TELECOMMUNICATIONS INDUSTRY: FACTS AND FIGURES

2014

ABOUT THE RUSSIAN DIRECT INVESTMENT FUND

The Russian Direct Investment Fund is a $10 billion fund established to make equity investments primarily in the Russian economy.

RDIF was created in 2011 under the leadership of the President and Prime Minister of to co-invest alongside top global investors, acting as a catalyst for direct investment in Russia. RDIF together with its co-investors invested and committed over $7 billion for this purpose, of which RDIF alone invested $1.3 billion and over $6 billion came from the leading international co-investment partners.

RDIF also attracted over $15 billion of foreign capital into the Russian economy through long-term strategic partnerships.

I RUSSIA IN THE GLOBAL TELECOMMUNICATIONS INDUSTRY RUSSIA IN THE GLOBAL TELECOMMUNICATIONS INDUSTRY

1.1 RUSSIA’S RANKING IN THE GLOBAL TELECOMMUNICATIONS INDUSTRY 2013

IN EUROPE GLOBALLY BY PAY-TV BY CELLULAR SERVICE № SUBSCRIBER BASE № SATURATION 9% increase1 in subscribers in 2013 166% saturation1 level by number of SIM 55% level of Pay-TV saturation cards 110% by active subscribers

IN EUROPE IN EUROPE BY NUMBER OF BROADBAND INTERNET USERS № GLOBALLY № 1 BY NUMBER OF Over 271 mln subscribers in 2013. INTERNET-VIDEO 49% saturation level (60-80% in big cities № USER BASE and over 50% in cities with populations under 3 500,000) after USA and Japan

Sources: ITU: ITC Facts and Figures, 2013; Ericsson; Comscore

6 WWW.INVESTINRUSSIA.COM 1.2 CELLULAR SERVICE IN RUSSIA AND GLOBALLY 2009-2013, number of contracts per 100 people

Russia 160.1 165.5 142.1 145.3 152.9

Europe 116.8 115.0 117.9 119.6 122.8

China 55.3 63.2 72.0 80.8 88.7

USA 88.6 91.3 94.4 96.0 95.5

2009 2010 2011 2012 2013

Source: ITU

WWW.RDIF.RU 7 RUSSIA IN THE GLOBAL TELECOMMUNICATIONS INDUSTRY

1.3 BROADBAND ACCESS (BBA) SATURATION LEVEL IN RUSSIA AND GLOBALLY 2013, %

In Russia Globally

49% 39%

Source: ITU

8 WWW.INVESTINRUSSIA.COM 1.4 FIXED BROADBAND INTERNET SUBSCRIBERS IN RUSSIA AND GLOBALLY 2009-2013, per 100 households

8.98 14.46 Russia 10.93 12.14 16.62

Europe 22.1 23.6 24.8 25.7 26.6

China 7.69 9.29 11.4 12.72 13.6

USA 25.3 26.5 27.4 28.4 28.5

2009 2010 2011 2012 2013

Source: ITU

WWW.RDIF.RU 9 RUSSIA IN THE GLOBAL TELECOMMUNICATIONS INDUSTRY

1.5 RUSSIAN INTERNET USER BASE IS RANKED FIRST IN EUROPE AND SIXTH IN THE WORLD as of February 2014, mln unique visitors

Russia

Germany USA China

66.8 194.7 52.6

354.6 Japan 73 80.1

Brazil 68

India

Source: Comscore, Digital future in focus, 2014

10 WWW.INVESTINRUSSIA.COM 1.6 INTERNET USERS IN RUSSIA AND GLOBALLY 2009-2013, % of the population

Russia 29 43 49 62 63

Europe 63 66 69 71 73

China 29 34 38 42 46

USA 71 72 70 79 84

2009 2010 2011 2012 2013

Source: ITU

WWW.RDIF.RU 11

II RUSSIAN TELECOMMUNICATIONS INDUSTRY: CURRENT ISSUES AND TRENDS RUSSIAN TELECOMMUNICATIONS INDUSTRY: CURRENT ISSUES AND TRENDS

2.1 RUSSIAN TELECOMMUNICATIONS MARKET STRUCTURE 2013, by segment, %

Landline 11%

BBA 10% Cellular service 58%

Pay-TV 3%

Postal service 8%

Other 10%

Source: CNews Analytics, 2013

14 WWW.INVESTINRUSSIA.COM 2.2 RUSSIAN TELECOMMUNICATIONS MARKET 2009-2013, RUB bln

Russian telecommunications market Revenue growth rates of the 2009-2013, RUB bln telecommunications market in Russia 2009-2013 and forecast up to 2018, by segment, % 1,635

Market, 4 total 1,543 7

Pay-TV CAGR 6.96%1,441 5 17 1,349 Broadband 2 1,249 access 12

Cellular 6 service 9

2009 2010 2011 2012 2013 CAGR, 2014-2018, est СAGR, 2009-2013

Source: CNews Analytics, 2013

WWW.RDIF.RU 15

III TELECOMMUNICATIONS INDUSTRY IN RUSSIA: LEADING COMPANIES TELECOMMUNICATIONS INDUSTRY IN RUSSIA: LEADING COMPANIES

3.1 A HIGH LEVEL OF CONSOLIDATION IN THE RUSSIAN TELECOMMUNICATIONS MARKET

80% of the Russian telecommunications market is controlled by “the big four” (, MTS, VimpelCom and Megafon), which have presence in all key industry segments.

“Big Four” share in the Russian telecommunications industry 2013, by revenue, % 78 90

Landline market Long-distance and international calls market

89 58 38

Cellular market Broadband market Pay-TV market

Source: CNews Analytics, 2013

18 WWW.INVESTINRUSSIA.COM 3.2 TOP-10 TELECOMMUNICATIONS COMPANIES IN RUSSIA 2011-2013, by revenue, RUB bln

Company 2013 2012 2011 2013/ 2011, %

1 398.4 378.2 311.9 127.7 MTS (Cellular service) 2 325.7 332.4 214.6 151.7 Rostelecom (Cellular service) 3 297.2 272.3 242.6 122.5 Megafon (Cellular service) 4 289.4 280.3 266 108.7 VimpelCom (Cellular service) 5 65.3 59.5 - 109.7* (Cellular service) 6 27.4 27.1 24.8 110.4 TransTeleCom (Landline service) 7 19 13.9 9.7 195.8 ER-Telecom (Internet, cable TV) 8 12.9 11.7 10.8 119.4 Multiregional Transit Telecom (Landline service) 9 12.6 11.2 10.3 122.3 Akado (Internet, cable TV) 10 9.4 9.1 - 103.2* NTV-Plus (Cable TV)

*2013/2012

Source: CNews Analytics, 2013

WWW.RDIF.RU 19 TELECOMMUNICATIONS INDUSTRY IN RUSSIA: LEADING COMPANIES

3.3 LARGEST SUPPLIERS OF INFORMATION TECHNOLOGY FOR TELECOM OPERATORS 2011-2013, by industry projects revenue, RUB bln

Company 2013 2012 2011 2013/2011, %

1 31.2 13.7 156.9 NVision Group 21.5 2 18.1 17.7 100.1 Technoserv 17.7 3 8.5 5.2 146.1 ITG 7.6 4 9.9 - 74.7* Compulink 7.4 5 8.6 6.5 93.8 RRC 6.1 6 4.7 4.1 114.6 Asteros 4.7 7 4.7 2.1 223.8 Satel 4.7 8 3.6 3.0 106.6 Peter-Service 3.2

*2013/2012 Source: CNews Analytics, 2013

20 WWW.INVESTINRUSSIA.COM 3.4 GROWTH LEADERS IN THE TELECOMMUNICATIONS SECTOR 2013, by revenue, RUB bln

Company 2013 2012 2013/2012, %

1 1.6 150.5 MUS Energetiki (EESTelecom)(Moscow) 2.4 2 0.5 146.0 Mango Telecom (Moscow) 0.7 3 13.9 136.8 ER-Telecom (Perm Krai) 19 4 2.4 135 Gazprom Space Systems (Moscow region) 3.3 5 1.1 131.9 Obit (St. Petersburg) 1.5 6 6.3 128.5 Tricolor TV (St. Petersburg) 8.1 7 0.9 118.6 Telecomnefteproduct (Moscow) 1.1 8 2.9 115.2 Enforta (Moscow) 3.4

Source: CNews Analytics, 2013

WWW.RDIF.RU 21 TELECOMMUNICATIONS INDUSTRY IN RUSSIA: LEADING COMPANIES

3.5 RUSSIAN BROADBAND MARKET: TOP 5 OPERATORS BY NUMBER OF BBA SUBSCRIBERS 2013, thousand subscribers

Company 2013 2012 2013/2012, Компания 2013 г. %

1 8,543 115 Rostelecom 9,824 2 2,449 112 ER-Telecom 2,732 3 2,376 97 VimpelCom 2,298 4 2,205 103 MTS 2,264 5 921 131 TTK 1,209

Source: J’son & Partners Consulting

22 WWW.INVESTINRUSSIA.COM 3.6 TOP 5 COMPANIES BY PAY-TV SUBSCRIBER BASE GROWTH 2011-2013, mln households

Company 2013 2012 2013/2012, Компания %

1 8.9 Tricolor TV 10.1 113.4 2 5.25 Rostelecom 5.23 99.6 3 2.35 ER-Telecom 2.49 105.9 4 2.85 MTS 2.46 86.3 5 1.05 TTK 1.75 166.6

Source: J’son & Partners Consulting

WWW.RDIF.RU 23 NOTES

24 WWW.INVESTINRUSSIA.COM NOTES

WWW.RDIF.RU 25 RDIF PRESENTS

INVEST IN RUSSIA PLATFORM

INVEST IN RUSSIA

26 WWW.INVESTINRUSSIA.COM SITE MAP

WHY RUSSIA KNOWLEDGE HUB & NEWS

Key facts about the Russian economy. Russia’s Browse our library of Investment News and global ranking in different areas. Research, companies’ case studies, guides, industry reports and comments from investment professionals and the business community around WHERE TO INVEST the world.

COMPARE REGIONS Every region talks about their pro-business INVESTMENT TOOLS investment climate. We gather evidence on the actual state of affairs. THEY CHOOSE RUSSIA SECTORS Success stories of foreign investors from multiple Gain access to the partners’ reports, guides and Russian regions. Track inward strategic investment other materials about key industries. across Russia. REGION PROFILES PROJECT DATABASE Say to your success in Russia. Our team of The Project Database is the central storehouse of regional professionals provide you with the information on regional projects, verified by the expertise and up to date information you need in Russian Direct Investment Fund professionals. order to make an informed investment decision SITE SELECTION TOOLS with regards to any specific region. The best way to find the best properties (greenfield Get a historical perspective on top international and brownfield). companies which have made specific regions in The easy-to-use property search tool allows you to Russia their home and see their profiles. find a specific site by entering Size, Other Features and Location Filters. Compare selected properties TOP RUSSIA side-by-side, download individual property sheets and see your results in a basic or detailed list view, Use this link to learn more about the largest or on a map. Russian companies.

OUR PARTNERS INVESTMENT ANNOUNCEMENT

Stay connected with investment promotion agencies Find information about publicly announced and government authorities in any region in Russia. investments within Russian regions.

WWW.RDIF.RU 27 Presnenskaya Nab., 8/1 Moscow, Russia, 123317 Tel.: +7 (495) 644-34-14 Fax: +7 (495) 644-34-13 [email protected] www.rdif.ru www.investinrussia.com