ROSTELECOM PJSC: Rostelecom acquires a telecom operator in St. Petersburg

Rostelecom acquires a telecom operator in St. Petersburg

Moscow, Russia - July 25, 2019 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest digital service provider in Russia, today announces that its subsidiary Bashinformsvyaz ("Bashtel") has signed an agreement to acquire 100% stake in Prometey LLC ("the Company"), a communications operator in St. Petersburg and the Leningrad region.

Prometey has been providing services to corporate and state clients, as well as to individual customers since 2004.

The company operates its own fibre optics network which spans St. Petersburg and the Leningrad region, where it also possesses a strong market share in the B2B and B2G segments. Prometey has implemented a number of large-scale projects in both in St. Petersburg and the broader region, including projects carried out as part of the "Safe City" initiative. It has collaborated closely with the Government of St. Petersburg to assist with the set-up and maintenance of the Regional Automated Centralised Notification system. The provider's B2B/G client base consists of more than 1,600 organisations, most of which are business centres and commercial properties.

Over the last 3 years, Prometey has strengthened its position in B2C, securing its leadership in providing Internet and cable TV services for new build properties in the Murino area of the Leningrad region, serving about 20,000 households.

In 2018, Prometey's turnover amounted to RUB 430 million.

Prometey deal is in line with a strategic priority to develop Rostelecom's digital ecosystem and client services.

Anna Shumeyko, Senior Vice President and Chief of Staff of the Presidential executive office of Rostelecom, commented: "The acquisition will broaden the range of opportunities for Rostelecom to implement its innovative Smart City projects, and we will upsell Prometey's clients with a wide range of services for new-build properties through our multimedia platform Wink. The deal will also enable us to further promote our "Smart Home" and packaged mobile communications offerings across Prometey's customer base."

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PJSC Rostelecom is the largest digital service provider, operating in all segments of the telecommunications market in Russia, it serves millions of households, the state and private enterprises across the country.

Rostelecom is Russia's undisputed market leader, providing high-speed Internet access to over 13 million families and pay-TV services to more than 10.2 million families, over 5.4 million of which are subscribed to Rostelecom's IPTV services on a national level. Rostelecom's MVNO base is over 1.3 million users. The Company develops digital solutions for smart homes, online education, telemedicine and other services.

In the first three months of 2019, the Group generated RUB 78.7 billion of revenues, RUB 26.4 billion of OIBDA (33.5% of revenue) and RUB 5.6 billion of net income.

The Group is the leading provider of telecommunications services to government bodies and corporates of all levels with more than 1.0 million legal entities currently using Rostelecom's high-speed Internet services and VPN.

Rostelecom is a key strategic innovator that provides solutions in the following fields: E-Government, cybersecurity, data-centers and cloud computing, biometry, healthcare, education and housing & utility services.

The Group's stable financial position is confirmed by its credit ratings. Rostelecom has been assigned 'BBB-' and 'BB+' international credit ratings by Fitch Ratings and Standard&Poor's respectively, and AA(RU) by ACRA.

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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 PAO Rostelecom's (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.