SSA.L Regulatory News (SSA)

FOR IMMEDIATE DISTRIBUTION 31 October 2016

Sistema to sell up to 1.27% of MTS shares in connection with tender offer

Moscow, Russia - October 31, 2016. Sistema PJSFC ("Sistema" or "the Corporation"") (LSE: SSA; MOEX: AFKS), a Russian public diversified holding company, announces that it has signed a binding sale-and-purchase agreement for shares of PJSC MTS ("MTS") in connection with the tender offer to purchase MTS shares ("the Tender Offer") by MTS's subsidiary Stream Digital, LLC ("the Purchaser").

Under the agreement, the Corporation will sell to the Purchaser up to 25,454,636 ordinary shares of MTS (up to 1.27% of the company's issued share capital), for a consideration of up to RUB 5,065,472,700. The precise number of shares for the purpose of the transaction will be calculated on the basis of the number of shares that will be sold by minority shareholders of MTS under the Tender Offer*, in proportion to Sistema Group's effective share** in the share capital of MTS as of 31 October 2016 (50.65%). The transaction will be carried out at a price equal to the single strike price at which MTS's minority shareholders will sell the company's shares under the Tender Offer. The transaction is subject to the Purchaser's successful completion of the Tender Offer.

Sistema Group's effective share of the share capital of MTS will thus not change materially as a result of the sale of shares of MTS by the Corporation and the completion of the Tender Offer.

Sistema President Mikhail Shamolin said: "Sistema welcomes the launch of MTS's share repurchase programme, which will further increase shareholder returns and strengthen the company's investment case. The transaction we are announcing today will allow the Corporation to raise additional funds for investments, while retaining its effective controlling stake in MTS, which is in line with our strategic priorities."

* The number of shares accepted by the Purchaser under the Tender Offer

**Percentage of issued share capital calculated excluding MTS shares owned by subsidiaries of MTS

***

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

Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, high technology, banking, retail, timber processing, agriculture, real estate, pharmaceuticals, tourism and healthcare services. The company was founded in 1993. Its revenue in 2015 reached RUB 708.6bn; its total assets equalled RUB 1.3tn as of 31 December 2015. Sistema's global depositary receipts are listed under the symbol "SSA" on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow Stock Exchange. Website: www.sistema.ru.

THIS ANNOUNCEMENT IS FOR GENERAL INFORMATION ONLY AND DOES NOT FORM PART OF ANY OFFER TO SELL, OR THE SOLICITATION OF ANY OFFER TO BUY, SECURITIES. THE DISTRIBUTION OF THIS ANNOUNCEMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. ANY PERSONS READING THIS ANNOUNCEMENT SHOULD INFORM THEMSELVES OF AND OBSERVE ANY SUCH RESTRICTIONS. THIS ANNOUNCEMENT CANNOT BE USED AS A BASIS FOR ANY INVESTMENT AGREEMENT OR DECISION.