Rostelecom launches the next generation Transit Europe - Asia project
Moscow, Russia - June 17, 2020 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest integrated digital service provider in Russia, today announces that it has launched, a project to construct a new generation fiber-optic communication line connecting Russian western and eastern borders under a working title TEA NEXT.
In 2023-2024 Rostelecom plans to launch a brand-new set of services, based on the transit communication line between Europe and Asia TEA NEXT which is a next step of the TEA project evolution. TEA NEXT will provide clients with an opportunity to utilize the dark fiber[1] infrastructure and locate its own equipment along the new fiber-optic communications line.
TEA NEXT fiber-optic communication line is unique because it is designed to encompass facilities that no other existing terrestrial system provides, but which are widely used in sub water intercontinental communications models. Moreover, it will be available for use by all major Russian operators.
The project is developed by Rostelecom's newly founded company Atlas which will be supported by financial and strategic partners, including one of the Russian banks and a number of international investors and communications operators. Total investment will amount to US$500 million within several years.
TEA NEXT project capacity will reach 96 dark fiber lines available to international operators and global OTT companies as a transit communications means connecting Asia and Europe, and to national operators in Russia.
The first level of the infrastructure - dark fiber lines with platforms for own active DWDM equipment[2] available along the new line, will be provided to clients for long-term use of up to 20-25 years. This will allow them to utilise dark fiber at their own discretion and with their own equipment during the entire guarantee period of up to 2045. The active DWDM equipment can be easily replaced or modernised at any time during the period of use which will increase efficiency of the capacity they acquire.
The TEA NEXT line will be constructed based on the cutting edge Ultra Low Loss optical fibre which allow for use of all advanced long-distance DWDM equipment. The mainline will pass along the shortest route from West to East of the country with stations in largest cities[3]. Round Trip Delay will not surpass 85 m/s from Moscow to Vladivostok, and 55 m/s from Moscow to Khyagt.
Natalia Kryuchkova, Vice-President for Carrier Business and Sales of Rostelecom, commented: "TEA's West-East infrastructure for Russian operators was built in 1990s and 2000s and, the next 5-10 years will see its replacement or significant modernisation. By the end of TEA NEXT construction, Rostelecom's fibre optic infrastructure will not only be used by Rostelecom, but a substantial number of other Russian operators will also benefit from its technically advanced features allowing for better and more flexible planning of owned communications network. From the commercial point of view, it will provide a much more cost-effective model for long term investments in backbone network infrastructure".
Further information is available at https://www.company.rt.ru/en/ir/news_calendar/.
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Rostelecom is the largest integrated digital services and products provider, operating in all segments of the telecommunications market in Russia. The Company serves millions of households, state and private enterprises across the country.
Rostelecom is Russia's undisputed market leader, providing high-speed Internet access and pay-TV. The total number of broadband users stands at over 13.2 mln users, it has more than 10.5 mln pay-TV customers, over 5.7 mln of which are subscribed to Rostelecom's IPTV services. Tele2 Russia, a Rostelecom subsidiary , is a major player in the mobile market with over 44 mln subscribers and the industry-leading NPS, a customer satisfaction benchmark.
In the first quarter of 2020, the Group generated RUB 121.6 bln of revenues, RUB 47.1 bln of OIBDA (38.7% of revenue) and RUB 7.7 bln 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.
