MegaFon completes acquisition of Neosprint LLC

27 April 2018

Moscow, Russian Federation (27 April 2018) — Public Joint Stock Company “MegaFon” (LSE: MFON), a pan-Russian operator of digital opportunities (“MegaFon” or the “Company”), announces the completion of the acquisition of a 100% stake in Neosprint LLC (the “Acquisition”).

Pursuant to the decision taken by the Company’s Board of Directors on 02 April 2018, as earlier reported at: https://corp.megafon.com/investors/news/capital_market_releases/20180403-0919.html, MegaFon has completed the acquisition of a 100% stake in Neosprint LLC (“Neosprint”), an operator that owns a 24 MHz frequency band in the 3.4 — 3.6 GHz spectrum in Moscow. This is the third largest amount of 3.4 — 3.6 GHz spectrum available in Moscow.

The transaction will allow MegaFon to take an important step towards the development of its 5G network. The spectrum acquired, which is fully available and usable, is spectrum in high demand for the rapid deployment of 5G networks in Moscow. The Company already plans to utilize the spectrum in June of this year to deploy test 5G networks in stadiums hosting the 2018 World Cup games in Moscow.

The total consideration for the Acquisition is RUB 720 million. The Company will pay 70% on or before 7 May 2018, and the remainder of the consideration, after any required adjustments, will be paid 3 months later.

Sergei Soldatenkov, Chief Executive Officer of MegaFon, commented:

"The acquisition of Neosprint is in line with our digital strategy and our ambitions to become a leader in implementing the Government’s Digital Economy Programme for Russia. We believe that deployment of 5G networks in Russia will become essential in the 2020 — 2025 timeframe, as we expect that mobile traffic growth rate will accelerate in the coming years. We will use the ability of 5G networks to provide super low latencies and super reliability and to accommodate a much higher density of devices to enable us to implement complex and integrated digital projects for our large corporate and government clients. At the same time, we are very aware that, due to limited availability of spectrum and the high level of investment required, independent development of 5G networks may be challenging. It was for this reason that MegaFon concluded a partnership agreement with Rostelecom to jointly develop 5G networks and to optimize 5G roll-out cost.