MOSCOW, Russia (5 February 2015) - Open Joint Stock Company "MegaFon" (LSE: MFON), a leading Russian telecommunications operator ("MegaFon" or the "Company"), announces that Standard and Poor's Ratings Services ("S&P" or the "Agency") has taken several actions on the Company's credit ratings, following its downgrade of the sovereign rating on Russia.

S&P affirmed the local currency rating of the Company at the BBB- level, noting MegaFon's above-average profitability, solid credit metrics and liquidity position, as well as its ability to service debt. At the same time, S&P has downgraded the Company's foreign currency rating one notch to BB+, explaining that this action reflected constraints imposed by the Agency's Transfer and Convertibility assessment of Russia.

Gevork Vermishyan, Chief Financial Officer of MegaFon, commented on the S&P rating actions as follows: "Since the Company is a non-exporter, our foreign currency rating is constrained by the Russia sovereign rating. We share S&P's opinion on MegaFon's strength deriving from the Company's robust credit metrics, operational excellence and solid liquidity which is reflected in our affirmed investment-grade local currency rating, preserving our position as the highest S&P-rated telecom in Russia".

The text of the S&P release is available at http://www.standardandpoors.com/prot/ratings/articles/en/us?articleType=HTML&assetID=1245380575846.


For More Information:

OJSC MegaFon
Media: Peter Lidov Tel: + 7 926 200-66-99 plidov@megafon.ru
Investors: Dmitry Kononov Tel: + 7 926 200-64-90 dkononov@megafon.ru

Notes to Editors

MegaFon OJSC is a leading Russian telecommunication service provider, operating in all segments of the telecommunications markets in Russia. The Company and its subsidiaries have licences to operate in all of the Russian regions and in the Republics of Abkhazia, South Ossetia and Tajikistan.

The Company was the first in Russia to launch 3G for commercial operations. In July 2012, MegaFon was awarded one of four ten-year licences for the provision of 4G/LTE services throughout the entire Russian Federation and has already started providing these services in 68 different regions. In October 2013, MegaFon completed the acquisition of a 100% interest in Scartel/Yota, which hold significant 4G/LTE licences, from Garsdale Services Investment Limited ("Garsdale"), its shareholder and a member of the AF Telecom group (see below). The Company is a leader in the provision of mobile Internet, and is number two in terms of the number of active subscribers in Russia.

As a result of its acquisition of the Synterra Group, one of the leading Russian backbone operators, in June 2010, MegaFon substantially increased its fixed-line B2B and B2G businesses, as well as its provision of fixed broadband services. In September 2012, the Company acquired the VAS Media group of companies, which was integrated with MegaLabs, its R&D subsidiary.

In December 2012, the Company acquired a 25% interest (or 50% economic interest) in the Euroset retail chain, the largest chain in Russia providing telecommunications goods and services, and acquired a further 25% interest from Garsdale in July 2014.

In November 2012, MegaFon successfully completed an initial public offering on the Moscow Stock Exchange and the London Stock Exchange. MegaFon has two principal shareholders, companies in the USM Group (approximately 56.32%) and the TeliaSonera group (approximately 25.17%). Additional shares are held by a wholly owned subsidiary of the Company (3.92%, of which USM Holdings Limited has the right to acquire up to 2.5% prior to 2017), while the public float represents approximately 14.59% of the outstanding shares.

MegaFon was the Mobile General Partner of the XXII Winter Olympic Games and XI Paralympic Games held in Sochi in 2014. The state-of-the-art communication system installed by the Company for the Games contributed significantly to the participants' enjoyment of the Games, and to the overall success of the Games.

Cautionary Statement Regarding Forward Looking Statements

Some of the information in this document may contain or refer to projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "forecast", "intend", "will", "could", "may", or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions, and are based upon various assumptions which are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control. We may not achieve or accomplish these plans or predictions. The Company does not necessarily intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries in which the Company operates, as well as many other risks specifically related to the Company and its business and operations.

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