MegaFon Investor presentation...2G BS, units 3G BS, units 4G BS, units 121 102 126 030 2014 2015 Growth 10.8% Share of BS interconnected via FOCL(1), % Backbone, km • In 2015, MegaFon

MegaFonInvestor presentation

2016 Moscow Exchange Forum

April 12-13

2

Certain statements and/or other information included in this document may not be historical facts and may constitute “forward looking statements”

within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 2(1)(e) of the U.S. Securities Exchange Act of 1934, as amended. The

words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plans”, “forecast”, “project”, “will”, “may”, “should” and similar expressions may

identify forward looking statements but are not the exclusive means of identifying such statements. Forward looking statements include statements

concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues, operations or performance,

capital expenditures, financing needs, our plans or intentions relating to the expansion or contraction of our business as well as specific acquisitions

and dispositions, our competitive strengths and weaknesses, the risks we face in our business and our response to them, our plans or goals relating

to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in

the industry and the political, economic, social and legal environment in which we operate, and other information that is not historical information,

together with the assumptions underlying these forward looking statements. By their very nature, forward looking statements involve inherent risks,

uncertainties and other important factors that could cause our actual results, performance or achievements to be materially different from results,

performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous

assumptions regarding our present and future business strategies and the political, economic, social and legal environment in which we will operate

in the future. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be

achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most

likely or standard scenario. We expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect actual results,

changes in assumptions or in any other factors affecting such statements.

Disclaimer

Agenda

1. About MegaFon

2. Key Corporate and Financial Highlights for 2015

3. Appendix

About MegaFon

1

Wireless revenues; 86.2%

Wireline revenues; 7.5%

Sales of handsets and accessories; 6.4%

>98% of revenues comes from Russia

RUB 313.4bn

MegaFon – investment summary

Highlights Consolidated FY 2015 revenue breakdown

Source: Company data. Note: (1) – By overall mobile revenue and number of subscribers as of the year end of 2015 in Russia

(2) – Total number of subscribers as of the year end of 2015 was 76.8m in Russia, Tajikistan, South Ossetia and Abkhazia(3) – Russian population as of the latest census in October 2010

Compelling historical financial performance

• 2nd largest Russian mobile operator(1), with 74.8m subscribers(2) and historically growing market share

• Unique network position overall on the back of substantial investments

• Unrivalled frequency spectrum

• Leading 4G/LTE operator providing access to 4G/LTE network in 77 Russian regions to 59.2%(3) of population by the end of 2015

• Innovative player with a customer-centric approach and a leading position in digital services and content

• Extensive retail network consisting of over 8,000 stores, including 2,097 owned-and-operated stores, approx. 2,000 third-party monobrand stores and 4,000 Euroset stores

• Managed by a professional team with solid track record

• Listed on the London and Moscow stock exchanges since 27 Nov 2012

Strong

fundamentals

Growth

Returns

• Superior historical growth among Big 3 Russian mobile operators with future growth potential

• Strategically focus on improving operating efficiency and capital expenditure management which translates into growing cash flows

• Highly attractive shareholder remuneration policy: at least 50% of net income, or 70% of free cash flow

RUB bn 2011 2012 2013 2014 2015 CAGR

Total mobile subscribers (MM) 62.8 64.6 70.1 72.2 76.8 5.2%

Consolidated revenue 242.4 272.3 297.2 314.8 313.4 6.6%

Consolidated OIBDA 100.6 117.1 132.6 138.5 132.4 7.1%

Margin (%) 41.5% 43.0% 44.6% 44.0% 42.2%

Capex (70.6) (45.2) (47.1) (56.5) (70.2) -0.1%

As % of revenues 29.1% 16.6% 15.9% 17.9% 22.4%

OIBDA−Capex 30.0 71.9 85.4 82.0 62.2 20.0%

As % of revenues 12.4% 26.4% 28.7% 26.1% 19.8%

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22 years of our success story to become a leading telecom operator in Russia

Source: Company data.

Launch of 4G/LTE services in partnership with Yota

Acquisition of 50% stake in Euroset

Start listing on the LSE and MICEX

242.4

272.3297.2

314.8 313.4

1993 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

“NorthWest GSM” founded, launched operations in St. Petersburg

1st operator in Europe to launch “MMS” and 1st

operator in Russia to introduce “Mobile-TV”

1st operator to cover all regions in Russia

1st operator to launch 3G network in Russia in St.Peters-burg

Acquisition of Synterra

Becomes #2 mobile operator in Russia in terms of subscribers

Acquisition of Net-by-Net

MegaLabs launches operations

NorthWest GSM acquired nine other regional GSM operators and renamed MegaFon

MegaFon total revenues(RUB bn)

Launch of online store and introduction of EDGE technology

Acquisition of 100% stake in Yota/Scartel

Number of 4G subscribers hits 1 million

~20x

Leading 4G provider in Russia

General Communication partner for Sochi Olympics 2014

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Acquisition of 4 SMARTS companies in Volga region

Acquisition of GARS

Purchase of 49.99% stake in class A office building in Moscow

32,6%30,7% 30,9%

29,3%31,0% 30,7%

25,8%

27,1% 27,1%28,8% 29,0% 29,7%23,7%

25,1% 24,3% 23,9% 23,8% 23,7%

17,8% 17,1% 17,6% 18,1%16,1% 15,9%

2010 2011 2012 2013 2014 2015

Source: Bloomberg Consensus Forecast summary (April 2015)Note:(1) - Government focus on MTR and potential roaming regulation is increasing(2) - Fully implemented since April 2014 (3) - Including numbers ported into Scrtel/Yota network(4) - Includes Canada, Germany, France, Italy, Japan, United Kingdom, United States

Russian telecommunications market preserves attractiveness despite turbulent macroeconomic environment

Russian market fundamentals

Competitive telecom market dynamics

• 3 nationwide mobile operators

• Tele2 lags the Big3 operators in the market share, but launched its services in Moscow in late October 2015

• Predominantly prepaid market, limited handset subsidies

• Relatively high OIBDA margin (compared to developed markets) on the back of relatively benign competition and regulatory framework

Benign regulatory framework

• Mobile termination rates, roaming rates, and last mile fiber access are not regulated(1)

• Mobile number portability implemented relatively late in terms of market development(2). In 2015, MegaFon was the beneficiary of 32% of total numbers ported in(3).

• Local loop unbundling is not implemented

MegaFon track record of gaining market share

(Subscribers in millions)

-0.1 pp

+0.7pp

-0.3 pp

-0.3 pp

∆ 2015/2014

219 228 230 237 240

Others

Russian mobile subscribers market share

Total mobile revenues FY 2015 Data revenues FY 2015

252

RussiaEastern Europe

G7(4)

GDP (CAGR 2015-2018E real change p.a.) 0.6% 2.2% 1.8%

CPI (CAGR 2015-2018E, change p.a.) 6,8% 5.4% 1.8%

29,9%

33,4%

25,0%

11,7%

+0.1 p.p.

+0.7 p.p.

+0.1 p.p.

QoQ annual change in market share

37,5%

36,7%21,7%

4,1%

+0.0p.p.

+0.3 p.p.-0.4 p.p.

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-0.9 p.p.+0.3 p.p.

Other

8

Network infrastructure development in 2015

Fiber opticsinfrastructure

Number of base stations

46 337 47 946

38 147 42 281

18 54723 003

2014 2015

Growth▲ 9.9%

2G BS, units 3G BS, units 4G BS, units

121 102 126 030

2014 2015

Growth▲ 10.8%

Share of BS interconnected via FOCL(1), %

Backbone, km

• In 2015, MegaFon remained focused on increasing the quality of itsservices by continued roll-out and modernisation of 4G/3G/2Gnetworks in Russia

• By the year-end, the key indicators for the connection quality inMegaFon network improved:

• As of the end of 2015, MegaFon had the largest network amongRussian mobile operators, which comprised more than 113,000 basestations, +10% y-o-y

• MegaFon increased the length of its backbone infrastructure by 4%y-o-y, while its fiber optics infrastructure expanded to 184.4K km(4)

This enabled it to expand network footprint and capacity to providefixed-line business services

• In 2015, MegaFon completed integration of all branches into itsGlobal network operational center (GNOC). As of now, the GNOCenables centralised monitoring of, maintenance of and control overthe network quality across MegaFon’s country-wide operations

Note: (1) FOCL – fiber-optic communication lines(2) CSSR – Call set-up success rate(3) DCR - Drop call rate(4) Refined data, vary from those reported earlier

▲ 24.0%

▲ 10.8%

▲ 3.5%

64% 64%

Backhaul, km

184 401166 453

Key points

▲ 4.1%

▲ 28.7%

4G 3G 2G

CSSR(2) 99.47% 99.27% 98.98%

DCR(3) 0.33% 0.39% 0.75%

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9 Note: (1) — Russian population as of the latest census in October 2010

4G development in 2015 – focus on quality

Federal regions covered by MegaFon 4G / LTE network

Cities where LTE-Advanced available

4G/LTE network development

• MegaFon is focused on expansion of coverage in existingareas of presence and service quality improvement

• More 4G availability:

– 77 federal regions

–more than 780 cities and towns

– 14 out of 15 cities with a population(1) over 1m people

4G/LTE services

• LTE-Advanced services providing speeds of 150-450

Mbit/sec were available in 9 cities as of the year-end

• 4G-enabled devices registered on MegaFon network - 7.85m

units, or +34% y-o-y

• 4G traffic usage increased by 45% y-o-y

• Share of 4G traffic in total data traffic – c.40%

LTE-roaming

• MegaFon is one of the world’s leaders in LTE-roaming

coverage in terms of countries covered

• In 2015, LTE-roaming coverage extended to 66 countries

with 80 operators

Saint-Petersburg

Chelyabinsk

Moscow

Rostov-on-Don

Chita

Nizhniy Novgorod

Samara

Khabarovsk

2849

72 77

25%36%

51%59%

2012A 2013A 2014A 2015A

Availability of MegaFon 4G services

Number of Russia’s regions, where MegaFon 4G is available

% of population covered

Vladivostok

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Strong position in distribution in 2015

Structure of MegaFon distribution network

MegaFon Retail,incl. online store

> 2,000 stores

Franchised stores underMegaFon brand

~ 2,000 stores

Euroset(50% interest)

~ 4,000 stores

Controlled retail

Independent dealers:

Multi-brand electronic storesRussian Post outletsLocal dealersOther

Federal retail chain(dealer agreement)

~ 3,000 stores

72% gross additions(1)

• Through its controlled and non-controlled retail network,MegaFon holds the leading position in distribution in Russia

• The current structure of the distribution network enablesMegaFon to steadily increase its subscriber and data userbase in a cost-effective way and improve the quality of grossadditions

• MegaFon’s controlled retail accounted for 72% of total grossadds, while the owned retail stores accounted for c.40% oftotal gross adds in 2015

• Despite the shift to cheaper and more affordable devicesamid weaker consumer purchasing power, in 2015 we sold25% more smartphones in unit terms than a year ago in ourown retail stores. This helped us to deliver stronger mobiledata revenue

Note: (1) - Sales for the quarter, excluding Yota, as of end of Q4 2015(2) – Sales represented in unit terms(3) – Sales of data-enabled devices include sales of 4G smartphones, tablets, modems and routers

Non-controlled retail 28% gross additions(1)

+25% y-o-y

Smartphones

+113% y-o-y

4G smartphones

Sales of data-enabled devices(2) in MegaFon

Retail in 2015

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MegaFon TV – a key development for growth in data monetisation and increase of customer loyalty

11

Content

Devices supported

Uniqueness

• Unique terms of use for subscribers using “All inclusive” bundled tariff plans and options

• VOD and LiveTV tandem solution

• Premium HD content: Amedia, Discovery HD, HBO, Disney, Warner, Universal, Sport HD, etc.

• Individual recommendations based on ratings and perceptions by subscribers

• OTT solution available for all types of devices: smartphone, tablet, SMART TV, Web

• VOD: Large catalogue of movies, TV series and sequels of first-rate Russian and foreign studios

• Live TV: 130+ channels, including 1 and 2 multiplex

Company’s existing subscribers

3rd party clients

… aimed at both subscribers of MegaFon and those of other mobile operators

Clients Purposes

• Boosting of subscribers loyalty and lifetime

• Data usage enhancement

• Monetisation of subscriber base

• Monetisation of active users of MegaFon.TV app

• Acquisition of new subscribers

61% of app users rate the service as “good” and “excellent”4.0 average rate in Google Play and AppStore

Fully-fledged video and TV OTT solution launched in June 2015 MegaFon TV creates value for digital offering…

Customers’ dynamics satisfaction by the service

350K users registered at 31 December 2015c.40% average monthly growth of user base since launch

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Key developments in B2X(1) segment in 2015

Note: (1) B2X includes B2B and B2G business segments(2) CDN – Content delivery network(3) Based on Company’s estimate of M2M market in terms of M2M subscribers

Key projects in 2015

• Development of new IT tariff products to reduce the time to market launch ofindividual offerings for corporate clients

• Launch of programme for improvement of indoor coverage in business andcommercial centers

• Launch of the mono-industry towns development programme

• Launch of new exclusive overland cross-border passages Russia-Georgia andRussia-Kazakhstan

• Contract with RT-Invest Transportation Systems signed for distribution of 2million sim-cards to be installed on board heavy vehicles to meter over thehighway tracking

B2X strong performance in FY2015

New products and services

• Launch of M2M-Monitoring service on the basis of a new platform in all branchesof MegaFon

• Commercial launch of “Wi-Fi with authorisation” service on a federal level

• Launch of “Electronic document flow” service

• Upgrade of “Office zone” service, a cloud solution for SME business

• Launch of “Online conference” service in all branches of MegaFon

• Promotion of Geo-analytics service based on BigData analysis

• Upgrade of CDN(2) network: network capacity increased by more than 40%, scopeof services expanded by 60%

286 K

Number of B2X clients + 5% y-o-y

2.8 m

Number of B2X mobile data users

+23.1% y-o-y

8.2%

B2X total revenue

+ 8.2% y-o-y

6.6%

B2X mobile revenue

+ 6.6% y-o-y

30.9%

B2X mobiledata revenue +

30.9% y-o-y

• M2M subscribers exceeded 1.6 million as at 31 Dec 2015

• MegaFon’s M2M market share increased to 25%(3)

New B2B/B2G clients

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Data ARPU, RUB per month APPMb, RUB

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed. (1 ) —Data Service User is defined as a Subscriber who has used any of our data transfer services within the preceding one month (2) — Active subscribers that do not comply with the definition of Data Service User Base(3) — Total data revenues in a given period divided by average number of data service subscribers during such period, divided by number of months in such period(4) — Starting from 2013, APPMb presented here vary from those reported earlier do to the change in methodology for data service user calculation. APPMb is calculated by taking ARPDU for a given period, and dividing by DSU in that period(5) — Total number of megabytes transferred during a given period divided by average number of data subscribers during such period, divided by number of months in such period(6) — Total CAPEX, including CAPEX on spectrum acquisition via purchase of SMARTS in August 2015. Refers to actual CAPEX accrued for the year and may not match cash flow CAPEX

Superior operating performance…

Operating results provided on this page cover only the Russian business. Financial results are presented on a consolidated basis

…translating into strong financials

218,8 241,1 259,0 269,5 270,0

15,217,9

20,1 22,2 23,48,4

13,3 18,1242,4272,3

297,2

2011 2012 2013 2014 2015

100,6 117,1 132,6 138,5 132,4

41,5%43,0% 44,6% 44,0%

42,2%

2011 2012 2013 2014 2015

19,1 21,0 25,2 27,429,3

61,6 62,668,1 69,7

74,8

2011 2012 2013 2014 2015

Data service user base (1) User base not using data service (2)Wireless services Wireline services Equipment & Accessories

Lower▼ 0.4%

Total Russia wireless subscribers, MM

Russia Data ARPU (ARPDU(3)) and APPMb(4)

Consolidated Revenue breakdown, RUB Bn

Consolidated OIBDA and OIBDA margin

70,645,2 47,1 56,5

70,2

29,1%

16,6% 15,9%17,9%

22,4%

2011 2012 2013 2014 2015

Consolidated CAPEX(6) and CAPEX margin Growth▲ 24.2%

Demonstrating resilient operating and financial performance

Lower▼ 4.4%

314.8

23.1

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313.4

19.9

628 1091 1 556

2 6143 286

27%32% 38%

47%53%

2011 2012 2013 2014 2015

Data-enabled device penetration

Russia DSU(5) and data-enabled device penetration

DSU, Mb/month

148 164 177

211233

0,240,15

0,11

0,08 0,07

0,00

0,10

0,20

0,30

2011 2012 2013 2014 2015

Return to growth through digital strategy

14

New strategy focuses on “Digital“ trend, mobile data monetization and new product offerings

Since 2012 MegaFon successfully implementedan efficient growth strategy

Strategy implementation in 2012-15 allowed to accumulate free cash flow and increase the dividends

• Grown MegaFon share in the mobile market

• Increased business efficiency

• Deployed modern infrastructure and full-fledged 4G communications network

• Implemented new investment management process and subsequent optimized investment budget

• Enhanced organizational structure to strength the Company's position in the B2C, B2B, B2G and B2O markets with the aligned governance models

• Cover digital subscriber needs and requirements

• Leverage Internet and OTT companies cooperation

• Develop own innovative products and services (MegaFon TV, М2М services, mobile finance mobile advertising, cloud solutions)

• Well-timed construction and modernization of the network, utilizing spectrum advantage

• Identification and implementation of new growth areas in operating efficiency

Despite challenging macro MegaFon will return to sustainable growth with winning the “Digital”

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Financial and Operating Results

2

Results in 2015 in line with the full-year guidance

16

Note: All changes are shown on a year-on-year basis – FY 2015 vs FY 2014(1) — Revenue for FY2014 amounted to RUB 314.8bn(2) — Y-o-Y (or year over year) means the same periods in the current and previous year on either a quarterly or yearly basis. (3) — Organic CAPEX, excluding CAPEX on spectrum acquisition via purchase of SMARTS(4) — Gross CAPEX totaled RUB 70.2bn

Actual Target

Revenue growth

OIBDA margin

CAPEX

Metric

Flat(1) RUB 313.4bn

Status

OIBDA margin 42.2 %≥ 41.5 %

RUB 64.0bn(3)≤ RUB 65.0bn

Revenue was flat y-o-y(2)

CAPEX net of SMARTS acquisition

totalled RUB 64.0bn(4)

OIBDA margin was 0.7 p.p. above

guidance

In line

In line

In line

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Key highlights: earnings trend

Note: Due to rounding, manual calculations for financials and KPIs(2) may differ from those displayed(1) — Net profit attributable to equity holders of the Company(2) — Key performance indicators (“KPIs”)

Revenue

Revenue, OIBDA and Net profit82,2

74,0 76,1 81,3 82,0

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Lower▼ 0.3%

314,8 313,4

2014 2015

Lower▼ 0.4%

36,7 39,0

11,7% 12,5%

2014 2015

OIBDA

Net profit(1)

Quarterly data, RUB bn % of RevenueFull-year data, RUB bn

34,5 32,0 34,7 36,129,5

41,9% 43,2% 45,6% 44,5%36,0%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

2,8

7,4

13,0 13,3

5,3

3,4%10,0% 17,1% 16,4%

6,5%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Growth▲ 89.1%

Lower▼ 14.4%

Lower▼ 4.4%

Growth▲ 6.3%

138,5 132,4

44,0% 42,2%

2014 2015

• In 2015, total revenue was in line with the full-year

target with service revenue up by 0.6% y-o-y, but

impacted by lower revenue from sales of equipment and

accessories (-14.0% y-o-y) resulting from the change in

sales mix from expensive data-enabled devices towards

affordable smartphones

• OIBDA declined by 4.4% y-o-y due to higher marketing,

and general and administrative expenses

• As a result of the OIBDA decline, OIBDA margin

decreased by 1.8 p.p. y-o-y to 42.2%, which still

remained above the full-year target

• Net profit(1) increased by 6.3% y-o-y due to lower foreign

exchange loss compared to FY2014 and gain on

derivative financial instruments due to efficient foreign

exchange management

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Key highlights: free cash flow and CAPEX

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed(1) – MegaFon CAPEX refers to actual CAPEX accrued for the year and may not match cash flow CAPEX.

CAPEX

CAPEX(1), OIBDA-CAPEX, Free Cash FlowGrowth▲ 15.5%

Growth▲ 24.2%

OIBDA-CAPEX

Free Cash Flow

Quarterly data, RUB bn % of RevenueFull-year data, RUB bn

Lower▼ 20.3%

Lower▼ 58,0%

Lower▼ 24.2%

Lower▼ 23.9%

• In 2015, MegaFon spent RUB 70.2bn, which is 24.2%

higher than in FY 2014 mainly due to:

– higher spending on 4G/LTE network roll-out and

modernisation of 2G/3G network

– RUB 6.1bn purchase of spectrum through the SMARTS

acquisition, which will enable network roll-out CAPEX

optimisation going forward

– Net of acquisition of SMARTS’ spectrum, FY 2015

CAPEX totaled RUB 64bn, which is in line with the full-

year target

• Due to the lower OIBDA and higher CAPEX spending,

OIBDA-CAPEX decreased by 24.2% y-o-y

• Free Cash Flow decreased by 23.9% y-o-y mostly due to

higher CAPEX and decreased cash flow from operating

activities

20,5

8,112,5

25,923,6

24,9%

10,9%16,5%

31,9% 28,8%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014

56,570,2

17,9%

22,4%

2014 2015

14,0

23,922,2

10,25,917,0%

32,3% 29,1%12,6%

7,2%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014

82,062,2

26,1% 19,8%

2014 2015

17,4

11,7

19,3

8,9

13,8

21,1%15,9%

25,4%

10,9%16,9%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014

70,7

53,8

22,5%17,2%

2014 2015

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Mobile data revenue remains the key revenue growth driver

Key revenue components

Due to rounding, manual calculations for financials and KPIs may differ from those displayed.Note: (1) — Other wireless revenue includes revenues from VAS services; revenue from local subscribers which includes monthly fees, airtime revenues, own subscriber roaming and connection fees; wireless interconnection revenues; roaming charges to other wireless operators and other wireless revenues(2) — Include smartphones, tablets, dongles, routers, and other data-enabled devices

Wireless revenue increased in 2015 by 0.2% y-o-y. Growth inmobile data revenue and higher demand for MegaFon’scontent and mobile commerce value-added services (+4.5%y-o-y) fully compensated for a slowdown in revenue fromtraditional voice services

Mobile data continued to be the key growth driver andrepresented 25.5% of total revenue in FY2015 vs. 21.3% inFY2014, increasing by 19.0% y-o-y due to:

― expansion of data user base by 6.8% y-o-y to 29.9 millionusers as a result of our active data user acquisition effortsand higher adoption of data-enabled devices (more than50% of data-enabled devices(2) registered on MegaFonnetwork)

― higher data usage resulting from:

• active marketing efforts and intensive 4G networkdevelopment

• introduction of new tariff offerings to promote higherdata usage and promotion of affordable data-enableddevices in controlled retail stores

Wireline service revenues increased by 5.6% y-o-y due toexpansion of B2B and B2G client base, acquisition of GARSand attraction of new B2O projects due to DREAMdevelopment

Sales of handsets and accessories decreased by 14.0% y-o-yas a result of the change in sales mix towards more affordablesmartphones, including 3G and 4G smartphones, exclusivelyintroduced to the market by MegaFon

Wireless 83.6% 86.7% 87.8% 86.9% 83.5% 85.6% 86.2%

- Data 21.3% 24.1% 25.6% 26.6% 25.6% 21.3% 25.5%

Wireline 7.7% 7.4% 7.0% 7.0% 8.5% 7.0% 7.5%

Handsets and accessories

8.7% 5.9% 5.2% 6.1% 8.0% 7.4% 6.4%

17,5 17,9 19,5 21,6 21,0

51,2 46,2

47,4 49,0 47,5

6,3 5,5

5,3 5,7 6,9

7,2

4,4 4,0

5,0 6,6

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Lower▼ 0.3%

▲ 19.9%

Other wirelessrevenue(1)

Wireline

Handsets and

accessories

Data

82.2

74.0 76.181.3 82.0

▲ 9.6%

▼ 8.2%

▼ 0.3%

(RUB bn)

67,2 79,9

202,3 190,1

22,2 23,4

23,1 19,9

2014 2015

Lower▼ 0.4%

314.8 313.4

▲ 19.0%

▲ 5.6%

▼ 14.0%

▲ 0.2%

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Total Russia wireless subscribersincluding data service users

(million)

27,4 26,9 27,928,5 29,3

69,7 69,571,4

73,9 74,8

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Data service user base (1) User base not using data service (2)

Drivers of Russia total wireless services revenues: Wireless subscribers

Results provided on this page cover only the Russian business

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed(1) — Data Service User is defined as a Subscriber who has consumed any amount of data traffic within preceding month(2) — Mobile subscribers that do not fall within the definition of Data Service User Base

• Overall subscriber base in Russia increased by 5.1

million new subscribers (+7.2% y-o-y) to 74.8 million

resulting from:

- active subscriber acquisition marketing efforts and

new marketing campaign

- upgrade of existing tariffs and introduction of new

services

- new dealer contract with Svyaznoy, which provides

access to an additional attractive customer base

• Data service user base expanded by 6.9% y-o-y to 29.3

million users accounting for more than 39% of the

overall subscriber base supported by growth in

smartphone users base (+23.8% y-o-y)

• Increase in data service users was achieved due to

organic growth through initiatives aimed at promoting

shift of “pure” voice users to data usage and increased

penetration of data-enabled devices on MegaFon

network, now totaling 53%

Share of data users in overall subscriber base, %

39.3% 38.7% 39.1% 38.6% 39.2%

▲ 6.9%y-o-y

▲ 7.2%y-o-y

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DSU(2) & APPMB(3)

DATA ARPU (ARPDU(4))

Drivers of Russia total wireless services revenues: DSU and APPMB

Results provided on this page cover only the Russian business

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed(1) Operating KPIs presented here vary from those reported earlier due to change of methodology for data service users calculation.

Please refer to our Q4 and FY 2015 Results press release for reconciliation details (2) Total number of megabytes transferred during a given period divided by average number of data subscribers during such period, divided by number of months in such period; (3) ARPDU for a given period divided by DSU in such period; (4) Total data revenues in a given period divided by average number of data service subscribers during such period, divided by number of months in such period

• Strong increase of DSU (+25.7% y-o-y) in 2015 resulted

from:

– upgrade of tariff and internet options with higher

mobile data allowances

– active marketing promotions

– intensive roll-out of the 4G/LTE network resulting in

a higher share of 4G traffic (almost 40% of total

traffic)

– growing penetration of data-enabled devices on

MegaFon network up to c.53% as of the end of 2015

– continued increase in 4G-enabled devices registered

on MegaFon network reaching 7.9 million

• APPMB decreased by RUB 0.01 y-o-y

• ARPDU increased by 10.4% y-o-y due to organic growth

in data traffic usage on the back of increasing customer

demand for larger data packs, which became more

affordable

214 219232

244 238

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

2 9813 195 3 113 3 185

3 638

0,07 0,07 0,07 0,08 0,07

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Growth▲22.0 %

Growth▲11.2%RUB per

month

DSU, Mb/month APPMb, RUB

Data revenue operating statistics

Quarterly data Full-year data

2 614

3 286

0,08 0,07

2014 2015

211

233

2014 2015

Growth▲ 25.7%

Growth▲10.4% F

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138,5

(1,4)

0,2

(1,7) (3,3)

132,4

OIBDA2014

Revenue Cost of revenue Sales &Marketing

General &Administrative

OIBDA2015

▼ (0.5%)

OIBDA (RUB bn)

(0.3%)(0.4%) +10.1% +4.4%

Key factors influencing OIBDA margin

• In 2015, OIBDA decreased by 4.4% y-o-y, while OIBDA

margin declined by 1.8 p.p. y-o-y to 42.2%, remaining

above the full-year target

• The following factors influenced OIBDA:

- Gross profit decreased by 0.5% y-o-y due to lower

total revenues (-0.4% y-o-y), while .gross profit

margin remained flat at 73.1%

- Sales & marketing expenses increased by 10.1% y-o-y

mainly due to rise of the advertising activity related to

a new company positioning campaign

- General & administrative expenses grew by 4.4% due

to:

– increased rent and utilities expenses resulting from

our network expansion;

– higher employee benefits expense mainly due to an

increase in social charges

y-o-y growth

Key drivers of OIBDA margin

Lower▼ 4.4 %

Gross profit

Key components

OIBDA margin

(%)

Gross profit margin44.0% 42.2% ▼1.8 p.p.= 0% ▼ 0.6 p.p ▼ 1.2 p.p.

S&M as % of revenue

G&A as % of revenue

y-o-y decrease

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17%

83%

RUB USD

Liquidity(1) currency split

Net debt build-up, RUB bn As of 31 Dec 2014 As of 31 Dec 2015 Change

Cash and cash equivalents 22.2 17.5 (4.7)

Short-term investments 47.9 20.2 (27.7)

Total debt 206.3 218.5 12.2

Long-term debt 156.3 172.6 16.3

Short-term debt 50 45.9 (4.1)

Net debt 136.2 180.8 44.6

• Despite the dividend payment in December 2015 and

M&A activity in Q3-Q4 2015, MegaFon retained a

comfortable level of leverage:

– Net debt/LTM OIBDA at 1.37x level at the end of Q4

2015

– MegaFon fully paid dividend for 9m 2015 in the

amount of RUB 40bn in December 2015

– Purchase of interest in a building at Oruzheyny Lane,

Moscow, executed in Q4 2015

• Market volatility risks mitigated by keeping liquidity in

FX:

– Over 80% of cash held in hard currencies

• In December 2015, Moody’s changed its outlook on

MegaFon’s rating to “Stable” following an upgrade of

sovereign rating outlook

Net debt and liquidity development

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed(1) — Liquidity is calculated as the sum of Cash and cash equivalents and Short-term investments(2) — c. 0.25% in EUR for operating purposes

136,2 129,1 113.6 123,0

180,8

0,98x 0,94x0,82x

0,90x

1,37x

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

RUB bn / (x)

Net debt Net debt/LTM OIBDA

Growth▲ 0.39x

Net debt and Net debt/LTM OIBDA

(2)

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21%

24%34%

10%

11%

61%9%

28%

2%

44%

39%

17%

46%

36%

18%

31-D

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014

Debt portfolio structure

By currency (1)By instrument By maturity

Bonds

Bank Loans

Equipment Financing 3 Years

1 Year

5 Years and Longer

4 Years

2 Years

Debt profile

• No short-term refinancing risk

- 55% of Company’s debt becomes due within 3Y tenor or later

• Continuing strategy to keep a predominant portion of the creditportfolio in RUB

– Changes in Q4 2015 were attributable to the ECA drawdownsand the repayment of the hedged portion of the debt

• Further optimization of the Company’s debt portfolio

– In October 2015, MegaFon successfully placed RUB 15bn ofexchange bonds at a coupon rate of 11.4% p.a. for a period of 2years

– In December 2015, MegaFon and Sberbank signed a newrevolving credit facility in the amount of up to RUB 30bn. Underthis credit facility, MegaFon has already drawn a tranche in theamount of RUB 15bn

– Proceeds from these borrowings were used to partially prepayshort-term ruble debt with higher interest rates and replenishRUB liquidity

• New credit facilities to further back-up MegaFon’s CAPEX and caterfor refinancing needs were signed in December:

– New credit facility with CDB for USD 300 mln to finance Huaweiprocurement

– Credit facility with CDB for USD 300 mln aimed at refinancing ofa part of the Company’s existing debt – the Company’s firstfacility with CDB not linked with equipment purchases

– Finnvera-covered facility agreement with Sberbank in theamount of EUR 70 mln – the first ever RUB-denominated ECA-type facility for the Company

62%15%

21%2%

24%

20%

12%

24%

20%

31-D

ec-2

015

% of total

EUR

RUB

USD Swapped(2)

USD

Note: Due to rounding, manual calculations for financials and KPIs may differ from those displayed(1) — On nominal basis; (2 ) — Including structured and plain vanilla FX swaps

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Flat to low single digit y-o-y growth

RUB 120-126bn

Up to RUB 75bn

Revenue

OIBDA

CAPEX

Outlook for 2016

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Appendix

3

Existing MegaFon Corporate Governance structure complies with allrequirements of the London and Moscow stock exchanges whereMegaFon trades

Board of Directors elected in June-2015 consists of 7 members:

4 Board members represent interests of minority shareholders: 2TeliaSonera representatives and 2 INEDs

3 representatives of controlling shareholder USM

Three Committees of the Board of Directors have been set up forimproving corporate governance standards:

Audit Committee

Remuneration and HR Development Committee

Finance and Strategy Committee

On 12 Nov 2013, MegaFon’s Board of Directors approved the Code ofBusiness Conduct and Ethics further streamlining the corporategovernance procedures in the Company

Following the listing reform on the Moscow Exchange, in June 2014, theCompany’s shares were upgraded to the “Highest” quotation list QL I,thus allowing pension funds and state corporations to invest inMegaFon’s stock

- This upgrade confirms MegaFon compliance with MOEX’s highestcorporate standards

Corporate governanceBoard of Directors composition

Vladimir Streshinsky

MegaFon employs the best-in-class Corporate Governance practices…

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Sergey SoldatenkovChairman of the Board

Sergey Kulikov

Carl Peter Christian Luiga

Ingrid Maria Stenmark

Jan Rudberg

Nominated by USM Nominated by Teliasonera

Independent directors

Lord Myners

The majority of the Board represents minority shareholders

…led by a management team with extensive TMT experience

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Ivan Tavrin, Chief Executive Officer

● Chief Executive Officer of MegaFon since April 2012

● Extensive experience in the Russian media industry, pioneeringits development over the past 16 years, including RegionalMedia Group, Media One Holding, Vyberi Radio Group and TV-3

● Board positions outside MegaFon include MO-TV Holdings Limited, UTH Russia Limited, Media-One Holdings Limited and CJSC Kommersant Publishing House

Konstantin Likhodedov, Director, Consumer Business

● Director for Consumer Business since September 2015

● Previously Director of the Moscow branch of MegaFon

● Joined MegaFon in 2012

Dmitry Kononov, Director, Investors Relations and M&A

● Director for Business Development, M&A, IR since Dec 2008

● Joined MegaFon in 2000. Served as the Company’s CFO in 2002-2004

● 22 years of TMT experience

Alexander Bashmakov, Chief Technical Officer

● CTO since August 2015

● Previously Chief Strategy and Procurement Officer of MegaFon

● 8 years in management consulting with focus on Telecom & IT (Accenture and BCG)

Gevork Vermishyan, Chief Financial Officer

● CFO since Jul 2011

● Previously Director of Corporate Finance at AFK Sistema

● 13 years of finance / 8 years of TMT experience

Evgeny Chermashentsev, Chief Operating Officer

● Appointed Chief Operating Officer (Executive Director) ofMegaFon in July 2015

● Previously Deputy CEO for Infrastructure of MegaFon

● Joined MegaFon in 2012

● Before joining MegaFon held various senior positions at mediaand broadcasting companies

● c.20 years of TMT experience

Executive Bodies

MegaFon has noticeable advantage in terms of frequencies… … allowing to get significantly higher datatransfer rate in MegaFon’s network

Both operator and end-user equipment already support 2x20

MHz for LTE, no other operator beside MegaFon can provide such

band length

After implementation of technology neutrality MegaFon is the

only operator able to utilize 3 times 2x20 MHz channels (2x20

MHz in 1800 band and 2 times 2x20 in 2600 band) for LTE

In other technologies all nation-wide operators are almost equal

None of nation-wide operators except MegaFon can realize

significant benefits from implementing technological neutrality

700 MHz (LTE) 2x7,5 2x7,5 2x7,5 2x7,5

800 MHz (LTE) 2x7,5 2x7,5 2x7,5 2x7,5

900 MHz (2G(2))2x4,8-

2x15,6(1)

2x2,4-2x13,2(1)

2x0,8-2x13,6(1)

2x0,6-2x8,4(1)

1 800 MHz (2G / LTE)

2x14,6-2x30,6(1)

2x13,6-2x44,4(1)

2x12-2x29,6(1)

2x9,4-2x44,6(1)

2 100 MHz (3G) 2x15 2x15 2x15 2x15

2 400 MHz (LTE) - - - 30 - 70(1)

2 600 MHz (LTE - TDD(3))

25 25 - -

2 600 MHz (LTE) 2x40 2x10 2x10 2x10

(1) Band size varies depending on Russian region(2) 3G only for Moscow, Moscow region and Komsomolsk-on-Amur(3) In Moscow only

Wider band means higher data transfer rate and higher capacity of the network

MegaFon’s Spectrum Advantage

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MegaFon’s headline tariffs (Moscow region) (1/2)TARIFF NAME

MegaFon -All included S

PRICE

MegaFon -All included M

MegaFon -All included L

300 RUB/ month• 300 minutes

• 2 GB of 3G, 4G+ traffic

• 200 SMS

• 1 free movies and channels on MegaFon TV

FEATURES

500 RUB/ month

• 550 minutes


• 400 SMS


800 RUB/ month

• 1000 minutes in Russia


• 1000 SMS


BEYOND THE PACKAGE

• To MegaFon subs in Russia – 0 RUB/min

• To other subs of Moscow region – 1.6 RUB/min

• All outgoing calls to other regions of Russia – 3 RUB/min

Bun

dled

tar

iffs

Pop

ular

tari

ffs Switch to zero

Everything is simple 0 RUB/ month

• Outgoing calls to MF subs of Moscow region –0 RUB/ min

• Outgoing calls to other subs of Moscow region – 2.5 RUB/ min

• Outgoing call on not MG subs of Moscow region – 1.6 RUB/min

• Outgoing calls to other subs in Russia – 3.9 RUB/min

0 RUB/ month • All outgoing calls to other regions of Russia – 3 RUB/min

• Not applicable

MegaFon -All included VIP 2,700 RUB/ month



• 5000 SMS


Fre

e o

n ne

t ca

lls

in R

uss

ia













1,200 RUB/ month



• 2000 SMS


MegaFon -All included XL

MegaFon’s headline tariffs (Moscow region) (2/2)

MegaFon - Internet XS

350 RUB/ month• 3 GB of traffic

• Maximum speed is not limited


590 RUB/ month

890 RUB/ month

Inte

rnet

tari

ffs

opti

ons

• 16 GB of traffic*



• 36 GB of traffic*



• Once a plan data allowance isused, the Internet access willautomatically be suspendeduntil the next calendar monthor until the plan is upgradedwith other options

(*) 50% of traffic is available from 8.00 am to 00.59 am, the rest 50% of traffic is available from 1.00 am to 7.59 am

(**) Amount of traffic available is unlimited from 1.00 am to 7.59 am, 30 GB of traffic is available from 8.00 am to 00.59 am

(***) Valid only within 12 months from the date of the purchase of service under the special offer

TARIFF NAME PRICE FEATURES BEYOND THE PACKAGE

190 RUB/ month – 1st month7 RUB/day – from 2nd month

1,290 RUB/ month

• 70 MB of traffic per day


• Unlimited amount of traffic**



Roa

min

gta

riff

san

dop

tion

s

Around the world- Roaming tariff 9 RUB/ day• Europe, CIS: incoming, outgoing calls – 13 RUB/min / SMS – 11 RUB/ sms

• Other countries: incoming, outgoing call – 19 or 43 RUB/ min / SMS – 14 RUB/ sms

Whole world – voice tariff option 39 RUB/ day • Incoming calls - 0 RUB/ min from 0 to 30 minutes, from 31st minute – according to the roaming price list of the country of location

Internet abroad – data tariff option Depends on country• 10 MB of traffic per day - from 49 to 1990 RUB per day (Europe – 129 RUB/ day)

• 30 MB of traffic per day – from 129 to 4990 RUB per day (Europe – 329 RUB/day)

MegaFon - Internet S

MegaFon - Internet M

MegaFon - Internet L

MegaFon - Internet XL

Internet Tablet S(special offer, valid till 12-Jun-2016) 400 RUB/ month

• 4 GB of traffic + 3 GB of traffic monthy free of charge***



Contact Information

MegaFon Investor Relations30 Kadashevskaya embankmentMoscow, 115035, RussiaTel.: +7 495 926 2012Email: [email protected]: ir.megafon.com

Documents

MegaFon Investor presentation...2G BS, units 3G BS, units 4G BS, units 121 102 126 030 2014 2015 Growth 10.8% Share of BS interconnected via FOCL(1), % Backbone, km • In 2015, MegaFon