Moscow, 19 June 2017 - Sistema PJSFC (LSE: SSA, MOEX: AFKS), a Russian diversified public holding company, and JSC Ruselectronics, a subsidiary of the state-owned corporation Rostec, announce the signing of a memorandum of understanding on establishing a joint venture in the area of microelectronics (hereinafter, “the JV”).

The parties will contribute their assets that design, manufacture and certify electronic components to the JV. The final list of assets to be transferred will be determined after the completion of due diligence.

Under the shareholder structure, it is planned that Sistema will receive a controlling stake in the JV. Sistema may also attract independent financial investors to the JV during the period it is being formed.

The transaction forming the JV is expected to close before the end of Q1 2018.

"Sistema has extensive competences in microelectronics. Its subsidiary, Mikron, has Russia's only production based on 180-90-65 nm technology and is conducting research into 45 nm technology. I am confident that the partnership, which will merge the country's leading microelectronic enterprises, will bring Russian microelectronics to a brand new level," said Sistema president Mikhail Shamolin.

"Merging assets will help to formulate a single R&D policy in radioelectronics. By doing so we will be able to build a technological chain based on unified principles and technologies, which will enhance efficiency and reduce excessive competition between Sistema and Rostec entities," said Sergey Boev, Deputy Chairman of Sistema's Board of Directors and Chairman of the Board of RTI.

"The merger of assets has been initiated in accordance with Rostec's strategy aimed at attracting investment partners to companies that ensure the country's technological sovereignty. It will allow pursuing a single research, technological and product strategy, centralising management of R&D programmes, expanding cooperation between enterprises, optimising utilisation rates and increasing operational efficiency," said Grigory Elkin, acting CEO of Ruselectronics.

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