Rostelecom’s Board of Directors approves acquisition of Freshtel’s Russian business

Moscow, Russia – April 30, 2015 – Rostelecom OJSC (MOEX - RTS: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces that its Board of Directors has approved the acquisition of the Russian assets of FreshTel Group, which includes 100% stakes in Interproekt LLC, Orion LLC, Progress LLC and Stolitsa LLC, for a total cost of RUB 210 million. As of the end of April 2015, FreshTel’s debt amounted to approximately RUB 2.3 billion.

FreshTel provides services to over 14,000 subscribers in more than 38 Russian towns. It has a large frequency resource to provide wireless internet access in the 3.4GHz and 3.5GHz bands via WiMax technology (more than 80% of this spectrum is composed of the 20-70 MHz bandwidth).

Sergey Kalugin, Rostelecom’s President, commented: “The acquisition of FreshTel is an important strategic step for us. Given the increasing competition in small and medium-sized cities, the main driver for future growth in the broadband segment is providing coverage to less densely populated areas in low rise buildings and compact single-storey settlements. Expanding the wire network for internet access in these areas is often economically inefficient, given what is involved to develop the network to the very last mile. By acquiring FreshTel, we will enhance our opportunities to develop wireless internet access in the last mile, and we will be able to significantly reduce the costs associated with constructing and operating networks in such areas. The deal will enable Rostelecom to expand its broadband subscriber base and improve revenue from these services. It will also help us to gain a competitive advantage and enhance our leading position in Russia’s internet market.”