Russia's largest listed conglomerate OAO AFK Sistema (AFKS.RS) Wednesday said its board has agreed to sell its 50.9% stake in fixed-line telecommunications operator OAO Comstar United Telesystems (CMST.RS) to OAO Mobile TeleSystems (MBT), a mobile operator which Sistema also controls.

The deal was widely expected and the price of the stake - $1.272 billion, or $5.98 a share - was reported by media Friday.

The transaction will be conducted in rubles, since this is a legal requirement, but half of the price will be pegged at a rate of RUB31.93 to the dollar.

MTS, in a separate release, said it hasn't yet decided whether to extend the offer to Comstar's minority shareholders.

It isn't required to do so under Russian law because Sistema is the controlling shareholder of both companies.

Sistema's shareholders will vote on the transaction at an extraordinary general meeting Oct. 1.

Company Web sites: www.mtsgsm.com; www.comstar.ru; www.sistema.com

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