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9. Information for Shareholders and Investors

9. Information for
Shareholders and Investors

Equity Capital. Issues of the Company's Shares and Bonds

Dividend policy

Bond issues

MTS operations as
reflected in ratings

Equity Capital. Issues of the Company's Shares and Bonds

The equity capital of MTS OJSC as of December 31, 2010 was 199,332,613.80 rubles.

Outstanding and authorized shares of MTS OJSC as of 31.12.2010*:

Categories/classes of shares Number of shares Nominal value per share (rubles)
Outstanding shares
Common shares 1 993 326 138 0.1
Preferred shares 0 0
Authorized shares
Common shares 103 649 654 0.1
Preferred shares 0 0

* According to the Report on results of the issue of MTS OJSC securities (filed by the Federal Financial Markets Service of the Russian Federation on April 21, 2011 that were placed by means of conversion in the course of reorganization by merger of COMSTAR UTS OJSC, the number of actually placed securities of the additional issue was 73,087,424 pieces with par value of zero point one (0.1) rubles each.

As of December 31, 2010 the registered shareholders of MTS OJSC had the following shares in the equity capital*:

Joint Stock Financial Corporation Sistema Open Joint Stock Company 31.92%
INVEST-SVYAZ Limited Liability Company** 8.04%
Sistema Holding Limited** 9.71%
Sistema Telecom Assets Limited Liability Company** 3.02%
ADR Holders 39.8%
Free float, GDR Holders and others 7.51%

* Calculation of shareholders' shares in MTS OJSC equity capital was carried out without consideration of the following assumptions. MTS CJSC and Capital CJSC (100% subsidiaries of MTS OJSC) hold 0.13% and 0.3% of MTS OJSC shares respectively. Our 100% subsidiary MTS Bermuda Ltd. holds 67,995,335 our shares in the form of ADRs that were repurchased in 2006-2008.

** INVEST-SVYAZ LLC, Sistema Holding Limited and Sistema Telecom Assets LLC are affiliated companies of AFK Sistema OJSC.

Shares in the equity capital

Dynamics of the prices for MTS OJSC common shares, January 2010 ľ December 2010*

* The quotes are stated as of the last trading day of the month, for MTS shares ľ weighted average price.

American depositary receipts

On June 30, 2000 MTS successfully placed an issue of American Depositary Receipts (ADR), Level 3 on the New York Stock Exchange (NYSE: MBT). MTS OJSC became the second Russian company that implemented the highest level ADR program.

Since October 3, 2003, MTS shares have been traded as non-listed securities on the Moscow Interbank Currency Exchange (MICEX). In December 2003 MTS shares were included in MICEX Quotation List B. Since October 2010 MTS shares have been traded in Quotation List A1.

On April 20, 2010 MTS announced a change of the ratio between American Depositary Receipts (ADR) and the Company's common shares starting from May 3, 2010. As a result the ADR to common shares ratio was changed from 1:5 to 1:2. Therefore, the holders of MTS ADRs as registered per the end of the business day April 28, 2010, received 1.5 additional ADRs per each ADR they had.

As of December 31.12.2010 a total of 388,698,253 ADRs was issued for registered common shares (equal to 777,396,505 registered common shares).

Information on stock exchange listings of MTS OJSC shares

Trading floor Stock ticker
NYSE, New York MBT
MICEX, Moscow MTSI
RTS, Moscow MTSS

On the New York Stock Exchange MTS shares are listed as American Depositary Shares (ADR). (Ratio: 1 ADR to 2 shares)

Information on current listings and transaction prices is available in Russian and English at:

Share prices, 2010

MICEX Price (RUR)
Minimum price per share 217.64
Maximum price per share 273.49
Average daily trading volume 226,229,168
Price as of 31.12.2010 259.88

American depositary shares of MTS OJSC onáNew York Stock Exchange, 2010

NYSE Price (USD)
Minimum price per share 17.84
Maximum price per share 23.55
Average daily trading volume 58,551,148
Price as of 31.12.2010 20.87

Credit ratings of MTS as an issuer*

Moodyĺs Ba2, outlook stable
S&P BB, outlook positive
Fitch Ratings ┬B+, outlook positive

* Data as of 31.12.2010.

Bond issues

MTS is one of the largest issuers of corporate bonds in Russia. In 2010 the Company successfully paced ruble bonds for RUR 25 bln. The funds received as a result of the bond issue the Company uses for refinancing of its debt portfolio and for the implementation of the investment program.

Basic details of bond issues

Issuer Mobile TeleSystems Finance SA (Luxembourg)
Type of security Eurobonds (144A/Reg S), secured by the Company
Coupon 8.00% fixed, payable semiannually
Issue price 99.736%
Currency of issue US dollar
Amount of issue 400,000,000
Maturity date 28 January 2012

Issuer MTS International Funding Limited
Type of security Eurobonds (144A/Reg S), secured by the Company
Coupon 8,625% fixed, payable semiannually
Issue price 100%
Currency of issue US dollar
Amount of issue 750,000,000
Maturity date 22 June 2020

The first issue of the MTS OJSC ruble denominated bonded loan for 10 billion rubles took place is June 2008. In October 2008 MTS OJSC placed two more issues of bonds for 10 billion rubles each. In May 2009 the ruble denominated bonded loan was issued for 15 billion rubles and in July 2009 one more bonded loan was issued for 15 billion rubles. On 16 November MTS OJSC placed two more issues of bonds for 10 and 15 billion rubles. The funds received from the bond issues were used for corporate purposes, for optimization of the Company's debt portfolio and implementation of the investment program.

On 9áApril 2010áMTS OJSC set a new coupon rate for the following coupon periods at 7% per annum that will be effective until the maturity date. On 26 April 2010 MTS OJSC passed an offer for Series 01 bonds that resulted in the redemption of own bonds for the total amount of RUR 7.1ábillion.

On 14 April 2010 MTS OJSC set a new coupon rate for the following coupon periods at 7.75% per annum that will be effective until the maturity date. On 29 April 2010 MTS OJSC passed an offer for Series 02 bonds that resulted in the redemption of own bonds for the total amount of RUR 6.3 billion.

On 10 June 2010 MTS OJSC set a new rate for 6-10 coupons at 8% per annum. The bonds provide for an offer in three years. On 24 June 2010 MTS OJSC passed an offer for Series 03 bonds that resulted in the redemption of own bonds for the total amount of RUR 179.5 million.

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 01
Coupon 1-3 coupons ľ 14.01%, 4-10 coupons - 7% per annum
Issue price 100%
Currency of issue Ruble
Amount of issue 10,000,000,000
Date of placement 23 October 2008
Maturity date 17 October 2013
ISIN Reg No RU000A0JQ0D4
Offer -

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 02
Coupon 1-3 coupons ľ 14.01%, 4-14 coupons ľ 7.75% per annum
Issue price 100%
Currency of issue Ruble
Amount of issue 10,000,000,000
Date of placement 28 October 2008
Maturity date 20 October 2015
ISIN Reg No RU000A0JQ0E2
Offer -

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 03
Coupon 1-4 coupons - 8.7%, 5-10 coupons - 8% per annum, 11-20 coupons ľ to be specified by the issuer
Issue price 100%
Currency of issue Ruble
Amount of issue 10,000,000,000
Date of placement 24 June 2008
Maturity date 12 June 2018
ISIN Reg No RU000A0JPTJ4
Offer 20 June 2013

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 04
Coupon 1,2 coupons ľ 16.75% per annum, 3-5 coupons - to be specified by the issuer
Issue price 100%
Currency of issue Ruble
Amount of issue 15,000,000,000
Maturity date 19 May 2009
Maturity date 13 May 2014
ISIN Reg No RU000A0JQ5E1
Offer 19 May 2011

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 05
Coupon 1-3 coupons ľ 14.25% per annum, 4-7 coupons - to be specified by the issuer
Issue price 100%
Currency of issue Ruble
Amount of issue 15,000,000,000
Date of placement 28 July 2009
Maturity date 19 July 2016
ISIN Reg No RU000A0JQ8Q9
Offer 24 July 2012

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 07
Coupon 1-14 coupons ľ 8.7% per annum
Issue price 100%
Currency of issue Ruble
Amount of issue 10,000,000,000
Date of placement 16 November 2010
Maturity date 07 November 2017
ISIN Reg No RU000A0JR4H6
Offer -

Issuer Mobile TeleSystems Open Joint Stock Company
Type of security Documentary interest bearing non-convertible bonds payable to bearer, subject to compulsory centralized storage, Series 08
Coupon 1-10 coupons ľ 8.15% per annum, 11-20 coupons - to be specified by the issuer
Issue price 100%
Currency of issue Ruble
Amount of issue 15,000,000,000
Date of placement 16 November 2010
Maturity date 03 November 2020
ISIN Reg No RU000A0JR4J2
Offer 12 November 2015

Dividend policy

The main objective of MTS OJSC as the leading group of telecommunications companies in emerging markets is to maintain sufficient resources and flexibility to meet its financial and operating requirements. At the same time, the Company continually seeks the ways to create shareholder value both through its commercial and financial strategies, including organic and inorganic development, and through management of the Company's capital.

MTS OJSC uses the practice of annual dividend payments as a part of its policy aimed at enhancing shareholder value. When determining the amount of dividends payable by the Company, the Board of Directors considers a variety of factors, including the prospects for revenue growth, requirements for capital expenses, cash flow from core operations, potential acquisition opportunities, as well as the Company's debt position. Decisions on dividends are proposed by the Board of Directors and later voted upon at an annual general meeting of MTS shareholders in the first half of the year.

MTS aims to return a minimum of 50% of net annual profit (according to US GAAP) to its shareholders through dividend payments, but this may vary depending on any of the above circumstances.

Dividend history, 2002 to 2009

2002 2003 2004 2005 2006 2007 2008 2009
Total dividends (MUSD) 111 220 403 562 747 1243 1158 999
As % of net income 40% 43% 41% 50% 69% 60% 60% 75%
Per one ADR, USD 0.3 0.6 1.0 1.4 1.9 3.1 3.0 1.0
Per one share, RUR 1.70 3.20 5.75 7.60 9.67 14.84 20.15 15.40

Financial calendar 2011*

General meetings of shareholders
27 June 2011 Annual general meeting of MTS OJSC shareholders
Meetings of the Board of Directors
03 February 2011, 15 March 2011, 14 April 2011, 12áMayá2011, 27áJune 2011, 28 July 2011, 15 September 2011, 27áOctoberá2011, 15 December 2011 MTS OJSC Board of Directors
Release of financial statements (Russian accounting standard)
30-31 March 2011 Q4 (12 months) 2010 30 July 2011 Q2 (6 months) 2011
30 April 2011 Q1 (3 months) 2011 30 October 2011 Q3 (9 months) 2011
Release of financial statements (International accounting standards)
5 April 2011 Q4 (12 months) 2010 Q3 2011 Q2 (6 months) 2011
Q2 2011 Q1 (3 months) 2011 Q4 2011 Q3 (9 months) 2011

* The dates may be adjusted.

MTS operations as reflected in ratings

Rating/Contest MTS rating/nomination in the contest Source
Top 100 world brands BRANDZÖ rating 72 Financial Times, 28.04.2010 Millward Brown agency
Global Mobile Awards 2010 Winner in the category: 'The best solution for customer care' GSM Association (18.02.2010)
Global Telecoms Business Innovation Awards Winner in the category: 'Innovative bank cards for customers' Global Telecoms Business (International Telecommunications Edition)(10.06.2010)
'500 best Internet resources in Europe', Hallvarsson&Halvarsson The best corporate resource among Russian companies The Company was put on rating: '500 best Internet resources in Europe'. Hallvarsson&Halvarsson (19.01.2010)
Confidence Mark rating Winner in the category: 'Mobile operator' Reader's Digest (27.01.2010)
Call-Center Awards ľ 2010 (Crystal Headset) Winner in categories:
'Operator of the year'
'The best campaign'
'The best shift of the year'
'The best multichannel contact center'
'The best staff management practices'
Call Center Guru Professional Community (24.03.2010)
Meffys Mobile Entertainment Award 2010 Winner in the category: 'Cross-platform technology' Meffys Mobile Entertainment Awards (22.06.2010)
40 under 40 Global Telecoms Business rating The Company's top managers were put on the global rating of the most successful world telecoms business managers under 40. 'Global Telecoms Business' (Magazine) (07.04.2010)
VáInternational Contest 'The Best Risk Management in Russia and CI S - 2010' Category:
'The best risk manager'
The Russian Risk Management Society (11.06.2010)
V National Award 'Director of the Year' Winner in the category: 'Director for Corporate Governance/ Corporate Secretary Association of Independent Directors under the auspices of PricewaterhouseCoopers and The Russian Union of Manufacturers and Businessmen (01 December 2010)
XIII Annual Federal Contest of Annual Reports Winner in categories: 'The best disclosure of information on corporate governance in the annual report'
'The best annual report in the telecoms sector of economy'
RĎS
(19 November 2010)
Silver Mercury 2010 Winner in the category: 'Best integrated campaign using multiple communication channels' The Russian Association of Marketing Services under the auspices of Association of Russian Communication Agencies (19.05.2010)
'Business and Higher Educational Institutions: Partnership 2009' ľ rating of The Russian Union of Rectors Rating leader in categories: 'The largest employer of young people'
'The best professional adaptation practices for students of higher educational institutions'
The Russian Union of Rectors (24.05.2010)