Rostelecom to acquire Morton Group’s telecommunications assets

Moscow, Russia – March 28, 2016 – Rostelecom PJSC (“the Company”) (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces that its subsidiary Bashinformsvyaz PJSC has signed an agreement to acquire the telecommunications assets of Morton Group for RUB 633 million.

The telecommunications assets of Morton Group include three companies, which provide broadband, digital pay TV and telephony services for new housing developments in Moscow and the Moscow Region. The company services more than 40,000 residential and 2,000 corporate customers. In 2015, Morton’s telecommunications business generated revenue of RUB 428 million and an EBITDA margin of 34%. Morton has no debt obligations.

Maria Florentyeva, Senior Vice-President of Rostelecom PJSC, commented: "The acquisition is in line with our strategy to build a competitive position in the broadband and pay-TV market, including through local M&A transactions. The deal will allow Rostelecom to enter a new housing development sector, where, historically, the Company’s services have been under-represented. On top of that, Rostelecom will gain additional market share in Moscow region and a high-quality network infrastructure on very attractive terms. "