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Russian fund joins with Deutsche Bank in $237.1 mln telecom deal

The Russian Direct Investment Fund has partnered with Deutsche Bank in an investment in Russia’s largest telecommunications company Rostelecom. The fund and Deutsche Bank will invest a total of $237.1 million, which will be used to develop and strengthen Rostelecom’s market position.

Press Release

The Russian Direct Investment Fund (RDIF) and Deutsche Bank, one of the leading international banks, made a joint investment in Russia’s largest telecommunications company, Rostelecom. The two parties will invest a total of $237.1 million USD on a parity basis, which will be used to further develop and strengthen the company’s market position. The transaction has received the necessary approval from Rostelecom, as well as the governing bodies of RDIF and Deutsche Bank.

As a result of the deal, the two investors will purchase 72,187,366 Rostelecom ordinary shares from its subsidiary company MOBITEL. The structure of the deal
also contains agreements relating to call and put options, according to which Rostelecom is entitled a portion of the profits from an increase in value of shares.

As part of the same terms investors will receive protection against a decrease in the price of the shares. The struck agreements do not assume physical settlement.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund, said: “Sustained growth in the Russian economy means demand among consumers and
businesses for reliable and ultra-fast broadband will continue to increase. It is therefore the right time to invest in the telecommunications sector. This deal
capitalizes on the recent changes in Rostelecom’s corporate governance and development strategies and will be another important step in realizing Russia’s
infrastructure potential”.

Sergey Kalugin, President of Rostelecom, said:

“We are confident in the potential of our company, so it was important for us to retain the right to benefit from upside deriving from an increase in the share price.
On the other hand, we are committed to improving Rostelecom’s investor base and attracting high-profile investors. We have therefore decided to offer treasury shares to help achieve this outcome. We are very pleased that we have received interest from such prominent investors as RDIF and Deutsche Bank, who are both wholly focused on further improving the value of the company. Attracting long-term partners is a key part of Rostelecom’s strategy to successfully achieve its ambitious goals and, I hope, will serve to attract other qualified investors.”

The Russian Direct Investment Fund (RDIF) was founded in June 2011 to make equity investments, primarily within the Russia Federation. RDIF’s management
company is a 100 per cent subsidiary of Vnesheconombank. In each investment it makes RDIF is mandated to secure co-investment that as a minimum matches its capital investment, thus acting as a catalyst for direct investment into the Russian economy. Additional information can be found at:

Rostelecom is a dynamic, fast-growing company and Russia’s largest telecommunications group, providing services across all parts of the sector
throughout the country. The company is the market-leader in Russia for FBA and pay television, with over 9.5 million broadband services subscribers and more
than 6.8 million users of Rostelecom pay TV, of which over 1.7 million use the unique national channel, Interactive TV.

The company is also one of Russia’s largest mobile operators actively developing a new generation of wireless networks and currently has more than 13.6 million mobile subscribers. It is also the market leader in telecommunication services for the Russian Government and corporate users of all levels, with nationwide recognition as a technological leader in innovative solutions in e-government, cloud computing, health, education, security and housing and communal services. The stable financial position of the company is reflected by strong credit rating agency scores of BBB- (Fitch) and BB+ (Standard & Poor).
Additional information is available at: