Financial results for the fourth quarter and twelve months of 2015

Investor and Analyst Call, 17 March 2016

Mr. Ivan Tavrin, Chief Executive Officer Mr. Evgeny Chermashentsev, Chief Operating Officer Mr. Gevork Vermishyan, Chief Financial Officer Mr. Dmitry Kononov, Director for IR and M&A Disclaimer

Certain statements and/or other information included in this document may not be historical facts and may constitute “forward looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 2(1)(e) of the U.S. Securities Exchange Act of 1934, as amended. The words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plans”, “forecast”, “project”, “will”, “may”, “should” and similar expressions may identify forward looking statements but are not the exclusive means of identifying such statements. Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues, operations or performance, capital expenditures, financing needs, our plans or intentions relating to the expansion or contraction of our business as well as specific acquisitions and dispositions, our competitive strengths and weaknesses, the risks we face in our business and our response to them, our plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industry and the political, economic, social and legal environment in which we operate, and other information that is not historical information, together with the assumptions underlying these forward looking statements. By their very nature, forward looking statements involve inherent risks, uncertainties and other important factors that could cause our actual results, performance or achievements to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the political, economic, social and legal environment in which we will operate in the future. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. We expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect actual results, changes in assumptions or in any other factors affecting such statements.

2 Agenda of Q4 and FY2015 conference call

1. Introduction Dmitry Kononov 2. Key Highlights Ivan Tavrin 3. Operating Highlights Evgeny Chermashentsev 4. Financial and Operating Results Gevork Vermishyan 5. Outlook for 2016 Gevork Vermishyan 1

Key Highlights of 2015 Results in 2015 in line with the full-year guidance

Metric Target Actual Status Highlights Key

Revenue growth Flat(1) RUB 313.4bn In line Revenue was flat y-o-y(2)

OIBDA margin was 0.7 p.p. above OIBDA margin ≥ 41.5 % 42.2 % In line guidance

OIBDA margin Financial and Operating Results Operating Financial and CAPEX net of SMARTS acquisition CAPEX ≤ RUB 65.0bn RUB 64.0bn(3) In line

totalled RUB 64.0bn(4) Outlook for 2016 for Outlook Note: All changes are shown on a year-on-year basis – FY 2015 vs FY 2014 (1) — Revenue for FY2014 amounted to RUB 314.8bn (2) — Y-o-Y (or year over year) means the same periods in the current and previous year on either a quarterly or yearly basis. 5 (3) — Organic CAPEX, excluding CAPEX on spectrum acquisition via purchase of SMARTS (4) — Gross CAPEX totaled RUB 70.2bn Events in FY 2015 and post-closing events

STRATEGIC ACQUISITIONS BUSINESS AND CORPORATE DEVELOPMENTS • Acquisition of additional spectrum in the Volga region through the purchase of a 100% • New strategic partnership agreement with Svyaznoy, a national chain of mobile telecom interest in four companies from the SMARTS Group to optimise network CAPEX retail outlets, for wider distribution of MegaFon services and products, including free top-up Highlights Key services and implementation of various joint e-commerce projects • Acquisition of a 100% interest in GARS Holding Ltd., a building local exchange carrier, providing a full range of fixed-line telecommunication services to the tenants of business • Active development of MegaFon TV content services as a way to monetise data, increase centres in Moscow and St Petersburg to expand B2B footprint customer loyalty and attract new customers. In 2015, MegaFon TV services (50 TV channels and up to 4 films) were included in the bundled tariffs • Acquisition of a 49.999% interest in Glanbury Investments, the owner of a class A office building at 41 Oruzheyny Lane, Moscow, to be used by MegaFon as its new corporate • Launch of a project for the creation of a tower company to improve tower infrastructure headquarters management • Launch of the Unified billing system and start of the Unified service center project to improve • Acquisition of additional frequency spectrum at frequency distribution auctions: efficiency of operations – October 2015: 1,800 MHz spectrum band in the Republic of Dagestan and the Karachay- • Joint development and operation of 4G/LTE standard communication networks across 10 Cherkess Republic regions of Russia with VimpelCom to accelerate 4G/LTE rollout at lower costs – February 2016: 2,570 - 2,595 MHz and 2,595-2,620 MHz spectrum bands in 40 regions of

Russia, including St Petersburg and Leningrad region DEBT PORTFOLIO OPTIMISATION Financial and Operating Results Operating Financial and • Early repayment of exchange bonds series BO-04 totaling RUB 15bn in May DIVIDENDS DISTRIBUTION IN 2015 • Total RUB 50bn, or RUB 80.64 per ordinary share (or GDR), distributed in dividends in 2015 • Successful placement of the RUB 15bn series BO-05 exchange bonds at a coupon rate of 11.4% p.a. for a 2-year period in October – dividends in the amount of RUB 10bn approved by the Company’s AGM on 30 June 2015 – dividends in the amount of RUB 40bn approved by the Company’s EGM on 11 December 2015 • Signing of a new credit facility with CDB for USD 300 mln to finance Huawei procurement and a credit facility for USD 300 mln aimed at refinancing part of the Company’s existing debt – STRENGTHENING OF THE MANAGEMENT TEAM the Company’s first facility with CDB not linked with equipment purchases • Introduction of 2 new positions in the Company’s management: • Signing of Finnvera-covered Facility Agreements with Unicredit Bank Austria AG for EUR 150 – COO – to improve the efficiency of the management of the Company’s operations million and with Sberbank for EUR 70 million to finance the purchase of fixed and wireless – Director for New Businesses and Partnerships – to focus on development and telecommunication equipment, software and related services from Nokia Solutions and 2016 for Outlook monetization of new products Networks 6 Q4 2015 key financial and operational highlights Key points Consolidated Q4 2015 82.0 Revenue (RUB bn) Q4 2014 82.2 (down ▼ 0.3% y-o-y) • In Q4 2015, consolidated revenue remained flat with service Highlights Key revenue up by 0.5% and revenue from sales of equipment and accessories down by 8.2% y-o-y due to change in sales mix Consolidated Q4 2015 29.5 towards more affordable devices OIBDA (RUB bn) Q4 2014 34.5 (down ▼ 14.4% y-o-y) • OIBDA decreased by 14.4% y-o-y due to higher marketing and general and administrative expenses. As a result, OIBDA margin declined by 5.9 p.p. y-o-y to 36.0% OIBDA Margin (%) Q4 2015 36.0 Q4 2014 41.9 (down ▼ 5.9 p.p. y-o-y) • Net profit increased by 89.1% y-o-y due to lower foreign exchange loss and decreased income tax expenses

Net Profit(1) (RUB bn) Q4 2015 5.3 • Total CAPEX increased by 15.5% y-o-y to RUB 23.6bn Q4 2014 2.8 (up ▲ 89.1% y-o-y) • MegaFon added 4.6 million new mobile subscribers in the past year

(+6.4% compared to the end of Q4 2014) mainly due to active Financial and Operating Results Operating Financial and subscriber acquisition efforts and a new distribution agreement CAPEX (RUB bn) Q4 2015 23.6 with Svyaznoy Q4 2014 20.5 (up ▲ 15.5% y-o-y)

Mobile subscribers(2) Q4 2015 76.8 (million, as of 31 December) Q4 2014 72.2 (up ▲ 6.4% y-o-y)

All financial figures provided in this presentation are presented on consolidated IFRS basis unless otherwise stated Outlook for 2016 for Outlook Note: (1) — Profit attributable to equity holders of the Company. (2) — Data includes subscribers of the Company in Russia and its subsidiaries in Russia and outside: “TT mobile” CJSC in the Republic of Tajikistan, “AQUAFON-GSM” CJSC in 7 the Republic of Abkhazia and “OSTELEKOM” CJSC in the Republic of South Ossetia 4G development in 2015 – focus on quality

4G/LTE network development

Federal regions covered by MegaFon 4G / LTE network

• MegaFon is focused on expansion of coverage in Highlights Key Cities where LTE-Advanced available existing areas of presence and service quality improvement

Saint- • More 4G availability: Petersburg –77 federal regions –more than 780 cities and towns Moscow (1) Nizhniy Novgorod –14 out of 15 cities with a population over 1m people Samara 4G/LTE services Rostov-on-Don Khabarovsk Chelyabinsk • LTE-Advanced services providing speeds of 150-450

Chita Vladivostok Mbit/sec were available in 9 cities as of the year-end • 4G-enabled devices registered on MegaFon network -

7.85m units, or +34% y-o-y Results Operating Financial and • 4G traffic usage increased by 45% y-o-y Availability of MegaFon 4G services • Share of 4G traffic in total data traffic – c.40% 72 77 49 51% 53% 28 36% LTE-roaming 25% • MegaFon is one of the world’s leaders in LTE-roaming 2012A 2013A 2014A 2015A coverage in terms of countries covered Number of Russia’s regions, where % of population covered MegaFon 4G is available • In 2015, LTE-roaming coverage extended to 66 2016 for Outlook countries with 80 operators 8 Note: (1) — Russian population as of the latest census in October 2010 Network infrastructure development in 2015

Growth Key points ▲ 9.9% • In 2015, MegaFon remained focused on increasing the quality Highlights Key of its services by continued roll-out and modernisation of 23,003 ▲ 24% 18,547 Number of base 4G/3G/2G networks in Russia stations 38,147 42,281 ▲ 11% • By the year-end, the key indicators for the connection quality in MegaFon network improved:

46,337 47,946 ▲ 6% 4G 3G 2G CSSR(2) 99.47% 99.27% 99.98% 2014 2015 DCR(3) 0.33% 0.39% 0.75% 2G BS, units 3G BS, units 4G BS, units • As of the end of 2015, MegaFon had the largest network Growth among Russian mobile operators, which comprised more than ▲ 42.7%

113,000 base stations, +10% y-o-y Results Operating Financial and 237 497 • MegaFon increased the length of its backbone infrastructure 166 453 ▲ 146% by 4% y-o-y, while its fiber optics infrastructure expanded to Fiber optics 64% 64% 237.5K km. This enabled it to expand network footprint and infrastructure capacity to provide fixed-line business services ▲ 4% 121,102 126,030 • In 2015, MegaFon completed integration of all branches into its Global network operational center (GNOC). As of now, the 2014 2015 GNOC enables centralised monitoring of, maintenance of and

control over the network quality across MegaFon’s country- Outlook for 2016 for Outlook Backbone, km Backhaul, km Share of BS interconnected wide operations Note: via FOCL(1), % 9 (1) FOCL – fiber-optic communication lines (2) CSSR – Call set-up success rate (3) DCR - Drop call rate Strong position in distribution in 2015

Structure of MegaFon distribution network • Through its controlled and non-controlled retail network,

MegaFon holds the leading position in distribution in Russia Highlights Key Controlled retail 72% gross additions(1) • The current structure of the distribution network enables MegaFon to steadily increase its subscriber and data user base in a cost-effective way and improve the quality of gross additions • MegaFon’s controlled retail accounted for 72% of total gross adds, while the owned retail stores accounted for c.40% of MegaFon Retail, Franchised stores under Euroset total gross adds in 2015 incl. online store MegaFon brand (50% interest) • Despite the shift to cheaper and more affordable devices amid weaker consumer purchasing power, in 2015 we sold > 2,000 stores ~ 2,000 stores ~ 4,000 stores 25% more smartphones in unit terms than a year ago in our own retail stores. This helped us to deliver stronger mobile

data revenue Results Operating Financial and Non-controlled retail 28% gross additions(1) Sales of data-enabled devices(2) in MegaFon Retail in 2015 Independent dealers:

Smartphones 4G smartphones Multi-brand electronic stores Federal retail chain +25% y-o-y +113% y-o-y Russian Post outlets (dealer agreement) Local dealers Other

~ 3,000 stores 2016 for Outlook

10 Note: (1) - Sales for the quarter, excluding Yota, as of end of Q4 2015 (2) – Sales represented in unit terms (3) – Sales of data-enabled devices include sales of 4G smartphones, tablets, modems and routers MegaFon TV – a key development for growth in data monetisation and increase of customer loyalty Fully-fledged video and TV OTT solution launched in June 2015 MegaFon TV creates value for digital offering…

… aimed at both subscribers of MegaFon and those of other mobile operators

Clients Purposes

Company’s • Boosting of subscribers loyalty and lifetime existing • Data usage enhancement subscribers • Monetisation of subscriber base • VOD: Large catalogue of movies, TV series and sequels of first-rate Russian and foreign studios Content • Monetisation of active users of MegaFon.TV app • Live TV: 130+ channels, including 1 and 2 multiplex 3rd party clients • Acquisition of new subscribers

Devices • OTT solution available for all types of devices: supported smartphone, tablet, SMART TV, Web Customers’ dynamics satisfaction by the service

• Unique terms of use for subscribers using “All inclusive” 350K users registered at 31 December 2015 bundled tariff plans and options c.40% average monthly growth of user base since launch • VOD and LiveTV tandem solution Uniqueness • Premium HD content: Amedia, Discovery HD, HBO, Disney, 61% of app users rate the service as “good” and “excellent” Warner, Universal, Sport HD, etc. 4.0 average rate in Google Play and AppStore • Individual recommendations based on ratings and perceptions by subscribers 11 Key developments in B2X(1) segment in 2015

B2X strong performance in FY2015 Key projects in 2015

• Development of new IT tariff products to reduce the time to market launch of Highlights Key 286 K 2.8 m individual offerings for corporate clients Number of Number of • Launch of programme for improvement of indoor coverage in business and B2X clients B2X mobile + 5% y-o-y data users commercial centers +23.1% y-o-y • Launch of the mono-industry towns development programme • Launch of new exclusive overland cross-border passages Russia-Georgia and 8.2% 6.6% 30.9% Russia-Kazakhstan B2X total B2X mobile B2X mobile • Contract with RT-Invest Transportation Systems signed for distribution of 2 revenue revenue data revenue + million sim-cards to be installed on board heavy vehicles to meter over the + 8.2% y-o-y + 6.6% y-o-y 30.9% y-o-y highway tracking

• New products and services M2M subscribers exceeded 1.6 million as at 31 Dec 2015 • MegaFon’s M2M market share increased to 25%(3)

• Launch of M2M-Monitoring service on the basis of a new platform in all branches Results Operating Financial and of MegaFon • Commercial launch of “Wi-Fi with authorisation” service on a federal level New B2B/B2G clients • Launch of “Electronic document flow” service • Upgrade of “Office zone” service, a cloud solution for SME business • Launch of “Online conference” service in all branches of MegaFon • Promotion of Geo-analytics service based on BigData analysis • Upgrade of CDN(2) network: network capacity increased by more than 40%, scope

of services expanded by 60% Outlook for 2016 for Outlook

Note: 12 (1) B2X includes B2B and B2G business segments (2) CDN – Content delivery network (3) Based on Company’s estimate of M2M market in terms of M2M subscribers 2 Financial and Operating Results Key highlights: earnings trend

Lower Lower ▼ 0.3% ▼ 0.4% Revenue, OIBDA and Net profit 82.2 82.0 314.8 313.4 Highlights Key 74.0 76.1 81.3 Revenue • In 2015, total revenue was in line with the full-year target with service revenue up by 0.6% y-o-y, but impacted by lower revenue from sales of equipment and accessories (-14.0% y-o-y) resulting from the change in Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2014 2015 sales mix from expensive data-enabled devices towards Lower Lower affordable smartphones ▼ 14.4% ▼ 4.4% 138.5 34.5 34.7 36.1 132.4 32.0 29.5 • OIBDA declined by 4.4% y-o-y due to higher marketing, 41.9% 43.2% 45.6% 44.5% 44.0% 42.2% and general and administrative expenses OIBDA 36.0% • As a result of the OIBDA decline, OIBDA margin

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2014 2015 decreased by 1.8 p.p. y-o-y to 42.2%, which still remained above the full-year target Results Operating Financial and Growth Growth (1) ▲ 89.1% ▲ 6.3% • Net profit increased by 6.3% y-o-y due to lower foreign 13.0 13.3 36.7 39.0 exchange loss compared to FY2014 and gain on (1) 7.4 derivative financial instruments due to efficient foreign Net profit 5.3 11.7 12.5 2.8 10.0% 17.1% 16.4% % % exchange management 3.4% 6.5%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2014 2015

Quarterly data, RUB bn Full-year data, RUB bn % of Revenue Outlook for 2016 for Outlook

Note: Due to rounding, manual calculations for financials and KPIs(2) may differ from those displayed 14 (1) — Net profit attributable to equity holders of the Company (2) — Key performance indicators (“KPIs”) Key highlights: free cash flow and CAPEX

Growth Growth ▲ 15.5% ▲ 24.2% CAPEX(1), OIBDA-CAPEX, Free Cash Flow

25.9 Highlights Key 23.6 70.2 CAPEX 20.5 56.5 • In 2015, MegaFon spent RUB 70.2bn, which is 24.2% 22.4 12.5 % higher than in FY 2014 mainly due to: 24.9% 8.1 31.9% 28.8% 17.9% 16.5% 10.9% – higher spending on 4G/LTE network roll-out and Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014 2014 2015 modernisation of 2G/3G network

Lower Lower – RUB 6.1bn purchase of spectrum through the SMARTS ▼ 58,0% ▼ 24.2% acquisition, which will enable network roll-out CAPEX 23.9 22.2 82.0 optimisation going forward 62.2 14.0 OIBDA-CAPEX 32.3% 29.1% 10.2 26.1% 19.8 – Net of acquisition of SMARTS’ spectrum, FY 2015 17.0% 12.6% 5.9 % CAPEX totaled RUB 64bn, which is in line with the full- 7.2% year target

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014 2014 2015 Financial and Operating Results Operating Financial and • Due to the lower OIBDA and higher CAPEX spending, Lower Lower ▼ 20.3% ▼ 23.9% OIBDA-CAPEX decreased by 24.2% y-o-y 70.7 19.3 17.4 53.8 • Free Cash Flow 13.8 Free Cash Flow decreased by 23.9% y-o-y mostly due to 11.7 25.4% 21.1% 8.9 22.5% higher CAPEX and decreased cash flow from operating 15.9% 16.9% 17.2% 10.9% activities

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014 2014 2015

Quarterly data, RUB bn Full-year data, RUB bn % of Revenue Outlook for 2016 for Outlook

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed 15 (1) – MegaFon CAPEX refers to actual CAPEX accrued for the year and may not match cash flow CAPEX. Key revenue components

Mobile data revenue remains the key revenue growth driver Wireless revenue increased in 2015 by 0.2% y-o-y. Growth in mobile data revenue and higher demand for MegaFon’s (RUB bn) Lower Lower content and mobile commerce value-added services (+4.5% Highlights Key ▼ 0.3% ▼ 0.4% y-o-y) fully compensated for a slowdown in revenue from 82.2 traditional voice services Handsets 81.3 82.0 314.8 313.4 and 76.1 ▼ 8.2% accessories 7.2 74.0 5.0 6.6 23.1 19.9 ▼ 14.0% Mobile data continued to be the key growth driver and 4.0 represented 25.5% of total revenue in FY2015 vs. 21.3% in Wireline 6.3 4.4 5.7 6.9 ▲ 9.6% 22.2 23.4 ▲ 5.6% 5.3 5.5 FY2014, increasing by 19.0% y-o-y due to: ― expansion of data user base by 6.8% y-o-y to 29.9 million users as a result of our active data user acquisition efforts Other wireless and higher adoption of data-enabled devices (more than 49.0 47.5 (1) 51.2 47.4 50% of data-enabled devices(2) registered on MegaFon revenue 46.2 202.3 190.1 ▼ 0.3% ▲ 0.2% network) ― higher data usage resulting from: • active marketing efforts and intensive 4G network development Data Results Operating Financial and 17.9 19.5 21.6 21.0 ▲ 19.9% 79.9 ▲ 19.0% 17.5 67.2 • introduction of new tariff offerings to promote higher data usage and promotion of affordable data-enabled Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2014 2015 devices in controlled retail stores Wireline service revenues increased by 5.6% y-o-y due to Wireless 83.6% 86.7% 87.8% 86.9% 83.5% 85.6% 86.2% expansion of B2B and B2G client base, acquisition of GARS - Data 21.3% 24.1% 25.6% 26.6% 25.6% 21.3% 25.5% and attraction of new B2O projects due to DREAM development Wireline 7.7% 7.4% 7.0% 7.0% 8.5% 7.0% 7.5% Handsets and Sales of handsets and accessories decreased by 14.0% y-o-y 8.7% 5.9% 5.2% 6.1% 8.0% 7.4% 6.4% accessories as a result of the change in sales mix towards more affordable

smartphones, including 3G and 4G smartphones, exclusively 2016 for Outlook Due to rounding, manual calculations for financials and KPIs may differ from those displayed. Note: introduced to the market by MegaFon 16 (1) — Other wireless revenue includes revenues from VAS services; revenue from local subscribers which includes monthly fees, airtime revenues, own subscriber roaming and connection fees; wireless interconnection revenues; roaming charges to other wireless operators and other wireless revenues (2) — Include smartphones, tablets, dongles, routers, and other data-enabled devices Drivers of Russia total wireless services revenues: Results provided on this page cover Wireless subscribers only the Russian business

Total Russia wireless subscribers (million)

including data service users Highlights Key 73.9 74.8 71.4 69.7 69.5 • Overall subscriber base in Russia increased by 5.1 million new subscribers (+7.2% y-o-y) to 74.8 million ▲ 6.9% resulting from: 28.5 29.3 y-o-y 27.4 26.9 27.9 - active subscriber acquisition marketing efforts and new marketing campaign

▲ 7.2% - upgrade of existing tariffs and introduction of new y-o-y services - new dealer contract with Svyaznoy, which provides access to an additional attractive customer base

• Data service user base expanded by 6.9% y-o-y to 29.3 Results Operating Financial and million users accounting for more than 39% of the Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 overall subscriber base supported by growth in smartphone users base (+23.8% y-o-y) Data service user base (1) User base not using data service (2) • Increase in data service users was achieved due to organic growth through initiatives aimed at promoting Share of data users in overall subscriber base, % shift of “pure” voice users to data usage and increased 39.3% 38.7% 39.1% 38.6% 39.2% penetration of data-enabled devices on MegaFon

network, now totaling 53% 2016 for Outlook

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed 17 (1) — Data Service User is defined as a Subscriber who has consumed any amount of data traffic within preceding month (2) — Mobile subscribers that do not fall within the definition of Data Service User Base Drivers of Russia total wireless services revenues: Results provided on this page cover DSU and APPMB only the Russian business

Growth Growth

▲22.0 % ▲ 25.7% Data revenue operating statistics Key Highlights Key

3,638 3,286 • Strong increase of DSU (+25.7% y-o-y) in 2015 resulted 3,195 3,113 3,185 2,981 2,614 from: DSU(2) & APPMB(3) – upgrade of tariff and internet options with higher mobile data allowances 0.07 0.07 0.07 0.08 0.07 0.08 0.07 – active marketing promotions Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2014 2015 – intensive roll-out of the 4G/LTE network resulting in a higher share of 4G traffic (almost 40% of total DSU, Mb/month APPMb, RUB traffic) – growing penetration of data-enabled devices on Growth MegaFon network up to c.53% as of the end of 2015 Growth RUB per ▲11.2% ▲10.4% month – continued increase in 4G-enabled devices registered Results Operating Financial and 244 238 233 232 211 on MegaFon network reaching 7.9 million 219 DATA 214 • APPMB decreased by RUB 0.01 y-o-y ARPU (ARPDU(4)) • ARPDU increased by 10.4% y-o-y due to organic growth in data traffic usage on the back of increasing customer Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2014 2015 demand for larger data packs, which became more affordable Quarterly data Full-year data

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed 2016 for Outlook (1) Operating KPIs presented here vary from those reported earlier due to change of methodology for data service users calculation. Please refer to our Q4 and FY 2015 Results press release for reconciliation details 18 (2) Total number of megabytes transferred during a given period divided by average number of data subscribers during such period, divided by number of months in such period; (3) ARPDU for a given period divided by DSU in such period; (4) Total data revenues in a given period divided by average number of data service subscribers during such period, divided by number of months in such period Key factors influencing OIBDA margin

Key components Key drivers of OIBDA margin Key Highlights Key OIBDA S&M as % of G&A as % of • In 2015, OIBDA decreased by 4.4% y-o-y, while OIBDA 44.0% Gross profit margin revenue revenue 42.2% ▼1.8 p.p. margin margin declined by 1.8 p.p. y-o-y to 42.2%, remaining (%) = 0% ▼ 0.6 p.p ▼ 1.2 p.p. above the full-year target Lower ▼ 4.4 % • The following factors influenced OIBDA: - Gross profit decreased by 0.5% y-o-y due to lower 138.5 0.2 total revenues (-0.4% y-o-y), while .gross profit OIBDA 132.4 (1.4) (RUB bn) (1.7) (3.3) margin remained flat at 73.1% - Sales & marketing expenses increased by 10.1% y-o-y mainly due to rise of the advertising activity related to a new company positioning campaign

- General & administrative expenses grew by 4.4% due Financial and Operating Results Operating Financial and to: Gross profit – increased rent and utilities expenses resulting from ▼ (0.5%) our network expansion; – higher employee benefits expense mainly due to an increase in social charges (0.4%) (0.3%) +10.1% +4.4%

OIBDA Revenue Cost of revenue Sales & General & OIBDA

2014 Marketing Administrative 2015 Outlook for 2016 for Outlook y-o-y growth y-o-y decrease 19 Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed. Net debt and liquidity development

Net debt build-up, RUB bn As of 31 Dec 2014 As of 31 Dec 2015 Change • Despite the dividend payment in December 2015 and

Cash and cash equivalents 22.2 17.5 (4.7) M&A activity in Q3-Q4 2015, MegaFon retained a Highlights Key Short-term investments 47.9 20.2 (27.7) comfortable level of leverage: Total debt 206.3 218.5 12.2 – Net debt/LTM OIBDA at 1.37x level at the end of Q4 2015 Long-term debt 156.3 172.6 16.3 Short-term debt 50 45.9 (4.1) – MegaFon fully paid dividend for 9m 2015 in the amount of RUB 40bn in December 2015 Net debt 136.2 180.8 44.6 – Purchase of interest in a building at Oruzheyny Lane, Moscow, executed in Q4 2015 Net debt and Net debt/LTM OIBDA Liquidity(1) currency split • Market volatility risks mitigated by keeping liquidity in RUB bn / (x) Growth FX: ▲ 0.39x – Over 80% of cash held in hard currencies

1.37x 17% Financial and Operating Results Operating Financial and • In December 2015, Moody’s changed its outlook on 0.98x 0.94x 0.90x 0.82x MegaFon’s rating to “Stable” following an upgrade of 180.8 sovereign rating outlook 136.2 129.1 113.6 123.0 83%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 (2)

Net debt Net debt/LTM OIBDA RUB USD Outlook for 2016 for Outlook

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed 20 (1) — Liquidity is calculated as the sum of Cash and cash equivalents and Short-term investments (2) — c. 0.25% in EUR for operating purposes Debt profile

Debt portfolio structure • No short-term refinancing risk

- 55% of Company’s debt becomes due within 3Y tenor or later Key Highlights Key (1) By instrument By currency By maturity • Continuing strategy to keep a predominant portion of the credit portfolio in RUB % of total – Changes in Q4 2015 were attributable to the ECA drawdowns 2% and the repayment of the hedged portion of the debt 18% 20% 24%

21% • Further optimization of the Company’s debt portfolio 2014 - 46% – In October 2015, MegaFon successfully placed RUB 15bn of

Dec 15% exchange bonds at a coupon rate of 11.4% p.a. for a period of 2 - 62% 24%

36% 20% years 31 12% – In December 2015, MegaFon and Sberbank signed a new revolving credit facility in the amount of up to RUB 30bn. Under this credit facility, MegaFon has already drawn a tranche in the amount of RUB 15bn – Proceeds from these borrowings were used to partially prepay

2% 11% Results Operating Financial and 17% 21% short-term ruble debt with higher interest rates and replenish 28% 10% RUB liquidity

44% 2015

- • New credit facilities to further back-up MegaFon’s CAPEX and cater 61% 24% for refinancing needs were signed in December: Dec 9% - 39% 34%

31 – New credit facility with CDB for USD 300 mln to finance Huawei procurement – Credit facility with CDB for USD 300 mln aimed at refinancing of Bank Loans RUB 1 Year 2 Years USD Swapped(2) a part of the Company’s existing debt – the Company’s first Equipment Financing 3 Years 4 Years facility with CDB not linked with equipment purchases Bonds USD 5 Years and Longer

EUR – Finnvera-covered facility agreement with Sberbank in the 2016 for Outlook amount of EUR 70 mln – the first ever RUB-denominated ECA- Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed type facility for the Company 21 (1) — On nominal basis; (2 ) — Including structured and plain vanilla FX swaps Outlook for 2016 3

Outlook for 2016 Key Highlights Key

Revenue Flat to low single digit y-o-y growth

OIBDA RUB 120-126bn Financial and Operating Results Operating Financial and

CAPEX Up to RUB 75bn Outlook for 2016 for Outlook

23 Contact Information MegaFon Investor Relations 30 Kadashevskaya embankment Moscow, 115035, Russia Tel.: +7 495 926 2012 Email: [email protected] Web: ir.megafon.com