Rostelecom announces preliminary results of

its Real Estate Portfolio Optimisation Programme for 2017

 

December 27, 2017, Moscow - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia's national telecommunications operator, today announces the preliminary results of its Real Estate Portfolio Optimisation Programme for 2017. The Company has pursued several principal work streams as part of its initiative to monetise its real estate portfolio, achieving tangible results.

As part of the Company's drive to improve internal efficiency, Rostelecom phased out 1,084 properties which required significant maintenance expense, had no investment potential and were not of commercial interest to the business.

 

As part of the sale of surplus space in 2017, Rostelecom sold properties for the total of RUB 4.4 billion. The sold properties are located across Russia, including large regional centres with commercial value, as well as those with limited demand for real estate.

 

The Company also leases approximately 717,000 sq. m. Rostelecom and X5 Retail Group, a leading retail company, have a lease agreement for more than 48,000 sq. m. in 73 cities across Russia. This is a vivid example of how commercial deals can be mutually beneficial.

 

Furthermore, Rostelecom and Sberbank have expanded joint cooperation in the development of the commercial real estate sub-fund joint venture, increasing its authorized capital to RUB 8.8 billion. The main objective of the capital increase is to purchase 22 additional real estate properties for RUB 4.8 billion with a total area of 139,000 sq. m. in Moscow, the Moscow Region, and Saint Petersburg.

 

According to the preliminary results of the real estate portfolio optimisation programme, the total area in Rostelecom's real estate portfolio was reduced by 3.3% in 2017. 665,000 sq. m. of additional space has been evaluated and currently listed for sale for approximately RUB 6.8 billion.

 

Dmitry Kurakin, Vice President and Administrative Director, Rostelecom PJSC, commented: "We continue actively optimising our real estate portfolio, as we see great potential for creating additional value for our stakeholders. We have already achieved tangible results, and we are set for a feasible plan to monetise this portfolio further. In addition to the contribution to the growth of our proceeds, the programme also allows us to reduce operating costs, which, in turn, will help to improve the OIBDA and provide opportunities to increase our cash flow, while ensuring appropriate returns to our shareholders."

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Rostelecom (www.rostelecom.ru) is one of the largest national telecommunications operators in Russia and Europe. The Company operates in all segments of the telecommunications market and covers millions of households in Russia.

 

Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 12.7 million fixed-line broadband subscribers and over 9.7 million pay-TV subscribers, over 4.7 million of which are subscribed to Rostelecom's IPTV services.

 

In the nine months of 2017, the Group generated RUB 221.2 billion of revenues, RUB 71.2 billion of OIBDA (32.2% of revenue) and RUB 9.9 billion of net income.

 

The Group is a market leader in providing telecommunications services to government bodies and corporates of all levels.

 

Rostelecom is an important innovator that provides solutions in the field of E-Government, cloud computing, healthcare, education, security and housing & utility services.

 

 

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Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and intended to be covered by the safe harbours created thereby.

Those forward-looking statements include, but are not limited to:

* Assessment of Rostelecom's PJSC (the Company) future operating and financial results as well as forecasts of the present value of future cash flows and related factors;

* The Company's plans to take ownership stakes in other organisations;

* the Company's anticipated capital expenditures and plans to construct and modernize its network;

* the Company's expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing;

* the Company's plans with respect to improving its corporate governance practices;

* the Company's expectations as to its position in the telecommunications market and forecasts on the development of the market segments within which the Company operates;

* economic outlook and industry trends;

* the Company's expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company's activity;

* other statements regarding matters that are not historical facts.

 

Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:

* risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;

* risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies;

* risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company's services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market;

* technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies;

* other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company's Annual Report and the Company's other public filings.

 

Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances upon the annual report publication or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.

 

Note: This announcement contains inside information in accordance with Article 7 of EU Regulation 596/2014 of November 10, 2014

Full name and position making the announcement - Ekaterina Ustinova, IR Director.