Rostelecom OJSC: ROSTELECOM AND THE FEDERAL COMMUNICATIONS AGENCY SIGN A GOVERNMENT CONTRACT AIMED AT BRIDGING THE DIGITAL GAP

  Rostelecom OJSC: ROSTELECOM AND THE FEDERAL COMMUNICATIONS AGENCY SIGN A   GOVERNMENT CONTRACT AIMED AT BRIDGING THE DIGITAL GAP  UK Regulatory Announcement  MOSCOW   ROSTELECOM AND THE FEDERAL COMMUNICATIONS AGENCY SIGN A GOVERNMENT CONTRACT                       AIMED AT BRIDGING THE DIGITAL GAP  Moscow, Russia – May 13, 2014 –Rostelecom OJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces that the Company has signed a government contract with the Federal Communications Agency (Rossvyaz) on providing universal communications services.  As part of this contract, legislative changes were established, including appointing Rostelecom as the sole provider of universal communications services in Russia. Within the scope of the contract, Rostelecom will carry out maintenance work on 148,000 universal service payphones and 21,000 public internet access points, and will also provide data transfer services at a speed of no less than 10Mbit/s in settlements with a population of between 250 and 500 people.  To fulfill the terms of the contract, Rostelecom will need to lay down new fibre optic communications lines of approximately 200,000 kilometres in length. This will enable Rostelecom to provide internet access for over 13,600 settlements across Russia with a total population of approximately 4 million.  The contract with Rostelecom will expire in 10 years’ time. It will be financed using resources from the universal services fund, which is managed by Rossvyaz. According to estimates, approximately RUB 163 billion will be used to provide universal services over the ten year period.  Oleg Dukhovnitsky, Head of the Federal Communications Agency (Rossvyaz), commented: “We today turned another page in the history of Russian telecommunications. The introduction of the law “On Communications” in 2003 formed the basis of the universal service system, and over the last 11 years, this system has become more versatile and flexible with regard to customers. This ten year contract is a huge responsibility for both the government and the operator, and Rossvyaz is ready to cooperate with Rostelecom in a constructive manner for the benefit of the Russian population.”  Sergey Kalugin, President of Rostelecom, also commented: “All of the world’s advanced countries are implementing projects to ensure that all their citizens’ have equal access to broadband. In Russia, we have five years to complete a large amount of work. By the end of 2018, all the settlements listed in the contract will have access to high-speed internet. Rostelecom is well-equipped to carry out this project. We have experience of implementing large-scale government projects, along with some of the country’s best infrastructure and leading specialists.  It’s important to note that the project will in fact see many more Russian settlements and residents receive universal services than is indicated in the contract. Fibre optic lines will be constructed in a manner that will see all neighbouring towns, villages and hamlets gain access to high-speed internet. As a result, millions of Russians will be thrust into the digital age and receive equal access to the information society with all its opportunities for communication, information exchange, access to public services, education, online banking and e-commerce. It will essentially provide everyone with equal access to all the things the modern person cannot imagine living without.”                                      * * *  For more information please visit http://www.rostelecom.ru/en/ir or contact:  “Rostelecom Investor Relations / Rostelecom IR” application is now available to download for free from the Apple App Store and Google Play  Investor Relations Department  Tel. +7 (499) 995 97 80  ir@rt.ru                                      * * *  Rostelecom (www.rostelecom.ru) is one of the largest national telecommunications operators in Russia and Europe. The Group operates in all segments of the telecommunications market and covers more than 34 million households.  Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 10.6 million fixed-line broadband subscribers and over 7.5 million pay-TV subscribers.  The Group generated RUB 325.7 billion of consolidated revenues, RUB 113.3 billion of OIBDA (34.8% of revenues) and RUB 24.1 billion of net income for the 12 months ended December 31, 2013.  The Group is a market leader in providing telecommunications services to government bodies and corporates of all levels. It is also an important innovator that provides solutions in the field of medicine, E-Government, cloud computing, education, security and housing & utility services.  Rostelecom was assigned ‘BBB-’ and ‘BB+’ international credit ratings by Fitch Ratings and Standard & Poor’s respectively.                                      * * *  Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby.  Those forward-looking statements include, but are not limited to:    *Management’s assessment of the Company’s future operating and financial     results as well as forecasts of the present value of future cash flows and     related factors;   *the Company’s anticipated capital expenditures and plans to construct and     modernize its network;   *the Company’s expectations as to the growth in demand for its services,     plans relating to the expansion of the range of its services and their     pricing;   *the Company’s plans with respect to improving its corporate governance     practices;   *the Company’s expectations as to its position in the telecommunications     market and the development of the market segments within which the Company     operates;   *economic outlook and industry trends;   *the Company’s expectations as to the regulation of the Russian     telecommunications industry and assessment of impact of regulatory     initiatives on the Company’s activity;   *other statements regarding matters that are not historical facts.  Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:    *risks relating to changes in political, economic and social conditions in     Russia as well as changes in global economic conditions;   *risks relating to Russian legislation, regulation and taxation, including     laws, regulations, decrees and decisions governing the Russian     telecommunications industry, securities industry as well as currency and     exchange controls relating to Russian entities and their official     interpretation by regulatory bodies;   *risks relating to the Company, including the achievement of the     anticipated results, levels of profitability and growth, ability to create     and meet demand for the Company’s services including their promotions, and     the ability of the Company to remain competitive in a liberalized     telecommunications market;   *technological risks associated with the functioning and development of the     telecommunications infrastructure, technological innovations as well as     the convergence of technologies;   *other risks and uncertainties. For a more detailed discussion of these and     other factors, see the Company’s Annual Report and the Company’s other     public filings.  Many of these factors are beyond the Company’s ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.  Contact:  Rostelecom OJSC  
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