Our new business model relies on content and digital services which have been consistently growing at double-digit rates and are driving Rostelecom’s strategic transformation.

Our retail business showed strong performance in 2017, with 33 million households passed by fibre, 12 million broadband users, 5 million Pay TV subscribers, and 830 thousand MVNO subscribers.

Rostelecom’s B2B business has 763 thousand broadband subscribers, including 45% fibre-connected. The Company is leading in the Russian data centre market, with a total of 5,300 racks as at the end of 2017, comprising over 14% of the market.

The government remains our major customer. In-depth expertise and a vast pool of experience have ensured Rostelecom’s lead under the IT Infrastructure section of the Digital Economy of the Russian Federation programme. More than half of Russian regions use our digital healthcare, security, and emergency response solutions. Drawing on the government’s financial support, Rostelecom has been extending its digital network to remote areas of the country while consistently refining its internal business processes to make the customer experience as smooth as possible. As at the end of 2017, over 6,000 settlements were connected to fibre under the government-sponsored Bridging the Digital Divide (BDD) programme, while 64 million people are now using the e-government website.

Rostelecom successfully maintains relations with other operators. In 2017, our market share in traffic transmission was 56%, with over 1 Tbps of our capacity contracted for carrying transit traffic between Europe and Asia. Our communications networks have been upgraded and rapidly expanding, with their combined length already totalling 500,000 km. In 2017, the Company completed its Kamchatka–Sakhalin–Magadan FOCL and proceeded to connect the Kuril Islands to its network. During the year, the throughput of our backbone network rose to 15.5 Tbps..

In the reporting period, Rostelecom continued improving its operational efficiency, rightsizing its workforce and streamlining its organisational structure, while divesting non-core assets. The combined effect from our efficiency improvement programme totalled RUB 17 billion over the past several years.

The Company places a particular emphasis on fostering its corporate culture by encouraging all level employees to engage in creating customer value. In 2017, the Board of Directors approved the new long-term management incentive programme, which directly motivates key employees to boost the Company’s value. The programme will contribute to the Company’s sustainable growth and delivery of business priorities within its transformation into a digital service provider. As of 2018, we are using NPS as a key performance indicator to assess customer satisfaction.

We will continue in the current direction of boosting the share of digital services and solutions, as we are confident that our new strategy fully addresses both the current needs of the market and emerging challenges. We are planning to maintain our leadership by building ecosystems of competitive digital products that cater to the needs of our customers.

I would like to recognise the positive contribution that our employees, shareholders, and partners have shown during 2017.