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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