ROSTELECOM PJSC (RKMD)
Rostelecom to start co-investing with the Russian Internet Initiatives Development Fund
Moscow, Russia - January 21, 2020 - Rostelecom PJSC (MOEX - RTS: RTKM, RTKMP; OTCQX: ROSYY), Russia's largest digital communication services provider, and the Internet Initiatives Development Fund (IIDF) are establishing a strategic partnership, launched to develop the Russian venture capital market. Rostelecom will collaborate with IIDF by joining the Fund's Investment Division charter capital "IIDF Invest" - a shareholder in more than 350 IT start-ups. Rostelecom investments will boost the fund's portfolio and help provide financing for new Russian start-ups.
Rostelecom's investment in IIDF Invest will amount to RUB 2 billion, representing a 31.03% share in the Fund's charter capital in total, with the first 18.36% secured in December 2019 and the remaining investment being finalised by the end of January 2020. Rostelecom representatives will join the investment committee of the fund.
IIDF Invest will use the investment proceeds to support new innovation projects and provide additional support to the fund's most promising existing projects. The investment offer for start-ups will be reviewed, whereby pre-seed stage companies will get up to Rub 5 million of financing, while growth stage companies will be able to receive up to RUB 65 million.
Mikhail Oseevskiy, President of Rostelecom, commented: "Rostelecom has made great progress in transforming into a leading provider of digital services. From a growth perspective, I am pleased to see a stronger focus on innovative business streams, such as data centres, cloud, cyber security, smart cities, IoT to name but a few. The strategic partnership with IIDF is aimed at enhancing efficiencies in this area, identifying new growth drivers and expanding the ecosystem of digital services. These drivers might not always be obvious given the increasing speed of technological developments - somewhat ambitious ideas today, they can conquer markets and geographies tomorrow."
Kirill Varlamov, President of IIDF and IIDF Invest, commented: "IIDF is always looking for new sources of financing to support its various investment streams. Our partnership with Rostelecom opens a new chapter in IIDF's evolution as we will be reconsidering the investment cycle with a full commitment to supporting promising IT start-ups and growth companies and providing the entrepreneurs with access to Rostelecom's unique expertise."
Further information is available at https://www.company.rt.ru/en/ir/news_calendar/.
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The Internet Initiatives Development Fund (IIDF) is a Russian venture capital fund established by the Agency for Strategic Initiatives in 2013 by order of Russian President Vladimir Putin. The Foundation invests in technology companies in the early stages of development, develops a network of start-up accelerators, and is involved in the development of methods of legal regulation of the venture industry.
IIDF Invest invests in technology start-ups that are in their early stages. Since 2013, IIDF Invest has invested RUB 3.87 billion in more than 420 companies. Currently, there are 350 operating businesses in the portfolio, of which about 50 are developing successfully both in Russia and internationally.
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PJSC Rostelecom is the largest digital service provider, operating in all segments of the telecommunications market in Russia, it serves millions of households, the state and private enterprises across the country.
Rostelecom is Russia's undisputed market leader, providing high-speed Internet access to over 13.1 million users and pay-TV services to more than 10.3 million clients, over 5.5 million of which are subscribed to Rostelecom's IPTV services on a national level.
In the nine months of 2019, the Group generated RUB 242.6 billion of revenues, RUB 81.4 billion of OIBDA (33.6% of revenue) and RUB 16.4 billion 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.
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