ROSTELECOM ACQUIRES 100% OF CHITA-ON-LINE LTD
Moscow, Russia – August 3, 2012 – Rostelecom OJSC (MICEX - RTS: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces that it has signed an agreement to acquire a 100% stake in Chita-on-Line Ltd. (“Chita-on-line”), one of the largest alternative operators in Chita. As part of the deal, AMT CJSC (“AMT”) and Westelecom JSC (“Westelecom”), wholly-owned subsidiaries of Rostelecom, will acquire 100% of Chita-on-Line shares from private investors. The deal for both operators will not exceed RUB 140 million (approximately US$ 4.3 million1), and part of the payment will be deferred.
Chita-on-Line provides FTTB and ETTH broadband access and pay TV services, along with other telecom services. The company operates its own optical network of over 228.8 km covering the entire city area. It has also minor network intersections with Rostelecom’s branch in Chita.
Chita-on-Line has demonstrated high growth rates in its operational and financial results. The operator had 8,100 broadband and 4,900 pay TV subscribers as at May 31, 2012, up 18% and 22%, respectively, compared to December 31, 2011. The operator has a local broadband market share of approximately 11% and 10% of the pay TV market share in Chita2. The company generated revenue of RUB 61.7 million with an average 2009-2011 CAGR of 33%. EBITDA increased by 26% year on year to RUB 16.6 million in 2011.
* * *
For more information please visit www.rostelecom.ru or contact:
Investor Relations Department
Tel. +7 (499) 995 97 80
* * *
Rostelecom (www.rostelecom.ru) is Russia’s national telecommunications operator and now also includes the regional incumbent telecommunications operators (CentreTelecom, SibirTelecom, Dalsvyaz, Uralsvyazinform, VolgaTelecom, North-West Telecom and Southern Telecommunications Company) and Dagsvyazinform. Rostelecom has the largest domestic backbone network (approximately 500 thousand km) in Russia. The Company holds licences to provide a wide range of telecommunications services (telephony, data, TV and value-added solutions) to residential, corporate and governmental subscribers and fourth party operators across all regions of the Russian Federation. The Rostelecom brand is one of Russia’s ten most trusted brands (source: Romir market research).
Rostelecom’s ordinary and preferred shares are traded on the MICEX-RTS (RTKM, RTKMP) stock exchange, and its depository receipts are traded over-the-counter in the United States on the OTCQX under the symbol ‘ROSYY’. Rostelecom is majority owned (55.1% of ordinary shares) by the Russian Government and has a free float of less than 40% of the outstanding ordinary shares and over 70% of the outstanding preferred shares. Rostelecom was assigned a ‘BBB-’ and ‘BB+’ international credit ratings by Fitch Ratings and Standard&Poor’s respectively, both with a ‘Stable’ outlook. Rostelecom had 28.1 million local fixed-line voice subscribers, 12.7 million mobile voice subscribers, 8.4 million fixed-line broadband subscribers and 6.0 million pay-TV subscribers at the end of 1Q 2012. The Group generated RUB 84.4.0 billion of consolidated revenues, RUB 34.8 billion of OIBDA (41.2% of revenues) and RUB 14.6 billion of net income for the three months ended March 31, 2012.
* * *
Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby.
Those forward-looking statements include, but are not limited to:
• Management’s assessment of the Company’s future operating and financial results as well as forecasts of the present value of future cash flows and related factors;
• 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 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 after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.
1 Central Bank of Russia exchange rate as at August 2, 2012
2 Company’s estimates