Investor Presentation
www.rostelecom.ru Disclaimer
By attending any meeting where this presentation is made, or by reading any part of this presentation, you acknowledge and agree to be bound by the following: § This presentation has been prepared by OJSC Rostelecom (the “Company”). This presentation is strictly confidential to the recipient, may not be distributed to the press or any other person, and may not be reproduced in any form, in whole or in part. § The Company has included its own estimates, assessments, adjustments and judgments in preparing certain market information herein, which have not been verified by an independent third party. Market information included herein is, therefore, unless otherwise attributed exclusively to a third party source, to a certain degree subjective. While the Company believes that its own estimates, assessments, adjustments and judgments are reasonable and that the market information prepared by the Company appropriately reflects the industry and the markets in which it operates, there is no assurance that the Company’s own estimates, assessments, adjustments and judgments are the most appropriate for making determinations relating to market information. § Neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. § This presentation is confidential and does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. § This presentation is not intended for publication or circulation in the United States. This presentation does not constitute and should not be construed as an offer to sell or the solicitation of an offer to buy securities in the United States or to any U.S. person (as defined in Regulation S under the US Securities Act of 1933 (the “Securities Act”)). No securities of the Company have been, nor will be, registered under the Securities Act or the securities laws of any state of the United States, and unless so registered may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This presentation does not constitute a public offering or an advertisement of securities in the Russian Federation and does not constitute an offer or a proposal to make offers or to acquire any securities in the Russian Federation. § In any member state of the European Economic Area, this Presentation is made to and directed only at persons who are qualified investors within the meaning of article 2(1)(e) of the Prospectus Directive (2003/71/EC) (“Qualified Investors”). In addition, in the United Kingdom, this Presentation is made to and directed at: (i) investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) and (ii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within article 49(2)(A) to (D) of the Order (such persons together with Qualified Investors, being “Relevant Persons”). In these jurisdictions, persons who are not Relevant Persons must not rely on or act upon the information contained in this presentation or any of its contents. Any investment or investment activity to which this Presentation relates is only available to Relevant Persons and will be engaged in only with Relevant Persons. The recipients of the information contained herein should not base any behavior that would amount to market abuse for the purposes of the Financial Services and Markets Act 2000 (“FSMA”) and the Code of Market Conduct made pursuant to the FSMA on the information in this Presentation or any information provided or discussed in connection with it. § This presentation is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions.
2 www.rostelecom.ru Content
1 Rostelecom overview
2 Corporate and financial highlights
3 Rostelecom strategy update
4 Creating T2-RTK Holding - national mobile player
5 Appendix
3 www.rostelecom.ru 1. Rostelecom overview
4 www.rostelecom.ru Rostelecom Today
§ Rostelecom networks and services cover all Federal districts of Russia, including Moscow § Strong market positions in most of the telecom segments Leading Universal operator § 69%1 market share in fixed voice § 40%1 market share in fixed Broadband § 58%1 market share in IPTV
~ 500,000 km of national backbone and unique “last mile” infrastructure with Unique infrastructure almost 34 mln households passed
26,51 mln fixed – line subs, 10.61 mln broadband subs, 7.51 mln pay-TV subs Strong subscriber base and 14.81 mln mobile voice subs
Revenue2013 : RUR 325.7 bln Net Income2013 : RUR 24.1 bln Positive Financial Results OIBDA2013 : RUR 113.3 bln Cash CAPEX2013 : RUR 68.5 bln OIBDA margin2013: 34.8% Net debt/OIBDA31.12.2013: x1.9
§ Currently traded on Moscow Exchange § Rostelecom is included in MSCI Large Cap. Current weight in MSCI Russia is Blue chip 1.08%2 § Investment rating “BBB-” from Fitch Rating (confirmed in August 2013), credit rating “BB+” from S&P rating agency (confirmed in June 2013)
1 – as of end of 2013 2 – as at March 3, 2014 5 www.rostelecom.ru New Executive Management Team Members Sergey Kalugin • President - CEO Maria • Vice-President, Strategy and Investor Florentieva Relations • Joined the Company in March, 2013 • Joined the Company in May, 2013 • 12 years experience in Telecom & • 7 years experience in Telecom & Media Media • Previously Deputy CEO of National • Previously CEO of National Telecommunications Telecommunications Andrey • Senior Vice-President, Innovations Cheglakov • Joined the Company in April, 2013 Kai-Uwe • Vice-President - CFO Mehlhorn • Over 10 years experience in Technology • Joined the Company in May, 2013 • Previously worked as Deputy Director • Over 21 years of TMT experience, 11 years General at Federal Goznak at CFO position • Previously CFO of Megafon and Tele2. Dmitriy • Vice-President, IT Sadkov Larisa • Joined the Company in June, 2013 Tkachuk • Senior Vice-President - Commercial • Over 13 years of experience in IT Director • Previously served as Director of • Joined the Company in April, 2013 Management Consulting Department at IBS • Over 10 years of Telecom & Media and at McKinsey & Company experience • Senior Vice-President, Network • Previously Commercial Director at Megafon Alexander Tseitlin Maintenance Mikhail • Vice President of Legal Affairs • Joined the Company in May, 2013 Irzhevsky • Joined the Company in October, 2013 • Over 30 years of Telecom experience • Over 20 years of consulting in international • Previously CEO at Mostelecom law firms • Previously Partner at Freshfields Bruckhaus Deringer LLP 6 www.rostelecom.ru Rostelecom business mix Fixed-line business
Revenue, RUB bn Fixed-line RGUs(1), mln
291 28.2 287 26.5 Rostelecom (consolidated) 11
Revenue and OIBDA, RUB bn 280 9.7 10.6 6.9 7.5 332 326 11 2012 2013 2012 2013
One-off Revenue from project Telephony B2C+B2B “Election” 36.2% Broadband B2C+B2B 321 34.8% Pay TV 120 113 Mobile business
Revenue, RUB bn Mobile subs, mln
2012 2013 13.6 14.8 Revenue OIBDA % OIBDA margin One-off Revenue from project “Election” 41 39
2012 2013 2012 2013
Note: (1) Revenue generating units 7 www.rostelecom.ru (2) Revenue breakdown based on IFRS consolidated accounts excluding intercompanies 2. Corporate and financial highlights
8 www.rostelecom.ru Key Recent Corporate Events and Results for FY2013
HIGHLIGHTS HIGHLIGHTS
Strategic and business news Corporate news • Strategy update with focus on fixed broadband and • Sergey Kalugin was appointed the President of the the pay TV businesses Company in March 2013. Enhancing the Senior Management team took place afterwards. • Mobile business development through the creation of a JV with Tele 2 Russia • The second stage of Rostelecom’s reorganization was completed on October 1, 2013. Svyazinvest and 20 • Rostelecom Board of Directors approved contributing its mobile assets into a JV with other joint-stock companies merged with Rostelecom. TELE2 RUSSIA HOLDING AB on Dec 12, 2013. As a result of the mandatory buyback caused by the reorganisation, the Company acquired 6.5% of ordinary • Framework agreement signed on Feb 6, 2014 and 17.5% of preferred treasury shares. • New partnerships established such as a strategic • The Russian Direct Investment Fund (RDIF) and partnership agreement with Gazprom-Media and Deutsche Bank collectively acquired 72,187,366 Sberbank Rostelecom ordinary shares (c.2.7%) from • Internal review of business processes and Rostelecom’s subsidiary Mobitel. The investment participation in an independent Global Telecom Cost amounted to RUB 7.674 billion. Benchmarking Project with AT Kearney • Rostelecom’s subsidiary LLC Mobitel acquired 7.45% of • Optimization of procurement procedures which has Rostelecom’s ordinary shares from OJSC already led to savings of RUB 16 bln in 2013 Gazprombank in a transaction worth RUB 25.2 billion. • New Government sponsored programmes agreed, • On December 30, 2013 EGM approved the spin-off of including Digital Divide Bridging and E-Government Rostelecom’s integrated mobile assets into RT-Mobile. As a result of the mandatory buyback caused by the • Rostelecom successfully acted as Sochi 2014 reorganisation, the Company will acquire 6.1% of Olympic and Paralympic Games general partner ordinary and 13.7% of preferred treasury shares.
9 www.rostelecom.ru Key Operational Results for FY 2013
Fixed Broadband Pay-TV IPTV (mln subscribers) (mln subscribers) (mln subscribers) +8% YoY +9% YoY +38% YoY
10,6 7,5 9,7 2,2 6,9 133 453 1,6 448 116 185 155
2012 2013 2012 2013 2012 2013
Fixed Broadband Fibre Fixed –line Voice Mobile Segment (mln subscribers) (mln subscribers) (mln subscribers)
+30% YoY -6% YoY +9% YoY
4,0 28,2 14,8 26,5 13,6 3,1 249 415 241 263 408 239
2012 2013 2012 2013 2012 2013
ARPU ! As a result of Svyazinvest merger in accordance with the Group accounting policy all comparatives were revised for FY2011, FY2012, 10 www.rostelecom.ru FY2013. Quarterly data were revised starting from 4Q2012 as the first comparative period for 4Q2013 Key Financial Results for FY 2013
OIBDA (RUB bln) and Revenue (RUB bln) OIBDA margin (%)
6% Video Growth One-off effect OIBDA in 1Q’12 Surveillance -2% Rate y-o-y margin Effect* 36,2% 34,8% +1.2% growth** 10 without one-off in 1Q12 120 332 326 113
2012 2013 2012 2013 * - video surveillance revenue (one-off) ** - growth rate without video surveillance revenue in 1Q 2012
CAPEX (RUB bln) Net Income (RUB bln)
One-off effect Net income % of revenue 28,2% in 1Q’12 margin
21,0% 10,0%
94 7,4% 33
24 68
2012 2013 2012 2013
11 www.rostelecom.ru Revenue structure
FY 2012 FY 2013
Other Local Other Local 20% Telephone 19% Telephone services services 27% 27% Pay-TV Pay-TV 3% 4%
Broadband Broadband Internet DLD / ILD, DLD / ILD, Internet 16% Intra-Zonal Intra-Zonal 17% 10% 10% Interconnect Mobile Interconnect & rent of Mobile 12% & rent of channels 12% 11% channels 11%
The revenue structure changed in favour of growing segments, including broadband and pay-TV.
12 www.rostelecom.ru Capital Expenditures
CAPEX Trends (RUB bln) KEY DATA
CAPEX / Revenue 28,2% • In 2013, CAPEX decreased by 27% y-o-y to RUB 68 bln. The decrease in investment in the reporting 21,0% quarter resulted predominantly due to more effective
94 procurement activity.
• The Company continued to upgrade tender process. As a result, we have witnessed CAPEX and OPEX 68 savings of RUB 16 bln for 2013.
• In 2013, the CAPEX to Revenue ratio amounted to 2012 2013 21% compared to 28% in 2012.
Quarterly CAPEX Trends (RUB bln)
CAPEX / Revenue
33% 32%
25%
18% 28,3 25,2 9% 21,4
14,4 7,5
4Q12 1Q13 2Q13 3Q13 4Q13
13 www.rostelecom.ru Tightening Cash Flow Control
Total Debt 1 Net Debt Analysis FCF2 Analysis (RUB bln) (RUB bln) (RUB bln)
Loans and Net Debt/ Growth rate borrowings held for sale OIBDA y-o-y 1,9 16,7 17,2 1,7 14,2
10
218 228 3,0 201 217 -3,0
2012 2013 2012 2013 2012 1Q13 1H13 9M13 2013
Total Debt by maturity KEY DATA (RUB bln) • As of the end of 2013, total debt amounted to RUB 228 bln and is mainly 3-5 years 2 years 1 year affected by the mandatory buyback for the amount of RUB 30.25 bln as a result of SVI merger.
11% • The Company succeeded in lowering the average weighted cost of 28% 24% 41% funding in 2013 to 8.11%. • More than 99% of our total debt is RUB denominated to minimize 48% 47% currency risk. • In 2013, the Company made progress in optimizing its debt portfolio 2012 2013 towards long- term maturity loans. • In 2013, the Company reported FCF of RUB 17.2 bln, 5 x higher y-o-y.
1 - RUB 10 bln is considered as liabilities held for sale as are attributed to mobile subsidiaries 14 www.rostelecom.ru 2 - Free Cash Flow = net cash provided by operating activities less CAPEX 3. Rostelecom strategy update
15 www.rostelecom.ru Rostelecom strategic priorities
Fixed-line business Mobile services business
ü Accelerated expansion of fiber last ü Joint venture with Tele2 Russia - creation mile to unlock value of the largest fixed- of a national mobile operator line network in Russia − Sufficient scale to compete with MTS, MegaFon, VimpelCom
ü Strengthening competitive advantage in − Effective utilization of 3G/4G bandwidth to household and «heavy» licenses coupled with substantial content delivery capex savings and B/S deleveraging
ü Accelerate roll-out of 3G/4G networks nationwide ü Bundling of services to reduce churn rates – Triple play and other ü Capitalise on the mobile broadband opportunity
ü Maintain high level of operational ü Leadership in Pay-TV market and efficiency investing into content ü Convergent offerings: mobile as part of 4-Play bundles
ü Focus on digital platforms and services ü Continue to use Rostelecom backbone and – OTT, SaaS and other backhaul
16 www.rostelecom.ru Russian TMT market forecasts: key segments
Fixed and Pay TV Digital media and advertising IT and ICT services
RUB bn RUB bn RUB bn 568 +1% 489 +13% 507 +15% 528 88 +29% 109 +3% 78 +22% 93 49 +13% 56 99 +12% +23% 87 +12% 267 195 108 78 –6% 250 29 25 26 70 25 +11% 50 182 195 +1% 15 282 +14% 191 +5% 153 149 81 77 –1%
2013 2018 2013 2018 2013 2018 Data center and cloud-based solutions Broadband B2C B2B Digital content Mobile advertising Communication services Pay TV B2O Online advertising TV advertising Information security Telephony B2C Other services Integration and IT outsourcing
§ Stagnation as a result of decline in fixed § Transition from analog to digital content § Rising demand from government and voice and slowdown in broadband distribution business for outsourcing of data storage segment growth § Significant growth in online advertising and processing § Pay TV market will continue to grow as market, primarily, in search advertising. In § Corporate clients’ cost optimization for consumers are willing to pay for diverse addition, rapid growth is observed in mobile communication and IT services and high-quality content and online video advertising § Transition to IT-outsourcing model § The fastest growing segments are OTT¹ and IPTV
+xx% Revenue CAGR in 2013-2018 ¹OTT (Over the Top) - delivery of video signal to user’s device (computer, handset) over 17 www.rostelecom.ru the Internet bypassing service operator Source: iKS-Consulting, J’son&Partners, Direct Info, IDC, OVUM, PwC, Rostelecom Rostelecom current position in B2C segment
Pay TV • Rostelecom is the leader in Pay TV subscribers¹, mln Market share by revenues, %, 4Q2013 Pay TV market. Company’s Rostelecom revenue market share in 10% IPTV reached 58% in 2013 MTS 10.1 • IPTV is the key growth driver 8.8 22% ER-Telecom 7.5 6.9 2012 35% in this segment. Rostelecom 12% Akado subscriber base increased 2.9 2.6 2.3 2.6 2013 Tricolor by 38% y-o-y and reached 1.0 1.0 5% VimpelCom 2.2m subscribers in 4Q2013 6% 11% Others Rostelecom Tricolor VimpelCom MTS ER-Telecom
Broadband B2C • Rostelecom is the largest Fixed broadband B2C subscribers, mln Market share by subs, %, 4Q2013 provider of fixed broadband services in Russia 10% 10% Rostelecom • As of 4Q2013 the number of 30% 9.0 9.8 MTS fiber optic subscribers 39%36%40% 2012 41% ER-Telecom increased by 30% y-o-y to 39% 4.0m subscribers, while the VimpelCom 2.2 2.3 2.4 2.3 2.5 2.7 2013 9% total subscribers base 11% Others 11% increased by 8% y-o-y and 9%11% amounted to 10.6m Rostelecom MTS VimpelCom ER-Telecom
Fixed-line telephony • Rostelecom market share Fixed-line subscribers, mln Market share by subs, %, 4Q2013 was stable in 2012-2013 • As of 4Q 2013 the company 28.2 26.5 18% served 26.5m subscribers Rostelecom (6% decrease versus 4Q MTS (MGTS) 2012) 13%13% 68%69% 2012 13% Others 7.2 68% 5.0 5.0 4.5 2013
Rostelecom MTS (MGTS) Others
Source: iKS-Consulting, ACM Consulting, operators data Note: All data shown includes Russia only. 18 www.rostelecom.ru ¹ For Tricolor TV only paying subscribers are taken into account Key strategic pillars of Rostelecom fixed-line business
1 Technological leadership in IP networks § Fibre network rollout § Increase capacity of backbone and regional networks
5 2 Differentiated Efficiency increase offerings
§ Capex optimisation § Focus on development of with strong focus on unique content offering return on investment § Triple play & other § Productivity increase bundling § Acceleration of development of new products 4 3 Organisational Best-in-class transformation customer service
§ Transformation of § Modernisation of customer corporate and service platform organisational structure § Upgrade to unified OSS/BSS¹ systems 19 www.rostelecom.ru ¹OSS/BSS - Operation Support System/Business Support System 1 High speed access
From single-point roll-out today… …to systematic approach to network development
xDSL PON
§ New strategy for household coverage – “Broadband conveyor”, which involves cluster-based roll-out, covering all households in city regions. Single-point roll-out is only allowed in up to 20% of households § Ensure continuity of the priority access technology for the existing network. All new backbone segments are PON-ready § Decommission telephony lines and exchanges in regions where supported by the business case § Use CPEs with multiple interfaces (Ethernet, RJ, RF, WiFi 2.4 / 5GHz) § Use wireless access as replacement for last mile in regions with low population density § Target households covered by the end of 2016 – 33m – all households in high and medium rise buildings § Sign framework agreements and decrease procurement costs by switching to standardised network architecture and equipment
20 www.rostelecom.ru Development of differentiated offerings for B2C 2a subscribers
Effect of bundled services on the level of churn § Differentiated tariffs for Inter-regional and
international calls Telephony 1.00 p.p.
Telephony § Bundling with Broadband and Pay TV services Telephony + BB 0.65 p.p. to reduce churn and maintain subscriber levels Telephony + Pay TV 0.62 p.p.
Telephony + BB + Pay TV 0.44 p.p.
Rostelecom B2C Broadband subscribers § Speeds 10% higher versus competitors, for the same monthly tariffs CAGR +10% Broadband § Exclusive speed of 1Gbit/s for top-end tariff
2013 2018
TV subscribers as % of Broadband subscribers1, % 100% § Interactive TV with unique content proposition PT 85% (HD, exclusive channels, VoD²) Belgacom Pay TV 51% FT 38% § ОТТ platform (TV Everywhere)³ KPN
2006 2008 2010 2012
§ § Financial services Payment for goods and services, cash services, credits, overdrafts and deposits, money transfers § Smart house / Safe house § Home monitoring, control on water and electricity costs with smart meters, New services remote control of electrical appliances, remote monitoring of health § Online and mobile commerce § Mobile and online payments, use of personal mobile and fixed line telephony accounts as electronic wallet
Source: McKinsey, Сompany data, Morgan Stanley research ¹PT - Portugal Telecom, Belgacom – Belgian operator, FT – France Telecom, KPN – Dutch operator 21 www.rostelecom.ru ²VoD – Video on Demand ³ТV Everywhere – Allows consumers to watch TV on any connected device (e.g. mobiles, tablets, etc) 2b Pay TV segment strategy
1 § Increase speed and network capacity in order to switch subscribers to bundled Network improvement in services with higher ARPU Content providers Broadcasters Distributors order to increase ARPU § Examples: roll out FTTH VDSL networks in Europe, upgrade of cable networks 2 § State of the art technology, high speed Provide best-in-class network as an instrument for cross selling Distributors services to enhance and client retention Content providers Broadcasters customer loyalty § Examples: LGI Set-Top-Boxes (stickiness) and Free TV offerings (cross-selling)
3 § Acquisition or merger with content Vertical integration with providers to prevent emergence of content providers to intermediaries Content providers Broadcasters Distributors avoid intermediaries § Examples: Comcast / NBC Universal
4 Providing fixed and § Acquire expertise in fixed line business to mobile services in provide attractive bundled offerings Content providers Broadcasters Distributors bundled offerings § Examples: Vodafone acquisition of CWW
5 Expand digital coverage, § Expand digital coverage to allow allowing monetisation monetisation of content on all platforms content independent of § Examples: digital and related business of Content providers Broadcasters Distributors the platform P7S1, increase in VoD for RTL
22 www.rostelecom.ru 2c B2B and B2Gs products development
Large corporate clients SME
§ Package solutions for companies with § Full Package Products for sub- requirements of large, high capacity, segments reliable and secure networks § Package: Broadband + fixed voice, § Core services: VPN, WAN, option – VPN + hosting Broadband, data centers hosting, fixed voice § Cloud computing services О7: Hosted PBX, virtual office, web- § Cloud computing services О7: call video- conference communications center, unified communications, web- video- conference communications, § M2M services: transport and telepresence and broadcast, logistics, CCTV monitoring information security, managed services, content filtering
§ Integrated solutions
23 www.rostelecom.ru 3 Implementing client service best practices
Key initiatives Targets
§ Unified call-center on the base of common IT infrastructure § 90% calls processed at first attempt Call center § Unified call number for client services and client call rebalancing system § 95% client satisfaction § Unified SLA rate
Online client § Multiplatform web-interface: rt.ru portal and ‘my account’ service § > 50% share of services § Focus on customer self-service through web-channels remote channels
§ Restructuring of retail distribution network: carve-out of retail chain operations into § 20% share of channel in revenues Retail separate entity, retail chain optimisation, franchising opportunities distribution § Rebranding of the distribution network to increase sales and improve brand awareness § 2x decrease of distribution network § Focus on efficiency of distribution network (margins) OPEX
§ Less than 2% share § Standardisation of maintenance process of repetitive requests 2nd and 3rd § Centralisation of network monitoring and management support lines § Less than 24h § Upgrade incentive system for maintenance staff with key focus on quality of service request processing time
Client-centric approach for large corporate clients: § Personal account manager to provide assistance on key customer support and services § 90% calls processed questions at first attempt Corporate and § Dedicated technical support line, quality of service (QoS) management § 3% lost calls rate SME accounts (LCR) Differentiated approach for SME clients: § 80% service level § Standartised SLA depending on service package commitment § Dedicated sales and support channels with unified business processes
24 www.rostelecom.ru 4 Organizational transformation
Organizational § Centralisation of support functions: IT, backoffice, etc. transformation § Creation of competence centers at macro branches level initiatives § Outsourcing of certain business functions and related optimisation of organizational structure
§ Development of ‘ideal’ operational model with solid scalability potential on the base of some pre- selected local branch ‘Ideal branch’ – Pilot project in Voronezh branch model § Replication of developed operational model at regional branches level § ‘Ideal branch’ project is expected to be instrumental for the whole organizational process and should also set the ground for CRM and other IT systems
Corporate § Management efficiency: lead by example, mentorship, commitment, encouragement and staff culture training transformation § Customer-oriented approach, continuous improvement and sustainability § Motivate to action and evaluate on real achievements improvement § Simplicity and delegation: facilitate accomplishment of the objectives and empowerment
25 www.rostelecom.ru 5 Focus on improvement of operational and investment efficiency
Procurement optimization Fixed line CAPEX / Revenue, %
-52% Backbone 500 240 ‘000 RUB per 1 km
2012 2H2013
-36% 25% 6,2 Last mile (fiber) 4,0 ‘000 RUB per 1 port
2012 2H2013
-49% 18% Set-Top-Box (STB) 3,5 ~17-18% ‘000 RUB 1,8 15% 2012 2H2013
Headcount optimisation
Revenue per employee1, RUB m / employee 4,6 4,2 Average - 3.9 CAGR >2.5 2,9 +10% 1,8 2012 2013 2014 2015-2018
2 Rostelecom Rostelecom AT&T DT/ Orange 9M'2013 2018 T-Mobile
Source: Companies data Notes: 1 Data on international operators (incl. their mobile business) is PPP (purchasing power parity) adjusted 2 Calculated as annualized revenue for 9m 2013 divided by number of employees as of the end of 3Q2013 26 www.rostelecom.ru Focus on shareholder value
Revenue OIBDA margin
Target: 3-4% CAGR over next 5 Target: 100-200 bps improvement years over next 5 years ü Focus on Broadband and IPTV ü Focus on centralization of support offering (fibre + unique content functions + operational efficiency offering) improvement ü Achieve coverage of 33 mln households (1Gb/s) in 2 years Significant FCF and ROIC improvement
CAPEX / Revenue
Target: 200-300bps improvement over next 3 years ü Focus on per unit cost (2H’13 purchases c. 50% cheaper than in 2012)
27 www.rostelecom.ru 4. Creating T2-RTK Holding – national mobile player
28 www.rostelecom.ru Joint venture with Tele2 Russia: transaction highlights
§ Rostelecom and Tele2 Russia to merge their mobile assets to form a new national mobile operator T2 RTK Holding (or “JV”) in the largest in-market consolidation in Russian telecom space § Subject to receipt of necessary regulatory and corporate approvals and successful completion of all transaction stages, Rostelecom will get 45% ownership in JV and is expected to become the largest single beneficial shareholder § Transaction will be effected in two stages Stage 1: – Rostelecom will contribute its standalone mobile subsidiaries and certain mobile assets (except for its spectrum in the 450MHz band), including SkyLink, along with associated net debt of approximately RUB 34bn – Tele2 Russia will contribute all its mobile assets, along with associated net debt of approximately RUB 27bn Stage 2: – Rostelecom will transfer its integrated mobile businesses and integrated licenses (including LTE), subject to an internal reorganisation required to effect the transfer § Before completion of Stage 2, JV will get access to Rostelecom spectrum assets through MVNO arrangements § Transaction was approved by Rostelecom Board of Directors on December 12, 2013
29 www.rostelecom.ru Transaction structure
1 Stage 1 – transfer of mobile subsidiaries 2 Stage 2 – transfer of integrated mobile assets
Other Other VTBC VTBC investors investors 50% 50% 50% 50%
Tele2 Russia Holding AB Rostelecom Tele2 Russia Holding AB Rostelecom
74% / 55% 26% / 45% 55% / 55% 45% / 45% 100% Integrated mobile assets of MVNO T2-RTK Holding Rostelecom + licenses (including T2-RTK Holding MVNO LTE)
100% 100%1 100%1 100%2 100% Standalone Standalone mobile Mobile Integrated mobile assets of Mobile subsidiaries of Tele2 mobile subsidiaries and selected subsidiaries of Rostelecom + licenses (including Russia subsidiaries of assets of Rostelecom Tele2 Russia LTE) + assets transferred earlier Rostelecom
Economic rights / Voting rights
§ Rostelecom contributed its standalone mobile § Rostelecom transfers its integrated mobile businesses subsidiaries (including SkyLink), selected assets, along and licenses (including LTE), subject to an internal with associated net debt of c. RUB 37bn, and received reorganisation required to effect the transfer 26% economic stake in JV (45% voting rights) § Upon successful completion of Stage 2, Rostelecom’s § Tele2 Russia contributed all of its mobile assets, along economic stake will increase from 26% to 45% with associated net debt of c. RUB 30bn, and received § Rostelecom will enter into MVNO agreement with JV for 74% economic stake in JV (55% voting rights) LTE to provide 4-play services § JV got access to Rostelecom integrated spectrum assets through MVNO arrangements
1 In CJSC Acos: 94,4456%; in CJSC SkyLink: 50% (effectively 100% of the charter equity); in OJSC Apex: 93.49%; in CJSC TSRS: 40%
30 www.rostelecom.ru Transaction rationale (1/4) Key considerations
Strategically important transaction for Rostelecom
§ Reinforce Rostelecom’s mobile strategy by creating mobile operator with sufficient scale to compete nationwide § Rostelecom is expected to be the largest single beneficial owner in the JV – Pre-emptive rights in the event of a strategic sale by Tele2 Russia and right to acquire additional equity interests (up to the controlling stake) in the event of an IPO § Retention of upside from mobile-fixed synergies and future convergence
Builds long-term shareholder value
§ Substantial operational and financial upside from strengthened competitive position § Significant synergy potential on capex and opex § Release of cash flows at Rostelecom level
31 www.rostelecom.ru Transaction rationale (2/4) Re-positioning Rostelecom’s mobile assets through JV with Tele2 Russia
Benefits for Rostelecom Key combination parameters
ü Increased scale Rostelecom Tele2 Russia – Over 38m subscribers mobile – Over 16% market share (by subscribers) Regions 35 41 ü Full national license coverage covered3 ü Increased footprint Subscribers 14.8 23.7 – From 35 to 641 operational regions (mm)4 ü Capture mobile data growth opportunity ü Provide convergent services Revenue 39 65 (RUB bn)4 ü Ability to accelerate 3G/4G networks roll-out ü Accelerate monetization of licence portfolio Market 6% 10% 6 ü Capitalize on Tele2 Russia’s know-how and impressive share track record: from a newcomer to niche player successfully competing with BIG-3
Mobile revenues 2013 (RUB bn)2 Nationwide license coverage Mobile assets Russia Population coverage5 100% Other players Tele2 Russia Rostelecom Licenses held (by region of RF): 700 MHz (LTE) 83 regions 800 MHz (LTE) 83 regions 900 MHz (2G) 26 regions 272 104 257 229 5 39 1800 MHz (2G / LTE ) 78 regions 65 2100 MHz (3G / UMTS) 71 regions 2300 MHz (LTE) 39 regions MTS MegaFon VimpelCom JV 2600 MHz (LTE) 83 regions
Source: Companies data 1 Including 12 regions where Tele2 operations overlaps with Rostelecom. Excluding CDMA only regions. 2 Rostelecom revenue including CDMA subscribers. Only Russian business is taken into account 3 Number of regions with commercial 2G, 3G mobile operations as of Q3 2013 32 www.rostelecom.ru 4 Based on 2013 full year 5 License coverage, including technology neutrality 6 Based on number of subscribers Transaction rationale (3/4) Substantial synergy potential
Area Synergies
ü Upsell existing Tele2 Russia subscribers high speed mobile data packages ü Cross-selling fixed line services to mobile subscribers Revenue ü Converged proposition for Rostelecom subscribers: offer mobile services bundled with Rostelecom fixed line services ü Increased revenues from international roaming due to renegotiated tariffs for Tele2 Russia
ü Site rationalisation in Rostelecom and Tele2 Russia overlapping regions ü Efficient 3G and 4G roll-out through colocation on existing Tele2 Russia sites ü Efficient 4G network roll-out in Tele2 Russia regions due to wide spectrum bandwidth Network & IT ü Backhaul, backbone and core network consolidation ü Optimisation of roaming costs ü Consolidate and simplify IT and billing
ü Increased bargaining power with federal distributors Distribution & ü Rationalisation of retail network by leveraging Rostelecom retail locations and Tele2 Russia’s marketing monobrand stores ü Reduction in marketing costs
ü Leveraging Tele2 Russia know-how and business development track record to launch a national operator with uniform high standard of operation across the country and efficient Other synergies central management function ü Elimination of overlapping functions ü Efficiencies in property management and procurement
33 www.rostelecom.ru Transaction rationale (4/4) Release of cash flows at Rostelecom level
Revenue 2013 (RUB bn) Net debt as of 4Q’13 (RUB bn)
100% 112%3% 100% 88% 16% (39) 84% (34)
326 217 287 183
Rostelecom as is Rostelecom mobile Rostelecom less mobile Rostelecom as is Rostelecom mobile Rostelecom less mobile assets assets assets assets¹ x% Share in Rostelecom total revenues x% Share in Rostelecom total net debt
CAPEX 2013 (RUB bn) Carve-out impact
100% 37% § Additional cash flow released
(25) 63% § Substantial savings of mobile CAPEX, particularly from capital intensive roll-out of 3G/4G networks 68 43 § Balance sheet is strengthened § Elimination of debt related to mobile operations
Rostelecom as is Rostelecom mobile Rostelecom less mobile § Minor impact on top line assets assets § Large scale of fixed line business compared to mobile x% Share in Rostelecom total CAPEX
Source: Company data including CDMA subscribers 1 Rostelecom’s net debt less net debt transferred to JV
34 www.rostelecom.ru Indicative transaction timetable
Key transaction docs Transfer of standalone Transfer of Integrated Fully Completion of signed and transaction assets by Rostelecom assets and licenses by integrated transition period announced and Tele2 Russia Rostelecom operations
STAGE 1 STAGE 2 INTEGRATIONAL PHASE FULL INTEGRATION
Before the end of 1Q’14 4 – 10 months 2014 – beginning of 2015 2015 and thereafter
NOV 1Q’2014
Integration Stage One Stage Two largely closed closed completed
Reorganization through transfer of integrated mobile assets to the Implementation of integration plan subsidiary Regulatory and corporate approvals obtained JV gets access to Rostelecom Active network rollout spectrum assets through MVNO
35 www.rostelecom.ru 5. APPENDIX
36 www.rostelecom.ru Svyazinvest Merger – Key Results
Current structure (as at November 20th, 2013) Key results
State Property • Simplification of shareholders structure, Agency elimination of cross-ownership.
State stake • Assets consolidated: 51,13%1 • 20 daughter companies merged with Rostelecom (influence on RAS accounting); • 2 major Svyazinvest assets merged – 9,38%1 Mobitel 28,2% stake in Bashinformsvyaz and 80% stake in Central Telegraph (total 7,21%1 Treasury expected revenues in 2013 – over RUB shares 32,28%1 10 bln) (influence on both RAS and IRFS accounting) Other Shareholders • Number of shares decreased by c9,3%.
Total number of shares: Ordinary shares 2 669 204 301 Preferred shares: 242 831 469
1- voting stake
37 www.rostelecom.ru Group’s dividends
Dividends (RUB bln) KEY DATA
% of net income RAS / IRFS 46% / 3% • In April 2012 the Board of Directors proposed to approve 2012 dividend payment in the total amount of RUB 8,2 bln or 25% of RAS net income for 25% / 24% 2012 or:
• RUB 4.1022 for 1 preferred share of class A (total payment of 3,05% of RAS net income or 2,87% of IRFS net income)
• RUB 2.4369 for 1 ordinary share (total payment of 21,95% of RAS net income or 20,64% IRFS net income)
• Dividends were approved during shareholders’ meeting in June 2013.
Dividend for 2012 • Dividends are calculated as:
• at least 20% of IRFS net income / by number of ordinary shares for • RUB 4,1022 for 1 preferred share 1 ordinary share; of class A • 10% of RAS Net income / 25% of total number of shares for 1 • RUB 2,4369 for 1 ordinary share preferred share.
38 www.rostelecom.ru Rostelecom in B2B and B2G, B2O Segments
1 B2B and B2G market in Revenues, % 2 B2O market in Revenues, % 1 Rostelecom is the absolute market leader in B2B and 19% 54% Rostelecom Rostelecom B2G, with 54% market share 46% other operators other operators 81% 2 Leader in B2O segment with 19% market share
3 4 3 5% annual revenue growth in Rostelecom revenues in B2B and Rostelecom revenues in B2O, B2B and B2G (excl. one-offs) B2G, RUB bln RUB bln 125 +5% growth** without +1% growth 11 one-off in 1Q12 4 40.4 1% annual growth in B2O 114 119 40.2
2012 2013 2012 2013 One-off revenue from project “Election”
** - growth rate without video surveillance revenue in 1Q 2012
39 www.rostelecom.ru Source: Rostelecom, IKS-Consulting, AC&M Cloud & IT Services: Competitive Advantage to Become the Unchallenged Leader
E-government O7. City ü United portal for public services ü City infrastructure monitoring ü Public services in e-format ü Predicting and prevention of ü 70 out of 83 regions already emergency situations subscribed (200K total in all levels)
O7. Medicine O7. 112 ü United electronic medical card ü United contact number for ü E-front desk admission and processing of messages ü Medicine info systems ü Special services coordination
O7. Education O7. DOC ü E-School and E-Nursery ü Office administration ü Social network for school students ü Document exchange ü Educational TV channel
O7. Housing O7. Business ü Tariff and budget control ü Automation of key business ü Payments and financial assets processes ü ü Market potential - over 100K Virtual office service companies 40 www.rostelecom.ru P&L Statement
Growth Growth Growth P&L 1Q 2013 2Q 2013 3Q 2013 4Q 2013FY 2013 2012 2011 rates 4Q rates FY rates FY
Revenue (see breakdown below) 79.602 79.870 80.905 85.328 325.704 -0.05% -2% 332.435 6% 312.330
Operating Expenses (68.047) (67.099) (68.052) (77.638) (280.836) -0.3% 1% (278.604) 10% (252.294) Wages, salaries, other benefits and payroll taxes (see breakdown below) (23.059) (21.947) (21.712) (24.284) (91.002) 0.2% 2% (88.815) 10% (80.801) including stock option program 0.000 0.000 1.101 Depreciation and Amortization (17.877) (16.260) (16.814) (17.463) (68.414) 0.2% 3% (66.511) 12% (59.322) Interconnect Charges (10.355) (12.555) (12.721) (14.116) (49.746) 5% 2% (48.858) 16% (42.123)
Materials, utilities, repair and maintenance (6.229) (6.166) (7.992) (8.107) (28.495) 9% 0% (28.483) -2% (29.004) Other operating income 2.739 2.934 5.766 4.490 15.929 17% 8% 14.749 -6% 15.703 Other operating expense, including: (13.266) (13.106) (14.579) (18.158) (59.108) -6% -3% (60.686) 7% (56.747) Impairment of property, plant & equipment (PPE) 0.000 0.000 0.000 Loss on sale and disposal of PPE (0.031) (0.118) (0.196) (0.344) -23% -54% (0.752) -9% (0.829) Bad debt reserve (0.774) (0.953) (0.413) (2.140) 107% 54% (1.389) 120% (0.632) Operating Profit 11.555 12.770 12.853 7.690 44.868 2% -17% 53.831 -10% 60.036 Operating Profit margin 14.5% 16.0% 15.9% 9.0% 13.8% 16.2% 19.2%
OIBDA 29.432 29.030 29.667 25.153 113.282 1% -6% 120.342 1% 119.358 OIBDA Margin 37.0% 36.3% 36.7% 29.5% 34.8% 36.2% -5% 38.2%
Income from equity accounted investees 0.009 0.028 0.024 0.116 0.177 673% 234% 0.053 -73% 0.198 Finance costs (3.973) (3.795) (3.887) (4.145) (15.800) 5% -3% (16.278) 12% (14.572)
Other Investing and financial gains 0.828 (0.270) 3.588 (0.698) 3.448 78% -22% 4.408 101% 2.194 Foreign exchange loss, net (0.140) (0.395) 0.016 (0.054) (0.574) -136% -217% 0.489 -229% (0.378)
Profit before income tax 8.278 8.337 12.593 2.910 32.119 -13% -24% 42.503 -10% 47.478
Income tax expense (1.765) (2.010) (2.325) (1.888) (7.988) 175% -14% (9.301) -13% (10.659)
Net Profit 6.513 6.327 10.268 1.022 24.131 -62% -27% 33.202 -10% 36.819 Net Profit margin 8.2% 7.9% 12.7% 1.2% 7.4% 10.0% -15% 11.8%
! As a result of Svyazinvest merger in accordance with the Group accounting policy all comparatives were revised for FY2011, FY2012, 41 www.rostelecom.ru FY2013. Quarterly data were revised starting from 4Q2012 as the first comparative period for 4Q2013 Revenue Structure
Growth Growth Growth Revenue / Breakdown 1Q 2013 2Q 2013 3Q 2013 4Q 2013FY 2013 2012 2011 rates 4Q rates FY rates FY
By services: Local Telephone services 21.730 22.403 21.734 21.568 87.436 -3% -2% 89.504 -2% 91.526 Intra-Zonal 4.231 4.184 4.525 4.230 17.171 -13% -13% 19.634 -13% 22.439 DLD / ILD 4.695 4.248 4.147 4.011 17.101 -20% -17% 20.562 -15% 24.236 Interconnect and traffic transit 5.554 5.754 7.010 6.546 24.864 13% 13% 21.991 8% 20.444 Mobile communication services 9.503 9.939 9.576 9.884 38.902 -3% -5% 41.161 1% 40.660 Rent of channels 3.335 3.290 1.119 1.742 9.486 -30% -17% 11.433 6% 10.782 Broadband Internet 13.520 13.487 14.402 14.529 55.938 9% 8% 51.619 8% 47.984 Pay-TV 2.787 2.700 3.145 3.274 11.906 34% 29% 9.208 36% 6.748 Data services 5.349 5.617 5.575 6.485 23.025 16% 10% 20.872 9% 19.227 Other 8.897 8.248 9.672 13.059 39.876 -2% -14% 46.451 64% 28.284
% of total Revenues Local Telephone services 27.3% 28.0% 26.9% 25.3% 26.8% 26.9% 29.3% Intra-Zonal 5.3% 5.2% 5.6% 5.0% 5.3% 5.9% 7.2% DLD / ILD 5.9% 5.3% 5.1% 4.7% 5.3% 6.2% 7.8% Interconnect and traffic transit 7.0% 7.2% 8.7% 7.7% 7.6% 6.6% 6.5% Mobile communication services 11.9% 12.4% 11.8% 11.6% 11.9% 12.4% 13.0% Rent of channels 4.2% 4.1% 1.4% 2.0% 2.9% 3.4% 3.5% Broadband Internet 17.0% 16.9% 17.8% 17.0% 17.2% 15.5% 15.4% Pay-TV 3.5% 3.4% 3.9% 3.8% 3.7% 2.8% 2.2% Data services 6.7% 7.0% 6.9% 7.6% 7.1% 6.3% 6.2% Other 11.2% 10.3% 12.0% 15.3% 12.2% 14.0% 9.1%
By customers: B2C 41.958 41.434 40.955 41.537 165.884 -1% -1% 167.330 -2% 170.373 B2B 17.949 18.147 19.477 18.253 73.827 0% 4% 70.794 -2% 72.437 B2G 10.607 10.061 10.881 14.055 45.604 -6% -16% 54.159 54% 35.212 B2O 9.087 10.228 9.591 11.483 40.389 11% 1% 40.152 17% 34.308
B2C 52.7% 51.9% 50.6% 48.7% 50.9% 50.3% 54.5% B2B 22.5% 22.7% 24.1% 21.4% 22.7% 21.3% 23.2% B2G 13.3% 12.6% 13.4% 16.5% 14.0% 16.3% 11.3% B2O 11.4% 12.8% 11.9% 13.5% 12.4% 12.1% 11.0%
! As a result of Svyazinvest merger in accordance with the Group accounting policy all comparatives were revised for FY2011, FY2012, 42 www.rostelecom.ru FY2013. Quarterly data were revised starting from 4Q2012 as the first comparative period for 4Q2013 Balance Sheet
Bln RUR BALANCE SHEET 31/03/2013 30/06/2013 30/09/2013 31/12/2013 31/12/2012 31/12/2011 Assets Current Assets Cash & cash equivalents 7.295 14.891 7.416 7.960 13.629 9.634 Other investments 4.137 4.547 10.862 1.966 3.492 4.609 Prepayments 3.661 3.708 3.917 3.508 4.416 2.945 Prepaid income tax 3.635 3.381 2.701 4.894 2.951 3.384 Inventories 4.692 4.561 4.233 3.941 4.990 5.172 Trade and other accounts receivable 40.513 42.217 43.594 39.824 35.882 30.512 Other current assets 1.537 1.528 1.704 0.609 0.908 1.109 Total current assets 65.469 74.832 74.427 62.702 66.268 57.365 Assets held for sale 93.048 0.401 0.261 Non-current assets PPE & Intangible assets 397.190 393.989 389.289 335.059 399.917 348.493 Investment property 0.254 0.216 0.229 0.113 0.274 0.259 Goodwill and other intangible assets 85.724 84.672 83.196 64.346 88.329 89.340 Investment in associates 0.785 0.807 0.830 0.918 0.775 0.773 Other investments 0.580 (0.248) 0.138 0.520 3.035 1.829 Other non-current assets 8.325 7.752 9.430 4.266 8.191 15.061 Total non-current assets 492.857 487.189 483.113 405.222 500.521 455.755 Total assets 558.325 562.021 557.540 560.972 567.190 513.381
Liabilities Current Liabilities Accounts payable 51.219 95.857 49.838 73.635 61.839 41.279 Short-term loans and borrowings 56.698 47.639 59.432 33.209 65.016 82.453 Other current liabilities 9.001 8.988 8.843 9.419 10.287 8.863 Total current liabilities 116.918 152.484 118.114 116.263 137.142 132.595 Liabilities held for sale 17.647 Non-current Liabilities Shareholders equity 0.106 0.106 0.106 0.097 0.097 0.097 Treasury shares (36.487) (31.194) (58.898) (68.325) (34.822) (18.388) Additional paid in capital 4.423 4.414 4.570 1.658 4.344 4.743 Retained earnings and other reserves 273.330 242.186 283.774 262.967 266.607 235.158 Non-controlling interest 2.664 2.429 3.201 3.359 2.606 9.588 Long-term loans 157.941 152.454 166.017 184.600 152.874 94.640 Employee benefits 11.183 11.220 11.193 9.774 10.861 11.046 Deferred tax liabilities 23.220 22.815 24.515 26.728 23.107 20.518 Other non-current liabilities 5.026 5.108 4.949 6.204 4.374 23.384 Total non-current liabilities 441.407 409.537 439.426 427.062 430.048 380.786 Total equity & liabilities 558.325 562.021 557.540 560.972 567.190 513.381
Net Debt 203.207 180.655 207.171 217.309 200.769 162.850 Net Debt / OIBDA LTM x 1.8 x 1.6 x 1.8 x 1.9 x 1.7 x 1.4
! As a result of Svyazinvest merger in accordance with the Group accounting policy all comparatives were revised for FY2011, FY2012, 43 www.rostelecom.ru FY2013. Quarterly data were revised starting from 4Q2012 as the first comparative period for 4Q2013 Cash Flow Statement
Bln RUR CASH FLOW STATEMENT 1Q 2013 1H 2013 9M 2013 2013 2012 2011 Cash flows from operating activities Profit before income tax 8.278 16.616 29.209 32.119 42.503 47.478 Adjustments to reconcile profit before taх to cash generated from operations: Depreciation and amortization 17.877 34.137 50.951 68.414 66.511 59.322 Loss on sale of property, plant and equipment 0.065 0.031 0.148 0.344 0.752 0.829 Impairment losses /(reversal of impairment losses) 0.000 0.000 0.000 0.000
Finance costs excluding finance costs on pension and other lt social liabilities 3.789 7.396 11.102 15.031 15.332 13.547 Other non-cash (gains) / loss 0.000 0.000 0.000 0.000 Other investing and financing gains (0.828) (0.558) (4.146) (3.457) (4.408) (2.194) Other cash flows from operating activities 0.609 1.274 2.186 2.537 0.847 0.812 Share-based payment expenses 0.000 0.018 0.588 Changes in net working capital: (0.942) 0.923 (8.088) (7.738) (1.328) (13.823) Cash generated from operations 28.848 59.819 81.363 107.250 120.227 106.559 Interest paid (4.082) (8.270) (12.639) (17.083) (16.292) (12.461) Income tax paid (2.648) (4.646) (4.896) (4.474) (7.301) (9.316) Net cash provided by operating activities 22.118 46.904 63.828 85.694 96.634 84.782
Cash flows from investing activities Purchase of PPE and intangible assets (25.112) (32.692) (47.101) (68.487) (93.665) (87.905) Proceeds from sale of property, plant and equipment 0.315 0.667 0.920 1.641 2.727 2.167 Acquisition of financial assets (2.061) (3.718) (11.244) (11.925) (9.725) (7.497) Proceeds from disposals of financial assets 1.518 2.856 4.149 16.443 9.855 10.403 Purchase of subsidiaries, net of cash acquired (0.021) (0.021) (0.021) (0.047) (1.507) (32.281) Other cash flows from investing activities 0.003 0.143 0.258 0.446 0.472 2.164 Acquisition of equity accounted investees (0.020) Net cash used in investing activities (25.358) (32.764) (53.039) (61.930) (91.863) (112.949)
Cash flows from financing activities Purchase of treasury shares (30.299) (58.376) (22.126) (4.507) Sale of treasury shares 0.499 6.448 9.372 22.306 5.830 1.782 Proceeds from bank and corporate loans 97.583 172.933 327.254 509.685 532.983 298.626
Repayment of bank and corporate loans (125.464) (219.887) (344.991) (524.430) (492.891) (251.592) Repayment of bonds 25.000 (1.215) (1.613) (1.613) (7.285) (13.932) Proceeds from promissory notes 22.863 12.050 Repayment of promissory notes (0.282) (22.939) (15.984) Dividends paid to shareholders of the Group (0.427) (5.880) (5.830) (9.169) (0.686) Other cash flows from financing activities (0.719) 29.258 29.167 29.105 (8.026) (4.182) Net cash used in financing activities (3.101) (12.889) (16.990) (29.434) (0.760) 21.575
Net (decrease)/increase in cash and cash equivalents (6.334) 1.264 (6.213) (5.669) 3.995 (6.618) Effect of exchange rate changes on cash and cash equivalents 0.006 0.016 (0.011) (0.000) (0.016) (0.026) Cash and cash equivalents at beginning of year 13.629 13.629 13.629 13.629 9.634 16.252 Cash and cash equivalents at the end of year 7.295 14.893 7.416 7.960 13.629 9.634
FCF (2.994) 14.212 16.727 17.207 2.969 (3.123)
! As a result of Svyazinvest merger in accordance with the Group 44 www.rostelecom.ru accounting policy all comparatives were revised for FY2011, FY2012, FY2013. Quarterly data were revised starting from 4Q2012 as the first comparative period for 4Q2013 Contact Information
Investor Relations
Office +7 (499) 995 9780 E-mail: [email protected] Web: http://www.rostelecom.ru/en/ir/
45 www.rostelecom.ru