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JSFC Sistema (SSA)

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Thursday 31 March, 2011

JSFC Sistema

Statement re The Russian Government Makes Equit...

Statement re The Russian Government Makes Equity Investment into Sistema Shyam Teleservices

JSFC Sistema

THE RUSSIAN GOVERNMENT MAKES EQUITY INVESTMENT INTO SISTEMA SHYAM TELESERVICES

Moscow, Russia – March 31, 2011 – Sistema (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, today announces an increase in the share capital of Sistema Shyam TeleServices Ltd. (SSTL), Sistema’s subsidiary in India which provides telecommunications services under the MTS brand, by means of an additional share issue.

Following the placement of additional shares with the Russian government and investors in India, SSTL increased its share capital by INR 28,894.5 million (approximately US$ 647 million). The Russian government, represented by Rosimushchestvo (the Federal Agency for State Property Management), acquired a 17.14% stake in SSTL for INR 26,988 million (approximately US$ 600 million). The Russian Federation’s portion of the transaction was financed with funds held in Indian rupees, which represented Indian government debt to the Russian Federation.

Following the completion of the secondary share issue, Sistema’s stake in SSTL amounts to 56.68%, while Indian investors own 26.05%.

In accordance with the agreement between Rosimushchestvo and Sistema, Rosimushchestvo has a put option to sell its stake in SSTL to Sistema during a one year period beginning five years after the purchase of shares in SSTL. Sistema has an obligation to purchase SSTL shares from the Russian government for the higher of US$ 777 million or market value determined by an independent valuator. Under the terms of the agreement, until the put has been exercised or expires, Sistema has agreed not to reduce its stake in MTS below 50%+1 share. The agreement does not provide for any specific consequences in connection with this provision (i.e., no accelerated exercise of the put, etc.), and the parties could agree to revisit and revise this provision.

SSTL plans to use the proceeds from the secondary offering to further strengthen its position in the mobile broadband market, to expand its mono-brand retail network in existing telecommunications circles, and to launch services in 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 10 million subscribers in 19 circles. The company provides mobile broadband services under MBlaze brand to nearly 500,000 people in more than 130 largest cities in India. Sistema owns 56.68% of Shyam TeleServices Ltd. For further information please visit www.mtsindia.in.

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

Investor Relations Public Relations

Evgeniy Chuikov         Vsevolod Sementsov
Tel.: +7 (495) 692 1100 Tel: +7 (495) 730 1705

ir@sistema.ru

pr@sistema.ru

Sistema is the largest diversified public financial corporation 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$ 7.3 billion for the third quarter of 2010, and total assets of US$ 42.0 billion as at September 30, 2010. 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 RTS Stock Exchange, under the symbol “AFKC” on the MICEX Stock Exchange, and under the symbol “SIST” on the Moscow Stock Exchange (MSE).

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. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. 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.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities of JSFC Sistema and/or any of its subsidiaries and affiliated companies, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the shares or securities of Sistema and/or any of its subsidiaries and affiliated companies.