Rostelecom · RUS:RTKM
Rostelecom — Investor Day (March 2018)
41 slides from Rostelecom's investor day presentation, Mar 21, 2018
Slide 1: Capital Markets Day
..recn CAPITAL MARKETS DAY ROSTELECOM March 21, 2018
Slide 2: Disclaimer
Rostelecom DISCLAIMER RT.RU | CAPITAL MARKETS DA\ 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 i
Slide 3: Speakers
\ Rostelecom SPEAKERS bare Cs A 14.00 - 15.00 Registration Management presentation 15.00 - 16. i . " 9:00 70:00 “New Opportunities in the Digital World Vladimir Kirienko First Vice President 16.00 - 16.30 Closing remarks and Q&A Sergey Anokhin Senior Vice President and CFO 16.30 - 17.00 Launch of th
Slide 4: New Opportunities in the Digital World
\ Rostelecom NEW OPPORTUNITIES IN THE DIGITAL WORLD Mikhail Oseevskiy, President and CEO
Slide 5: Rostelecom — A Clear Leader Across Key Markets: Households
ROSTELECOM — A CLEAR LEADER ACROSS KEY MARKETS HOUSEHOLDS 1200:SC 5 830 & 33 © min broadband min IPTV subscribers. ths MVNO min households subscribers subscribers +14% over 3 years +79% over 3 years +26% over 3 years cs Es = RT.RU | NEW OPPORTUNITIES IN THE DIGITAL WORLD
Slide 6: Rostelecom — A Clear Leader Across Key Markets: Business
ROSTELECOM — A CLEAR LEADER ACROSS KEY MARKETS BUSINESS 7 (G20 7630 5..3 coe ae oe he ind ths racks in data 33 a by fibre centres 88% over 3 years RT.RU | NEW OPPORTUNITIES IN THE DIGITAL WORLD
Slide 7: Rostelecom — A Reliable Partner to the State
ROSTELECOM — A RELIABLE PARTNER TO THE STATE ths settlements under the min State E-services Regions use Rostelecom BDD project portal users digital solutions: Medicine, Smart City, 112 RT.RU | NEW OPPORTUNITIES IN THE DIGITAL WORLD
Slide 8: Rostelecom — An Operator for Operators
ROSTELECOM — AN OPERATOR FOR OPERATORS hb 1Tb/s O20 56h G > S x Market share of Contracted within the Services for maintenance -::: traffic transit services Europe-Asia Transit of telecom operators’ ; project networks RT.RU | NEW OPPORTUNITIES IN THE DIGITAL WORLD
Slide 9: Rostelecom — A Technology Leader
Backbone network capacity, Tb/s ROSTELECOM — A TECHNOLOGY —" 137 LEADER = ME 10.6 2014 THE KAMCHATKA-SAKHALIN-MAGADAN SUBMARINE TRANSMISSION LINE PUT INTO OPERATION +46% 100%°03 17986 400™ Increase in backbone Backbone networks backup km network span Gb/s capacity data transmission capacity over 3 y
Slide 10: Rostelecom — Improvements in Internal Efficiency
ROSTELECOM — IMPROVEMENTS IN INTERNAL EFFICIENCY +21%© >17lm -16%42 =206 Increase in revenue per RUB bln Headcount optimisation RUB bln employee cost savings as a result of CF generated from the Revenue per employee, RUB min the efficiency improvement Number of employees, ths sale of real estate ove
Slide 11: Digital Economy Programme and Key Projects
TO THE STATE DIGITAL ECONOMY PROGRAMME | Information infrastructure core —) Information security |__ Personnel and education Smart City Vv Public administration APPLICATION =~} Healthcare Digitalisation of key economic sectors: energy, transport, agriculture and other 11 RT.RU | NEW OPPORTUNITIES IN
Slide 12: Strategic Agenda: A Digital Partner for Households, Business and the State
STRATEGIC AGENDA: A DIGITAL PARTNER FOR HOUSEHOLDS, BUSINESS AND THE STATE aarie SRS DEVELOPMENT TRAJECTORY Digital ecosystem fs: range of high quality telecom and digital services to meet the variety of customer needs oe" telecom operator A wide range of premium quality telecom services TELECOM ECO
Slide 13: Evolution of the Strategic Vision and Priorities
RT.RU | NEW OPPORTUNITIES IN THE DIGITAL WORLD Rostelecom EVOLUTION OF THE STRATEGIC VISION AND PRIORITIES STRATEGY 2018-2022 Developing Products & Technological lan Human Capital . Efficiency Services Ecosystems and & Platform 3? Development posey Increase coll STRATEGY Improving Customer Experienc
Slide 14: Key Pillars of the Updated Strategy
Vladimir Kirienko First Vice-President 01 KEY PILLARS OF THE UPDATED STRATEGY Developing Products & Services Ecosystems and Improving Customer Experience 14
Slide 15: Best Customer Experience
BEST i . CUSTOMER iar NPS sume EXPERIENCE x \_g= 9 Technical support SLA enhancement Higher speed Staff training connections for clients ie) NPS monitoring RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom 45
Slide 16: Focus on Clients and Their Needs
FOCUS ON CLIENTS AND THEIR NEEDS 16 RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 17: Friendly Ecosystem for Families
FREINDLY ear E CO SYSTE M FO R Fixed telephony FAMILIES G oS MVNO OTT video > Games Cloud software Video = surveillance E-Learning O Shopping Antivirus Financial services x E-Medicine éx 17 Insurance RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 18: Capturing the New Build Market
CAPTURING _ MiilinnncoiesaunnrieBu THE NEW os - ) Complex Video B U | LD MAR KET Surveillance = @ genre & IP-telephony a Smart Home © Smart Intercom > Smart Gate Bar 18 RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 19: One-Stop Shop Solutions for Business
Oo & 0 N E- STO P S H @) Pp Broadband Fixed telephony SOLUTIONS FOR O Information BUSINESS “ay Video Hosted PBX surveillance » ee i ate Communications 7 » Nees A eS ° WiFi Data centres & cloud solutions Corporate TV M2M 19 RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPER
Slide 20: Enhance Business Clients Segment
TO ENHANCE BUSINESS CLIENTS SEGMENT KS Focus on large business Ww Leadership in SMB market q Turnkey complex digital solutions 20 RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 21: Market Leader in Data Centres and Cloud Services
MARKET LEADER IN DATA CENTRES AND CLOUD SERVICES TARGET 2022 >10 +7042 ths racks market growth in 2018- 2022 NO1 i@: on data centres market RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 22: Information Security Service
ASA SERVICE oS SOC - monitoring and response 24/7 @ Threats assessment and penetration tests (2) Complex approach to information security Investments in client safety RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 23: Comprehensive IT Services Model
COMPREHENSIVE 4s, © IT SERVICES Provision of es computing security M O D E L infrastructure e Service ff solutions & services @ XaaS ee dard desktop 23 infrastructure RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom re: at connectivity
Slide 24: Operator with an Advanced Infrastructure
OPERATOR WITH AN ? Delivering turnkey infrastructure © 020 project development Gy, Enhancing transit backbone infrastructure 24 RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 25: Establishing Smart Cities
ESTABLISHING SMART CITIES a et & ~ 112 Hot Line lEengeray ast! asee Gen ciratarsy Urban intellectual transportation platform t 5 @) hy Ecology Revenue Growth from Smart City Projects by 2022 25 RT.RU | DEVELOPING PRODUCTS & SERVICES ECOSYSTEM AND IMPROVING CUSTOMER EXPERIENCE Rostelecom
Slide 26: Technologies for the Future: Key Investment Priorities
TECHNOLOGIES 0 F TH E FUTU R E Key Investment Priorities Tools Network MBA, syndicates Digital start-ups Venture Virtualisation and partnerships accelerator and digital investments sandbox __| Ay Artificial Intelligence Partnerships Fer) Fett] Eli) 1% (5%) of Revenue (CAPEX) will 5 Start U iti jevel
Slide 27: Key Pillars of the Updated Strategy
KEY PILLARS OF THE UPDATED STRATEGY Sergey Anokhin Senior Vice President and CFO O02 Human Capital Development > @) 4 Efficiency Increase 27
Slide 28: Employees at the Centre of Business Development
EMPLOYEES AT THE CENTRE OF BUSINESS DEVELOPMENT ea tena 20% 20-25% = up to 0 - 0 & automation of the NW of workplace will be ee culture and workplaces by >80% Generation Z by 2022 . 5 a . w. QW Increase in staff with digital skills and competences ae Management model CG) Demand for digital expertise
Slide 29: Focus on Personnel Productivity and Performance
Staff structure, ths FOCUS ON PERSONNEL ” PRODUCTIVITY & on PERFORMANCE a procedures 115-120 Routine staff 2017 2022 ] 2p 10-15% TARGETS 440% - aT - A 2022 Increase in staff Decrease in p.p i Headcount optimisation productivity of revenue 29 RT.RU | HUMAN CAPITAL DEVELOPMENT
Slide 30: Friendly Corporate Environment
FRIENDLY © CORPORATE es vo ENVIRONMENT \ win ee os Individual communication: . \ compensation set & Individual New work learning formats 30 RT.RU | HUMAN CAPITAL DEVELOPMENT
Slide 31: Digital Economy Is Knowledge Economy
DIGITAL ECONOMY IS 11 courses KNOWLEDGE Qfwaety Bian « aa sd E CO N O MY Digital communication YR channels N Quantum technology 02 ew aIgBE® Project management professions Neurotechnology 01 Robotics Work in functional unit: . . + With relocation lloT + New industrial Computer programming + Remotely
Slide 32: The Best Network
THE BEST NETWORK TARGETS 2022 Extending the IP network Capacity Optimising the Access Network Rolling out SDN/NFV to ensure higher speeds and heavy content to increase quality, decrease accident to improve network management smooth delivery rate and ensure connection of smart and decrease maintenanc
Slide 33: Convenient IT Unlocks Great Potential for Business
CONVENIENT IT KEY PILLARS UNLOCKS GREAT thy POTENTIAL FOR B U S| N ESS pa Ensuring transparency and flexibility Streamlining of the IT landscape Developing information environment and analytics to ensure better understanding of clients’ need TARGETS >30% 1-5 months 2022 decrease in exploited IT syst
Slide 34: Improving Efficiency to Support Margins
IMPROVING EFFICIENCY TO SUPPORT MARGINS Increase in operational Real-estate Decision making process efficiency management i TARGETS upto20 >30 100% 2022 RUB bin RUB bin Facilitation of decision savings over 2018- from real estate in 2018-2022 making processes 2022 RT.RU | EFFICIENCY INCREASE
Slide 35: Optimised Real-Estate Portfolio Drives OIBDA
Real estate space, sq.m mln OPTIMISED REAL- “Tassie ESTATE PORTFOLIO 50% DRIVES OIBDA 7 Rent 2017 2022 Operational expenditure savings + 3 >1 due to reduced RUB bin RUB bin cumulatively for 2018-2022 annually starting from 2022 portfolio RT.RU | EFFICIENCY INCREASE
Slide 36: Capex — Focus on New Streams and Efficiency
CAPEX — FOCUS ON NEW STREAMS AND EFFICIENCY 5% 13% 57% 15% BB Scaling BB Optimisation/ HB New products J Promising initiatives efficiency *Capital expenditures excluding state programmes.
Slide 37: Revenue Growth Coupled with Stable Margins and Decreased Capex Levels
REVENUE GROWTH COUPLED WITH STABLE MARGINS AND DECREASED CAPEX LEVELS REVENUE MARGINS CAPEX / REVENUE TARGETS -59 9 9 2018-2022 4- Shi >3 2 h od 17% lit
Slide 38: Closing Remarks
\ Rostelecom CLOSING REMARKS Mikhail Oseevskiy, President
Slide 39: Dividend Policy
\ Rostelecom Dividend >75% >5RUB 72088 Policy , < 100% of FCF & per ordinary share & of Net Income for 2018-2020 RT.RU | DIVIDEND POLICY Rostelecom
Slide 40: Q&A
\ Rostelecom Q&A
Slide 41: Investor Relations Contacts
\ Rostelecom Investor Relations CONTACTS Office: +7 (499) 995 9780 E-mail: ir@rt.ru Web: