The largest digital services provider in Russia

Rostelecom announces its IFRS financial and operating results for the first quarter of 2015

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The growing broadband and pay-TV segments increase their share of overall revenue by 3 percentage points

OIBDA margin of 34.2% and improved financial outlook for 2015

Moscow, Russia – May 21, 2015 - Rostelecom OJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces its consolidated financial results for the first quarter of 2015 prepared in accordance with IFRS.

FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS

FIXED LINE BUSINESS

  • Revenue of RUB 71.1 billion compared to RUB 72.6 billion in the first quarter of 2014. This was due to the one-off gains from the delivering telecommunications services during the Sochi Winter Olympics in the first quarter of 2014;
  • OIBDA[1] amounted to RUB 24.5 billion compared to RUB 25.2 billion in the first quarter of 2014;
  • OIBDA margin amounted to 34.2% compared to 34.7% in the corresponding period of the previous year;
  • CAPEX[2] doubled year-on-year to RUB 15.4 billion (21.5% of revenue compared to 10.4% of revenue during the first quarter of 2014). This was due to a low comparison base for the first quarter for 2014,;
  • Free Cash Flow (FCF)[3] of RUB 1.6 billion compared to RUB 13.0 billion in the first quarter of 2014 due to the high comparison base in the first quarter of 2014. This is due to higher levels CAPEX during the reporting period and an increase in accounts receivable in relation to delivering universal services;
  • Net debt[4] remained stable and amounted to RUB 171.3 billion;
  • Net profit of RUB 2.1 billion compared to RUB 2.6 billion in the first quarter of 2014. This was mainly due to the consolidation of losses from affiliated companies, particularly T2 RTK Holding, which is now actively constructing networks and integrating the mobile assets which were transferred to the JV with Tele2 Russia.
Press-release

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

[2] Here and below, capital expenditure (“CAPEX”) comprises cash spent on fixed assets and intangible assets

[3] Here and below, FCF is calculated as free cash flow from operating activity minus CAPEX, plus proceeds from selling fixed assets and intangible assets

[4] Here and below, net debt is calculated as total debt less cash, cash equivalents and short-term investments.