growth for 2014; key factors expected to Influence MTS's OIBDA dynamics:

Revenue growth In core markets

Adoption rate of data plans for smartphones and tablets

Sales trends of handsets and accessories

Competitive factors

Increasing share of Inflation-based expenses

CAPEX spending for 2014 Is expected to be 21% of revenue. The Investments Include network enhancement and key projects:

On-going roll out of LTE networks throughout Russia

Enhancements to 3G networks

Continued deployment of GPON In Moscow and Moscow region

Network Improvements and equipment swaps In Ukraine

Maintenance CAPEX In Armenia

Build out of 3G networks In Turkmenistan

MTS sees significant macroeconomlc uncertainty and volatility across Its markets of operation, which may cause MTS to revisit Its market guidance and, In turn, Impact Its financial and operating results

Commentary

Mr. Andrei Dubovskov, President and CEO of MTS, commented, “Overall In 2013, revenue for the Group grew by 5% to over 398 billion rubles. In all of our markets we see rising usage of voice and strong data adoption in virtually all customer segments. In Russia, we continue to realize benefits through data adoption from our focus In retail on sales of low-cost devices as we lead the market In data penetration through smartphones. Both Internal data and Independent sources confirm MTS's leadership In network speed, customer service, brand and other Important factors that create our leading customer experience. Unfortunately, we also see macroeconomic factors that have hurt our ability to grow; In particular In Ukraine, macroeconomlc uncertainty combined with the absence of 3G likely means that this market may lag the Group's pace of growth. In spite of these developments, we feel confident In our ability to further grow In our core markets, execute our strategy of differentiation and continue to generate value for our shareholders.”

Mr. Vasyl Latsanych, MTS Vice President for Marketing, said, “In Q4 2013, In our Russian business, we grew 7% year-over-year. Driving this growth was our mobile business, which grew over 8% year-over-year which, we believe may be the fastest organic rate of growth In the market based on the publicly available data. One of the key drivers of growth was greater adoption of data plans as smartphone penetration among our active subscribers reached 34%, and our data attach rate Increased to over 42%. In Q4 2013, this contributed to an Increase In data traffic of 49% year-over-year. Revenue was also aided by a strong holiday performance In our retail chain, where sales Improved by 9% quarter-on-quarter. We also registered high-value subscriber additions for the period. Our sales of SIM-cards continue to be both consistent and sustainable; churn fell slightly to 9.0% for the quarter, a 200 bps reduction from 2012, and MOU Increased to 345 minutes. For the year, churn fell to 36.3%, which Is a level we haven't seen since 2009 and a marked Improvement versus our competitors. Our fixed business recorded 5% growth year-on-year and 9% quarter-on-quarter aided by contributions from MGTS.

Mr. Alexey Kornya, MTS Vice President and Chief Financial Officer, said, “For the year OIBDA grew 8% to 175 billion rubles, which translated to a rate of growth roughly 300 bps faster than topllne growth. Overall we showed over 100 bps In Improvement In our OIBDA margin through a mix of high-margin revenue growth and sustained Improvement In our cost efficiencies. In Q4, OIBDA grew 11% year-over-year to 45 billion rubles for an OIBDA margin of nearly 43.0% or our highest Q4 margin In recent memory. Reflecting these trends, for the year OIBDA of MTS Russia Increased 7% to 157.7 billion rubles.”