Sistema announces results of Indian licences auction

11/03/2013

Sistema announces results of Indian licences auction

Highlights

- Secured 8 circles, with 3 carrier slots of 1.25 Mhz each

- Final footprint to service 40% of country's population, address over 60% of data potential and safeguard 75% of SSTL's current revenues.

- 3 circles to close with resulting operations to consist of 9 circles

- Licence cost reduced to US$ 368 million (approx.) net of previous licence fees

Moscow, Russia  - March 11, 2013 - Sistema JSFC ("Sistema", or the "Group") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS, today announces that the Group's Indian telecom subsidiary, Sistema Shyam TeleServices Limited ("SSTL" or the "Company"), has won a spectrum in the 800 Mhz band in 8 circles following its participation in today's licence auction.

The circles won by SSTL include Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) & West Bengal. The Company's operational footprint will also include the Rajasthan circle which was not affected by the Supreme Court of India's order dated February 2, 2012. When bidding for the spectrum, SSTL carefully considered a range of variables including spectrum pricing, number of carrier slots available, levels of competition, future data potential in the circles. Based on such criteria, the Company decided not to bid for Mumbai, Maharashtra and Uttar Pradesh (East) and will immediately inform its customers of the closure of SSTL operations in those circles. As a result, SSTL's final footprint will include 3 carrier slots of 1.25Mhz each in 9 circles, servicing 10.45 million of its customers.

For the 8 circles won by SSTL in the spectrum auctions today, the Company will be required to pay a total of US$ 665 million (approx.) for a licence period of 20 years. The terms include payment of 25% of the final bid amount within 10 days, followed by a payment moratorium until March 2016, after which the balance amount will be paid in 10 equal annual installments. The Government of India has confirmed that SSTL will be able to set off the previous licence cost of US$ 297 million (approx.) against the new spectrum cost.

The spectrum in 8 circles is technologically neutral and is valid for 20 years. This provides an opportunity to strengthen SSTL's data driven strategy through a possible LTE roll out in the future. Moreover, the selected circles account for over 60% of the current data market in India.

SSTL intends to provide a more detailed operational update on the new footprint and future strategy before Sistema's annual results on 16^th April.

Mikhail Shamolin, President and CEO of Sistema commented:

"Today's news is an important result which highlights the success of our strategy as SSTL's operations will now focus on the most prospective regions, servicing 40% of the country's population, amounting to over 60% of the data market whilst also maintaining 75% of the company's revenues. Crucially, this outcome results in no upfront cash licence cost, substantially reduced operating losses and a clearer roadmap for SSTL's profitability. We look forward to providing more details about SSTL's resulting footprint in due course."

For further information, please visit www.sistema.com or contact:

Sistema is the largest publicly-traded diversified holding company 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$ 8.8 billion for the third quarter of 2012, and total assets of US$ 46.3 billion as at September 30, 2012. 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 MICEX-RTS Stock Exchange, and under the symbol "SIST" on the Moscow Stock Exchange (MSE). Sistema was ranked number 315 in the 2011 edition of the Fortune Global 500 list. Website: www.sistema.com

The Company is not an investment company, and is not and will not be registered as such, under the U.S. Investment Company Act of 1940.

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. 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.

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