16 February 2012
Moscow, Russian Federation - Mobile TeleSystems OJSC ("MTS" - NYSE: MBT), the leading telecommunications provider in Russia and the CIS, announces that on February 9, 2012, MTS received a Request for Arbitration from Mobile TeleSystems Finance SA ("MTS Finance"), wholly owned subsidiary of MTS, which has initiated an arbitration process under a loan agreement ("Loan Agreement") between the parties dated January 28, 2005. Under the terms of the Loan Agreement, MTSF lent $400 million to MTS. MTS Finance seeks the payment of all sums due to it under the Loan Agreement. MTS agrees that arbitration is the correct forum for any dispute between the parties but strongly denies that any sum is still owed by it to MTS Finance.
The arbitration will be conducted under the Rules of the London Court of International Arbitration.
In disputing any liability to MTS Finance, MTS will rely on its redemption of a $400 million Eurobond issued by MTS Finance, which matured on January 28, 2012, by making a payment as guarantor under the terms of the Indenture. The sum lent to MTS by MTS Finance under the Loan Agreement constituted the proceeds of this Eurobond issue. In the ordinary course and under the circumstances, MTS Finance may have written off any sum it considered it was owed. However, the position between MTS and MTS Finance in relation to the Loan Agreement (including the availability of a off-set) needs formally to be resolved to understand what assets of MTS Finance could be available in the event a separate LCIA award in favor of Nomihold Securities Inc. (made on November 11, 2010 and declared final on January 5, 2011) is held to be enforceable against MTS Finance.
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For further information, please contact in Moscow:
Joshua B. Tulgan
Director, Investor Relations
Acting Director, Corporate Finance
Department of Investor Relations
Mobile TeleSystems OJSC
Tel: +7 495 223 2025
E-mail: ir@mts.ru
Learn more about MTS. Visit the official blog of the Investor Relations Department at www.mtsgsm.com/blog/
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Mobile TeleSystems OJSC ("MTS") is the leading
telecommunications group in Russia, Eastern Europe and
Central Asia, offering mobile and fixed voice, broadband,
pay TV as well as content and entertainment services in one
of the world's fastest growing regions. Including its
subsidiaries, the Group services over 100 million mobile
subscribers. The Group has been awarded GSM licenses in
Russia, Ukraine, Uzbekistan, Turkmenistan, Armenia and
Belarus, a region that boasts 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). Additional information about the MTS Group can
be found at www.mtsgsm.com.
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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
undertake or 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, the severity and duration of
current economic and financial conditions, including
volatility in interest and exchange rates, commodity and
equity prices and the value of financial assets; the impact
of Russian, U.S. and other foreign government programs to
restore liquidity and stimulate national and global
economies, our ability to maintain our current credit
rating and the impact on our funding costs and competitive
position if we do not do so, strategic actions, including
acquisitions and dispositions and our success in
integrating acquired businesses, including Comstar-UTS,
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, governmental regulation
of the telecommunications industries and other 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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