Rostelecom gets RUB 7.7 bn investment from RDIF and Deutsche Bank

Rostelecom OJSC, Russia’s national telecom operator has announced that the Russian Direct Investment Fund (RDIF) and Deutsche Bank are jointly investing RUB 7.7 billion.

The investments will be directed towards both the company’s future development and to strengthening its market position. The deal has received all the necessary approvals from Rostelecom, RDIF and Deutsche Bank.

As a result of the deal, the investors will acquire 72,187,366 ordinary Rostelecom shares from its subsidiary LLC MOBITEL. The structure of the deal will also involve Rostelecom signing call and put options to entitle the Company to a portion of an increase in share value if the share price rises, and investors will be protected if the share price falls. In addition, the option contracts do not infer the delivery of shares if the option is exercised.

Sergey Kalugin, president, Rostelecom said, “We are delighted that investors as prestigious and well-established as the RDIF and Deutsche Bank share our belief in Rostelecom’s potential for growth. Attracting long-term partners is a vital part of implementing Rostelecom’sambitious plans and the deal serves as a positive signal for other top tier investors who may also look to participate in our growth prospects.

“The sale of our treasury shares helps to improve Rostelecom’s investor base, and the proceeds generated will be used to reduce the Company’s leverage, and further strengthen our market position. We have also ensured that Rostelecom will continue to benefit from any additional upside as the disposed treasury shares appreciate in value,” added Kalugin.

Kirill Dmitriev, general director, RDIF said, “Against the backdrop of growth in the Russian economy, demand for reliable networks and ultrafast broadband infrastructure from individual customers and businesses will increase. Now is therefore the time to invest in the telecommunications sector, and recent reforms to Rostelecom’scorporate governance practices and its development leave the Company perfectly positioned to capture the growth in the sector, particularly as Russia looks to reach infrastructure capacity.”

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