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Reasons to invest in MTS

Leading positions in all markets of operation

MTS maintains its leadership in traditional telecommunications business as well as becoming a leading player in the digital world.

Leadership in mobile business: We are #1 provider of mobile services in our key Russian home market in terms of revenue and subscribers, consistently maintaining market share of over 30%. We are either #1 or #2 mobile operator in all other countries of operation: the Ukraine, Armenia and Belarus with total coverage of over 200mn people.

Leadership in fixed business: We are a convergence leader in Moscow through our subsidiary MGTS, Moscow’s incumbent fixed-line telecommunications operator, with “last mile” GPON-enabled access to approximately 95% of households in the city.

Leadership in innovation and technologies: We have consistently lead our market in exploiting new revenue opportunities, whether it is through the introduction of bundled tariffs or new services. We are developing a unique ecosystem, through which we offer innovative products in FinTech, Internet of Things, BigData, system integration, e-commerce and digital services.

Consistent shareholder returns

MTS boasts a consistent and transparent dividend return dating to the early 2000s and has leveraged its strong financial position to devise ways for additional returns.

Dividend: We have been paying a steady dividend since our IPO in 2000. For the last three years, we paid in total over RUB 150 bln. Our current dividend policy assumes a payout of RUB 25-26 per ordinary share (RUB 50.0 - 52.0 per ADR) for each calendar year.

Share repurchase: At two points in its history, in 2007 and recently in 2016, MTS has launched share repurchase programs to generate additional value for its shareholders. In addition, it was the first US-registered Russian company to launch a Dutch auction tender in the history of Russian capital markets.

Attractive industry fundamentals with strong potential for growth

MTS operates in the telecommunications sector, which globally has shown to be resilient during times of economic uncertainty and showcases growth during times of economic and technological evolution.

Operating in one of the leading emerging markets: Russia is a large market with growth potential benefitting from improving economic fundamentals, a supportive regulatory framework, high barriers to entry and attractive risk/return ratio.

Stable demand: As a critical component of the larger consumer basket, telecommunication services enjoy stable demand from consumers and businesses alike. The telecommunications sector has proven to be defensive in times of economic uncertainty and has shown growth during periods of stronger economic activity.

Growth potential: The telecommunications sector benefits from digitalization through the introduction of new network technologies, like UMTS and LTE, the expansion of services the sector can offer, opportunities for increased cost efficiency (e.g. personnel optimization, marketing efforts, network operations), improved customer experience and the continued monetization of Big Data.

Focus on Digital: We are transforming our traditional telecommunications business model by putting tech/software at the core of our digital-focused 3D Strategy. We believe that increased monetization of digital services could be a key driver for our future growth and enable us to capture a larger portion of the customer wallet.

Strong financial performance

MTS has a strong track record of delivering superior financial performance and outperforming the peer group.

Strong balance sheet: MTS boasts a low Net debt / OIBDA ratio of ~1.1x and a manageable debt exposure.

Well-balanced financial strategy: MTS generates the highest levels of profitability and the most consistent CAPEX profile in the sector. Despite high levels of investment, the Company’s low leverage provides the flexibility to ensure a stable, but strong, reward to investors.

Experienced management team

MTS’s management team stands out in the sector by boasting strong industry expertise, as members of our Management Board average at least 10 years of experience at MTS and a solid execution track record. Our managers have been widely recognized as industry leaders and rank among the best in their fields.

Long and positive track record with international capital markets

MTS offers highly liquid equities with listings on both the New York Stock Exchange and the Moscow Exchange. In addition, MTS has regularly been active in the international debt markets. Our long history of capital markets activity has established high corporate governance standards, transparent governance practices and market-leading systems of internal control.

Listing: MTS Level III ADRs trade under the ticket MBT and have been listed on the New York Stock Exchange since its IPO in 2000. MTS’s ordinary shares are listed on the Moscow Exchange under the ticker MTSS. MTS’s majority shareholder, Sistema JSFC, is also a listed entity; its shares are traded on the London Stock Exchange under the ticker SSA.

Strong commitment to corporate governance: As a US-registered company based in the Russian Federation, MTS is committed to exceeding regulatory commitments of two leading markets for capital markets activity. Both management and shareholder interests have long been aligned through equity participation by over 400 MTS employees through a company-sponsored ESOP and phantom share program.

Recognized leading financial communications: Our investor relations efforts have been long-recognized as among the finest in the market by leading organizations such as Thomson Reuters Extel.

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