OREANDA-NEWS. October 13, 2009. Moscow, Russian Federation – Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the largest mobile phone operator in Russia and the CIS, announces that it has acquired a 50.91% stake in COMSTAR – United TeleSystems (“COMSTAR-UTS” – LSE: CMST), a leading supplier of integrated telecommunication solutions in Russia and the CIS, from AFK Sistema.

Under the terms of the agreement, a wholly owned subsidiary of MTS purchased Sistema’s 50.91% stake in COMSTAR-UTS for 39.15 billion rubles (USD 1.32 billion)1 or 184.02 rubles (USD 6.21) per Global Depositary Receipt (GDR).  In US dollar terms, this price differs from previously announced price due to recent depreciation in the value of the US dollar versus the Russian ruble, though the terms of the transaction remain unchanged.  MTS and its related subsidiaries have received all necessary regulatory approvals to realize the transaction.  No decision has been made regarding the extension of an offer to minority shareholders of COMSTAR-UTS.

MTS believes the transaction will provide access to important growth markets in commercial and residential broadband; realize value-accretive synergies in capital and operational expenditures; and provide a foundation for the development of effective content platforms and services.

The approval of the acquisition of COMSTAR-UTS by the MTS Board of Directors was based on the recommendation of the Special Committee to the Board, which consists of the three independent directors who serve on the Board.  The Special Committee was established on May 22, 2009, to oversee the transaction process and decide whether to recommend the acquisition to the full Board.  Fairness opinions were provided to the Special Committee by independent financial advisors J.P. Morgan plc and ING.  Cleary Gottlieb Steen & Hamilton LLP served as legal advisor on the transaction, while PricewaterhouseCoopers Russia provided advice and analysis of the commercial, tax and financial aspects of the transaction.  Legal due diligence was performed by law firm Liniya Prava.  Additional independent legal advice to the Special Committee was provided by Cravath, Swaine & Moore LLP.

The management of MTS will address the investment community about the COMSTAR-UTS transaction and other aspects of MTS’ business during its upcoming Analyst and Investor Day on October 19, 2009.  For more information, please visit http://www.mtsgsm.com/resources/analyst_investor_days

1 As transactions between Russian entities must be carried out in rubles, MTS hedged the final amount due on completion of the transaction with 50% of the sale price pegged at 31.9349 rubles:dollar rate, while the balance has been calculated at 29.6090, the official rate of the Central Bank of Russia on the date of signing.