Moscow, Russia– February 2, 2012 – Rostelecom OJSC (MICEX & RTS: RTKM, RTKMP; OTCQX: ROSYY) (“the Company”), Russia’s national telecommunications operator, today announces that its wholly-owned subsidiary, Teleset Networks LTD, has invested US$ 22.5 million (approximately RUB 682 million[1]) in GNC‑ALFA, the largest independent Internet and data provider in Armenia, and gained 75% minus one share control of the company.

GNC-ALFA operates a modern fibre-optic network spanning approximately 1,500 km, which passes through 70% of the territory of the Republic of Armenia. GNC-ALFA’s network is interconnected with the region’s major backbone networks and major MMR (“meet-me-room”) centres, as well as with international gateways with Iran and Georgia. GNC-ALFA is the largest independent aggregator of national IP-traffic, and its subsequent transit, in Armenia. In 2012, GNC-ALFA plans to actively develop its broadband Internet and pay-TV services for individuals in Armenia. This will stimulate growth in its business and it will enable the company to capitalise on high demand from end-users in the Armenian market which also has strong potential for increases in penetration. GNC-ALFA reported revenues of approximately US$ 12 million with an EBITDA margin of 48% for the full year of 2011. The company’s current net debt stands at less than US$ 1 million.

Alexander Provotorov, President of Rostelecom, commented: “This is the first acquisition outside of Russia that we have concluded as part of our international expansion policy. The acquisition of a control stake in GNC-ALFA provides Rostelecom with access to a well-developed infrastructure for broadband and pay-TV services in the Armenian telecommunications market, a market which has a significant growth potential.” 

[1]According to the exchange rate of the Central Bank of Russia as at 01/02/2012