OREANDA-NEWS. Rostelecom OJSC (MICEX-RTS: RTKM, RTKMP; OTCQX: ROSYY) (the “Group” and the “Company”) Russia’s national telecommunications operator, today announced its IFRS consolidated financial results for the fourth quarter and twelve months ending December 31, 2012.

The Group’s revenues for 2012 amounted to RUB 321.3 billion, a year-on-year increase of 7% compared to 2011. The Group’s revenue mix is evolving with the contribution from Rostelecom’s growth segments, which include mobile communications, broadband and pay-TV. Rostelecom’s OIBDA margin was 36.9% in 2012, reflecting the active development of the Group’s mobile segment and the construction of 3G+ networks in 4Q 2012, as well as the increase in revenue from high-growth segments, though at lower margins than traditional segments, and the creation of reserves to compensate employees affected by the Group’s plans to reduce administrative personnel by up to 20% in 2013.

According to the Senior Vice - President of Rostelecom Pavel Zaitsev, ‘In 2012 all managers’ and employees’ efforts were focused on strengthening Rostelecom’s competitive position. We started to actively explore breakthrough areas of the business, such as – mobile broadband and pay-TV. So far, we have built 3G+ networks in 24 regions, 10 of which are already providing commercial mobile data transmission services to our subscribers. After the launch of our single interactive TV platform in May 2012, the service’s number of subscribers doubled to 1.4 million giving Rostelecom a 49% share of the Interactive TV market.’

KEY OPERATING HIGHLIGHTS:

Total number of households passed rose 6% year-on-year, reaching 33.8 million, of which 16.4 million (48%) were passed using FTTx technology

Total broadband subscriber base up 12% year-on-year to 9.2 million

The B2C subscriber base increased 12% to 8.5 million, of which the number of subscribers connected optically, increased 1.6 times year-on-year to 2.8 million (or 33% of the total subscriber base), giving the Company the highest rate of growth in the market in Russia. Rostelecom’s share of the B2C broadband markets is 40%.

Total Pay TV subscriber base increased 12% year-on-year to 6.6 million subscribers.

Out of the total subscriber base, the number of interactive TV subscribers more than doubled to 1.4 million, with the penetration of optical networks reaching 34%. Rostelecom’s share of the Interactive TV market is 49%.

Total mobile communications subscribers rose 4% year-on-year to 13.6 million.

The acquisition of SkyLink gave Rostelecom access to 3G licenses in 69 regions across Russia.

So far, 3G+ networks have been constructed and tested in 24 Russian regions, with commercial launches having taken place in 10 of those.

KEY FINANCIAL HIGHLIGHTS IN 2012:

Revenues up 7% year on year to RUB 321.3 billion

OIBDA up to RUB 118.6 billion

OIBDA margin of 36.9% compared with 37.5% a year earlier (without taking into account the non-monetary effect on Q4 2011 results due to reduced long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011).

Net profit of RUB 35.2 billion (RAS net profit is used as a basis for dividend calculation on preferred shares up to RUB 32.7 billion).

Capital expenditure6 of RUB 91.2 billion, representing 28.4% of consolidated revenues

Net debt7 of RUB 203.1 billion with a net debt / OIBDA8 ratio of 1.7x as at December 31, 2012.

KEY FOURTH QUARTER 2012 FINANCIAL HIGHLIGHTS:

Revenues up 4% year-on-year to RUB 82.6 billion

OIBDA up to RUB 24.6 billion with an OIBDA margin of 29.8% compared to 32.7% a year earlier (without taking into account the non-monetary effect on Q4 2011 results due to reduced long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011).

Net profit was RUB 4.6 billion.

Capital expenditure of RUB 27.7 billion, that is 33.6% of consolidated revenues.