Securities and Shareholder and Investor Relations

Shares

PJSC Rostelecom’s charter capital is RUB 6.96 million divided into 2,574,914,954 ordinary and 209,565,147 preference shares. A total of 45.04% is owned by the Russian Federation represented by the Federal Agency for State Property Management (Rosimushchestvo), with 38,98% of the charter capital in free float. As at 31 December 2018, the total number of Rostelecom shareholders was 153.3 thousand: 700 legal entities and 152.6 thousand individuals.Excluding disclosure of shareholders whose shares are held by nominee shareholders.

PJSC Rostelecom ordinary and preference shares (tickers RTKM and RTKMP) are admitted to the Level One quotation list of the Moscow Exchange and to the non-quotation section of Saint Petersburg Exchange’s list. PJSC Rostelecom shares are also included in the FTSE Emerging Markets and MVIS indices.

Ordinary and preference share trading volume totalled RUB 55,476 million and RUB 4,472 millionSource: Bloomberg., respectively, in 2018. The bulk of trade in PJSC Rostelecom shares was on the Moscow Exchange.

Source: Bloomberg

Depositary receipts

PJSC Rostelecom launched an American Depositary Receipt (ADR) programme for its ordinary shares in February 1998.For more details on the depositary and custodian see Appendix 11 Additional Information on PJSC Rostelecom to this Annual Report. One ADR stands for six ordinary shares. Currently, the ADRs are traded on the OTCQX trading platform, as well as on London, Frankfurt, and other foreign stock exchanges under unlisted trading privileges. As at 31 December 2018, 19.7 million ADRs were issued, or 4.6% of its total outstanding shares.

Bonds

In 2018, Rostelecom issued 10-year exchange-traded bonds for a total of RUB 10 billion, with a six-year put option, at 7.15% p.a. The proceeds were used to refinance the Company’s existing debt and did not change its overall leverage.

As at 31 December 2018, the total value of the Company’s outstanding bonds amounted to RUB 45.9 billion, or 22.47% of its debt portfolio.

In March 2018, the Board of Directors approved the Company’s Dividend PolicyApproved by PJSC Rostelecom’s Board of Directors on 14 March 2018; Minutes No. 17 dated 14 March 2018. The full text of the document is available at https://www.company.rt.ru/en/ir/dividends/Rostelecom_Dividend_Policy_for_2018-2020.pdf. which governs dividend payments for 2018–2020.

The Dividend Policy stipulates that the Company will seek to:

• allocate to dividend payouts on ordinary and preference shares for 2019–2020 at least 75% of its free cash flow in each reporting year
• ensure that the annual dividend per ordinary share is at least RUB 5
• ensure that the amount of dividend payouts on ordinary and preference shares does not exceed 100% of the IFRS net profit for the reporting year, but in no case be less than the amount recommended by Rosimushchestvo and the Government of the Russian Federation for partly state-owned companies if such requirement is applicable to the Company.

In 2018, the Company paid dividends in line with Regulations on the Dividend Policy of PJSC RostelecomApproved by PJSC Rostelecom’s Board of Directors on 4 December 2015; Minutes No. 13 dated 4 December 2015. The full text of the document is available at https://www.company.rt.ru/ir/corporate_governance/docs/Dividend_Policy_2015_ENG_NEW_Final.pdf. which govern dividend payments for 2015–2017. The Company aimed to allocate to dividend payouts on ordinary and preference shares for 2015–2017 at least 75% of its free cash flowFree cash flow (FCF) means the net cash from operating activities, (1) net of cash paid for purchased property, plant, and equipment and intangible assets, (2) plus proceeds from disposals of property, plant, and equipment and intangible assets. FCF is calculated on the basis of the consolidated statement of cash flows of the Company’s consolidated financial statements prepared under the International Financial Reporting Standards (IFRS). in each reporting year, but no less than RUB 45 billion in total for the three years.

According to the Charter, the annual per share dividend on Class A preference shares is equal to 10% of the Company’s RAS net profit divided by 25% of the total number of outstanding shares (both ordinary and preference shares), but no less than the dividend on ordinary shares.

By resolution of the Annual General Shareholders’ Meeting, the total amount of dividends on Rostelecom shares for FY2017 was RUB 14.05 billion; dividends on ordinary shares and Class A preference shares amounted to RUB 5.05The unrounded per share dividend was RUB 5.045825249373. per share. The dividends were paid out of the net profit for FY2017 (RUB 8.89 billion) and retained earnings of past years (RUB 5.16 billion).

By resolution of the Extraordinary General Shareholders’ Meeting dated 24 December 2018, the Company’s interim dividends for 9M 2018 was RUB 6.96 billion. Dividends on ordinary share and Class A preference shares amounted to RUB 2.5 per share.

Total FY2017 dividends on Class A preference shares amounted to 11.90% of the RAS net profit and 7.22% of the IFRS net profit for 2017. Dividends on ordinary shares amounted to 146.16% of the RAS net profit and 92.47% of the IFRS net profit for 2017.

RUB 6,328,421,000 out of net profit generated in 2017 was paid to the federal budget. The Company has no outstanding dividends payable to the federal budget.

According to international rating agencies, Rostelecom’s credit rating was in line with Russia’s sovereign credit rating at the time the ratings were assigned. Rostelecom’s ratings did not change during 2018, and the outlook remained stable.

Rostelecom is committed to building strong relations with the investment community, promptly providing information on its operations to stakeholders, and quickly responding to requests from investors and other target audiences. The Company maintains an ongoing dialogue with investment bank analysts and holds regular meetings with existing shareholders and potential investors.

In its interactions with investors, the Company primarily aims to:

• promote Rostelecom’s investment case
• manage expectations
• participate in analysing strategic decisions on the Company’s growth, including their impact on market capitalisation
• expand and diversify Rostelecom’s investor base, focusing on long-term investment funds
• reduce borrowing costs.

In March 2018, the Company held an Investor Day in Moscow to present its updated Strategy 2022.

During the year, Rostelecom took part in six investment conferences and held two non-deal roadshows.

Also, the Company’s senior management and IR team participated in approximately 80 one-on-one meetings and conference calls with about 130 investors.