34. Subsequent events

Settlement agreement with CJSC "Global-Tel"

During the bankruptcy procedure of CJSC "Globalstar - Space Telecommunications" (hereinafter CJSC "Global-Tel") on 16 January 2015 the Arbitration Court of Moscow approved the settlement agreement dated 14 November 2014 between CJSC "Global-Tel" (Debtor) and bankruptcy creditors whose claims were included in the register of creditors of CJSC "Global-Tel".

According to the settlement agreement the obligations of CJSC "Global-Tel" to the Company were ceases at 27 January 2015 by debtor’s issuance of the promissory note maturing on demand but not earlier than 30 November 2021 with the principal amount 1,042.9 and interest rate 13% per annum.

At the same date, on 27 January 2015, the Company purchased two promissory notes from Loral Space & Communications Inc. for the total principal amount 2,501.2 maturing on demand but not earlier than 30 November 2021 with interest rate 13% per annum, which were received by Loral Space & Communications Inc. from CJSC "Global-Tel" as repayment obligations under the settlement agreement on the case A40-27560/2012.

In addition, the Group purchase 49% interеst in Global Tel from Loral Space & Communications Inc. for 2 US Dollars increasing ownership to 100%. The Group will consolidate CJSC "Global-Tel" in 2015. As a result, income from reversing of bad debt provision on intragroup receivable amounted to 1,042.9 will be recognised.

The acquisition of a controlling stake in LLC "Data Storage Centre"

On 15 January 2015 Board of Directors approved a deal to acquire a controlling stake in LLC “Data Storage Centre” (operating under the SafeData brand), Russia’s largest provider of commercial data centres, traffic exchange service and content delivery.

The acquisition will enable Rostelecom to accelerate its development of a national content storage and distribution network. This includes a federal geographically distributed network of data centres, which combines communication channels, traffic exchange points, content delivery systems, as well as systems to protect against network attacks and traffic monitoring. As a result of the deal, Rostelecom becomes a leading player in the Internet exchange points (IX) and content delivery (CDN) segments. It will also strengthen the Company’s position in the data centre market, as Rostelecom will become Russia’s second largest provider with a 12% consolidated market share following the completion of the acquisition.

The deal has been structured in two stages:

1. During stage one, the Company will acquire 5.4% of the share capital of LLC "Data storage centre” with nominal value of 10.152 from Brennan Investments Limited for 104.2 according to purchase agreement.

2. During stage two, the Company will add 1,728.9 of cash to LLC "Data storage centre" share capital.As a result, the Company stake in LLC "Data storage centre" share capital will increase to 50.1%.

As of the date of issuing the present Consolidated Financial Statements for the year ended 31 December 2013 and 2014 the deal has been completed.

My Annual Report

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