December 29, 2016, Moscow -As part of its corporate real estate fund project, Rostelecom PJSC in partnership with Sberbank announces the completion of the first transaction within its new commercial real estate sub-fund which has been set up in the form of a joint venture with registered capital of RUB 4 billion^[1]. The real estate fund comprises real estate assets from Rostelecom's portfolio which have great potential for investment and development with the involvement of co-investors.

Sberbank, via Sberbank Investments LLC, and Rostelecom PJSC have contributed RUB 2 billion each to the joint venture and thus become 50% shareholders. The joint venture will purchase 16 commercial real estate properties from Rostelecom worth a total of more than RUB 4 billion. The properties are located in nine Russian cities, including six properties in Saint Petersburg and two in the Moscow Region with a total area of over 100,000 square metres. The properties have been selected based on their potential to appreciate in value following redevelopment.

James Corrigan, Managing Director, Merchant Banking and Advisory Department, Sberbank CIB, commented on the deal: 'Sberbank is a long-term strategic partner of Rostelecom. As an investor, we are interested in developing the investment and development potential of the properties managed by our joint venture. Leading corporate and investment banks in the real estate sector partnering with federal telecommunications companies to reach investment objectives has been successful in other countries. We are glad to pioneer the implementation of a similar strategy in Russia. We hope that the successful realisation of this pilot deal will strengthen our cooperation and act as a positive signal for the market, providing important impetus to further the development of partnerships between strategic and financial players to effectively manage commercial real estate funds.'

Mikhail Irzhevsky, Vice President of Legal Affairs, Rostelecom PJSC, commented: 'This deal is part of our strategic initiative to monetise the Company's real estate portfolio, as agreed by the Board of Directors. This pilot joint project with Sberbank enables us to undertake the first practical step towards the development and execution of the corporate real-estate fund strategy.'

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Rostelecom (www.rostelecom.ru) is one of the largest national telecommunications operators in Russia and Europe. The Company operates in all segments of the telecommunications market and covers millions of households in Russia.

Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 12.2 million fixed-line broadband subscribers and over 9.2 million pay-TV subscribers, over 4.0 million of which are subscribed to Rostelecom's IPTV services.

In the nine months of 2016 the Group generated RUB 217.0 billion of revenue, RUB 72.4 billion of OIBDA (33.4% of revenue) and RUB 8.7 billion of net income.

The Group is a market leader in providing telecommunications services to government bodies and corporates of all levels.

Rostelecom is an important innovator that provides solutions in the field of E-Government, cloud computing, healthcare, education, security and housing & utility services.

The Group's stable financial position confirmed by its credit ratings. Rostelecom was assigned 'BBB-' and 'BB+' international credit ratings by Fitch Ratings and Standard&Poor's respectively.

Sberbank - the largest bank in Russia and one of the leading global financial institutions. Sberbank accounts for about a third of total assets of the Russian banking sector. Sberbank is a key lender to the national economy and has the largest market share in deposits. The founder and main shareholder of PJSC Sberbank is the Central Bank of the Russian Federation, which owns 50% of the share capital plus one voting share. The other 50% of the Bank's shares are owned by Russian and international investors. Sberbank provides services to more than 135 million individuals and more than 4 million enterprises in 20 countries. The Bank has the most extensive branch network in Russia: about 17 thousand branches and internal business divisions. International network of the Bank consists of subsidiary banks, branches and representative offices in the UK, the USA, the CIS, Central and Eastern Europe, India, China, Turkey and other countries.
General Bank of Russia license to conduct banking transactions 1481. Official website of the Bank - www.sberbank.com (site of the Group Savings Bank), www.sberbank.ru.

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Sberbank CIB - Corporate and Investment Banking Sberbank. The key areas of activity are corporate loans (including trade finance), documentary business, investment banking, trading in securities, own investments. Corporate and Investment Banking Savings Bank provides its clients, including major corporations, financial institutions, state, federal and sub-federal authorities and organizations, integrated financial solutions and services of a financial advisor.

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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 Rostelecom's PJSC (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.

Note: This announcement contains inside information in accordance with Article 7 of EU Regulation 596/2014 of November 10, 2014
Full name and position making the announcement - Ekaterina Ustinova, IR Director.

^[1] The deal was organised by the Investment Department of Sberbank CIB, the corporate and investment banking business of Sberbank, via Sberbank Investments LLC (a 100% subsidiary of Sberbank).