The Russian Government Approves Equity Investment In Sistema Shyam Teleservices Ltd.

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 the Government of the Russian Federation has approved an equity investment in Sistema Shyam TeleServices Ltd. (SSTL), Sistema’s subsidiary in India, which provides telecommunications services under the MTS brand.

It is expected that the Russian Government, represented by the Federal Agency for State Property Management (Rosimushchestvo), will participate in an issuance of additional shares of SSTL, paying an equivalent of US$ 600 million in the form of Indian rupees held in accounts representing Indian governmental debt to the Russian Federation.

The issuance of shares to the Russian Government is subject to the receipt of necessary regulatory and corporate approvals, including the approval by the General Meeting of shareholders of SSTL, and the signing of binding agreements.

SSTL plans to use the funds to be received from the share issuance to finance continued development of the company’s activities, in particular: the reinforcement of its leading position in the area of wireless broadband internet coverage (under the EV-DO Rev. A standard), the expansion of its branded retail network in its current telecommunication circles, and the accelerated launch of operations in a number of new circles.

Sistema Shyam TeleServices Ltd. (previously Shyam Telelink Ltd.), established in 1998, launched its full operations in the State of Rajasthan in 2000. The company received the pan-Indian licence for mobile network operations in March 2008, and presently owns right to use frequencies for provision of mobile telephony services in 22 circles across the country. The company provides telecommunication services to more than 6 million subscribers in 12 circles: Rajasthan, Tamil Nadu (and Chennai), Kerala, Kolkata, West Bengal and Sikkim, Bihar (and Jharkhand), Delhi, Karnataka, Mumbai, Haryana, Maharashtra and Andhra Pradesh. SSTL is a joint venture between Sistema and Shyam Group of India with a 73.71% stake owned by Sistema.

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