Rostelecom’s Board of Directors decision on treasury shares

Moscow, Russia – April 27, 2014 – Rostelecom OJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces that its Board of Directors has approved the transfer of part of its treasury shares, representing approximately 2.6% of its ordinary shares, to its subsidiary LLC MOBITEL. The Annual General Meeting of Shareholders (“AGM”), due to be held on June 15, 2015, will also vote on the cancellation of the remaining treasury shares, amounting to 3.5% of ordinary shares and 13.7% of preferred shares. If the decisions are adopted and implemented, the quasi treasury shares on MOBITEL’s balance sheet will amount to 355,624 thousand ordinary and 64,519 thousand preferred shares

The Board of Directors’ decision was made in accordance with the law ‘On Joint Stock Companies’. This law stipulates that the Company must sell these shares at a price set no lower than their market value and not later than one year after their acquisition by the Company. Otherwise, the AGM is required to consider a reduction in the Company’s share capital by cancelling the shares. Last year, Rostelecom bought back shares from those shareholders who, unlike the majority, did not agree with demerging the Company’s mobile assets into RT-Mobile to be subsequently transferred to the JV with Tele2 Russia.

Sergey Kalugin, President of Rostelecom, commented: “The Company has reached a well-considered decision to transfer a portion of our treasury shares to MOBITEL and cancel the remaining shares. The result is a solution that best meets the needs of multiple groups of shareholders. Cancelling the remaining treasury shares will proportionally increase all shareholders’ stake in Rostelecom. The shares that sit on MOBITEL’s balance sheet should be viewed as an asset, which could be used for future fund raising through an SPO, or for M&A activity.”

In addition, MOBITEL has signed an agreement with the Federal Agency for State Property Management (Rosimushchestvo) on the management and voting of the Rostelecom shares owned by MOBITEL and Rosimushchestvo. This agreement was initiated by Rosimushchestvo.