ROSTELECOM PJSC: Rostelecom acquires national media operator Synterra Media

Rostelecom acquires national media operator Synterra Media

Moscow, Russia - October 22, 2020 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest integrated digital service provider in Russia, today announces that it has signed a legally binding agreement to acquire 100% of Synterra Media, an operator of national media services  and subsidiary of MTT Group, for RUB 1.5 billion with a deferred payment scheme subject to the renewal of existing contracts. The deal will strengthen Rostelecom's leading position in the terrestrial delivery of video content (contribution and distribution segments).  The consolidation of Synterra Media will facilitate the development of new business solutions and technological resources to media companies. Synterra will join Rostelecom as a subsidiary company, while retaining key staff and competencies.

Synterra Media is one of the key players in the ground delivery and distribution of media content, specialising in the following areas:

• the delivery of video content and connectivity services between event venues and the control rooms of TV broadcasting companies (contribution segment);
• the submission of TV programming to distribution networks and Pay TV operators in Russia and abroad of TV programmes from paid TV operators in Russian and abroad (distribution segment);
• the provision of media centre services; and
• the provision of dedicated communication channels and other services.

Synterra Media's services are used by some of the largest TV production companies in Russia[1], as well as pay TV providers[2], international media networks[3], regional TV companies and radio stations. The Company's revenues in 2019 amounted to around RUB 800 million and an EBITDA margin of over 40%.

Anna Shumeiko, Senior Vice-President, the Chief of Staff of the President of Rostelecom commented: "Synterra Media is a quality company with financial stability and a stable business model. This is a landmark deal in Russia which sees the strategic consolidation of terrestrial TV-signal delivery and distribution in the B2B segment. Rostelecom's dominant position and share in this segment provides huge potential for growth in the adjacent services market for broadcasters. We expect the integration of Synterra to realise significant synergy, which we expect will advance the business unit's performance."

Valery Ermakov, Vice President for B2B, commented: "Rostelecom has history in delivering TV content to the market and the acquisition of Synterra Media, a nationwide operator of media services, represents a logical step in the development of the B2B segment business. The acquisition essentially provides Rostelecom with the ability to establish competency that creates a "one-stop-shop" for a range of technological services to the media market."  

Further information is available at https://www.company.rt.ru/en/ir/news_calendar/.

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Rostelecom is the largest integrated digital services and products provider, operating in all segments of the telecommunications market in Russia. The Company serves millions of households, state and private enterprises across the country.

Rostelecom is Russia's undisputed market leader, providing high-speed Internet access and pay-TV. The total number of broadband users stands at over 13.4 mln users, it has more than 10.7 mln pay-TV customers, over 5.8 mln of which are subscribed to Rostelecom's IPTV services. Tele2 Russia, a Rostelecom subsidiary, is a major player in the mobile market with over 44 mln subscribers and the industry-leading NPS, a customer satisfaction benchmark.

During the first six months of 2020, the Group generated RUB 248.9 bln of revenues, RUB 95.9 bln of OIBDA (38.5% of revenue) and RUB 15.4 bln of net income.

The Group is the leading provider of telecommunications services to government bodies and corporates of all levels.

Rostelecom is a key strategic innovator that provides solutions in the following fields: E-Government, cybersecurity, data-centers and cloud computing, biometry, healthcare, education and housing & utility services.

The Group's stable financial position is confirmed by its credit ratings. Rostelecom has been assigned 'BBB-' and 'BB+' international credit ratings by Fitch Ratings and Standard & Poor's respectively, and AA(RU) by ACRA.

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Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and intended to be covered by the safe harbours created thereby.

Those forward-looking statements include, but are not limited to:

• Assessment of PAO Rostelecom's (the Company) future operating and financial results as well as forecasts of the present value of future cash flows and related factors;
• The Company's plans to take ownership stakes in other organisations;
• the Company's anticipated capital expenditures and plans to construct and modernize its network;
• the Company's expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing;
• the Company's plans with respect to improving its corporate governance practices;
• the Company's expectations as to its position in the telecommunications market and forecasts on the development of the market segments within which the Company operates;
• economic outlook and industry trends;
• the Company's expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company's activity;
• other statements regarding matters that are not historical facts.

Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:

• risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;
• risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies;
• risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company's services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market;
• technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies;
• other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company's Annual Report and the Company's other public filings.

Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances upon the annual report publication or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.

[1] Channel One Russia, VGTRK, NTV, Russia Today, TV Centre, Match TV, STS Media, MBs and NMG

[2] Tricolor TV, Orion Express, NTV+, GKS, MTS, Beeline, Megafon and R Telecom

[3] Eurovision, MX 1, Telstra, Globecast