MTS intends to increase its stake in MGTS to 94.1%

Operator MTS announced the intention of the MTS Group to acquire 100% in ZAO "Sistema-Invenchur" which is the direct owner of 29% of ordinary shares in OAO "Moscow City Telephone Network" (MGTS), the AFC "Sistema" ("System» - LSE: SSA), the largest in Russia and the CIS public diversified financial services company, signed on the basis of an indicative offer. Acquisition of "Systems-Invenchur" will allow MTS to increase its stake in MGTS to 94.1%. In accordance with the terms of the indicative offer for MTS Group 100% of the "System-Invenchur" 10.56 billion rubles. Following the transaction, MTS will own 99.1% of ordinary shares and 69.7% of preferred shares of OJSC "MGTS", equivalent to 94.1% of the share capital of the company. Net debt of JSC "Sistema-Invenchur" is 10.44 billion rubles, and is indebted to AFK "System." transaction is fully consistent with the strategy of MTS to create an integrated service provider and enables us to strengthen its position in the most attractive and profitable market in Moscow. Later MTS intends to join MGTS, which makes it possible to develop new convergent products and services that will promote the early realization of the investment program aimed at modernizing MGTS network and create synergy for MTS in excess of 14 billion rubles in the period up to 2017, indicative offer has no binding legal force. The transaction should be pre-approved by a special committee of independent directors at the Board of Directors of MTS, the board of directors of MTS, as well as get corporate approval procedures in AFK "System". MTS has already received approval for the transaction from the Federal Antimonopoly Service (FAS) of Russia. The transaction is expected before the end of 2011.