OREANDA-NEWS. August 25, 2014. Rostelecom OJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, announces its consolidated financial results for the first half and second quarter of 2014 prepared in accordance with International Financial Reporting Standards (‘IFRS’).

FIRST HALF FINANCIAL HIGHLIGHTS FOR CONTINUING OPERATIONS (FIXED LINE BUSINESS)

Revenue from continuing operations grew 3% year-on-year in the first six months of 2014 to RUB 145.2 billion;

Net income of RUB 10.2 billion (RUB 14.4 billion in the first half of 2013);

OIBDA of RUB 51.3 billion compared to RUB 53.6 billion in the corresponding period of 2013;

OIBDA margin of 35.4% compared to 37.8% in the first half of 2013;

Capital expenditure of RUB 21.2 billion, or 14.6% of consolidated revenues. This represents a 26% year-on-year decrease (CAPEX was 20.3% of consolidated revenues in the first half of 2013);

Net debt4 of RUB 177.7 billion with a net debt/annualized OIBDA ratio of 1.7x as at 30 June 2014.

SECOND QUARTER FINANCIAL HIGHLIGHTS FOR CONTINUING OPERATIONS (FIXED LINE BUSINESS)

Revenue from continuing operations grew 2% year-on-year in the second quarter of 2014 to RUB 72.6 billion;

Net income of RUB 6.1 billion, compared to RUB 8.9 billion in the corresponding period of 2013;

OIBDA of RUB 26.2 billion (RUB 27.5 billion in the second quarter of 2013);

OIBDA margin of 36.0% compared to 38.7% in the second quarter of 2013;

Capital expenditure of RUB 13.6 billion (18.8% of revenue), which is 115% higher than the corresponding period of 2013, when CAPEX represented 8.9% of revenues.

Sergey Kalugin, Rostelecom’s President, commented: “We continue to make good progress in implementing our strategic initiatives. Improvements have already been made in a number of areas and there are signs of qualitative changes taking place within the Company as we aim to transform our business. The quality of our customer service is improving, our network infrastructure is being modernised and our product line is developing as a result of improving packages and attractive tariff plans.

We have also made significant progress in our mobile strategy by completing all the legal formalities to form a JV with Tele2 Russia several months ahead of schedule. This is a clear signal to the market that we are focused on execution and we are delivering on our objectives efficiently. We certainly still have a lot of work to do, but our recent achievements give us optimism and confidence that we will be able to rise to the challenge and to fulfil the goals set out in our strategy.”

Kai-Uwe Mehlhorn, Senior Vice-President and Chief Financial Officer, added: “We achieved revenue growth in our core business on the back of larger broadband and pay-TV subscriber bases, and the video surveillance project we undertook during the Unified State Exam. This is an excellent result given the reduced demand for traditional telecommunications services. We have also significantly reduced our debt burden, which is one of our strategic priorities, particularly at a time of volatility in the capital markets and increasing cost of financing. This will ease pressure on the Company’s financial expenses and provide opportunities for net profit to grow in the future. Despite the current complex economic situation and macro-economic uncertainty, we maintain our financial forecasts for 2014, as our current results and our expectations for the second half of the year give us confidence that we will fulfil our plan for 2014.”