MTS, Russia’s largest mobile operator, has signed agreements with all the existing shareholders of UMC, providing for the acquisition of a 57.7% stake in UMC for $194.2 million. According to the agreements, MTS will purchase a 16.3% stake from KPN; 16.3% from Deutsche Telekom, and 25% from Ukrtelecom. In addition, MTS has entered into a put and call option agreement with TDC for the purchase of its 16.3% stake. The exercise period of the call option is from May 5, 2003 to November 5, 2004 and the put option is exercisable from August 5, 2003, to November 5, 2004 and is subject to a minimum price of $55 million. MTS also has an option agreement with Ukrtelecom to purchase its remaining 26% stake, exercisable from February 5, 2003 to November 5, 2005, with an exercise price of $87.6 million. If all options are exercised MTS will own a 100% stake in UMC. UMC is a leading mobile operator in Ukraine offering services to over 1.5 million subscribers. The company operates under nationwide GSM 900/1800 and NMT 450 licenses. Ukraine has a population of 49.3 million. According to UMC’s audited results prepared under International Financial Reporting Standards (IFRS), the company’s revenues in 2001 were $215.8 million, EBITDA was $100.7 million, and net income was $44.3 million. Commenting on the signing of the agreements, MTS’ President Michael Smirnov said, “MTS’ expansion into Ukraine is in line with the Company’s strategy to exploit growth opportunities beyond Russia’s borders. We believe that the acquisition of UMC would provide MTS with the best opportunity to enter the developing Ukrainian mobile market, which has a penetration rate of only 6.7%. We already operate a successful joint venture in Belarus, another CIS country with a population of 10 million. This agreement would increase the number of our subscribers to over 7 million and would consolidate our position as a leading GSM operator in the region.” As part of the transaction, MTS will guarantee UMC’s loans from its current shareholders totaling $58.1million. ING Barings has been the sole financial advisor to MTS on the transaction. Completion of the transaction is subject to a number of conditions, including approval by appropriate governmental authorities in Ukraine and the Russian Federation, as well as MTS corporate approvals. No assurance can be given that the transactions noted above will be completed on the terms and conditions described, or at all.