Moscow, Russian Federation – September 17, 2003 – Mobile TeleSystems OJSC (“MTS” - NYSE: MBT), Russia’s largest mobile phone operator, has agreed to acquire 100% of Kubtelesot, a 47.3% shareholder in Kuban GSM. As the result of this transaction, MTS’ ownership in Kuban GSM increases to 100%.
MTS has signed agreements to acquire 100% of Kubtelesot for $107 million. Kubtelesot owns 47.3% of Kuban with MTS owning the remaining 52.7%. As the result of the transaction, MTS’ownership in Kuban increases to 100%.
Kuban provides GSM 900/1800 services in the Krasnodar region and the Republic of Adygeya located in the South of Russia. The company’s subscriber base is approximately 1.2 million.
Since June 2003, Kuban has operated under the MTS brand and has offered MTS’ national tariff plans.
MTS acquired a controlling 51% stake in Kuban in April 2002 for $71.4 million. In October 2002, MTS acquired newly-issued shares of Kuban GSM for $4.9 million, thereby increasing its ownership in the company to 52.7%.
Since MTS’ purchase of a controlling stake, Kuban GSM’s subscriber base has more than doubled, and the company has opened four new branches and 9 customer sales and services centers as well as introducing GPRS and MMS services. The company covers around 70% of the territory of the Krasnodar region and the Republic of Adygeya.
Kuban GSM’s revenues for the first six months of 2003 were $64.7 million and net income was $7.8 million[1].
According to independent market research agency AC&M-Consulting, mobile penetration in the region at the end of August 2003 was 25%, with Kuban GSM’s market share at 86%. The population of the Krasnodar region and the Republic of Adygeya is approximately 5.57 million.
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Mobile TeleSystems OJSC (or "MTS") is the largest mobile phone operator in Russia in terms of subscribers. Together with its subsidiaries, the company services over 13 million subscribers. MTS and its subsidiaries are licensed to provide GSM services in regions in Russia, Ukraine and Belarus, which together have a total population of approximately 185.1 million. Since June 2000, MTS' shares have been listed on the New York Stock Exchange with the ticker symbol MBT. Additional information about MTS can be found on MTS' website at www.mtsgsm.com.
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These materials are not an offer for sale of any securities in the United States. Any securities may not be offered or sold in the United Sates absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Mobile TeleSystems OJSC has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States.
This communication is directed only at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the “Order”) and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as “relevant persons”). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Stabilization/FSA.
This press release is not a public offer or advertisement of securities in the Russian Federation, and is not an offer, or an invitation to make offers, to purchase any securities in the Russian Federation.
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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” 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, volatility of stock price, financial risk management, and future growth subject to risks.
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For further information contact:
Mobile TeleSystems, Moscow
Investor and Public Relations tel: +7095 911 6553
Andrey Braginski e-mail: ir@mts.ru
[1]According to unaudited US GAAP results
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