year, with average ARPU of RUB 254 in B2C; ? the number of IPTV subscribers increased by 9% to 6.2 million, and ARPU was RUB 307 in B2C; 4. The number of active mobile Internet users increased by 20% year-on-year during 1Q 2020. Year-on-year growth in

mobile Internet data traffic reached 34% during the first quarter of 2021; while cellular customer base churn

decreased to 8.2%; 5. The number of local telephony subscribers decreased by 10% to 13.7 million.

KEY EVENTS RELATING TO Q1 2021 AND AFTER THE END OF THE REPORTING PERIOD

Business news ? Rostelecom continues to develop and expand its range of products and services: ? within the "Game" tariff plan:

? the tariff has been expanded to subscribers of the Alliance Telecom network, making the plan's most popular

games available to a larger number of subscribers in the Far East;

Revenue generated by the "Game" tariff increased by 13% in the first quarter of 2021. ? Digital OTT platform Wink is now among the top 5 online cinema in the country:

? new TV channel packages launched: Transformer, Maximum, Premium as well as a subscription to Greatest Hits

videos;

? launched an AVOD (Advertising Video on Demand) model to provide free access to content by viewing ads;

? together with Tele2 Russia, an "exchange minutes for films" offer has been implemented.

During the first quarter of 2021, the number of Wink customers accessing videos on two or more devices increased by 30% to 2 million. Meanwhile, the number of Wink customers who manage the service using voice assistants tripled during 1Q 2021 to over 50,000. ? Rostelecom's "Key solution" continues to expand its functionality:

? Added a video analytics function to track special vehicles and traffic control;

? SIP video monitors for apartments have been introduced;

The "Key solution" surpassed a key milestone of 100,000 users during the first quarter of 2021. ? Enhancements to "Smart Home" and home video surveillance services continue to be introduced, including:

? a set of measures have been implemented to improve the service's resistance to DDoS / Brute Force attacks;

Revenue generated from the cloud video storage service has increased threefold. ? B2C fibre broadband revenues grew by 13%; ? Launched the educational platform "Sferum" jointly with Mail.ru Group, which saw more than 100,000 schoolchildren

became users of the digital educational platform in just a few weeks; ? a new platform "Wi-Fi 2.0" was launched for corporate clients with advanced capabilities in terms of statistical

and analytical tools for analyzing user behaviour in a public Wi-Fi network; ? Rostelecom continued to expand its digital segment during the first quarter of 2021: ? as part of the development of cybersecurity services:

? additional services were introduced to the market:

? a new automated Incident Response Plan (IRP);

? a sandbox service to protect against advanced cyber threats;

? a new version of the Solar appScreener 3.8 source code security product, which now has an innovative

vulnerability analysis function under trial;

? updates made to the Solar webProxy 3.5 secure web gateway with additions in the role model of

differentiation of access rights and flexible export of data from the system;

? The Solar inRights access rights management solution received compatibility certification for 1C: Enterprise

and the Alt Server operating system based on Linux;

? Completion of a large-scale project to monitor and respond to incidents within Rosseti's infrastructure in

Ural;

? Support was provided to Halyk Bank JSC, the largest universal commercial bank in the Republic of Kazakhstan,

with the installation of the Solar Dozor system to prevent the leakage of confidential data in 25 of the bank's

branches;

? supported the Singapore State insurance fund, Central Provident Fund Board (CPF), and Scoot Airlines, a

subsidiary of Singapore Airlines with the integration of Solar appScreener - a service to manage applications'

vulnerability; ? Rostelecom also continues to develop its suite of B2B cloud and data centre services:

? Cloud solution DataLine Cloud-152 was certified to operate state information systems and was deployed at two

Moscow-based data centres;

? The TIONIX Virtual Security product received the FSTEC certification (Federal Service for Technical and Export

Control);

? The Internet Technical Center (TCI) was included on the register of domestic IT companies, and has also

received ISO / IEC 27001: 2013 certification;

? A new 300-rack data centre was launched in Novosibirsk; ? Operator business segment highlights include: ? 10% year-on-year increase in ?2?[8] project revenues; ? the first long-term contract was awarded to Rostelecom and Megafon to provide a section of the optical spectrum; ? the provision of a 100G link from Frankfurt to Tokyo in preparation for the 2021 Olympic Games as well as a 100G

link to Frankfurt; ? Large projects undertaken include: ? the development of a geographic information system for an agro-industrial complex at Udmurtia; ? the implementation of an agribusiness systems integration project for Agrotech group in the Far East; ? The roll out of digital infrastructure required to undertake the Russian national Census in 2021, as part of a

government contract with Rosstat. ? Rostelecom's subsidiary, mobile operator Tele2, continues to strengthen its offering and customers can now:

? collect and save up minutes and gigabytes indefinitely;

? Use digital payment cards;

? gain access to online cinema Wink;

? purchase SIM cards at Lukoil gas stations;

? get a terabyte of Internet when buying Samsung gadgets;

? receive paid services regardless of their account balance.

During the year the company increased the number of base stations by almost a third;

Other news ? The Rostelecom Board approved the Company's corporate strategy to 2025 and adopted its dividend policy for

2021-2023; ? Rostelecom was also recognised during the quarter as:

? the number one provider of public Wi-Fi access points;

? the leading B2B broadband provider by number of subscribers and revenue;

? the leader in the Free Call service market;

? the top provider of virtual PBX clients;

? the number one provider of installed cloud video surveillance cameras. ? cloud provider DataLine, a Rostelecom group company, was recognised by Infinidat as the EMEA "Service Provider of

the Year in 2020"; ? Rostelecom is included in the Bloomberg 2021 Gender Equality Index. ? Tele2 Russia was ranked the best telecommunications employer according to hh.ru, and also received two gold and

three silvers at the Global Top Ranking Performers Awards; ? As part of its sustainable strategic development Tele2 Russia collected more than 4,000 old phones in order to be

recycled.

OPERATING REVIEW

Revenue analysis

Revenue structure by services 


RUB million                                               1Q 2021   1Q 2020    change 
Mobile                                                    46,100     40,964   13% 
Broadband                                                 24,029     21,993   9% 
Digital                                                   14,149     12,520   13% 
TV services                                               9,949      9,489    5% 
Wholesale services                                        18,397     17,771   4% 
Interconnect and traffic transit services                 4,422      4,247    4% 
VPN                                                       7,554      7,026    8% 
Rent of channels                                          2,476     2,434     2% 
Rent and maintenance of telecommunications infrastructure 3,945      4,064    (3%) 
Fixed telephony                                           12,741     14,190   (10%) 
Other services                                            6,593     4,686     41% 
Total                                                     131,958   121,613   9%

Revenue structure by customer segments 


RUB million                                 1Q 2021   1Q 2020    change 
B2C                                         67,164    62,807    7% 
Corporate customers / Government customers  43,741    38,996    12% 
Operators                                   19,973    18,845    6% 
Other                                       1,079     964       12% 
Total                                       131,958   121,613   9%

In the first quarter of 2021, revenue increased year-on-year by 9% to RUB 132.0 billion, as a result of the following factors: ? a 13% increase in revenue from mobile services, mainly due to a higher volume of mobile Internet data consumption

and standard voice services; ? 9% growth in revenue from broadband services due to a higher number of subscribers, growth in ARPU as well as

revenues from Internet connection contracts; ? a 41% increase in revenues from other services, due to the consolidation of Lukoil-inform operations acquired

during the fourth quarter of 2020, as well as growth in money transfers and mobile payments; ? a 13% increase in digital revenues mainly driven by the promotion of cloud and data centres services, the

development of platform-based e-government solutions and other innovative services. The late signing of contracts

with relating to some Digital regions and Cyber security projects also had an impact.

Operating income analysis

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