1. Reporting entity

The accompanying consolidated financial statements are of OJSC Rostelecom (“Rostelecom” or the “Company”), and its subsidiaries (together the “Group”), which are incorporated in the Russian Federation (“Russia”).

Rostelecom was established as an open joint stock company on 23 September 1993 in accordance with the Directive of the State Committee on the Management of State Property of Russia No. 1507–r, dated 27 August 1993. As at 31 December 2013, the Russian Federation, represented by the Federal Property Management Agency together with Vnesheconombank, controls the Company by holding of 51.03% of the Company’s ordinary shares.

The Group provides communication services (including local, intra–zone, long–distance domestic and international fixed–line telephone services, mobile services), data transmission, Internet, Pay TV, VPN and data centers services, rent of communication channels and radio communication services in the territory of Russian Federation. The Group operates the main intercity network and the international telecommunications gateways of the Russian Federation, carrying voice and data traffic that originates in its own network and other national and international operators’ networks to other national and international operators for termination.

The Company operates socially important Government programs, including “E–Government”, “Unified communication service” and other.

On 1 April 2011, the Company completed the merger with OJSC North–West Telecom, OJSC Centrtelecom, OJSC South Telecommunications Company, OJSC VolgaTelecom, OJSC Uralsvyazinform, OJSC Sibirtelecom, OJSC Far East Telecom (collectively referred to as the Interregional Companies (“IRCs”) and OJSC Dagsvyazinform (“Dagsvyazinform”) with the IRCs and Dagsvyazinform ceasing to exist as separate legal entities and all of their assets (including licenses), rights and liabilities being transferred to the Company as the legal successor of the IRCs and Dagsvyazinform under Russian law. The purpose of the reorganization was to establish an integrated telecommunications operator, a market leader in each segment of the Russian telecommunications market, eliminate internal conflicts of interest, expand into new market segments and optimize costs and capital expenditures.

On 1 October 2013, the Company completed the second stage of the reorganization where OJSC Svyazinvest (“Svyazinvest”), as well as 20 other joint–stock companies, which are either directly or indirectly controlled by Rostelecom and/or Svyazinvest, have been merged with Company. As the result, the Company has assumed all rights and responsibilities of the merged companies. The purpose of the second stage of reorganization was to eliminate any cross–ownership and to simplify the shareholder structure of the Group.

On 12 December 2013 the Board of Directors of the Company approved contribution of the Group’s mobile assets and liabilities into the share capital of T2 RUS Holding, newly created entity established by mobile operator Tele2 Russia Holding AB (Tele2 Russia). The Company will contribute substantially all of its mobile assets and licenses to T2 RUS Holding.

The contribution from Rostelecom will be effected in two stages. At the first stage the Company will contribute its standalone mobile subsidiaries and the Company’s mobile fixed assets into T2 RUS Holding.

Subsidiaries to be transferred at the first stage are as follows:

  • Akos CJSC
  • Apeks OJSC
  • Astarta CJSC
  • Baikalwestcom CJSC
  • Delta telecom CJSC
  • Kaliningradskie Mobilnie Seti OJSC
  • Moscovskaya sotovaya svyaz OJSC
  • MS–Direct CJSC
  • LLC Pilar
  • Saratovskaya sistema sotovoy svyazy CJSC
  • Skay–1800 CJSC
  • Sky Link CJSC
  • Uralvestcom CJSC
  • Volgograd–GSM CJSC
  • Yenisey telecom CJSC

At the end of the first stage, the Group will receive a 45% voting interest and a 26% of ordinary and preference shares in T2 RUS Holding.

During the second stage, the Company will spin off its integrated mobile businesses (which is a part of the Company), including licenses, into its new wholly owned subsidiary CJSC RT–Mobile. Upon completion of the spin–off, the Company will contribute its stake in CJSC RT–Mobile into T2 RUS Holding and thus increase its economic interest in T2 RUS Holding to 45%.

The Company’s headquarters are located in the Russian Federation, Moscow at 1st Tverskaya–Yamskaya Street, 14, 125047.