ROSTELECOM PJSC (RKMD)
Rostelecom acquires LUKOIL's telecommunication arm
Moscow, Russia - November 12, 2020 - Rostelecom Group (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest integrated digital service provider in Russia, today announces that it has signed a legally binding agreements to acquire 50.1% LUKOIL INFORM, the telecommunication business of LUKOIL - one of the largest vertically integrated oil and gas companies in the world. Under the agreements, at the time of signing, Rostelecom will acquire 50.1% shares in the company, with call/put options to increase Rostelecom's participation to 100% in 2023. The total deal value will depend on LUKOIL-INFORM's financial performance and will amount to no less than RUB 2 billion, including the exercising the call/put options.
LUKOIL-INFORM operates the telecommunication infrastructure for oil and gas exploration, production, processing, marketing and distribution across all LUKOIL's branches in 53 regions in Russia. In line with the agreement, LUKOIL will retain the existing contractual commitments for LUKOIL-INFORM over the next five years. The deal will further solidify Rostelecom's B2B offering through the formation of a competence center for digital development in oil and gas sector. This in turn will open up further opportunities to promote Rostelecom's comprehensive digital services across LUKOIL's wider corporate footprint.
Anna Shumeiko, Senior Vice-President, the Chief of Staff of the President of Rostelecom commented: "The acquisition of LUKOIL's telecommunications business will strengthen our proposition for corporates. The wider synergy effects of this fusion will yield new opportunities for collaboration with the largest oil and gas major, including in the area of IoT technologies. We have already started to explore new innovation projects and are looking forward to learning from colleagues at LUKOIL to further strengthen our digital skills that the oil and gas sector will benefit from".
Vladimir Kirienko, First Vice-President of Rostelecom commented: "The ongoing digital transformation and the growing demand for cloud coming from large industrial companies in the past few years, prompts them to hand over telecommunications divisions to communication operators. This trend has proved efficient both commercially and technologically, as companies don't need to invest in setting up large scale IT infrastructures and can rely on operators' ecosystems. The collaboration with LUKOIL will enable us to optimise and expand the range of services for the entire group, and going forward, build up our own competencies and enhance the digital offering for continuous processing industries".
Further information is available at https://www.company.rt.ru/en/ir/news_calendar/.
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PJSC 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 5.9 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 nine months of 2020, the Group generated RUB 383.9 bln of revenues, RUB 149.6 bln of OIBDA (39% of revenue) and RUB 27.4 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-centres 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:
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:
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.
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