The Russian government completes the payment for shares of SSTL

Sistema (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, which invests in, and is a major shareholder of, companies operating in different industries, today announced that, as a part of previously announced transaction the Russian government completed the payment for shares of Sistema Shyam TeleServices Ltd. (SSTL), Sistema’s subsidiary in India, which provides telecommunications services under the MTS brand.

Rosimushchestvo paid the rupee equivalent of US$ 600 million for a stake of approximately 17% in SSTL’s share capital. Following the additional share issue, the total stake in the share capital of SSTL owned by Russian parties (Sistema and Rosimushchestvo) will not exceed 74%.

SSTL expects to issue the shares to Rosimushchestvo during the first quarter of 2011, subject to the successful completion of a rights issue to SSTL’s Indian shareholders and compliance with all applicable Indian regulatory requirements. Upon final completion Sistema will announce all the relevant details about this transaction.

SSTL plans to use the funds to finance the continued development of the company, and in particular to strengthen its leading position in wireless broadband. The funds will also be used to expand the branded retail network in its current telecommunication circles and to accelerate the launch of operations in a number of new circles.

Sistema Shyam TeleServices Ltd. (SSTL) is a joint venture between Sistema {LSE: SSA} of Russia and the Shyam Group of India. Sistema is the majority shareholder in this joint venture and operates its telecom services under the MTS brand. MTS is well recognized in India and worldwide for its commitment to high quality and innovative telecom solutions.  MTS has recently been ranked by Millward Brown as 72nd out of the top 100 brands in the world. In a short span of time, MTS has secured over 8 million subscribers in India. The company is present in 13 telecom circles of Kolkata, West Bengal & Sikkim, Rajasthan, Chennai & Tamil Nadu, Kerala, Bihar & Jharkhand, Mumbai, Maharashtra & Goa, Delhi & NCR, Haryana, Karnataka, Andhra Pradesh and Gujarat. The company provides mobile broadband services under the MBlaze brand to more than 400,000 customers in 96 cities in India.

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Sistema is the largest diversified public financial corporation in Russia and the CIS, which invests in and is a major shareholder of companies serving over 100 million customers in the sectors of telecommunications, high technology, oil and energy, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Founded in 1993, the company reported revenues of US$ 7.3 billion for the third quarter of 2010, and total assets of US$ 42.0 billion as at September 30, 2010. Sistema’s global depository receipts are listed under the symbol “SSA” on the London Stock Exchange. Sistema’s ordinary shares are listed under the symbol “AFKS” on the RTS Stock Exchange, under the symbol “AFKC” on the MICEX Stock Exchange, and under the symbol “SIST” on the Moscow Stock Exchange (MSE).

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “will,” “could,” “may” or “might” the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities of JSFC Sistema and/or any of its subsidiaries and affiliated companies, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regardi