Slide 1: Investor Presentation based on FY 2019
Investor Presentation based on FY 2019
Slide 2: Investment highlights
Investment highlights market leader in Broadband & IPTV in Russia Digital OF SJ transformation o”Vv opportunity upside Dp? market leader in Data centres & laaS in Russia Exposure to markets with high growth potential revenue growth in mobile market by Tele2 Russia Attractive dividend policy based on
Slide 3: Transforming into provider of digital services
Transforming into provider of digital services Revenue structure transformation 2019 2018 2017 2016 2015 WA 16% 18% Content & Digital Services WEA 55% A8% 18% EXAM 44% 20% 20% WEA 39% YA 36% Revenue (RUB bn) @ 337.4 <__ +5.4% @ Total revenue, RUB bn @3202 Content & Digital services +4.9% I Broadband
Slide 4: Attractive dividend policy for 2018-2020
Attractive dividend policy for 2018-2020 Management will recommend a payment of RUB 5 per share for FY2019 >75% 2 NE 5Ox< 2 <100% of Free Cash Flow per ordinary share of Net Income
Slide 5: Key revenue drivers
Key revenue drivers
Slide 6: Leadership in core market of broadband services
Leadership in core market of broadband services 4 122mn2% 41% © broadband b2c market share in subscribers broadband b2c ") 11 mn ain 38% 0 broadband & VPN market share in b2b subscribers broadband b2b ") Broadband subscribers connected by fibre 366 mn fat households covered by fibre (out of 55 mn) 2
Slide 7: Unique proposition of pay TV services
Unique proposition of pay TV services 4 10.4 mG) 36% (9 +6 1% pay TV subscribers market share in pay TV") revenue growth from TV for Business in 2019 incl. fe) 5.6 mn 73% © IPTV subscribers market share in IPTV ") Revenue 11%) 3y CAGR = 16% 7
Slide 8: VAS & Cloud services as the main revenue driver
VAS & Cloud services as the main revenue driver VAS & Clouds revenue structure 2019 S27 TOLSINN 28 2016 NNIZS2UNNZ2N, , 369 8 2017 SOMES), 26.0 2016 MOINES» 18:2 6 SmartCity (incl. E-Government) { Videosurveillance [ll Data centres & Clouds Other VAS yoo Ae %OV VAS & Clouds revenue increase 43% A2%
Slide 9: Leadership in fast-growing data centres and cloud services
Leadership in fast-growing data centres and 4 cloud services #1 in Data centres (2) _ | #1 player with 11.5k racks following DataLine + 5 O % anil] — acquisition in 2020 5% Revenue growth in 2019 from data ™\ I Rostelecom centers and cloud services") 1194 Dataline ? 6 ° Bi coterate 58% 7 I DataPro a
Slide 10: Active development of Smart City projects
Active development of Smart City projects +50% >250k > Revenue growth yoy from Video cameras installed Smart City projects in 9 regions Revenue (RUB bn) 2019 347 2018 23.2 Sik OF 56 < complexes of photo and Regions covered by 112 video recording of traffic Hot Line system violations in 47 regions 23
Slide 11: Rapid expansion of information security services
Rapid expansion of information security services 24x ©) limn (4 867bn@ > >2ka Revenue growth from Cyberattacks repelled Daily average security Clients across Russia information security services in 2019 events (40k servers and 1.2k services under constant protection) e "
Slide 12: Other strategic priorities
Other strategic priorities
Slide 13: Delivering on 'Digital Economy' program
Delivering on ‘Digital Economy’ program 4 Tak 4 Settlements connected under the Bridging the Digital Divide project (85k km fibre optic completed) BDD project financials 2015- 2019 "), RUB bn 59.2 | 278 | Operating Cash CAPEX Income Target-2024: 14k settlements 64 mi @ Users of the state E- services
Slide 14: Tele2 Russia: best operational dynamics...
Tele2 Russia: best operational dynamics... Solid growth in subscriber base with the best NPS in the industry (42% with margin > 10 p.p. from nearest competitor) Subscriber base, mn +14% | 446 42.3, 40.6 39.0 l | 2016 2017 2018 2019 + 2 p.p. Market share increase over 3 years with 45 mn subscribers M
Slide 15: .. backed up by outstanding financial results
.. backed up by outstanding financial results Highest revenue growth in the industry Strong growth in profitability and net profit Improving leverage amid accelerated network development Revenue, RUB bn EBITDA Net debt / EBITDA reported, x +16% CAGR 230 143.2 163.3 105.9 I | 2016 2017 2018 2019 40%
Slide 16: Synergies
Synergies Revenue Increased competitiveness through the development of converged services Expanding the ecosystem of products and services 5G network development Strategy update of the Unique nation- Additional income wide convergent since convergent offer like no other subscribers bring in Russia h
Slide 17: Additional data
Additional data
Slide 18: Market size
Market size ") Structure Leading positions in the broadband market 4 b2c b2b 147 33 mn 55 2 mn RUB bn subscribers RUB bn subscribers Revenue Subscribers Revenue Subscribers BB Rostelecom {Mi ER-Telecom @ wuts 42% () VEON Others 39% 2019 2018 \ 2017 we 2015 TMT: Itin: 18
Slide 19: Market size
Market size ") Structure Strong expansion in the pay TV market 4 pay Wee incl. IPTV 104. 45 mn 32 9 mn RUB bn subscribers RUB bn subscribers Revenue Subscribers Revenue Subscribers BB Rostelecom 1% 18% fl ERTelecom 30% 23% 6% mts 9 42% 22% reff 16% lm VEON 9 9 9 \ 59% Others 30% 9 1 L% 14% 60% — 201
Slide 20: Key financial highlights
Key financial highlights RUB bn Revenue Growth, % Content & Digital Services revenue Growth, % OIBDA ') OIBDA margin, % Net Profit Net Profit margin, % Free Cash Flow CAPEX excl. state programms CAPEX / Revenue excl. state programms Net Debt Net Debt / OIBDA 2016 297.4 0.0% 129.4 10.5% 96.8 32.5% 12
Slide 21: Increasing operating efficiency
Increasing operating efficiency Targets-2022: Personnel +40% + 1% i Increase in staff productivity Revenue per employee (RUB mn) 2019 a 2.7 2018 ttt 2.5 2017 23 = Crain Headcount optimisation Number of employees (k) 2019 126.9 2018 128.6 207 es 133.7 6 BA — fe) Zo 20° Real estate portfolio optimisat
Slide 22: Stable leverage
Stable leverage Gross & net debt 1.8x 1.9x 1.9x 2.0x ° ° ° 241.2 1871 191.4 204.3 75 1 1867 2a 2016 2017 2018 2019 Debt structure by type 3% 27% 70% I Gross debt, RUB bn I Net debt, RUB bn @ Net debt / OIBDA, x 1 Loans BB Bonds Other Debt structure by maturity 2019 2020 2021 2022 2023 2024 es 35%, n
Slide 23: 2020 guidance
2020 guidance not including the acquisition of Tele2 Russia and DataLine Revenue OIBDA Cash CAPEX growth growth 5% > 5% /0- 19 RUB bn (excl. sponsored state programmes) By providing this outlook, we reserve the right to revise or update it at any subsequent period in case of events which, in our opi
Slide 24: Ownership structure of ordinary shares
Ownership structure of ordinary shares Free-float 28.6% Rosimuschestvo 38.2% State share: 50%+1 share Rostelecom Mobitel j 0.4% Number of ordinary shares = 3,282,997,929 VTB Bank & —_ ves consortium 3.4% 21.0% VTB Bank (under the shareholder agreement) 8.4% 24
Slide 25: Balance sheet
Balance sheet RUBbn 2016 2017 2018 2019 RUB bn 2016 2017 2018 =——.2019 ASSETS EQUITY AND LIABILITIES Non-current assets Equity Property, plant and equipment 343.667 348.430 373.839 401.516 Share capital 0.093 0093 0093 0.093 Investment properties 0.181 0.169 0172 0.181 ‘Additional paid in capital 0.
Slide 26: Profit & loss statement
Profit & loss statement RUB bn 2016 2017 2018 2019 19/18 Revenue 297.446 305.329 320.239 337.421 5.4% Operating expenses (257.610) (267.444) (284.439) (303.569) 67% Wages, salaries, other benefits and payroll taxes (90.340) (93.381) (97.360) (106.193) 9.1% Depreciation, amortization and impairment l
Slide 27: Cash flow statement
Cash flow statement RUB bn. Cash flows from operating a Profit before income tax Depreciation, amortization and impairment losses Gain/{Loss) on disposal of PPE and intangible assets Impairment loss of financial assets measured at amortised cost (Gain)/Loss from associates and joint ventures Finance
Slide 28: Revenue structure
Revenue structure RUB bn By services: Broadband Internet TV services Fixed telephony Wholesale services Rent of channels Interconnect and traffic transit VPN Rent & maintenance of telecommunication infrastructure VAS & Clouds Other telecommunication services Other non-telecommunication services % of
Slide 29: Operational data
Operational data SUBSCRIBERS, mn Local telephony B2C B2B Access B2C: Broadband B2B: Broadband + VPN B2B: Broadband Broadband by technology xDSL FITx xDSL FITx Pay IV IPTV Cable TV IPTV Cable TV Mobile (MVNO with Tele2) ARPU, RUB Access B2C: Broadband B2B: Broadband + VPN incl. Broadband FTTx B2C 828
Slide 30: Additional metrics
Additional metrics OIBDA RUB bn Operating profit Depreciation, amortization and impairment losses Expenses related to long-term incentive programme Expenses related to pension program subject to adjustment OIBDA OIBDA margin FREE CASH FLOW RUB bn Net cash from operating activities Purchase of PPE an
Slide 31: Disclaimer
Disclaimer By attending any meeting where this presentation is made, or by reading any part of this presentation, you acknowledge and agree to be bound by the following: This presentation has been prepared by PJSC Rostelecom (the “Company’). This presentation is strictly confidential to the recipien
Slide 32: Contacts
Contacts Investor relations Office: +7 (499) 995 9780 E-mail: ir@rt.ru Web: www.company.rt.ru/en/ir/