OREANDA-NEWS. August 2, 2012. Rostelecom OJSC (MICEX - RTS: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announces that it has completed the acquisition of a 100% stake in Sky Link CJSC (“Sky Link”). As part of the deal, Mobitel LLC (“Mobitel”)[1], a subsidiary of Rostelecom, has acquired a 50% stake in Sky Link from Svyazinvest in exchange for 1.91% of Rostelecom ordinary shares[2]. As a result, Mobitel’s effective ownership in Sky Link now amounts to 100%[3]. The 1.91% stake in Rostelecom has been valued at RUB 9.4 billion, or RUB 167 per share.

Sky Link currently owns licences in 76 Russian regions, covering over 90% of the total Russian population, which includes Moscow, St. Petersburg and several other major Russian cities. Sky Link’s licences enable the Company to provide services using CDMA-450 and UMTS-1900/2100 technologies in 65 regions, CDMA-450/2000 in 3 regions, GSM-1800 in 45 regions and GSM-900 in one region.

Alexander Provotorov, President of Rostelecom, commented: “The strategic acquisition of Sky Link enables us to strengthen our competitive position and increase the value of our Company. This was the last asset available in the market that could offer such extensive network coverage and unique frequencies. Sky Link is also the fourth operator to have obtained the remaining 3G frequencies in Russia. In addition, the consolidation of Sky Link’s assets marks an important landmark in our complex reorganisation process, which merges Svyazinvest with Rostelecom. The aim of this process is to eliminate any cross-ownership between the two companies, to simplify our shareholder structure and help attract interest from a broader range of investors.”

As a result of the transaction, Svyazinvest will increase its stake in Rostelecom to 45.3%, while Mobitel will own 4.64% of Rostelecom ordinary shares and 12.6% of Rostelecom preference shares. These shares could be used by the Company during strategic M&A deals, or they may be cancelled.

Ernst & Young LLC conducted an independent valuation of Sky Link shares. Avers Group LLC conducted an independent valuation of Rostelecom ordinary shares.

Further stages of the reorganisation process, which forms part of Svyazinvest’s merger with Rostelecom, can be found in Rostelecom’s reorganisation plan, which is available on the Company’s corporate website at http://www.rostelecom.ru/ir/reorganization/.

[1] Rostelecom owns a 99.9% stake in Mobitel

[2] The 1.91% stake represents 56,287,425 ordinary registered uncertified shares

[3] MC-Direct CJSC, a wholly-owned subsidiary of Sky Link, owns the remaining 50% stake in Sky Link