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Rostelecom

March 28, 2013

Rostelecom reports consolidated IFRS financial results for the fourth quarter and full year ended December 31, 2012

Moscow, Russia – March 28, 2013 – Rostelecom OJSC (MICEX-RTS: RTKM, RTKMP; OTCQX: ROSYY) (the “Group” and the “Company”) Russia’s national telecommunications operator, today announced its IFRS consolidated1 financial results for the fourth quarter and twelve months ending December 31, 20122.

The Group’s revenues for 2012 amounted to RUB 321.3 billion, a year-on-year increase of 7% compared to 2011. The Group’s revenue mix is evolving with the contribution from Rostelecom’s growth segments, which include mobile communications, broadband and pay-TV. Rostelecom’s OIBDA margin was 36.9% in 2012, reflecting the active development of the Group’s mobile segment and the construction of 3G+ networks in 4Q 2012, as well as the increase in revenue from high-growth segments, though at lower margins than traditional segments, and the creation of reserves to compensate employees affected by the Group’s plans to reduce administrative personnel by up to 20% in 2013.

According to the Senior Vice - President of Rostelecom Pavel Zaitsev, ‘In 2012 all managers’ and employees’ efforts were focused on strengthening Rostelecom’s competitive position. We started to actively explore breakthrough areas of the business, such as – mobile broadband and pay-TV. So far, we have built 3G+ networks in 24 regions, 10 of which are already providing commercial mobile data transmission services to our subscribers. After the launch of our single interactive TV platform in May 2012, the service’s number of subscribers doubled to 1.4 million giving Rostelecom a 49% share of the Interactive TV market.’

KEY OPERATING HIGHLIGHTS:

  • Total number of households passed rose 6% year-on-year, reaching 33.8 million3, of which 16.4 million (48%) were passed using FTTx technology
  • Total broadband subscriber base up 12% year-on-year to 9.2 million

               ·  The B2C subscriber base increased 12% to 8.5 million, of which the number of subscribers connected optically, increased 1.6 times year-on-year to 2.8 million (or 33% of the total subscriber base), giving the Company the highest rate of growth in the market in Russia. Rostelecom’s share of the B2C broadband markets is 40%.

  • Total Pay TV subscriber base increased 12% year-on-year to 6.6 million subscribers.

               ·  Out of the total subscriber base, the number of interactive TV subscribers more than doubled to 1.4 million, with the penetration of optical networks reaching 34%. Rostelecom’s share of the Interactive TV market is 49%.

  • Total mobile communications subscribers rose 4% year-on-year to 13.6 million.
  • The acquisition of SkyLink gave Rostelecom access to 3G licenses in 69 regions across Russia.
  • So far, 3G+ networks have been constructed and tested in 24 Russian regions, with commercial launches having taken place in 10 of those.

KEY FINANCIAL HIGHLIGHTS IN 2012:

  • Revenues up 7% year on year to RUB 321.3 billion
  • OIBDA4up to RUB 118.6 billion
  • OIBDA margin of 36.9% compared with 37.5% a year earlier (without taking into account the non-monetary effect on Q4 2011 results due to reduced long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 20115).
  • Net profit of RUB 35.2 billion (RAS net profit is used as a basis for dividend calculation on preferred shares up to RUB 32.7 billion).
  • Capital expenditure6of RUB 91.2 billion, representing 28.4% of consolidated revenues
  • Net debt7of RUB 203.1 billion with a net debt / OIBDA8ratio of 1.7x as at December 31, 2012.

KEY FOURTH QUARTER 2012 FINANCIAL HIGHLIGHTS:

  • Revenues up 4% year-on-year to RUB 82.6 billion
  • OIBDA up to RUB 24.6 billion with an OIBDA margin of 29.8% compared to 32.7% a year earlier (without taking into account the non-monetary effect on Q4 2011 results due to reduced long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011).
  • Net profit was RUB 4.6 billion.
  • Capital expenditure of RUB 27.7 billion, that is 33.6% of consolidated revenues.


1Q1 2011 financial results include contributions from North-West Telecom OJSC, CenterTelecom OJSC, Southern Telecommunications Company OJSC, VolgaTelecom OJSC, Uralsvyazinform OJSC, Sibirtelecom OJSC, Far East Telecom OJSC (“RTOs”), and also Dagsvyazinform OJSC and Rostelecom OJSC (under RAS), which had been under common control of Svyazinvest OJSC and were merged with Rostelecom on April 1, 2011. Operating activities include contributions from Sky Link CJSC, which was acquired by Rostelecom from Svyazinvest on July 27, 2012

2Q4 2012 represents unaudited results; 2012 audited

3Calculated as the sum of total number of households passed by xDSL, FTTx and xPON technologies, excluding technology intersections.

4Here and below, please refer to Attachment 1 to this statement for a full definition of OIBDA

5The non-monetary effect was RUB 4.7 billion on OIBDA margin in Q4 2011 and in total in 2011 without taking into account the non-monetary effect on the result of Q4 2011, due to the reduced long-term social obligations, as a result of the new labour contract signed by Rostelecom, its employees and the labour union in December 2011, which made up 39% .

6Here and below, capital expenditure (“CAPEX”) comprises cash spent on purchase of property, plant and equipment and intangible assets

7Here and below, net debt is calculated as the sum of long-term loans and short-term borrowings minus cash and cash equivalents and short-term investments

8OIBDA for the last 12 months

 

 

 

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