OREANDA-NEWS. February 10, 2014. Rostelecom OJSC (Moscow Exchange: RTKM, RTKMP; OTCQX: ROSYY), Russia's national telecommunications operator (“Rostelecom” or the “Company”), announces that it has signed a framework agreement with Tele2 Russia that will lead to the integration of their mobile assets (“framework agreement”).

The framework agreement, which was previously approved by Rostelecom’s Board of Directors, outlines the terms and conditions surrounding the contribution of Rostelecom’s mobile subsidiaries and its integrated mobile assets into the share capital of the joint venture, LLC T2 Rus Holding (“JV”). Rostelecom’s Board of Directors approved the decision to participate in the JV on December 12, 2013.

The JV sees Rostelecom’s mobile assets and Tele2 Russia’s assets combine to form a leading mobile operator in Russia. Rostelecom is transferring assets with an enterprise value of approximately USD3.5 billion to the JV.

In accordance with the framework agreement, the first stage of the deal is expected to be closed in spring 2014. The first stage will see Rostelecom contribute the shares of its mobile subsidiaries to the JV’s share capital, as well as part of its integrated mobile assets (the assets of the “start-up regions”), including Moscow and St Petersburg. Rostelecom will have a 45% share of votes and a 26% economic share. In addition, the two parties will enter into MVNO agreements, licensing agreements regarding the two companies’ brands, as well as a range of agreements for the transitional period. According to these agreements, Rostelecom will provide services for the JV during a certain period of time after the first stage has been completed. The first stage will also involve signing a participation agreement defining matters which include the JV’s corporate governance system.

The second phase of the transaction will be completed within the year. During the second stage of the deal, Rostelecom will contribute 100% of RT-Mobile shares to the JV’s share capital. Rostelecom will transfer its integrated mobile assets, allocated as part of the Company’s reorganisation approved at the AGM on December 30, 2013, to RT-Mobile. Following the completion of the second stage of the deal, Rostelecom will be able to increase its share in the JV’s share capital to 45%.

Sergei Kalugin, President of Rostelecom, commented: “This deal marks a key milestone in the implementation of Rostelecom’s mobile strategy. The Company’s mobile assets complement Tele2 Russia’s both in terms of geographical reach and in terms of combining Tele2 Russia’s successful operating model with Rostelecom’s extensive portfolio of frequency spectrums.”

Maria Florentieva, Vice President of Strategic Planning and Investor Relations, commented: “The framework agreement defines the operating procedure for Rostelecom to integrate its mobile assets into the JV. It also outlines the operational interaction of the two parties in the interim period before the deal is closed, which allows us to launch commercial integration as quickly as possible without waiting for the deal to be fully completed.”