Key events of 2013 & early 2014

Business news:

  • Rostelecom signed a RUB 600 million state contract with the Federal Education and Science Supervision Agency for organising video surveillance across the Russian Federation during the Unified State Exam in 2014
  • Rostelecom’s Board of Directors approved the Company’s long-term incentive plan for its management
  • The EGM held on April 2, 2014 approved the appointment of new members to the Board of Directors and made amendments to the Company’s charter
  • Rostelecom completed the first stage of the deal to establish a joint venture with Tele2 Russia and contributed the shares of its mobile subsidiaries to the JV, including CJSC Sky Link, as well as the assets of its start-up regions which include Moscow and St Petersburg among other regions
  • Rostelecom and Tele2 Russia signed a joint venture framework agreement that will lead to the integration of their mobile assets
  • Rostelecom`s Board of Directors approved contribution of its mobile assets into a joint venture with Tele2 Russia Holding AB, equally owned by VTB Capital, the private equity arm of VTB, one of Russia’s largest banks, and a consortium of investors
  • Rostelecom`s Board of Directors approved the key components of the Company’s updated strategy to 2018
  • Rostelecom completed the launch of 3G mobile networks in 22 Russian regions including in St-Petersburg and the Leningrad region
  • IPTV subscriber base reached 2 million
  • Cloud services were launched for corporate clients
  • An agreement on transit traffic between Europe and Asia was signed with China Telecom
  • Rostelecom launched the first part of its LTE network in Sochi
  • Rostelecom’s Board of Directors approved the appointment of Sergey Kalugin as President of Rostelecom to succeed Alexander Provotorov
  • Rostelecom launched corporate bonds worth a total sum of RUB 30 billion.

Reorganization:

Merger with Svyazinvest

  • The Rostelecom Board of Directors approved the price at which one ordinary and one preferred share will be bought from shareholders who vote against or do not take part in the voting over the company's reorganization. The buyback price of one ordinary share has been set at RUB 136.05, with the price of one preferred share at RUB 95.24 as set by the independent appraiser Ernst and Young
  • Svyazinvest bought 12,644,374 (or 0.43%) of Rostelecom’s ordinary shares from Rostelecom’s subsidiary, Mobitel for RUB 1,720,267 thousand. This amount was previously received by Svyazinvest as a result of Rostelecom acquiring part of Svyazinvest’s additional share issue in 2012
  • On 26 June 2013, the EGM approved the Company’s reorganisation by merging Svyazinvest and its subsidiaries
  • The Company completed share buyback from shareholders who voted against the reorganisation, or abstained from voting. As a result, Rostelecom acquired 6.5% of its own ordinary shares and 17.5% of preferred shares. The buyback amounted to RUB 30.253 billion
  • The Board of Directors approved the decision to increase the Company’s share capital through the issue of an additional 1,582,234,000 ordinary shares as part of the second stage of the reorganisation. As a result of the reorganization 1,071,502,300 of the newly issued shares were placed in favour of Rosimuschestvo, a major Svyazinvest shareholder. The remaining shares were only technically issued and cancelled in-line with legal requirements
  • On 1 October 2013, the Company’s reorganization was essentially finalised by merging Svyazinvest and a range of other companies (either directly or indirectly controlled by Rostelecom and/or Svyazinvest) to OJSC Rostelecom

Mobile assets spin-off into RT-Mobile

  • Rostelecom’s Board of Directors set the date of Extraordinary General Meeting to approve the Company’s reorganisation by spinning off Rostelecom’s integrated mobile assets to CJSC RT-Mobile. Besides Board of Directors approved the price at which one ordinary and one preferred share will be bought from shareholders who vote against or do not take part in the voting over the company's reorganization. The buyback price of one ordinary share has been set at RUB 123.93, with the price of one preferred share at RUB 87.80
  • The Company‘s shareholders voted to approve its reorganisation in the form of spinning off its mobile assets (including telecommunications equipment and intellectual property rights) into its subsidiary company, CJSC RT-Mobile
  • The Company completed share buyback from shareholders who voted against the reorganisation, or abstained from voting. As a result, the Company acquired 6.1% of its own ordinary shares and 13.7% of preferred shares. The buyback amounted to RUB 23.161 billion
  • CJSC RT-Mobile, Company’s wholly-owned subsidiary, was registered at the Official Single Register of Legal Entities on April 1, 2014

M&A:

  • The Russian Direct Investment Fund (RDIF) and Deutsche Bank, one of the leading international banks, collectively acquired 72,187,366 Rostelecom ordinary shares. The investment amounted to RUB 7.674 billion
  • Rostelecom’s subsidiary Mobitel acquired 7.45% of Rostelecom’s ordinary shares from Gazprombank in a transaction worth RUB 25.2 billion

Others:

  • Fitch affirmed Rostelecom`s investment grade rating of ‘BBB-’ with a Stable Outlook
  • Standard & Poor’s confirmed Rostelecom’s corporate credit rating of ‘BB+’ with a Stable Outlook