Russia's largest mobile operator by users, OAO Mobile TeleSystems (MBT), said Monday it has agreed to borrow a total of 59 billion rubles ($1.95 billion) from state-controlled lender OAO Sberbank (SBER.RS).

Sberbank lent MTS RUB47 billion for four years at an annual interest rate of 16% and RUB12 billion for two years at a rate of 15%.

MTS last month agreed to pay $1.27 billion for a 50.9% stake in fixed-line operator OAO Comstar United TeleSystems (CMST.RS), and said that some of the borrowed funds will be used to pay for this stake.

MTS is buying the stake from parent company OAO AFK Sistema (AFKS.RS).

MTS rival OAO Vimpel Communications (VIP) has also issued ruble debt recently. Both companies earn most of their revenue in rubles and following the currency's sharp depreciation at the beginning of this year, they are eager to reduce their share of debt held in dollars.

Company Web site: www.mts.ru

-By Will Bland, Dow Jones Newswires; +7 495 937 8445; william.bland@dowjones.com