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.
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For further information, please contact:
Mobile TeleSystems, Moscow
Tel: +7 495 223 2025
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Mobile TeleSystems OJSC (“MTS”) is the largest mobile phone operator in Russia and the CIS. Together with its subsidiaries, the Company services over 91.33 million subscribers. The regions of Russia, as well as Armenia, Belarus, Turkmenistan, Ukraine, and Uzbekistan, in which MTS and its associates and subsidiaries are licensed to provide GSM services, have a total population of more than 230 million. Since June 2000, MTS’ Level 3 ADRs have been listed on the New York Stock Exchange (ticker symbol MBT).
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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 MTS, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify forward looking statements by terms such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “will,” “could,” “may” or “might,” and 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. 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. We refer you to the documents MTS files from time to time with the U.S. Securities and Exchange Commission, specifically the Company’s most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, potential fluctuations in quarterly results, our competitive environment, dependence on new service development and tariff structures, rapid technological and market change, acquisition strategy, risks associated with telecommunications infrastructure, risks associated with operating in Russia and the CIS, volatility of stock price, financial risk management and future growth subject to risks.
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