Moscow, Russian Federation – PJSC MTS (NYSE: MBT, MOEX: MTSS), the leading telecommunications operator and digital service provider in Russia, announces the acquisition of a 28.63% stake in MTS Bank, one of the 50 largest banks in Russia.

In accordance with the agreement, MTS’s wholly-owned subsidiary Mobile TeleSystems B.V. acquired a stake in MTS Bank from Sistema PJSFC (LSE: SSA, MOEX: AFKS), the largest diversified public financial corporation in Russia and the CIS and the majority shareholder of MTS, for RUB 8.27 bln. As a result of the deal, MTS’s share in MTS Bank increased from 26.61% to 55.24%. Sistema’s direct ownership in MTS Bank decreased from 71.87% to 43.24%, while the balance of shares are held by other shareholders.

The deal assumes the consolidation of a controlling stake of MTS Bank by MTS that simplifies interaction between the companies, speeds up the decision-making process and reduces time-to-market for digital financial products. FinTech not only creates potentially new business streams for MTS, it also may positively impact the core telecom business as markets with high data penetration usage often showcase strong usage of mobile-based financial services. Likewise, greater integration will allow MTS to better utilize its retail networks, which will can help dramatically expand the bank’s reach.

Alexey Kornya, President and CEO of MTS, commented,"The acquisition of the controlling stake in MTS Bank is in line with our strategy to diversify the business, achieve synergies and develop innovative financial services. The deal allows us to consolidate MTS business in the Russian FinTech market, which grows by more than 10% per year, simplifies corporate and operational management, and most importantly - accelerates the launch of new products. For the years of our partnership, the bank went through deep transformation: with MTS’s support, the bank upgraded its IT-platforms, optimized business processes, increased its customer base and has been sufficiently capitalized. By 2017, MTS Bank has significantly improved its financial performance and become profitable. Now, we believe that closer integration will bring MTS Bank into top Russian banks in the most promising retail segments such as development of digital banking as an ecosystem of mobile services for customers and remote banking services for small businesses."

All necessary regulatory and corporate approvals have been received. The approval by the MTS Board of Directors was based on the recommendation of the Special Committee to the Board of Directors.

Key milestones of integration of MTS and MTS Bank

·                                 In August 2011, MTS, in partnership with MTS Bank (at that time known as MBRD) launched the MTS Dengi (MTS Money), a project aimed at providing customers throughout Russia with payment tools, including credit cards, near-field communications-enabled SIM cards and PoS (point-of-sale) credit.

·                                 In February 2012, MBRD, as part of a broad strategic commercial agreement, rebranded itself as MTS Bank and adopted the look and feel of MTS's internationally recognized brand.

·                                 In March 2013, MTS acquired 25.095% shares of MTS-Bank to take advantage of the convergence of financial and telecommunications services, with the ultimate aim of consolidating the controlling stake and create a digital platform for its customers.

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For further information, please contact in Moscow:

Joshua B. Tulgan
Director, Department of Corporate Finance and Investor Relations
Mobile TeleSystems PJSC
Tel: +7 495 223 2025
E-mail: ir@mts.ru