OREANDA-NEWS. MTS Finance, a 100%-owned subsidiary of Mobile TeleSystems OJSC (“MTS” - NYSE: MBT), advises that it has received from Nomihold securities inc. (Nomihold) a put notice pursuant to an option agreement for the 49% stake of Tarino Limited, the indirect owner of Bitel Llp (Bitel), a Kyrgyz GSM mobile phone operator, and states that it will be defending its rights.

As announced earlier by the Company, MTS Finance, a 100%-owned subsidiary of MTS registered in Luxembourg, acquired a 51% stake in Tarino Limited from Nomihold at the end of 2005. Tarino Limited was at that time the indirect owner, through its 100% owned subsidiaries, of Bitel.

Bitel’s offices were seized by Reservspetzmet in Bishkek three days after the official announcement of the acquisition. From that moment on the owners of Tarino Limited have no control over Bitel.

At the time of the transaction between MTS and Nomihold regarding the acquisition of 51% stake in Tarino Limited and signing of the put option for the remaining stake, MTS’ actions were dictated by the fact that Tarino Limited had complete control over Bitel. 

Were Nomihold able to comply fully with its contractual and legal duties, MTS would honor its obligations under its agreement with Nomihold.

However, circumstances with respect to certain Tarino subsidiaries including Bitel – the transfer of which was the basic objective of the agreement – would appear to make it impossible for Nomihold to comply with its obligations during the option period.

In these circumstances, the Company believes that if Nomihold insists on exercising the put option, Nomihold’s notice will be without legal basis and MTS will vigorously defend its rights.