The Board of Directors of "Rostelecom" approved association of cellular assets with Tele2 Russia

December 12, 2013 the Board of Directors of JSC "Rostelecom" approved association of cellular assets in a joint venture (hereinafter - "T2 RTC Holding") now Tele2 Russia Holding AB, which is equally owned by a private equity fund, "VTB Capital" and a consortium of investors. It is expected that "T2 RTC Holding" will be one of the leading players in the Russian mobile market with strong positions in the regions where the existing "Rostelecom" and Tele2 Russia and access to the frequencies of the next generation of mobile communications in all federal districts of the Russian Federation. Combined subscriber base "T2 RTC Holding" will be about 38 million subscribers (as of Q3 2013), and pro forma revenue in 2012 according to amount to about 101 billion rubles "Rostelecom" will make the capital "T2 RTC Holding," the majority of their cellular assets and licenses, while Tele2 Russia will give the joint venture all of its cellular assets in Russia. Note that the union will bring significant benefits to both sides and will benefit both consumers and the Russian telecommunications market. "T2 RTC Holding" plans significant investments in network 3G/LTE and innovative mobile services of high quality in the interests of Russian consumers and corporate clients.



"T2 RTC Holding" will receive instant Network Expansion to the federal level, as well as sufficient scale for successful competition with existing federal operators.
Combining mobile assets will "T2 RTC Holding" to participate fully in the growth of market services transfer data on the Russian telecommunications market through a combination of experience Tele2 Russia in the development of mobile business with a wide frequency range of the new generation of "Rostelecom".
"T2 RTC Holding" will have a significant potential to generate cash flows, including through the implementation in the medium term, significant synergies from the merger of the assets, in particular, in the area of deployment and maintenance of networks, service sales and service subscribers.
"T2 RTC Holding" will be able to offer converged fixed and mobile services at the federal level.
"Rostelecom" will receive an additional benefit from the significant reduction in the volume of direct investments in the mobile segment, as well as transfer of debt associated with mobile operations. In this case the expected decline in revenues will be relatively insignificant.
This transaction was approved by the Board of Directors of "Rostelecom" and subject to regulatory approvals, as well as compliance with other conditions precedent customary for such transactions. It is expected that the first phase of the deal will be closed in the first quarter of 2014. Completion of the second phase of the deal will depend on the holding "Rostelecom" reorganization in the form of spin-integrated mobile assets. The planned reorganization will require the approval of the general meeting of shareholders of "Rostelecom", which is scheduled for December 30, 2013. Upon receipt of all necessary approvals, the second phase of the transaction is scheduled for completion in the first half of 2014.