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Mobile TeleSystems

February 10, 2009

MTS acquires retail chain in Russia

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 100% stake in Narico Holdings Limited (Cyprus), a sole owner of Telefon.Ru, one of the largest retail chains in Russia, from Analog Holdings Limited and Delemont Investments Limited.

MTS has acquired a 100% stake in Telefon.Ru for $60 million, including the payment of approximately $22.4 million for inventory reserves1. In addition, the transaction includes a provision for a payment of $25 million in 12 to 18 months should the retail chain satisfy certain performance criteria.

Telefon.Ru operates 512 stores in 180 cities in Russia2 offering handsets and other electronic goods, as well as tariffs and contracts of mobile operators.

"Combining the reach of Telefon.Ru with our existing retail network will enable MTS to more effectively service our clients, provide a more robust product offering to new customer segments and overall bring the MTS brand closer to our population. The profitability leader in the Russian mobile distribution, Telefon.Ru will bring added retail insight and experience to MTS," remarked Mr. Mikhail Gerchuk, Chief Commercial Officer, MTS.

Added Mr. Mikhail Shamolin, President and CEO, MTS: "Since 2007, we have looked towards the optimization of distribution channels for added growth in our core markets. The current economic environment has provided attractive opportunities to more efficiently extend and control our distribution network. Adding Telefon.Ru, one of the market's most efficient and profitable retailers, to our network will certainly allow MTS to carry through on our promise of a unique customer experience and added value for shareholders."

Telefon.Ru’s results will be consolidated in the Company’s financial statements beginning from February 10, 2009.

1According to the Russian Central Bank exchange rate of 35,4146 RUB / USB as of February 1, 2009.

2As of January 1, 2009.

 

 

 

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