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23 December 2016

MegaFon to become a leader in digital convergence, announces intention to acquire a controlling stake in Mail.ru Group

Moscow, Russian Federation (23 December 2016) — Public Joint Stock Company “MegaFon” (LSE: MFON), a leading Russian telecommunications operator (“MegaFon” or the “Company”) announces the decision of its Board of Directors taken earlier today to call an Extraordinary General Meeting of Shareholders to approve the acquisition of 11.5 mln Class A shares and 21.9 mln ordinary shares in Mail.Ru Group Limited (LSE: MAIL) (“Mail.Ru”), currently held by subsidiaries of USM Holdings, representing an approximately 63.8% voting stake in the company.

Under the terms of the proposed transaction, MegaFon will acquire 11.5 mln Class A shares and 21.9 mln ordinary shares representing an approximately 63.8% voting stake in Mail.Ru from New Media and Technology Investment LP, New Media Technologies Capital Partners Limited and Ardoe Finance Limited, subsidiaries of USM Holdings, for an agreed consideration of $640 mln on completion plus an unconditional deferred payment of $100 mln due in one year post completion paid in cash.

MegaFon, a leading telecommunication operator in Russia, and Mail.Ru, a leader in the Russian-speaking Internet market, have been exploring a range of commercial projects aimed at creating strategic and economic value for both companies and their customers. As market dynamics and advances in technology have created favourable conditions for greater cooperation between telecom providers and digital media companies, MegaFon now sees a significant further benefit in becoming a shareholder of Mail.Ru in order to facilitate and accelerate the execution of common projects for the companies.

The transaction is aimed at achieving significant synergies for both companies, including enhancement of MegaFon’s digital offering and its distribution, launch of special VKmobile offering for users of VK social network, and other potential initiatives.

Following the proposed transaction, MegaFon and Mail.Ru would continue operating as separate entities, dealing on an arms-length basis, with both independent management teams dedicated to preserving each other’s corporate culture and governance, ensuring continuity of operating and product development activities, and focusing cooperation areas of mutual strategic and economic benefits. Any agreements between the companies would be on an arms-length and fully commercial basis. No significant changes are expected in Mail.Ru’s core business operational activity and corporate governance system.

Sergey Soldatenkov, CEO at MegaFon, said: “We are excited to announce an opportunity to acquire a controlling stake in Mail.Ru Group, a transaction which allows MegaFon to make the next step in realisation of its digital strategy. Closer ties with Mail.Ru Group will allow us to execute common strategic projects, including, but not limited to, the creation and promotion of special offerings to digital subscribers of VKmobile based on the social network VK, and improvements in clients targeting and segmentation (which latter projects we understand have been approved by Mail.Ru). In cooperation with Mail.Ru Group MegaFon would be able to provide a premium and differentiated offering to its digital subscribers, creating value for the shareholders of both companies.

We respect Mail.Ru team and its corporate culture. As a shareholder in Mail.Ru Group we will support the Mail.Ru team’s initiatives focused on further development of existing products and launch of new products”.

Boris Dobrodeev, CEO at Mail.Ru Group, said: “Potential co-operation in the execution of a number of common projects, such as the launch of the special VK branded offering and the use of predictive analytics technologies offers new useful products to our user base and new opportunities for our business. MegaFon is a natural partner for Mail.Ru in various areas and we look forward to working together.”

The transaction was recommended for approval by the Special Committee of MegaFon’s Board of Directors, comprised of non-executive and independent directors. On 23 December 2016 the Board of Directors approved the calling of an Extraordinary General Meeting of Shareholders on 20 January 2017 to approve the transaction. The transaction is also subject to receiving consent from the Russian anti-trust authorities, and subject to additional conditions, fulfilment of which is out of MegaFon’s control.

Morgan Stanley is acting as financial advisor to MegaFon, and Cleary Gottlieb Steen & Hamilton is acting as legal advisor to MegaFon. Bank of America Merrill Lynch is acting as financial advisor to the Special Committee of MegaFon and is providing a fairness opinion. White & Сase is acting as legal advisor to the Special Committee of MegaFon.

Mail.Ru Group (LSE:MAIL) is a leading company in the Russian-speaking Internet markets. Mail.Ru Group’s sites reach approximately 93% of Russian Internet users on a monthly basis (comScore, June 2016). In line with the ’communitainment’ (communication plus entertainment) strategy, Mail.Ru Group is building an integrated communications and entertainment platform. Mail.Ru Group owns Russia’s leading email service and one of Russia’s largest internet portals, Mail.Ru. Mail.Ru Group operates the three largest Russian language social networks, VKontakte (VK), Odnoklassniki (OK) and Moi Mir (My World), and Russia’s largest online games business (including such gaming titles as Warface, Armored Warfare, Skyforge and Perfect World). Mail.Ru Group also includes a leading OpenStreetMap-based offline mobile maps and navigation service MAPS.ME, two instant messaging (IM) services, Mail.Ru Agent and ICQ, which are popular in Russia and CIS, and other products. Mail.Ru Group also owns 100% stakes in Pixonic, mobile games developer, and Delivery Club, food delivery company.

MegaFon (LSE: MFON) is a leading federal mobile telecommunications operator in Russia with 77.3 mln subscribers. MegaFon is a leading 4G/LTE operator providing access to 4G/LTE network in 80 Russian regions to 65% of population by the end of Q3 2016. The company is an innovative player with a customer-centric approach and a leading position in digital services and content.

Joint audiocast:

MegaFon will be hosting an analyst and investors conference call today with a simultaneous audiocast to discuss the deal. Time: 7.00 (New York time), 12.00 (London time), 15.00 (Moscow time)

Dial-in details:
To listen to the call in original language of broadcasting (English and Russian), please dial:

Access confirmation code: 4719065
Local — Moscow, Russia: +7 495 213 0977
National free phone — Russian Federation: +8 800 500 9311
Local — London, United Kingdom: +44(0)20 3427 1906
National free phone — United Kingdom: 0 800 279 5004
Local — New York, United States of America: +1 646 254 3362
National free phone — United States of America: +1 877 280 1254

To listen to the call in English only, please dial:

Access confirmation code: 5085557
Local — Moscow, Russia: +7 495 213 0979
National free phone — Russian Federation: +8 800 500 9312
Local — London, United Kingdom: +44(0)20 3427 1909
National free phone — United Kingdom: 0 800 279 4977
Local — New York, United States of America: +1 212 444 0895
National free phone — United States of America: +1 877 280 2342
Password: MegaFon

Audiocast and slide presentation

The presentation file in PDF format is available for download at: http://corp.megafon.com/investors/events/presentations/

MegaFon Investor Call Recording (ENG)

MegaFon Investor Call Recording (original)

Replay facilities will be available for 7 days.

Replay password 4719065 (in original language of broadcasting)
5085557 (in English)
Russia Toll Free +8 10 800 2870 1012
UK Toll Free 0 800 358 7735
USA Toll Free +1 866 932 5017
Local — Moscow, Russia +7 495 705 9453
Local — London, United Kingdom: +44(0)20 3427 0598
Local — New York, United States of America: +1 347 366 9565

For More Information:

PJSC MegaFon
Investors: Dmitry Kononov
Director for Investor Relations and M&A
Tel: +7 926 200—64—90 dkononov@megafon.ru
Media: Peter Lidov
Director for Public Relations
Tel: +7 926 200—66—99 plidov@megafon.ru

Notes to Editors

MegaFon PJSC is a leading Russian integrated telecommunication service provider, operating in all segments of the telecommunications markets in Russia, and in the Republics of Abkhazia, South Ossetia and Tajikistan. MegaFon is a recognized market leader in the provision of mobile data services, was the first operator in Russia to launch commercial operation of a third generation (3G) network and was the first operator in the world to launch commercial operation of an LTE-Advanced (4G) data network. MegaFon is traded on the Moscow Exchange and the London Stock Exchange under the symbol MFON. Additional information about MegaFon and the products and services provided by MegaFon can be found at: http://www.megafon.ru

Cautionary Statement Regarding Forward Looking Statements

Some of the information in this document may contain or refer to projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “forecast”, “intend”, “will”, “could”, “may”, or “might” the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions, and are based upon various assumptions which are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control. We may not achieve or accomplish these plans or predictions. The Company does not necessarily intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries in which the Company operates, as well as many other risks specifically related to the Company and its business and operations.

Statement Regarding Inside Information

Some of the information in this document may be inside information. The subject matter, the identity of the issuer, the identity of the persons making the notification and their titles, and the date and time of the notification are all as set forth above.

All news

Other news

12 December 2018

MegaFon Finance LLC cancelled the global depositary receipts held by it and submitted a mandatory tender offer to acquire PJSC MegaFon shares to the Central Bank of Russia for review

Moscow, Russian Federation (12 December 2018) — Public Joint Stock Company “MegaFon” (MoEx: MFON), a pan-Russian operator of digital opportunities (“MegaFon” or the “Company”), announces that MegaFon Finance LLC (“MegaFon Finance”), a wholly-owned subsidiary of MegaFon, cancelled the global depositary receipts representing ordinary shares of the Company (“GDRs”) that were held by it and submitted a mandatory tender offer to acquire the Company’s shares to the Central Bank of Russia for review.
7 December 2018

Resolutions taken by the EGM

Moscow, Russian Federation (07 December 2018) — Public Joint Stock Company “MegaFon” (MoEx: MFON), a pan-Russian operator of digital solutions, (“MegaFon” or the “Company”), announces that MegaFon’s Extraordinary General Shareholders’ Meeting (EGM) at a meeting held by absentee voting on 06 December 2018 took the following resolutions:
27 November 2018

MegaFon approves the list of nominees to the Board of Directors and the Management Board

Moscow, Russian Federation (27 November 2018) — Public Joint Stock Company “MegaFon” (MoEx: MFON), a pan-Russian operator of digital opportunities (“MegaFon” or the “Company”), announces that MegaFon’s Board of Directors during its meeting held on 26 November 2018 has nominated candidates to the Board of Directors and the Management Board to be approved at the Extraordinary General Meeting on 21 December 2018, as earlier announced at: https://corp.megafon.com/investors/news/capital_market_releases/20181017-1143.html.