OREANDA-NEWS. June 20, 2011. Rostelecom (MICEX: RTKM, RTKM-002D - RTKM-017D, RTKMP; RTS: RTKM, RTKMP; OTCQX: ROSYY) (the “Company”), Russia’s national telecommunications operator, today announces that its Board of Directors has approved changes to the employee long-term incentive programme by launching an additional stock option programme amounting to RUB 3.5 billion. 39,554,794 of Rostelecom preferred shares, comprising 16.3% of total preferred shares or 1.2% of total number of Rostelecom shares, which are currently held by Mobitel LLC, a subsidiary of Rostelecom, will be used to implement this programme.

The two-year employee stock option programme started on June 9, 2011, and consists of two one-year stages. 50% of the programme will be implemented by the end of each stage.

The exercise option price corresponds to the current market price of Rostelecom’s preferred shares.

This additional option programme supplements the existing incentive programme of approximately 3.5% of the Company’s ordinary shares. The existing programme was launched in the summer of 2010 to provide further motivation to Rostelecom’s managers, as well as managers of the inter-regional telecom companies, recently merged with Rostelecom, and members of Svyazinvest’s senior management  who actively participated in the reorganisation process.

The number of employees that can participate in the long-term incentive programme has also been expanded, reflecting the changes in Rostelecom’s management team as part of the Company’s reorganisation.

Sergei Pridantsev, Chairman of the Nomination and Remuneration Committee, commented: “The expansion of our incentive programme will provide further motivation to our employees as they work towards generating growth for the Company and its shareholders. The changes also reconcile the interests of the Company’s shareholders, investors and employees who are responsible for executing the Company’s recently approved development strategy.”