Key events of 2011 & early 2012

2011

February 2011

On February 04, 2011, the Group completed the transaction to acquire 71.8% stake in OJSC National Telecommunications (“NTK”), largest independent cable TV operator and information provider in Russia.

The acquisition of NTK enabled the Rostelecom to enter Moscow market and to attain a leading position in the Russian Pay-TV segment.

March 2011

Rostelecom and each of the Interregional Companies of Svyazinvest (IRCs) contributed their respective repurchased shares to the share capital of MOBITEL, which became a 99.9% owned subsidiary of new Rostelecom when the merger was completed. MOBITEL therefore received 2.7% of Rostelecom’s outstanding ordinary shares and 28.8% of Rostelecom preferred shares.

April 2011

On April 1, 2011, the IRCs and OJSC Dagsvyazinform were excluded from the Unified State Register of Legal Entities, following their merger with OJSC Rostelecom. The ordinary and preferred shares and bonds of the merged companies were exchanged for newly issued Rostelecom ordinary shares and bonds. This completed the legal process of creating an integrated Group based on Rostelecom.

May 2011

On May 12, 2011, Rostelecom’s newly issued shares commenced trading on the CJSC Moscow Interbank Currency Exchange (“MICEX”) as 16 separate issues.

On May 13, 2011, the Board of Directors of Rostelecom approved its development strategy for 2011-2015.

On May 13, 2011, Standard & Poor’s upgraded Rostelecom to “BB+“ with a “Stable“ outlook.

June 2011

On June 2, 2011, Rostelecom acquired 39.87% of the ordinary shares of OJSC Bashinformsvyaz, the largest telecoms operator in the Republic of Bashkortostan. This acquisition enabled Rostelecom to enter the market of Bashkortostan.

On June 9, 2011, the Company’s Board of Directors approved changes to the employee long-term incentive programme by launching an additional stock option programme, amounting to 16.3% of the total preferred shares or 1.2% of the total number of Rostelecom shares.

On June 27, 2011, the Rostelecom AGM approved the payments of an annual dividend of RUB 105.5 million for the full year 2010, to be paid to holders of Rostelecom preferred shares as at the record date of May 10, 2011. The dividend, amounted to a payment of RUB 0.4344 per preferred ‘class A’ share. The AGM also approved that no annual dividends be paid to holders of ordinary shares for the full year 2010.

August 2011

On August 10, 2011, Rostelecom ordinary shares of the unified issue commenced trading on MICEX under the ticker RTKM in line with the approval of the cancellation of the individual numbers (codes) of the 16 additional issues of ordinary Rostelecom shares by the Russian Federal Service for Financial Markets’ (‘FSFM’). Since August 10, 2011 one issue of Rostelecom ordinary shares (RTKM) and one issue of preferred shares (RTKMP) are traded on MICEX.

On August 31, 2011, Rostelecom acquired a 50% stake in CJSC Volgograd-GSM from SMARTS Group. As a result, Rostelecom now holds a 100% stake in Volgograd-GSM. The company had 855,000 mobile subscribers as at the end of the first quarter of 2011.

September 2011

The MSCI included the Company’s ordinary shares in the Large Cap Segment of the MSCI Global Standard Indices and MSCI Russia Index with 3.43% weight, effective from September 1, 2011.

On September 2, 2011, Rostelecom acquired a 49% stake in CJSC Orenburg-GSM from SMARTS Group. As a result, Rostelecom now holds a 100% stake in Orenburg-GSM. The company had 185,000 subscribers at the end of the first quarter of 2011.

October 2011

On October 31,2011, Rostelecom announced that its Board of Directors has authorized a buyback of Rostelecom’s ordinary and preferred shares up to a total value of US$ 500 million.

December 2011

On December 26, 2011, Board of Directors approved a revision of the Company’s dividend policy. According to the new policy, the Company will pay not less than 20% of its net profit, as determined in accordance with International Financial Reporting Standards (“IFRS”), as a dividend on ordinary shares. The dividend per one preferred share was set at 10% of net profit according to RAS, divided by the total number of shares, which comprise 25% of the Company’s share capital.

2012

February 2012

On February 2, 2012, Rostelecom acquired 75% minus one share control over GNC ALFA, one of the largest independent backbone operators in Armenia.

On February 09, 2012 MOBITEL completed the acquisition of 3.86% of Rostelecom shares for a total cash consideration of RUB 19 billion through the over-the-counter market. As a result, MOBITEL`s ordinary share stake in Rostelecom increased to 6.55%.

On February 09, 2012, Rostelecom signed an agreement with Svyaznoy, the owner of Russia’s largest mobile communications and equipment retail network, which establishes the terms of cooperation between the companies to sell mobile equipment and services in 45 Russian regions.

On February 17, 2012, Rostelecom signed an agreement with Euroset, Russia’s largest mobile communications retailer, to establish unified conditions for cooperation between the companies to sell mobile equipment and services. Euroset’s shops will provide a full range of services for mobile voice subscribers of Rostelecom, its subsidiaries and also SkyLink in the 44 regions, in which they operate.

On February 24, 2012, Rostelecom signed a strategic cooperation memorandum with Mobile TeleSystems to jointly develop fixed and mobile networks. According to the memorandum, the companies intend to share each other’s existing infrastructures, such as fibre optic network resources, technological equipment sites, power supply stations, antenna towers and antenna feeder stations. As part of the signed agreement, Rostelecom and MTS will also jointly develop and maintain the transport network and base station infrastructure, and also develop network monitoring software systems.

On February 29, 2012, Rostelecom completed the acquisition of a 100% stake in Enter LLC a broadband Internet services provider to individual subscribers in Barnaul, Novokuznetsk and Tyumen. The deal serves as an alternative to capital expenditure in Enter’s regions.

March 2012

Rostelecom successfully set up a video surveillance system to monitor the voting process during the Russian Presidential elections as part of contracts awarded by the Ministry of Communications of Russia. Under the agreed scope of work, the Company collected and stored live video records, provided access to a data-communication network, and also organised the Internet transmission of live voting station videos during the Presidential elections on March 4, 2012. The video surveillance operation was solely executed by Rostelecom and over 90,000 polling stations were equipped with video surveillance systems. The value of the contract amounted to RUB 13 billion.

On March 6, 2012, Rostelecom completed the acquisition of a 28.2% stake in NTK. As a result, Rostelecom now holds a 100% stake in NTK. The transaction with NTK is expected to result in the realisation of approximately RUB 2 billion in synergies by 2015.

On March 24, Decree № 340 on the reorganisation of OJSC Rostelecom was signed by the President of Russia. It states that a unified company will be created by merging Svyazinvest OJSC (“Svyazinvest”) and its total assets with Rostelecom. The Russian Federation’s stake in Rostelecom will amount to over 50% of ordinary shares when coupled with a stake belonging to the State Corporation Bank for Development and Foreign Economic Affairs (“Vnesheconombank”, “VEB”). At the same time, the Decree excludes Svyazinvest from the list of strategic joint stock companies.

April 2012

Rostelecom signed an agreement with Yota, the Russian mobile broadband provider, that gives Company access to Yota’s LTE network infrastructure. Rostelecom will utilise a feature-driven development (FDD) range of frequencies of between 2500-2530 MHz and 2620-2650 MHz to provide telecommunications services as a Mobile Virtual Network Operator (MVNO). Rostelecom intends to start providing commercial services using an LTE network in the Moscow region from September 1, 2012 and the provision of these services across other Russian regions will be rolled out at a later stage.

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