OREANDA-NEWS. January 20, 2015. Rostelecom OJSC (MOEX - RTS: RTKM, RTKMP; OTCQX: ROSYY) (“Rostelecom” or the “Company”), Russia’s national telecommunications operator, today announces that its Board of Directors has approved a deal to acquire a controlling stake in LLC Data Storage Centre (operating under the SafeData brand), Russia’s largest provider of commercial data centres, traffic exchange service and content delivery.

The acquisition will enable Rostelecom to accelerate its development of a national content storage and distribution network. This includes a federal geographically distributed network of data centres, which combines communication channels, traffic exchange points, content delivery systems, as well as systems to protect against network attacks and traffic monitoring. As a result of the deal, Rostelecom will become a leading player in the Internet exchange points (IX) and content delivery (CDN) segments. It will also strengthen the Company’s position in the data centre market, as Rostelecom will become Russia’s second largest provider with a 12% consolidated market share[1] following the completion of the acquisition.

The deal has been structured in two stages:

During stage one, Rostelecom will acquire 5.4% of the share capital of LLC Data Storage Centre for RUB 104.2 million;

During stage two, Rostelecom will add RUB 1,728.9 million of cash to LLC Data Storage Centre’s share capital. As a result, Rostelecom’s stake in LLC Data Storage Centre’s share capital will increase to 50.1%.

The volume of information being stored globally is increasing exponentially and is driving growth in the data storage and distribution market. Other factors include an increase in cloud service computing capacity, the complexity of telecoms operators’ interworking model, as well as increasing demands for reliable and timely delivery of digital content. A law requiring companies to hold data on Russian users within the Russian Federation also makes this segment attractive.

Sergey Kalugin, President of Rostelecom, commented: “Acquiring a majority share in SafeData will enable Rostelecom to strengthen its presence on the data centre market and establish a leading position in the exchange points and content delivery segments. As a result of the deal, Rostelecom will quickly build up national-scale operations in the content storage and distribution market. The level of growth and promise offered by the marketplace makes its entry a logical step for Rostelecom. Furthermore, the business fits in with our overall strategy and SafeData is uniquely positioned, as the only player in the market to combine data processing centres, traffic exchange (IX) and content delivery (CDN) into its business. This acquisition will allow us to present our clients with an integrated offering and make us the market leader in providing data services.”
________________________________________
[1] The consolidated market share by revenue is the sum of the market shares of Rostelecom, MMTS-9 and SafeData based on 2013 data from IKS-Consulting