RNS Number:8457Q

JSC Sitronics07 February 2007 THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN AUSTRALIA, CANADA, JAPAN, THE RUSSIAN FEDERATION OR THE UNITED STATES SITRONICS ANNOUNCES PRICING OF IPO Part I

MOSCOW, 7 February 2007 - JSC SITRONICS ("SITRONICS"), a leading provider oftelecommunication solutions, including software, equipment and systemsintegration, IT solutions and microelectronic solutions in Russia and the

Commonwealth of Independent States with a strong presence in Central and Eastern

Europe and a growing presence in the Middle East and Africa announced today thatit has set the price of its offering (the "Offering"), of ordinary shares and

Global Depositary Receipts ("GDRs") representing interests in its shares.

SITRONICS intends to list its GDRs on the London Stock Exchange. The ordinaryshares are listed on the RTS Stock Exchange and the Moscow Stock Exchange. The

Offering is subject to receipt of all necessary regulatory approvals by the UK

Financial Services Authority.

Details of the Offering are as follows:- The price for the Offering (the "Offer Price") has been set at U.S.$0.24 per Share and U.S.$12.00 per Global Depositary Receipt ("GDR"), with each GDR representing an interest in 50 ordinary shares.- The Offer Price results in SITRONICS having a market capitalization of approximately U.S.$2.3 billion (before exercise of the over-allotment option).- SITRONICS has also granted the underwriters an over-allotment option in respect of an additional 125 million Shares in the form of GDRs.- SITRONICS' free float will amount to approximately 17.5% of the Company's issued share capital (before exercise of the over-allotment option).- The share mix in the Offering (before exercise of the over-allotment option) will be 92.5% primary and 7.5% secondary.- SITRONICS' GDRs will trade on the London Stock Exchange under the ticker symbol "SITR".- SITRONICS' shares are listed on the Moscow Stock Exchange and RTS under the ticker symbol "SITR".

SITRONICS intends to use approximately 50% of the proceeds from the Offering foracquisitions, including for the consolidation of minority interests in itssubsidiaries, 25% of the proceeds for the repayment of debt and the remaining25% of the proceeds for general corporate purposes, including for thedevelopment of new projects and for working capital.

Mr. Alexander Goncharuk, chairman of our Board of Directors, said "We aredelighted with the level of interest in the offering from a broad range ofinvestors in Russia, Europe and the United States. We are now looking forward tothe next stage of SITRONICS' strategic development".

Credit Suisse, Goldman Sachs International and Renaissance Capital are acting as

Joint Global Coordinators and Bookrunners of the Offering. HSBC is acting as

Co-Lead Manager.

SITRONICS

Alexander Boreyko, Investor Relations Director +7 495 225-98-26 +7 916 105-83-35

GAVIN ANDERSON & CO

Byron Ousey +44 207 554 1400

Dick Millard

Daniel Hunter

Michael Turner

ABOUT SITRONICS

SITRONICS is a leading provider of telecommunication solutions, includingsoftware, equipment and systems integration, IT solutions and microelectronicsolutions in Russia and the Commonwealth of Independent States with a strongpresence in Central and Eastern Europe and a growing presence in the Middle

East and Africa.

SITRONICS serves over 3,500 clients, maintains offices in 25 countries andexports its products and services to more than 60 countries. SITRONICS has over10,000 employees of which approximately 4,600 are involved in research anddevelopment.

SITRONICS key business operations are based in Prague, Czech Republic and

Athens, Greece for its telecommunication solutions division and in Kiev, Ukraineand Zelenograd, Russia, for its IT solutions and microelectronic solutionsdivisions, respectively.

For the nine months ended 30 September 2006, SITRONICS's revenues and OIBDA(1)were $1,049.8 million and $114.7 million, respectively. As of 30 September 2006,

SITRONICS had total assets of approximately $1.6 billion.

SITRONICS is majority owned by Sistema, a leading consumer services holdingcompany in Russia and CIS.

SITRONICS has developed strategic alliances in its home markets with Cisco

Systems, STMicroelectronics, Infineon and Giesecke & Devrient in relation tocertain products and services. SITRONICS has vendor relationships with Siemens,

Ericsson, Motorola, ORACLE, Intel, Sun Microsystems and Microsoft. Key customersinclude Sistema group companies, such as MTS, Comstar UTS and MTT, and also OTE,

Cosmote, Vodafone, Ericsson, Arcelor Mittal (formerly Mittal Steel), Banca

Intesa and TCL of China.___________________________(1) OIBDA is Operating Income Before Depreciation and Amortization___________________________ * * *

Some of the information in this press release may contain projections or otherforward-looking statements regarding future events or the future financialperformance of SITRONICS. You can identify forward-looking statements by termssuch as "expect," "believe," "anticipate," "estimate," "intend," "will,""could," "may" or "might" the negative of such terms or other similarexpressions. These statements are only predictions and actual events or resultsmay differ materially. We do not intend to or undertake any obligation to updatethese statements to reflect events and circumstances occurring after the datehereof or to reflect the occurrence of unanticipated events. Many factors couldcause the actual results to differ materially from those contained in ourprojections or forward-looking statements, including, among others, generaleconomic conditions, our competitive environment, risks associated withoperating in Russia, rapid technological and market change in our industries,and other factors specifically related to SITRONICS and its operations.

This document does not constitute or form part of any offer or invitation tosell or issue, or any solicitation of any offer to purchase or subscribe for,any shares or other securities of SITRONICS, nor shall any part of it nor thefact of its distribution form part of or be relied on in connection with anycontract or investment decision relating thereto, nor does it constitute arecommendation regarding the securities of SITRONICS.

This press release is not for distribution, directly or indirectly, in or intothe United States (including its territories and dependencies, any State of the

United States and the District of Columbia), Australia, Canada, Japan or the

Russian Federation. This press release is not an offer for sale of anysecurities in the United States. Securities may not be offered or sold in the

United States absent registration or an exemption from registration under the US

Securities Act of 1933, as amended, and the rules and regulations thereunder.

SITRONICS has not registered and does not intend to register any portion of anyoffering of securities in the United States or to conduct a public offering ofany securities in the United States.

This announcement is an advertisement and not a prospectus and investors shouldnot subscribe for or purchase any shares or other securities referred to in thisannouncement except on the basis of information in the prospectus which isintended to be published by SITRONICS in due course in connection with theadmission of GDRs representing the SITRONICS's shares to the Official List ofthe UK Financial Services Authority. Such prospectus will, followingpublication, be available in a printed form at the registered office of

SITRONICS.

This document does not constitute an offer of securities to the public in the

United Kingdom. This communication is directed only at (i) persons who areoutside the United Kingdom or (ii) persons who have professional experience inmatters relating to investments falling within Article 19(5) of the Financial

Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and(iii) high net worth entities, and other persons to whom it may lawfully becommunicated, falling within Article 49(2) of the Order (all such personstogether being referred to as "relevant persons"). Any investment activity towhich this communication relates will only be available to and will only beengaged with, relevant persons. Any person who is not a relevant person shouldnot act or rely on this document or any of its contents.

In any EEA Member State that has implemented Directive 2003/71/EC (together withany applicable implementing measures in any Member State, the "Prospectus

Directive") this communication is only addressed to qualified investors in that

Member State within the meaning of the Prospectus Directive.

This press release is not an offer, or an invitation to make offers, sell,purchase, exchange or transfer any GDRs in the Russian Federation or to thebenefit of any Russian person, and does not constitute an advertisement of the

GDRs in the Russian Federation and must not be passed on to third parties orotherwise be made publicly available in the Russian Federation. The GDRs havenot been and will not be registered in the Russian Federation and are notintended for "placement" or "public circulation" in the Russian Federation.

Stabilization / FSA Part II Appendix - Further Details of the Offering

Capitalized terms used but not defined herein shall have the meanings given tothem in the preliminary prospectus dated January 22, 2007.

The Offering* The offering consisted of 1,675,000,000 ordinary shares, consisting of 1,549,839,200 newly issued shares by Sitronics to be placed in the form of GDRs and 125,160,800 ordinary shares to be placed by Alexander Goncharuk (85,000,000 shares), Gennady Krasnikov (38,000,000 shares) and Alexander Titov (2,160,800 shares) in the form of shares (assuming no exercise of the over-allotment option by the Underwriters). The offer price per share is US$0.24 and the offer price per GDR is US$12.00. One GDR represents (and carries the right to vote) 50 shares.* In connection with the offering, Sitronics has granted to the Underwriters an over-allotment option, exercisable within 30 days of today's date, to purchase up to an additional 125,000,000 ordinary shares in the form of GDRs at the offer price, solely to cover over-allotments in the offering.* The net proceeds that Sitronics will receive from the offering, after deducting underwriting commissions, fees and expenses incurred by Sitronics in connection with the offering, will be approximately US$352.6 million (assuming the Underwriters do not exercise the over-allotment option).* Sitronics intends to use approximately 50% of the proceeds from the Offering for acquisitions, including for the consolidation of minority interests in its subsidiaries, 25% of the proceeds for the repayment of indebtedness and the remaining 25% of the proceeds for general corporate purposes, including for the development of new projects and for working capital.* As adjusted for the offering and assuming the Underwriters do not exercise the over-allotment option, Sitronics' share capital consists of 9,547,087,190 shares, each with a nominal value of one ruble, which are fully paid, issued and outstanding.* Following the offering and assuming the Underwriters do not exercise the over-allotment option, Sistema, our controlling shareholder, and its group companies (including one of our wholly owned subsidiaries) will own 74.22% of our issued shares.* Sitronics' existing shares have been admitted to list "V" on the Moscow Stock Exchange and on the Russian Trading System Stock Exchange ("RTS") , but are not traded.* Conditional trading in the GDRs on the London Stock Exchange is expected to commence on a when and if issued basis today.* Admission to the Official List and to trading on the regulated market is expected to take place on or about February 12, 2007.* Trading in the GDRs on the London Stock Exchange and PORTAL is expected to commence on or about February 13, 2007.* It is expected that delivery of the GDRs will be made against payment therefor in US dollars in same day funds through the facilities of DTC, Euroclear and Clearstream on or about February 12, 2007.* Number of GDRs in respect of which Sitronics has applied to the FSA for admission: 48,360,435 of which:* the number of GDRs to be issued on the Closing Date: 30,996,784; and* the maximum number of additional GDRs which may be issued from time to time (to the extent permitted by law) against the deposit of shares with the Depositary: 17,363,651.* Our GDR program will account for approximately 16.234% of our issued shares as a result of the offering (assuming the Underwriters do not exercise the over-allotment option) and approximately 17.316% of our issued shares (assuming the Underwriters exercise the over-allotment in full), not including the approximately 1.311% of our issued shares being sold by the Selling Shareholders which may be deposited in the GDR program.* The offer price of the shares and GDRs is substantially higher than the net book value per share and per GDR. That is, holders of GDRs will contribute 46.8% of Sitronics' total book equity capitalization as of September 30, 2006, but will own only 16.2% of our total equity outstanding, assuming the Underwriters do not exercise the over-allotment option.* The total underwriting commissions will be approximately $14.1 million, assuming no exercise of the over-allotment option. Certain affiliates of the Underwriters may purchase shares in the Offering.

Capitalization

The following figures set forth our capitalization as of September 30, 2006 asadjusted to give effect to the issuance of 1,549,839,200 shares in the offering(US$ thousands):* Short-term loans and notes payable: 122,854* Current portion of long-term debt: 130,176* Total short-term debt: 253,030* Long-term debt, less amounts maturing within one year: 209,609* Capital lease obligations, net of current portion: 3,225* Share capital: 286,313* Additional paid-in capital: 393,646* Retained earnings: 62,248* Accumulated other comprehensive income: 11,525* Total shareholders' equity: 753,732* Total capitalization: 1,219,596

Business

In February 2007, Strom Telecom changed its name to SITRONICS Telecom Solutions,

Czech Republic a.s., and it intends to transition to the "Sitronics" name in itsbusiness activities.

In January 2007, Mikron issued 9.88% of its ordinary shares to the Russian

Federation Agency for Management of Federal Property for a payment of 274.6million rubles. Our interest in Mikron decreased from 86% to 77%.

Principal and Selling Shareholders

The following sets forth information regarding ownership of our shares followingthe offering (assuming the Underwriters do not exercise the over-allotmentoption) in terms of number of shares and percentage of our total issued shares:* Sistema: 4,797,851,839 / 50.255%* Ecu Gest Holding S.A.: 1,309,641,070 / 13.718%* Sitronics Management LLC: 937,489,541 / 9.820%* Alexander Goncharuk: 300,188,550 / 3.144%* EBRD: 293,476,990 / 3.074%* Gennady Krasnikov: 151,234,000 / 1.584%* Laminea JSC: 41,150,000 / 0.431%* Alexander Titov: 19,447,200 / 0.204%* Other: 21,608,000 / 0.226%* Free float (including GDR holders): 1,675,000,000 / 17.545%* Total: 9,547,087,190 / 100%

Subscription and Sale

The underwriting commitments of the Underwriters in terms of total number ofshares and split between shares from Sitronics (in the form of GDRs) and sharesfrom the Selling Shareholders, are as follows:* Credit Suisse Securities (Europe) Limited: 502,500,000 shares (464,951,750 newly issued and 37,548,250 secondary)* Goldman Sachs International: 502,500,000 shares (464,951,750 newly issued and 37,548,250 secondary)* Renaissance Securities (Cyprus) Limited: 502,500,000 shares (464,951,750 newly issued and 37,548,250 secondary)* HSBC Bank plc: 167,500,000 shares (154,983,950 newly issued and 12,516,050 secondary) This information is provided by RNS The company news service from the London Stock Exchange

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