FORM 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
November 25, 2014
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Commission file number: 333-12032
Mobile TeleSystems OJSC
(Exact name of Registrant as specified in its charter)
Russian Federation
(Jurisdiction of incorporation or organization)
4, Marksistskaya Street
Moscow 109147
Russian Federation
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
Press release
Mobile TeleSystems Announces Financial Results for the Third Quarter Ended September 30, 2014
November 25, 2014
Moscow, Russian Federation Mobile TeleSystems OJSC (MTS - NYSE: MBT), the leading telecommunications provider in Russia and the CIS, today announces its unaudited US GAAP financial results for the three months ended September 30, 2014.
Key Financial Highlights of Q3 2014
· Consolidated Group revenues increased 3.6% y-o-y to RUB 107.1 billion
· Mobile service revenue in Russia rose 9.1% y-o-y to RUB 77.3 billion
· Data traffic revenue in Russia grew 37.2% y-o-y to RUB 17.2 billion
· Consolidated Group Adjusted OIBDA(1) up 4.1% y-o-y to RUB 48.2 billion
· Group OIBDA margin improved 0.2pp to 45.0%
· Consolidated net income(2) of RUB 16.1 billion
Amended Outlook for 2014
· Group revenue guidance increased from 1% to >2%
· Group OIBDA guidance increased from stable to ≈ 1%
· MTS Russia revenue guidance increased from 3-5% to ≈5%
· MTS Russia OIBDA guidance increased from 3-5% to ≈5%
· Group CAPEX guidance reiterated to approximately RUB 90 billion
Key Corporate and Industry Highlights
· Completed dividend payment of RUB 18.6 per ordinary MTS share (RUB 37.2 per ADR), or a total of RUB 38.435 bln based on the full-year 2013 financial results.
· Signed with the Republic of Uzbekistan a Settlement Agreement, the purpose of which was to resolve all disputes between the parties and enable MTS to resume operations in Uzbekistan, and discontinued international arbitration proceedings between MTS and the Republic of Uzbekistan at the International Center for Settlement of the Investment Disputes (the ICSID).
· Took possession a controlling stake in the Russian-Uzbek entity Universal Mobile Systems LLC and plans to commercially launch operations throughout the territory of Uzbekistan on December 1, 2014.
(1) OIBDA net of non-cash gain in the amount of RUB 3 604 mln due to transfer of a 50.01% stake in UMS, subsidiary in Uzbekistan, to MTS
(2) Attributable to the Group
2
· Completed dividend payment of RUB 6.2 per ordinary MTS share (RUB 12.4 per ADR), or a total of RUB 12.812 bln based on the H1 2014 financial results.
· Signed an agreement with Sberbank of Russia to open a non-revolving line of credit for a total amount of RUB 50 billion and amended terms of an existing credit agreement in the amount of RUB 20 billion.
· Launched satellite TV under the MTS brand in Russia.
· Signed a binding agreement with MTS Bank OJSC to acquire 952,000 ordinary shares of the Banks additional shares issuance for RUB 3,639,286,560.
Commentary
Mr. Andrei Dubovskov, MTS President and CEO, commented, During the quarter we increased our Group revenues by 3.6% year-over-year to RUB 107.1 bln. We witnessed revenue growth in Russia, Ukraine and Turkmenistan, but registered a slight decline in Armenia. As in Q2, hryvna devaluation and a weakening ruble impacted our Group performance.
Mr. Vasyl Latsanych, MTS Vice President for Marketing, said In Q3, we saw very strong growth in our Russian business unit with revenues improving by 8.4% year-over-year to RUB 99.2 bln. The growth was attributable to exceptionally strong performance of our mobile operations where revenues grew 9.1% year-over-year. Key drivers included subscriber migration from feature phones to smartphones as smartphone penetration in our active base reached almost 40%; success of our Smart family of tariffs which allows us to upsell existing subscribers on data plans by stimulating consumption of data products; continued growth from messaging as we increased sales of SMS bundles; growing penetration of tablets as number of tablets on our network increased by 35% year-over-year; expansion of the subscriber base as we added 5.95 million subscribers during the period; and high-quality of subscriber additions as demonstrated by positive dynamics in ARPU and sustained lowest level of churn in the market. Quarter-on-quarter our revenues rose by 9.1% as we benefited from seasonally strong roaming revenues throughout Russia and an increase in the subscriber base.
Mr. Alexey Kornya, MTS Vice President for Finance and Investments, added, In Q3 2014, Adjusted OIBDA increased by 4.1% to RUB 48.2 bln rubles. This figure was adjusted for a non-cash gain in the amount of 3.6 billion rubles we realized from the transfer of the controlling stake in UMS, an operating subsidiary in Uzbekistan, to MTS. Our growth in Adjusted OIBDA reflects many factors, including topline revenue dynamics in each of our markets of operation; the effect of a steadily rising contribution from data revenues in Russia; the impact of hryvna and ruble depreciation on our operating expenses; increased taxes and spectrum fees in Ukraine; rising G&A costs due to the enhancement of our mobile and fixed networks in Russia as well as pressure from inflationary expenses. On a quarterly basis, adjusted OIBDA grew by 11.5%, which was largely driven by seasonally higher roaming revenues and higher-quality subscriber additions, while maintaining steady sales & marketing expenses. Our Adjusted Group OIBDA margin net of the UMS effect came in at 45.0%. In Russia, OIBDA grew by 9.4% year-over-year to 45.4 billion rubles. This reflects both strong growth in mobile service revenues and an increased contribution from high-margin data revenues. This translates into a margin of 45.8%, the highest number we have registered in our Russian business unit since early 2009. In Ukraine, OIBDA declined by 10.7% year-over-year to UAH 1.21 billion. Profitability was under pressure due to increased taxes and frequency fees, higher payroll, electricity, site rentals costs and impact of the currency devaluation on cost items, including roaming and SIM cards, denominated in foreign currencies.
3
He continued, Despite macroeconomic weakness across our markets of operations, MTS continues to generate stable operating cash flows. Our free cash flows for the first nine months of 2014 declined by 11.7% compared to the previous period, but in Q2 2013 we benefited from a one-off gain from the settlement over Bitel LLC. Adjusted for this factor, our free cash flow was down by 7.6%, but this drop can be explained by higher CAPEX spending in Q3 2014; during the quarter we prepaid for a higher amount of non-ruble denominated equipment in anticipation of further weakening of the ruble. For the period, net income declined quarter-on quarter by 23.8% to RUB 16.1 bln. In Q4 2013, we registered a non-cash FOREX loss in the amount of RUB 9.5 bln from a revaluation of the foreign currency-denominated portion of the debt portfolio after significant ruble depreciation. The quarterly decline in bottom line was more pronounced as in the second quarter 2014 we had a non-cash FOREX gain in the amount of RUB 4.2 bln due to strengthening of the ruble.
Mr. Andrei Dubovskov, MTS President and CEO, concluded, The situation in Ukraine remains highly volatile and creates uncertainty at the Group level. It is hard to forecast what the operational trends in Ukraine would be going forward. Nevertheless, with the potential of 3G on the horizon we remain enthusiastic about the long-term prospects of the market. Nevertheless, we feel comfortable at this stage raising our Group guidance for 2014: we expect strength in the Russian market and better-than-expected performance in Ukraine and Armenia to lift revenue by at least 2% for the year. Russia will see around 5% of growth to this figure based on strong performance in the mobile market. In spite of the extreme volatility in the ruble we are seeing in Q4, we do expect Group OIBDA to improve by approximately 1%. CAPEX remains on track at roughly RUB 90 bln, but the figure might be impacted by currency fluctuations.
Additional Information
As of Q3 2014, MTS adjusted its subscriber reporting methodology to reflect three-months of subscriber activity instead of the previously used six-month methodology. In accompanying materials, subscriber numbers, as well as related operational indicators like Average Revenue Per User (ARPU) and Minutes of Use (MOU), Average Price Per Minute (APPM) and churn have been restated since Q1 2013 to provide like-for-like comparisons for FY2014 operational indicators.
In September 2014, MTS announced that Vladimir Evtushenkov, Chairman of the Board of Directors of Sistema JSFC (Sistema) (LSE: SSA), the parent company of MTS with effective ownership stake in MTS of 53.46%, was detained as part of an investigation into the privatization of BASHTek Group, through which Sistema owns a number of enterprises devoted to the extraction and marketing of oil and oil-related products. Though MTS reiterates that the investigation and any subsequent outcome of this investigation would have no effect on the Companys operations, certain changes at Sistema, including its revenue structure and debt position and other implications directly or indirectly arising out of Mr. Evtushenkov detainment and ongoing investigation, could potentially have an adverse effect on MTSs equity value, its credit ratings or other metrics used by investors to assess and value MTS public securities and tradable debt.
MTS continues to see sustained macroeconomic volatility in its markets of operations that may impact the financial and operational performance throughout the Group.
This press release provides a summary of some of the key financial and operating indicators for the period ended September 30, 2014. For full disclosure materials, please visit http://www.mtsgsm.com/resources/reports/.
4
Financial Summary
RUB mln |
|
Q314 |
|
Q313 |
|
y-o-y |
|
Q214 |
|
q-o-q |
|
Revenues |
|
107,148 |
|
103,388 |
|
3.6 |
% |
98,860 |
|
8.4 |
% |
Adjusted OIBDA |
|
48,186 |
|
46,290 |
|
4.1 |
% |
43,231 |
|
11.5 |
% |
- margin |
|
45.0 |
% |
44.8 |
% |
+0.2 |
pp |
43.7 |
% |
+1.3 |
pp |
Adjusted net operating income |
|
29,152 |
|
27,395 |
|
6.4 |
% |
24,973 |
|
16.7 |
% |
- margin |
|
27.2 |
% |
26.5 |
% |
+0.7 |
pp |
25.3 |
% |
+1.9 |
pp |
Net income attributable to the Group |
|
16,062 |
|
18,080 |
|
-11.2 |
% |
21,089 |
|
-23.8 |
% |
- margin |
|
15.0 |
% |
17.5 |
% |
-2.5 |
pp |
21.3 |
% |
-6.3 |
pp |
Russia Highlights
RUB mln |
|
Q314 |
|
Q313 |
|
y-o-y |
|
Q214 |
|
q-o-q |
|
Revenues(3) |
|
99,209 |
|
91,533 |
|
8.4 |
% |
90,390 |
|
9.8 |
% |
- mobile |
|
77,324 |
|
70,844 |
|
9.1 |
% |
70,884 |
|
9.1 |
% |
- fixed |
|
15,799 |
|
15,384 |
|
2.7 |
% |
15,584 |
|
1.4 |
% |
-sales of handsets & accessories |
|
7,785 |
|
7,094 |
|
9.7 |
% |
5,858 |
|
32.9 |
% |
OIBDA |
|
45,437 |
|
41,523 |
|
9.4 |
% |
40,309 |
|
12.7 |
% |
- margin |
|
45.8 |
% |
45.4 |
% |
+0.4 |
pp |
44.6 |
% |
+1.2 |
pp |
Net income |
|
10,818 |
|
15,630 |
|
-30.8 |
% |
19,450 |
|
-44.4 |
% |
- margin |
|
10.9 |
% |
17.1 |
% |
-6.2 |
pp |
21.5 |
% |
-10.6 |
pp |
|
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
ARPU (RUB) |
|
348.3 |
|
342.0 |
|
325.2 |
|
336.2 |
|
358.4 |
|
MOU (min) |
|
368 |
|
375 |
|
353 |
|
373 |
|
377 |
|
Churn rate (%) |
|
8.9 |
% |
9.8 |
% |
10.1 |
% |
10.9 |
% |
9.2 |
% |
Ukraine Highlights
UAH mln |
|
Q314 |
|
Q313 |
|
y-o-y |
|
Q214 |
|
q-o-q |
|
Revenues |
|
2,817 |
|
2,634 |
|
6.9 |
% |
2,563 |
|
+9.9 |
% |
OIBDA |
|
1,210 |
|
1,355 |
|
-10.7 |
% |
1,276 |
|
-5.2 |
% |
- margin |
|
42.9 |
% |
51.5 |
% |
-8.6 |
pp |
49.8 |
% |
-6.9 |
pp |
Net income |
|
763 |
|
684 |
|
11.5 |
% |
768 |
|
-0.7 |
% |
- margin |
|
27.1 |
% |
26.0 |
% |
+1.1 |
pp |
29.9 |
% |
-2.8 |
pp |
(3) Revenue, net of intercompany between mobile and fixed
5
|
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
ARPU (UAH) |
|
41.0 |
|
37.0 |
|
36.8 |
|
38.3 |
|
41.1 |
|
MOU (min) |
|
592 |
|
586 |
|
573 |
|
575 |
|
483 |
|
Churn rate (%) |
|
6.8 |
% |
7.4 |
% |
6.2 |
% |
4.5 |
% |
4.6 |
% |
SAC (UAH) |
|
57.1 |
|
53.3 |
|
49.4 |
|
50.8 |
|
63.4 |
|
- dealer commission |
|
36.7 |
|
29.7 |
|
29.4 |
|
31.2 |
|
37.5 |
|
- adv&mktg |
|
12.6 |
|
14.8 |
|
12.1 |
|
13.3 |
|
17.0 |
|
- handset subsidy |
|
0.6 |
|
0.9 |
|
0.7 |
|
0.8 |
|
1.7 |
|
- SIM card & voucher |
|
7.1 |
|
7.8 |
|
7.2 |
|
5.6 |
|
7.1 |
|
Armenia Highlights
AMD mln |
|
Q314 |
|
Q313 |
|
y-o-y |
|
Q214 |
|
q-o-q |
|
Revenues |
|
22,066 |
|
22,522 |
|
-2.0 |
% |
18,876 |
|
16.9 |
% |
OIBDA |
|
12,057 |
|
12,248 |
|
-1.6 |
% |
9,043 |
|
33.3 |
% |
- margin |
|
54.6 |
% |
54.4 |
% |
+0.2 |
pp |
47,9 |
% |
+6.7 |
pp |
Net income |
|
4,243 |
|
4,297 |
|
-1.3 |
% |
1,934 |
|
119.4 |
% |
- margin |
|
19.2 |
% |
19.1 |
% |
+0.1 |
pp |
10.2 |
% |
+9.0 |
pp |
|
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
ARPU (AMD) |
|
3,605.0 |
|
3,113.5 |
|
2,691.1 |
|
2,939.3 |
|
3,378.6 |
|
MOU (min) |
|
451 |
|
461 |
|
464 |
|
516 |
|
527 |
|
Churn rate (%) |
|
8.5 |
% |
8.3 |
% |
7.8 |
% |
7.7 |
% |
9.0 |
% |
SAC (AMD) |
|
6,077.1 |
|
6,800.7 |
|
5,129.8 |
|
5,302.3 |
|
4,773.3 |
|
Turkmenistan Highlights
TMT mln |
|
Q314 |
|
Q313 |
|
y-o-y |
|
Q214 |
|
q-o-q |
|
Revenues |
|
72 |
|
70 |
|
1.9 |
% |
69 |
|
3.2 |
% |
OIBDA |
|
30 |
|
27 |
|
11.2 |
% |
31 |
|
-2.6 |
% |
- margin |
|
41.8 |
% |
38.3 |
% |
+3.5 |
pp |
44.3 |
% |
-2.5 |
pp |
Net income |
|
26 |
|
24 |
|
7.1 |
% |
27 |
|
-3.7 |
% |
- margin |
|
36.0 |
% |
34.1 |
% |
+1.9 |
pp |
38.6 |
% |
-2.6 |
pp |
|
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
ARPU (TMT) |
|
13.7 |
|
13.9 |
|
12.8 |
|
13.6 |
|
14.1 |
|
MOU (min) |
|
617 |
|
620 |
|
588 |
|
575 |
|
564 |
|
Churn rate (%) |
|
13.0 |
% |
13.5 |
% |
12.0 |
% |
10.4 |
% |
11.2 |
% |
SAC (TMT) |
|
18.1 |
|
22.1 |
|
23.9 |
|
24.1 |
|
26.7 |
|
6
CAPEX Highlights
RUB mln |
|
FY 2011 |
|
FY 2012 |
|
FY 2013 |
|
9M14 |
|
Russia |
|
66,869 |
|
82,896 |
|
70,910 |
|
50,778 |
|
- as % of rev |
|
21.4 |
% |
24.5 |
% |
20.0 |
% |
18.3 |
% |
Ukraine |
|
4,487 |
|
4,125 |
|
8,840 |
|
2,248 |
|
- as % of rev |
|
13.4 |
% |
10.9 |
% |
22.2 |
% |
8.9 |
% |
Armenia |
|
1,344 |
|
751 |
|
1,093 |
|
345 |
|
- as % of rev |
|
22.8 |
% |
12.5 |
% |
17.5 |
% |
6.9 |
% |
Turkmenistan |
|
n/a |
|
11 |
|
732 |
|
456 |
|
- as % of rev |
|
n/a |
|
3.4 |
% |
25.8 |
% |
17.8 |
% |
Group |
|
72,798 |
|
87,783 |
|
81,575 |
|
53,827 |
|
- as % of rev |
|
20.9 |
% |
23.2 |
% |
20.5 |
% |
17.7 |
% |
* * *
For further information, please contact in Moscow:
Joshua B. Tulgan
Director, Corporate Finance & Investor Relations
Mobile TeleSystems OJSC
Tel: +7 495 223 2025
E-mail: ir@mts.ru
Learn more about MTS. Visit the official blog of the Investor Relations Department at www.mtsgsm.com/blog/ and follow us on Twitter: JoshatMTS
* * *
Mobile TeleSystems OJSC (MTS) is the leading telecommunications group in Russia and the CIS, offering mobile and fixed voice, broadband, pay TV as well as content and entertainment services in one of the worlds fastest growing regions. Including its subsidiaries, the Group services over 100 million mobile subscribers. The Group has been awarded GSM licenses in Russia, Ukraine, Turkmenistan, Armenia and Belarus, a region that boasts a total population of more than 200 million. Since June 2000, MTS Level 3 ADRs have been listed on the New York Stock Exchange (ticker symbol MBT). Additional information about the MTS Group can be found at www.mtsgsm.com.
* * *
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of MTS, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify forward looking statements by terms such as expect, believe, anticipate, estimate, intend, will, could, may or might, and the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not undertake or intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. We refer you to the documents MTS files from time to time with the U.S. Securities and Exchange Commission, specifically the Companys most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned Risk Factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of Russian, U.S. and other foreign government programs to restore liquidity and stimulate national and global economies, our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so, strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses, potential fluctuations in quarterly results, our competitive environment, dependence on new service development and tariff structures, rapid technological and market change, acquisition strategy, risks associated with telecommunications infrastructure, governmental regulation of the telecommunications industries and other risks associated with operating in Russia and the CIS, volatility of stock price, financial risk management and future growth subject to risks.
* * *
7
Attachments to the Third Quarter 2014
Earnings Press Release
Attachment A
Non-GAAP financial measures. This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP. Due to the rounding and translation practices, Russian ruble and functional currency margins, as well as other non-GAAP financial measures, may differ.
Operating Income before Depreciation and Amortization (OIBDA) and OIBDA margin. OIBDA represents operating income before depreciation and amortization. OIBDA margin is defined as OIBDA as a percentage of our net revenues. OIBDA may not be similar to OIBDA measures of other companies, is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations and comprehensive income. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of mobile operators and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. OIBDA can be reconciled to our consolidated statements of operations as follows:
Group (RUB mln) |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Adjusted operating income |
|
27,395 |
|
27,219 |
|
23,437 |
|
24,973 |
|
29,153 |
|
Add: D&A |
|
18,895 |
|
17,769 |
|
18,014 |
|
18,258 |
|
19,033 |
|
Adjusted OIBDA |
|
46,290 |
|
44,988 |
|
41,451 |
|
43,231 |
|
48,186 |
|
Russia (RUB mln) |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating income |
|
25,167 |
|
25,865 |
|
22,464 |
|
24,150 |
|
28,249 |
|
Add: D&A |
|
16,356 |
|
15,243 |
|
15,310 |
|
16,159 |
|
17,188 |
|
OIBDA |
|
41,523 |
|
41,107 |
|
37,773 |
|
40,309 |
|
45,437 |
|
Ukraine (RUB mln) |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating income |
|
3,397 |
|
3,109 |
|
2,634 |
|
2,153 |
|
2,071 |
|
Add: D&A |
|
2,165 |
|
2,085 |
|
2,256 |
|
1,665 |
|
1,410 |
|
OIBDA |
|
5,562 |
|
5,194 |
|
4,890 |
|
3,818 |
|
3,481 |
|
Armenia (RUB mln) |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating income/(loss) |
|
601 |
|
(27 |
) |
221 |
|
347 |
|
642 |
|
Add: D&A |
|
382 |
|
448 |
|
440 |
|
419 |
|
425 |
|
OIBDA |
|
983 |
|
420 |
|
662 |
|
766 |
|
1,067 |
|
8
Turkmenistan (RUB mln) |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating income |
|
305 |
|
488 |
|
289 |
|
354 |
|
352 |
|
Add: D&A |
|
4 |
|
11 |
|
25 |
|
23 |
|
27 |
|
OIBDA |
|
309 |
|
498 |
|
315 |
|
377 |
|
379 |
|
OIBDA margin can be reconciled to our operating margin as follows:
Group |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Adjusted operating margin |
|
26.5 |
% |
26.0 |
% |
24.0 |
% |
25.3 |
% |
27.2 |
% |
Add: D&A |
|
18.3 |
% |
17.0 |
% |
18.5 |
% |
18.5 |
% |
17.8 |
% |
Adjusted OIBDA margin |
|
44.8 |
% |
42.9 |
% |
42.5 |
% |
43.7 |
% |
45.0 |
% |
Russia |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating margin |
|
27.5 |
% |
27.5 |
% |
25.7 |
% |
26.7 |
% |
28.5 |
% |
Add: D&A |
|
17.9 |
% |
16.2 |
% |
17.5 |
% |
17.9 |
% |
17.3 |
% |
OIBDA margin |
|
45.4 |
% |
43.7 |
% |
43.3 |
% |
44.6 |
% |
45.8 |
% |
Ukraine |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating margin |
|
31.4 |
% |
31.3 |
% |
27.6 |
% |
28.1 |
% |
25.5 |
% |
Add: D&A |
|
20.0 |
% |
21.0 |
% |
23.6 |
% |
21.7 |
% |
17.4 |
% |
OIBDA margin |
|
51.5 |
% |
52.3 |
% |
51.2 |
% |
49.8 |
% |
42.9 |
% |
Armenia |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating margin |
|
33.2 |
% |
-1.7 |
% |
15.2 |
% |
21.7 |
% |
32.9 |
% |
Add: D&A |
|
21.2 |
% |
28.2 |
% |
30.2 |
% |
26.2 |
% |
21.8 |
% |
OIBDA margin |
|
54.4 |
% |
26.5 |
% |
45.4 |
% |
47.9 |
% |
54.6 |
% |
Turkmenistan |
|
Q313 |
|
Q413 |
|
Q114 |
|
Q214 |
|
Q314 |
|
Operating margin |
|
37.8 |
% |
59.5 |
% |
35.9 |
% |
41.6 |
% |
38.7 |
% |
Add: D&A |
|
0.5 |
% |
1.3 |
% |
3.1 |
% |
2.7 |
% |
3.0 |
% |
OIBDA margin |
|
38.3 |
% |
60.8 |
% |
39.0 |
% |
44.3 |
% |
41.7 |
% |
***
9
Attachment B
Net debt represents total debt less cash and cash equivalents and short-term investments. Our net debt calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare our periodic and future liquidity within the wireless telecommunications industry. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP.
Net debt can be reconciled to our consolidated statements of financial position as follows:
RUB mln |
|
As of Dec 31, 2013 |
|
As of Sep 30, 2014 |
|
Current portion of debt and of capital lease obligations |
|
25,064 |
|
11,431 |
|
Long-term debt and capital lease obligations |
|
194,083 |
|
222,369 |
|
Total debt |
|
219,147 |
|
233,800 |
|
Less: |
|
|
|
|
|
Cash and cash equivalents |
|
30,612 |
|
45,937 |
|
Short-term investments |
|
14,633 |
|
23,999 |
|
Net debt |
|
173,903 |
|
163,864 |
|
Free cash-flow can be reconciled to our consolidated statements of cash flow as follows:
RUB mln |
|
For nine months ended Sep 30, 2013 |
|
For nine months ended Sep 30, 2014 |
|
Net cash provided by operating activities |
|
121,602 |
|
120,548 |
|
Less: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
(35,967 |
) |
(40,771 |
) |
Purchases of intangible assets |
|
(7,946 |
) |
(13,056 |
) |
Proceeds from sale of property, plant and equipment |
|
270 |
|
506 |
|
Investments in and advances to associates |
|
(5 ,089 |
) |
(2,862 |
) |
Free cash flow from continuing operations |
|
72,870 |
|
64,365 |
|
10
LTM OIBDA can be reconciled to our consolidated statements of operations as follows:
RUB mln |
|
Three months ended Dec 31, 2013 |
|
Nine months ended Sep 30, 2014 |
|
Twelve months ended Sep 30, 2014 |
|
|
|
A |
|
B |
|
C=A+B |
|
Adjusted net operating income |
|
27,219 |
|
77,562 |
|
104,781 |
|
Add: D&A |
|
17,769 |
|
55,306 |
|
73,075 |
|
LTM Adjusted OIBDA |
|
44,988 |
|
132,868 |
|
177,856 |
|
***
11
Attachment C
Definitions
Subscriber. We define a subscriber as an organization or individual, whose SIM-card:
· shows traffic-generating activity or
· accrues a balance for services rendered or
· is replenished or topped off
Over the course of any three-month period, inclusive within the reporting period, and was not blocked at the end of the period.
Average monthly service revenue per subscriber (ARPU). We calculate our ARPU by dividing our service revenues for a given period, including interconnect, guest roaming fees and connection fees, by the average number of our subscribers during that period and dividing by the number of months in that period.
Average monthly minutes of usage per subscriber (MOU). MOU is calculated by dividing the total number of minutes of usage during a given period by the average number of our subscribers during the period and dividing by the number of months in that period.
Churn. We define our churn as the total number of subscribers who cease to be a subscriber as defined above during the period (whether involuntarily due to non-payment or voluntarily, at such subscribers request), expressed as a percentage of the average number of our subscribers during that period.
Subscriber acquisition cost (SAC). We define SAC as total sales and marketing expenses and handset subsidies for a given period. Sales and marketing expenses include advertising expenses and commissions to dealers. SAC per gross additional subscriber is calculated by dividing SAC during a given period by the total number of gross subscribers added by us during the period.
***
12
MOBILE TELESYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 (UNAUDITED)
(Amounts in millions of RUB except per share amount)
|
|
Nine months ended |
|
Three months ended |
|
|
|
September 30, 2014 |
|
September 30, 2013 |
|
September 30, 2014 |
|
September 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
Net operating revenue |
|
|
|
|
|
|
|
|
|
Service revenue |
|
283 759 |
|
275 003 |
|
99 317 |
|
96 238 |
|
Sales of handsets and accessories |
|
19 811 |
|
18 689 |
|
7 831 |
|
7 150 |
|
|
|
303 570 |
|
293 692 |
|
107 148 |
|
103 388 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
Cost of services |
|
(64 855 |
) |
(61 940 |
) |
(23 134 |
) |
(21 262 |
) |
Cost of handsets and accessories |
|
(17 484 |
) |
(15 446 |
) |
(6 825 |
) |
(5 877 |
) |
Sales and marketing expenses |
|
(15 869 |
) |
(16 768 |
) |
(5 429 |
) |
(5 785 |
) |
General and administrative expenses |
|
(66 757 |
) |
(64 125 |
) |
(21 664 |
) |
(21 565 |
) |
Depreciation and amortization expense |
|
(55 306 |
) |
(55 484 |
) |
(19 034 |
) |
(18 895 |
) |
Allowance for doubtful accounts |
|
(2 497 |
) |
(1 600 |
) |
(764 |
) |
(525 |
) |
Other operating expenses |
|
(3 240 |
) |
(3 791 |
) |
(1 146 |
) |
(2 084 |
) |
Gain from settlement agreement with Uzbekistan government |
|
3 604 |
|
|
|
3 604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income |
|
81 166 |
|
74 538 |
|
32 756 |
|
27 395 |
|
|
|
|
|
|
|
|
|
|
|
Currency exchange and transaction loss |
|
(9 088 |
) |
(4 633 |
) |
(9 523 |
) |
(28 |
) |
|
|
|
|
|
|
|
|
|
|
Other (expenses)/income: |
|
|
|
|
|
|
|
|
|
Interest income |
|
3 413 |
|
2 118 |
|
1 097 |
|
622 |
|
Interest expense, net of capitalized interest |
|
(12 171 |
) |
(12 515 |
) |
(4 159 |
) |
(4 036 |
) |
Other income/(expenses) |
|
1 115 |
|
11 592 |
|
(13 |
) |
688 |
|
Total other (expenses)/income, net |
|
(7 643 |
) |
1 195 |
|
(3 075 |
) |
(2 726 |
) |
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before provision for income taxes |
|
64 435 |
|
71 100 |
|
20 158 |
|
24 641 |
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
(13 542 |
) |
(13 964 |
) |
(3 819 |
) |
(6 282 |
) |
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
50 893 |
|
57 136 |
|
16 339 |
|
18 359 |
|
13
Net income from discontinued operations |
|
|
|
3 733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
50 893 |
|
60 869 |
|
16 339 |
|
18 359 |
|
|
|
|
|
|
|
|
|
|
|
Less net income attributable to the noncontrolling interests |
|
(717 |
) |
(782 |
) |
(277 |
) |
(280 |
) |
|
|
|
|
|
|
|
|
|
|
Net income attributable to the Group |
|
50 176 |
|
60 087 |
|
16 062 |
|
18 079 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of taxes |
|
|
|
|
|
|
|
|
|
Currency translation adjustment |
|
(5 701 |
) |
(3 312 |
) |
4 312 |
|
(423 |
) |
Unrealized gains/(losses) on derivatives |
|
4 293 |
|
1 370 |
|
3 119 |
|
(224 |
) |
Unrecognized actuarial gains |
|
15 |
|
28 |
|
7 |
|
9 |
|
Total other comprehensive (loss) income net of taxes |
|
(1 393 |
) |
(1 914 |
) |
7 438 |
|
(638 |
) |
Total comprehensive income |
|
49 500 |
|
58 955 |
|
23 777 |
|
17 721 |
|
Less comprehensive income attributable to the noncontrolling interests |
|
(1 004 |
) |
(874 |
) |
(529 |
) |
(229 |
) |
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to the Group |
|
48 496 |
|
58 081 |
|
23 248 |
|
17 492 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, in millions - basic and diluted |
|
1 989 |
|
1 989 |
|
1 989 |
|
1 989 |
|
Earnings per share attributable to the Group - basic and diluted: |
|
|
|
|
|
|
|
|
|
EPS from continuing operations |
|
25.23 |
|
28.33 |
|
8.08 |
|
9.09 |
|
EPS from discontinued operations |
|
|
|
1.88 |
|
|
|
|
|
Total EPS |
|
25.23 |
|
30.21 |
|
8.08 |
|
9.09 |
|
14
MOBILE TELESYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2014 (UNAUDITED) AND DECEMBER 31, 2013
(Amounts in millions of RUB)
|
|
As of September 30, |
|
As of December 31, |
|
|
|
2014 |
|
2013 |
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
|
45 937 |
|
30 612 |
|
Short-term investments |
|
23 999 |
|
14 633 |
|
Trade receivables, net |
|
32 268 |
|
34 554 |
|
Accounts receivable, related parties |
|
4 241 |
|
965 |
|
Inventory and spare parts |
|
7 779 |
|
8 498 |
|
VAT receivable |
|
7 556 |
|
6 651 |
|
Assets held for sale |
|
792 |
|
|
|
Prepaid expenses and other current assets |
|
18 625 |
|
20 763 |
|
Total current assets |
|
141 197 |
|
116 676 |
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT |
|
273 807 |
|
270 660 |
|
|
|
|
|
|
|
INTANGIBLE ASSETS |
|
81 485 |
|
74 329 |
|
|
|
|
|
|
|
INVESTMENTS IN AND ADVANCES TO ASSOCIATES |
|
16 371 |
|
13 393 |
|
|
|
|
|
|
|
OTHER INVESTMENTS |
|
4 726 |
|
4 392 |
|
|
|
|
|
|
|
OTHER NON - CURRENT ASSETS |
|
10 392 |
|
6 074 |
|
|
|
|
|
|
|
Total assets |
|
527 978 |
|
485 524 |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
Trade accounts payable |
|
21 049 |
|
23 864 |
|
Accrued expenses and other current liabilities |
|
68 495 |
|
49 619 |
|
Accounts payable, related parties |
|
2 881 |
|
3 315 |
|
Current portion of long-term debt, capital lease obligations |
|
11 431 |
|
25 064 |
|
Total current liabilities |
|
103 856 |
|
101 862 |
|
|
|
|
|
|
|
LONG-TERM LIABILITIES |
|
|
|
|
|
Long-term debt |
|
216 269 |
|
194 074 |
|
Capital lease obligation |
|
6 100 |
|
10 |
|
Deferred income taxes |
|
26 588 |
|
21 202 |
|
Deferred revenue and other long-term liabilities |
|
9 383 |
|
9 391 |
|
Total long-term liabilities |
|
258 340 |
|
224 677 |
|
|
|
|
|
|
|
Total liabilities |
|
362 196 |
|
326 539 |
|
|
|
|
|
|
|
Redeemable noncontrolling interests |
|
2 581 |
|
2 932 |
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY: |
|
|
|
|
|
Total shareholders equity attributable to the Group |
|
155 232 |
|
151 931 |
|
Non-redeemable noncontrolling interest |
|
7 969 |
|
4 122 |
|
TOTAL SHAREHOLDERS` EQUITY |
|
163 201 |
|
156 053 |
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
527 978 |
|
485 524 |
|
15
MOBILE TELESYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 (UNAUDITED)
(Amounts in millions of RUB)
|
|
Nine months ended |
|
Nine months ended |
|
|
|
September 30, 2014 |
|
September 30, 2013 |
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
Net income |
|
50 893 |
|
60 869 |
|
Net (income) from discontinued operations |
|
|
|
(3 733 |
) |
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
55 306 |
|
55 484 |
|
Currency exchange and translation loss |
|
9 088 |
|
4 633 |
|
Debt issuance cost amortization |
|
511 |
|
1 557 |
|
Amortization of deferred connection fees |
|
(898 |
) |
(722 |
) |
Equity in net income of associates |
|
(1 436 |
) |
(1 496 |
) |
Inventory obsolescence expense |
|
289 |
|
599 |
|
Provision for doubtful accounts |
|
2 497 |
|
1 600 |
|
Deferred tax loss |
|
2 650 |
|
7 142 |
|
Non cash gain from a settlement agreement with Uzbekistan government |
|
(3 604 |
) |
|
|
Other non-cash items |
|
61 |
|
(139 |
) |
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Decrease/(Increase) in trade receivables |
|
97 |
|
(6 857 |
) |
Decrease/(increase) in inventory |
|
436 |
|
(379 |
) |
Decrease/(Increase) in prepaid expenses and other current assets |
|
2 780 |
|
(4 281 |
) |
Increase in VAT receivable |
|
(846 |
) |
(1 076 |
) |
Decrease in trade payables, accrued liabilities and other current liabilities |
|
855 |
|
7 126 |
|
Dividends received |
|
1 869 |
|
1 275 |
|
Net cash provided by operating activities - continuing operations |
|
120 548 |
|
121 602 |
|
Net cash used in operating activities - discontinued operations |
|
|
|
(547 |
) |
Net cash provided by operating activities |
|
120 548 |
|
121 055 |
|
16
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
(40 771 |
) |
(35 967 |
) |
Purchases of intangible assets |
|
(13 056 |
) |
(7 946 |
) |
Proceeds from sale of property, plant and equipment |
|
506 |
|
269 |
|
Purchases of short-term investments |
|
(33 093 |
) |
(27 997 |
) |
Proceeds from sale of short-term investments |
|
40 019 |
|
21 290 |
|
Purchases of other investments |
|
(15 714 |
) |
(703 |
) |
Proceeds from sale of other investments |
|
730 |
|
|
|
Investments in and advances to associates, net |
|
(2 862 |
) |
(5 089 |
) |
Net cash used in investing activities - continuing operations |
|
(64 241 |
) |
(56 143 |
) |
Net cash provided by investing activities - discontinued operations |
|
|
|
115 |
|
Net cash used in investing activities |
|
(64 241 |
) |
(56 028 |
) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
Acquisition of noncontrolling interests in existing subsidiaries |
|
(26 |
) |
|
|
Proceeds from issuance of notes |
|
2 |
|
25 651 |
|
Repayment of notes |
|
(17 441 |
) |
(1 876 |
) |
Notes and debt issuance cost paid |
|
(25 |
) |
(184 |
) |
Capital lease obligation principal paid |
|
(103 |
) |
(137 |
) |
Dividends paid |
|
(37 547 |
) |
(29 086 |
) |
Proceeds from loans |
|
20 000 |
|
|
|
Loan principal paid |
|
(8 095 |
) |
(37 041 |
) |
Other financial activities |
|
22 |
|
(19 |
) |
Net cash (used in)/provided by financing activities - continuing operations |
|
(43 213 |
) |
(42 692 |
) |
Net cash provided by/(used in) financing activities - discontinued operations |
|
|
|
|
|
Net cash (used in)/provided by financing activities |
|
(43 213 |
) |
(42 692 |
) |
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
2 231 |
|
735 |
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS: |
|
15 325 |
|
23 070 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, at beginning of the period |
|
30 612 |
|
22 014 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, at end of the period |
|
45 937 |
|
45 084 |
|
17
|
Investor
conference call November 25, 2014 Andrei Dubovskov President, Chief
Executive Officer Alexey Kornya Vice President, Chief Financial Officer Vasyl
Latsanych Vice President, Chief Marketing Officer GROUP FINANCIAL RESULTS FOR
THE THIRD QUARTER 2014
|
|
SAFE HARBOR
Some of the information in this presentation may contain projections or other
forward-looking statements regarding future events or the future financial
performance of MTS, as defined in the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. You can identify forward
looking statements by terms such as expect, believe, anticipate,
estimate, intend, will, could, may or might, and the negative of
such terms or other similar expressions. We wish to caution you that these
statements are only predictions and that actual events or results may differ
materially. We do not undertake or intend to update these statements to
reflect events and circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. We refer you to the documents MTS
files from time to time with the U.S. Securities and Exchange Commission,
specifically the Companys most recent Form 20-F. These documents contain and
identify important factors, including those contained in the section
captioned Risk Factors that could cause the actual results to differ
materially from those contained in our projections or forward-looking
statements, including, among others, the severity and duration of current
economic and financial conditions, including volatility in interest and
exchange rates, commodity and equity prices and the value of financial
assets; the impact of Russian, U.S. and other foreign government programs to
restore liquidity and stimulate national and global economies, our ability to
maintain our current credit rating and the impact on our funding costs and
competitive position if we do not do so, strategic actions, including
acquisitions and dispositions and our success in integrating acquired
businesses, potential fluctuations in quarterly results, our competitive
environment, dependence on new service development and tariff structures,
rapid technological and market change, acquisition strategy, risks associated
with telecommunications infrastructure, governmental regulation of the
telecommunications industries and other risks associated with operating in
Russia and the CIS, volatility of stock price, financial risk management and
future growth subject to risks.
|
|
TABLE OF
CONTENTS FINANCIAL & CORPORATE HIGHLIGHTS Group news summary for Q3 2014
& key highlights Group financial highlights: revenue & OIBDA Group
financial highlights: net income Group mobile subscriber dynamics Group
capital expenditures Group debt at the end of Q3 2014 Group balance sheet
Group cash flows Outlook Dividend outlook 3D strategy KEY FINANCIAL &
OPERATING RESULTS Russian financial highlights Russian revenue breakdown
Russian mobile operating indicators Russia fixed operating indicators MGTS
Satellite TV Network development MTS retail network development MTS in
Financial Services Ukraine, Armenia and Turkmenistan financial highlights
& operating indicators Uzbekistan: re-entering the market APPENDIX
|
|
4 FINANCIAL
& CORPORATE HIGHLIGHTS
|
|
+3.6% Completed
dividend payment of RUB 18.6 per ordinary MTS share (RUB 37.2 per ADR), or a
total of RUB 38.435 bln based on the full-year 2013 financial results. Signed
with the Republic of Uzbekistan a Settlement Agreement, the purpose of which
was to resolve all disputes between the parties and enable MTS to resume
operations in Uzbekistan, and discontinued international arbitration
proceedings between MTS and the Republic of Uzbekistan at the International
Center for Settlement of the Investment Disputes (the ICSID). Took
possession of a controlling stake in the Russian-Uzbek entity Universal
Mobile Systems LLC, commercial launch of the operations throughout the
territory of Uzbekistan is planned on December 1, 2014. Q3 2014 HIGHLIGHTS
THEREAFTER Completed dividend payment of RUB 6.2 per ordinary MTS share (RUB
12.4 per ADR), or a total of RUB 12.812 bln based on the H1 2014 financial
results. Signed an agreement with Sberbank of Russia to open a non-revolving
line of credit for a total amount of RUB 50 bln and amended terms of an
existing credit agreement in the amount of RUB 20 bln. Launched satellite TV
under the MTS brand in Russia. Signed a binding agreement with MTS Bank OJSC
to acquire 952,000 ordinary shares of the Bank's additional shares issuance
for RUB 3,639,286,560. GROUP NEWS SUMMARY FOR Q3 2014 & KEY HIGHLIGHTS
+0.2pp +4.1% * OIBDA net off non-cash gain in the amount of RUB 3 604 mln due
to transfer of a 50.01% stake in UMS, subsidiary in Uzbekistan, to MTS In
September 2014, MTS announced that Vladimir Evtushenkov, Chairman of the
Board of Directors of Sistema JSFC (Sistema) (LSE: SSA), the parent company
of MTS with effective ownership stake in MTS of 53.46%, was detained as part
of an investigation into the privatization of BASHTek Group, through which
Sistema owns a number of enterprises devoted to the extraction and marketing
of oil and oil-related products. Though MTS reiterates that the investigation
and any subsequent outcome of this investigation would have no effect on the
Companys operations, certain changes at Sistema, including its revenue
structure and debt position and other implications directly or indirectly
arising out of Mr. Evtushenkov detainment and ongoing investigation, could
potentially have an adverse effect on MTSs equity value, its credit ratings
or other metrics used by investors to assess and value MTS public securities
and tradable debt.
|
|
GROUP FINANCIAL
HIGHLIGHTS: REVENUE & OIBDA Year-over-year revenue growth due to increase
in voice and data traffic revenues in and subscriber base growth in its key
markets of operations Topline growth offset by hryvna depreciation relative
to the Russian ruble Quarterly revenue dynamics enhanced by seasonally higher
roaming revenues, expansion of the subscriber base and increased sales of
handsets Year-over-year OIBDA dynamics in line with topline growth despite
mitigating factors, including: negative impact of hryvna devaluation and
increased taxes, utility and frequency fees in our Ukraine business unit
ruble depreciation in Russia higher payroll, utility and maintenance costs
due to network expansion in Russia Quarterly OIBDA dynamics reflect topline
dynamics and a higher seasonal contribution from roaming revenues TOTAL GROUP
REVENUE (RUB bln) +6.1% +3.6% +8.4% ADJ. OIBDA MARGIN* 45.5% 44.8% 42.9%
42.5% 43.7% 45.0% 44.3% 43.8% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
9M 2013 9M 2014 +3.4% *Adjusted for a non-cash gain in the amount of RUB 3
604 mln due to transfer of a 50.01% stake in UMS, subsidiary in Uzbekistan,
to MTS TOTAL GROUP ADJUSTED OIBDA* (RUB bln) +4.3% +4.1% +11.5% +2.1%
|
|
GROUP FINANCIAL
HIGHLIGHTS: NET INCOME Net income dynamics reflects a non-cash FOREX loss in
the amount of RUB 9.5 bln resulting from a revaluation of the foreign
currency-denominated portion of the debt portfolio following significant
ruble depreciation and a non-cash gain in the amount of RUB 3.6 bln from
transfer of 50.01% stake in UMS, subsidiary in Uzbekistan, to MTS MTS
continues to see sustained macroeconomic volatility in its markets of
operations that may impact the financial and operational performance
throughout the Group *Includes a non-cash gain on deconsolidation of
Uzbekistan of RUB 3 682 mln, **Includes a non-cash gain in the amount of RUB
3 604 mln from transfer of a 50.01% stake in UMS, subsidiary in Uzbekistan,
to MTS TOTAL GROUP NET INCOME (RUB bln) -37.8% -11.2% -23.8% NET INCOME
MARGIN 29.8% 17.5% 18.9% 13.4% 21.3% 15.0% 20.5% 16.5% Q2 2013 Q3 2013 Q4
2013 Q1 2014 Q2 2014 Q3 2014 9M 2013 9M 2014 -16.5% 16.1**
|
|
*Including CDMA
subscribers **MTS owns a 49% stake in Mobile TeleSystems LLC, a mobile
operator in Belarus, which is not consolidated GROUP MOBILE SUBSCRIBER BASE
DYNAMICS In Russia, MTS continues to attract and retain high-quality
subscribers by promoting innovative tariff plans and driving sales through
its proprietary retail network In Q3 2014, MTS adjusted its subscriber
reporting methodology to reflect three-months of subscriber activity instead
of the previously used six-month methodology MTS sustains its active
subscriber base through: best-in-class customer service market-leading
network performance and tariff plans and a market-leading retail platform
designed to migrate voice-only customers to data plans MTS SUBSCRIBERS (MLN
UNLESS NOTED) Q2 2014 Q3 2014 % Change TOTAL MOBILE 102.0 105.14 +3.1% RUSSIA
70.61 73.25 +3.8% UKRAINE* 22.31 22.73 +1.9% TURKMENISTAN 1.70 1.69 -0.5%
ARMENIA 2.12 2.15 +1.3% BELARUS** 5.26 5.31 +0.9%
|
|
GROUP CAPITAL
EXPENDITURES In Q3 2014, capital expenditures amounted to RUB 25.0 bln
Year-over-year increase in CAPEX due to ruble depreciation and prepayments of
telecommunications equipment in anticipation of further weakening of ruble In
Q3 MTS prepaid a portion of CAPEX for H2 2014 and H1 2015 to mitigate the
effect of ruble depreciation on its investments Key projects include the
enhancement of 3G networks in Russia, roll-out of LTE/4G networks throughout
Russia, and the ongoing deployment of GPON in Moscow as well as network
modernization in other markets of operations RUSSIA 66,869 82,896 70,910
50,778 UKRAINE 4,487 4,125 8,840 2,248 ARMENIA 1,344 751 1,093 345
TURKMENISTAN n/a 11 732 456 GROUP 72,798 87,783 81,575 53,827 - AS % OF
REVENUE 20.9% 23.2% 20.5% 17.7% (IN RUB MLN) 2011 2012 2013 9M 2014 FY 2014E ≈90,000
|
|
GROUP DEBT AT
THE END OF Q3 2014 **Debt composition by currency includes FOREX hedging in
the amount of $693.6 mln as of Q3 2014 DEBT COMPOSITION BY CURRENCY Q3 2014**
2% 79% 19% 43% 57% MTS Series 03, 08 and BO-01 ruble bonds contain put options
that can be exercised in December 2014, in November 2015 and in March 2018
respectively. MTS expects the options to be exercised. DEBT REPAYMENT
SCHEDULE (RUB bln) Total Group Debt* = 227.3 RUB bln DEBT COMPOSITION BY TYPE
Q3 2014* Signed an agreement with Sberbank of Russia to open a non-revolving
line of credit for a total amount of RUB 50 bln and maturity in September
2021 and amended the terms of an existing credit agreement in the amount of
RUB 20 bln by extending maturity from July 2015 to September 2017 High
proportion of ruble-denominated debt mitigates risks associated with currency
volatility and enhances MTSs balance sheet strength The share of US
dollar-denominated debt increased 2pp in comparison with the Q2 2014 due to
ruble depreciation versus the USD and EUR *Net of financial leasing
|
|
GROUP BALANCE
SHEET BALANCE SHEET (RUB mln UNLESS NOTED) As of Dec 31, 2013 As of September
30, 2014 CASH AND CASH EQUIVALENTS 30,612 45,937 SHORT-TERM INVESTMENTS
14,633 23,999 TOTAL DEBT* 219,147 233,800 LONG-TERM DEBT 194,084 222,369
SHORT-TERM DEBT 25,064 11,431 NET DEBT 173,903 163,864 LTM ADJUSTED OIBDA
175,011 177,856 NET DEBT/LTM ADJUSTED OIBDA 1.0x 0.9x Strong cash position in
Q3 due to preparation for RUB 12.8 bln dividend payout Net debt/LTM OIBDA
remains low by industry levels at 0.9 due to sustained growth in OIBDA,
stable cash flows and continued improvements in MTSs debt portfolio
Improvements in OIBDA and debt reduction as continuously improved MTSs
interest coverage ratio over the past six quarters LTM OIBDA/ Interest
Expenses 10.2 10.1 11.3 11.5 11.7 11.7 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2
2014 Q3 2014 NET DEBT (RUB bln) *Including capital lease obligations
|
|
GROUP CASH
FLOWS OPERATING AND FREE CASH FLOW FROM CONTINUING OPERATIONS (RUB mln) MTS
boasts stable operating and free cash flows despite currency weakness in its
secondary markets of operation Year-over-year decline in FCF due to increased
CAPEX as the Company prepaid a higher amount of foreign currency denominated
equipment in anticipation of further weakening of the ruble MTS continues to
demonstrate strong cash generation through its operations +16.8% -0.9% +50.5%
-11.7% ADJUSTED OPERATING AND FREE CASH FLOW FROM CONTINUING OPERATIONS* (RUB
mln) +42.1% -7.6% * Operating and Free Cash Flow from continuing operations
net of one-off effect related to the compensation for the settlement over
Bitel LLC +12.9% +1.9%
|
|
AMENDED OUTLOOK
FOR 2014 MTS raises expectations for Group revenue growth from >1% to
>2% for 2014E Growth in Russia raised to ≈5% Growth in Ukraine
impacted by on-going macroeconomic weakness and uncertain political
environment Group OIBDA guidance increased from stable to >1% Group
revenue and OIBDA dynamics further reflect sustained weakness of the Ukrainian
hryvna MTS maintains CAPEX guidance of RUB 90.0 bln, though currency
volatility may impact this final amount MTS sees significant macroeconomic
uncertainty and volatility across its markets of operation, which may cause
MTS to revisit its revenue and OIBDA guidance and, in turn, impact its
financial and operating results TOTAL GROUP REVENUE (RUB bln) GROUP CAPEX
(RUB bln) >2% ≈5% TOTAL MTS RUSSIA OIBDA (RUB bln) GROUP OIBDA (RUB
bln) ≈5% TOTAL MTS RUSSIA REVENUE (RUB bln) ≈1%
|
|
DIVIDEND
OUTLOOK DIVIDEND POLICY In April 2013, MTS Board approved a new dividend
policy, which stipulates that for the calendar years 2013-2015, MTS aims to
payout a minimum dividend distribution of an amount equal to at least 75% of
Free Cash Flow for the relevant financial period or, if greater, RUB 40.0 bln
per year In 2013, MTS also started paying out dividends on a semi-annual
basis using interim H1 and full-year financial result MTS paid out in total
RUB 41.0 bln in 2013 and RUB 51.2 bln in 2014 OUTLOOK FOR 2014+ MTS confirms
its dividend guidance for 2014 2015 of at least RUB 90 bln for the period
DIVIDEND HISTORY AND OUTLOOK (RUB bln)
|
|
DATA
DIFFERENTIATION 3D STRATEGY: LEVERAGING STRENGTHS & OPPORTUNITIES KEY MTS
GROWTH OPPORTUNITIES GROWTH IN MOBILE BROADBAND GROWTH IN FIXED BROADBAND/PAY
TV GROWTH IN CONVERGENT CORPORATE SERVICES Sustained efficiency and cash flow
generation MTS 3D STRATEGY DIVIDENDS Provide customers with fastest, most
reliable data networks Increase data penetration in our subscriber base
Ensure customers have the best connectivity experience in their homes,
workplace and places in between Offer customers unique products and services
to enhance their digital lives Establish Moscow as world-class in terms of
connectivity and network access Ensure a best-in-class customer experience to
improve loyalty throughout our markets of operation Improve continuously the
operational efficiency of MTS Enhance shareholder returns KEY MTS STRENGTHS
Largest subscriber base Strongest presence in high-value & corporate
segment Fastest mobile network speeds Most advanced retail platform in market
Leadership in mobile banking space Clear dividend policy PAYMENT OPTIONS AND
MOBILE BANKING TRADITIONAL TELECOMMUNICATIONS BUSINESS NEW BUSINESSES Track
record of success FTTB/FTTH services in 180 major Russian cities Digital
Moscow Highest customer loyalty ratings Strong position in Ukraine/CIS markets
Top brand
|
|
16 KEY
FINANCIAL & OPERATING RESULTS
|
|
RUSSIA
FINANCIAL HIGHLIGHTS Accelerated year-over-year revenue expansion driven by:
Higher usage of voice, messaging and data products Increased data adoption
among subscribers Strong subscriber additions Q-over-Q revenue growth
demonstrate seasonal trends, including higher roaming revenues, improved
sales of handsets and subscriber additions OIBDA growth reflects topline
revenue dynamics, greater contribution of high-margin data and higher roaming
and interconnect revenues TOTAL RUSSIA REVENUE (RUB bln) TOTAL RUSSIA OIBDA
(RUB bln) +5.9% +8.4% +9.8% +5.9% +9.4% +12.7% OIBDA MARGIN 45.4% 45.4% 43.7%
43.3% 44.6% 45.8% 44.7% 44.6% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
9M 2013 9M 2014 +6.2% +5.9%
|
|
RUSSIA REVENUE
BREAKDOWN MOBILE REVENUE (RUB bln) FIXED LINE REVENUE (RUB bln) SALES OF
HANDSETS & ACCESSORIES (RUB bln) +6.2% +9.1% +9.1% -2.2% +2.7% +1.4%
+21.8% +9.7% +32.9% Year-over-year growth in mobile service revenue
attributable to: Increased adoption of data through higher penetration of
smartphones and tablets Upselling of existing data users to tariff plans and
options with higher traffic allowances Growth in messaging revenues through
increased sales of SMS bundles Expansion of the subscriber base Q-over-Q
growth in mobile service revenues due to seasonally higher roaming revenues
and increase in subscriber base Growth in fixed line revenue due to upselling
customers as a result of continued modernization and enhancement of the networks
in Moscow and in the regions Retail handset revenue growth reflects seasonal
factors, higher unit sales and expansion of the MTS retail chain +7.6% STABLE
+6.2%
|
|
RUSSIA MOBILE
OPERATING INDICATORS ARPU (RUB) MOU (MIN) Year-over-Year ARPU growth driven
by upselling customers to tariff plans with larger data packages, as well as
the increased penetration of smartphones and tablets and attraction of higher
value subscribers MOU dynamics reflective of Companys efforts to drive usage
by promoting tariff plans with free on-net calling Churn stable at the lowest
levels in the market +2.9% +2.8% +6.6% STABLE +2.4% +1.1% SUBS, MLN 65.2 67.3
69.4 70.0 70.6 73.3 CHURN RATE, % 9.1% 8.9% 9.8% 10.1% 10.9% 9.2% VAS ARPU
99.7 102.2 111.8 112.0 112.6 118.3 - AS % OF ARPU 29.5% 29.3% 32.7% 34.4%
33.5% 33.0% APPM 0.92 0.95 0.91 0.92 0.90 0.95 Q2 2013 Q3 2013 Q4 2013 Q1
2014 Q2 2014 Q3 2014
|
|
RUSSIA MOBILE
OPERATING INDICATORS DATA TRAFFIC REVENUE (RUB mln) +14.1% +37.2% +12.1%
TOTAL VAS REVENUE (RUB mln) +6.5% +22.2% +8.9% Continued growth in total VAS
revenues results from MTSs focus on upselling customers on data plans,
promotion of affordable smartphones in its retail chain, sustained investment
in 3G/LTE networks, and success in creating the markets strongest value
proposition to customers Improvement in data traffic revenues driven by
growing smartphone and tablet penetration and upselling of existing data
users to tariff plans with bigger data packages Key initiatives included:
Launch and development of LTE networks Start of the sales of smartphones with
MTS SIM cards in Ozon.ru Launch of Smart Top tariff plan with 10GB of traffic
included Promo campaign Super Bit tariff plan for RUB 150 Promo campaign
Smartphone or tablet from MTS for RUB 1990 Up to RUB 1500 in credits on
mobile accounts with purchases of some of the Nokia and Samsung smartphones
+19.8% +39.4%
|
|
RUSSIA FIXED
OPERATING INDICATORS Residential ARPU growth highlights the rising share of
double-play and triple-play customers in the customer base, migration of
Pay-TV subscribers to MTSs digital TV platform, upselling of broadband
subscribers through modernization of fixed-line networks in the regions and
migration of ADSL customers in Moscow to GPON Quarterly decline in ARPU
reflect seasonal factors and promo campaigns related to subscriber additions
Increase in the number of households passed indicative of ongoing network
expansion in the regions Decline in residential subscriber base highlights
the migration of Pay TV subscribers from analog to digital platforms, which
results in defection of certain types of subscribers and decline in the
number of telephony subscribers in Moscow ARPU RESIDENTIAL (RUB) +1% +6.1%
-0.5% TOTAL HOUSEHOLDS PASSED, 000S 12,070 12,134 12,269 12,347 12,390 12,471
NUMBER OF SUBS, 000S* 7,844 7,690 7,563 7,426 7,294 7,185 Q2 2013 Q3 2013 Q4
2013 Q1 2014 Q2 2014 Q3 2014 * Including residential fixed-line telephony,
broadband, and pay-TV subscribers
|
|
In H2 2011,
MGTS began a RUB 50 bln investment project to replace outdated ADSL networks
with state-of-the-art Gigabit Capable Passive Optic Network (GPON), which
allow Internet access speeds of up to 1 Gb/s to all of Moscow's and Moscow
region's 4.4 million lines MGTS has so far installed over 35,000 km of fiber-optic
lines MGTS currently offers broadband access at the speeds up to 500 Mb/s and
190 TV channels, including over 30 HD channels as well as VoD services over
IPTV MGTS is growing its subscriber base by upselling its existing customers
from ADSL and acquiring new subscribers The project is expected to be
completed by the end of 2015, which will enable MTS/MGTS to introduce
unrivaled services, unmatched reliability and the fastest Internet access in
B2C broadband and Pay-TV markets MGTS
|
|
SATELLITE TV FORECAST OF SATELLITE TV MARKET
IN RUSSIA* (MLN SUBS) Satellite TV market is one of the fastest growing
segment of the Pay-Tv market in Russia Satellite TV market in terms of
subscribers is forecasted to grow by 42% between 2013 2018E* Volume of
satellite TV market in 2014 is expected to reach RUB 23 bln* By 2018, the
market is expected to increase by 40% to reach RUB 31.3 bln* Significant
opportunities in the satellite TV market due to low level of penetration of
cable TV, especially in rural areas MTS is uniquely positioned to capture
growth in this market due to: Unrivalled content portfolio of 160 channels,
including 30 HD channels Coverage of 95% of the Russias territory using
ABS-2 satellite Innovative set-top-box with inbuilt MTS SIM card and Ethernet/WiFi
connectivity providing for Internet access and access to a variety of
value-added services, (timeshift, catch-up, video-over-demand), payments
services, etc Significant experience in Pay TV and Mobile TV offerings Strong
brand Retail footprint of 4,100 stores across Russia Economies of scale using
existing call-centers and billing resources Launch of satellite TV will
enable MTS reduce line rentals costs substituting leased satellite channels
used as transport networks with own Satellite TV sales across Russia will be
launched till the end of 2014 +42.0% *Source: Json &Partners
|
|
NETWORK
DEVELOPMENT Regions where LTE networks will be launched in Q4 2014 - 2015
Regions with LTE networks As of October 01, 2014, MTSs network comprised
over 34,800 3G base stations and over 10,900 4G/LTE base stations LTE
networks in 65 regions LTE-enabled smartphones account for 9% of total
smartphones sold in the MTS retail chain in units 7% of smartphones on MTSs
network are LTE-enabled The largest LTE roaming network among Russian
operators with LTE roaming agreements with 39 operators in 31 countries In
September 2014, MTS was the first operator in Russia to test Carrier
Aggregation technology over 30 MHz of bandwidth spanning the 1800 MHz and the
2600 MHz ranges which allows MTS to increase LTE speeds up to 225 Mb/s Dlink
speed in Moscow in Q3 2014 (2G+3G+LTE)* (mbps) Dlink speed in Moscow in Q3
2014 (LTE only) (mbps) +1.1% +9.1% Dlink speed in Russia in Q3 2014
(2G+3G+LTE) (mbps) +12.7% * Data provided to MTS by Ookla
|
|
MTS RETAIL
NETWORK DEVELOPMENT *MTS defines a smartphone as a handset with one of the
following operating systems: iOS, Android, Windows, Blackberry OS, Symbian,
Linux, Bada or Asha At the end of Q3 2014, MTSs retail network comprised
4,100 stores, including 1,264 franchised outlets During the quarter MTS
increased its retail footprint by 50 own stores In Q3 2014, smartphones
accounted for 64.6% of phones sold in MTS stores in units In Q3 2014, total
smartphone penetration reached 39.9% DEVELOPMENT OF MTS RETAIL NETWORK
SMARTPHONES* SALES AND PENETRATION, 2011 2014
|
|
FINANCIAL
SERVICES TOTAL CREDIT PORTFOLIO (RUB bln) TOTAL NUMBER OF MTS DENGI CARDS
ISSUED (mln) +17.4% +95.9% +5.4% +11.1% +42.6% +4.6% MTS continues to see
strong demand for point-of-sale loans for smartphones 25.0% of smartphones
are sold with the assistance of some sort of P-o-S credit through MTSs
banking partners MTS and MTS Bank have introduced more stringent requirements
for issuing MTS Dengi cards which resulted in the decline of the approval
ratio and reduced the total number of cards issued during the period MTS and
MTS Bank focus on decreasing the share of interest- income (e.g. interest on
PoS loans and credit cards) and increasing the share of commission-related
income (i.e. annual commissions for servicing cards, commissions for cash
withdrawal, commissions for processing payments and money transfers) Turnover
and number of users of mobile payments through SMS-based services, MTSs
mobile application Easy Payment and website continue to rise MOBILE PAYMENTS
TURNOVER (RUB bln) MOBILE PAYMENTS USERS (mln) +28.5% +42.2%
|
|
UKRAINE
FINANCIAL HIGHLIGHTS Revenue growth driven by seasonally strong roaming
traffic and higher international calling for the period Decline in OIBDA
related to rising utility prices, a 2x increase in monthly frequency fees,
higher tax payments and hryvna devaluation impact on the costs denominated in
foreign currencies TOTAL UKRAINE REVENUE (UAH mln) TOTAL UKRAINE OIBDA (UAH
mln) +5.1% +6.9% +9.9% +2.9% -10.7% -5.2% OIBDA MARGIN 52.5% 51.5% 52.3%
51.1% 49.8% 42.9% 51.8% 47.7% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
9M 2013 9M 2014 +3.6% -4.5%
|
|
UKRAINE
OPERATING INDICATORS Year-over-Year ARPU increase due to higher subscribers
roaming revenues Decline in year-over-year minutes of use attributable to
difficulty in provisioning services in eastern Ukraine and impact of
macroeconomic factors on overall voice traffic ARPU (UAH) MOU (MIN) +1.0%
STABLE +7.5% -3.7% -18.4% -16.0% SUBS, MLN 20.4 21.3 21.5 21.7 22.3 22.7
CHURN RATE, % 5.8% 6.8% 7.4% 6.2% 4.5% 4.6% VAS ARPU 12.8 12.9 12.8 12.6 11.3
10.3 - AS % OF ARPU 31.5% 31.3% 34.5% 34.2% 29.6% 25.0% SAC 56.2 57.1 53.3
49.4 50.8 63.4 APPM 0.066 0.069 0.063 0.064 0.067 0.085 Q2 2013 Q3 2013 Q4
2013 Q1 2014 Q2 2014 Q3 2014
|
|
UKRAINE
OPERATING INDICATORS Decline in total VAS revenue is a result of reduced
consumption of value-added services, messaging and SMS-based content related
to overall drop in domestic voice traffic Period decline in data traffic
revenue reflects overall decrease in usage Key initiatives included: MTS
branded lotteries Try&Buy campaigns to stimulate usage of mobile Internet
TOTAL VAS REVENUE (UAH mln) DATA TRAFFIC REVENUE (UAH mln) +4.1% -13.7% -7.0%
+4.5% +1.0% -5.2% -5.0% +10.6%
|
|
ARMENIA
FINANCIAL HIGHLIGHTS TOTAL ARMENIA REVENUE (AMD bln) TOTAL ARMENIA OIBDA (AMD
bln) +13.6% -2.0% +16.9% +18.1% -1.6% +33.3% OIBDA MARGIN 52.3% 54.4% 26.8%
45.5% 47.9% 54.6% 52.5% 49.8% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
9M 2013 9M 2014 Year-over-Year revenue decline attributable to the sustained
decline in outgoing and incoming international calling due to macroeconomic
factors Quarterly increase in revenues attributable to seasonally higher
roaming and international calling revenues and regulatory decision to
increase termination rates for international calling starting from Q3 2014
Quarterly OIBDA dynamic reflects top-line growth, seasonally higher share of
roaming in the revenues mix and increase in termination rates for
international calls Year-over-Year OIBDA dynamics in line with revenue
dynamics and aided by an increase in termination rates for international
calls -3.4% -8.4%
|
|
ARMENIA
OPERATING INDICATORS ARPU (AMD) MOU (MIN) +11.6% -6.3% +14.9% SUBS, 000S 2,022.4
2,063.2 2,099.7 2,102.5 2,121.8 2,149.4 CHURN RATE, % 8.3% 8.5% 8.3% 7.8%
7.7% 9.0% SAC 6,287.4 6,077.1 6,800.7 5,129.8 5,302.3 4,773.3 APPM 7.53 7.99
6.75 5.80 5.70 6.41 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Year-over-Year decline in ARPU attributable to an increase in free on-net
calls included in the packages as well as reduced international calling
Quarterly increase in ARPU in line with traditional seasonal trends due to
increased subscriber roaming revenues Year-over-Year rise in MOU reflects
MTSs efforts to drive voice usage Continued improvement in churn dynamics
reflects the sustained focus on promoting customer loyalty +5.2% +16.8% +2.1%
|
|
TURKMENISTAN
FINANCIAL HIGHLIGHTS TOTAL TURKMENISTAN REVENUE (TMT mln) TOTAL TURKMENISTAN
OIBDA (TMT mln) OIBDA MARGIN 33.1% 38.3% 60.6% 39.0% 44.3% 41.8% 33.6% 41.7%
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 9M 2013 9M 2014
Year-over-year topline dynamics attributable to increased data revenues,
greater revenues form off-net calling and higher guest subscriber roaming
revenues Quarterly revenue dynamics reflective of strong increase in data
revenues due to network enhancement Strong year-over-year increase in OIBDA
due to decrease in network and equipment maintenance costs and changes in the
taxation policy Quarterly decline in OIBDA reflective of higher line rentals
costs +14.0% +41.8% +12.1% +1.9% +3.2% +30.0% +11.2% -2.6%
|
|
TURKMENISTAN
OPERATING INDICATORS ARPU (TMT) MOU (MIN) Year-over-year growth in ARPU
reflective of Companys success in the monetization of its subscriber base
Sequential decline in MOU attributable to MTSs initiatives aimed at reducing
the share of free on-net calling in the traffic mix SUBS, 000S 1,687.9
1,725.1 1,723.5 1,691.9 1,699.4 1,691.3 CHURN RATE, % 13.1% 13.0% 13.5% 12.0%
10.4% 11.2% SAC 13.6 18.1 22.1 23.9 24.1 26.7 APPM 0.021 0.022 0.022 0.022
0.024 0.025 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 +7.9% +2.9% +3.7%
+1.7% -8.5% -1.8%
|
|
Tashkent On
September 24, 2014, MTS took possession of a 50.01% stake in the
Russian-Uzbek entity Universal Mobile Systems LLC (UMS) The assets, equipment
and infrastructure, which were previously owned by Uzdunrobita FE LLC, former
MTS subsidiary in Uzbekistan, were transferred to UMS UMS has been granted 2G,
3G and LTE licenses, and received frequencies, numbering capacity and other
permits required for the launch of the operations MTS plans to launch
operations throughout the territory of Uzbekistan on December 1, 2014
1Source: IMF, World Economic Outlook Database, October 2014 Key facts about
Uzbekistan1 Population: 30.2 mln Population density: 76 per km2 GDP REAL
forecast 2015E: 6.5% UZBEKISTAN: RE-ENTERING THE MARKET
|
|
35 APPENDIX
|
|
Non-GAAP
financial measures. This presentation includes financial information prepared
in accordance with accounting principles generally accepted in the United
States of America, or US GAAP, as well as other financial measures referred
to as non-GAAP. The non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the information prepared in
accordance with US GAAP. Due to the rounding and translation practices,
Russian ruble and functional currency margins, as well as other non-GAAP
financial measures, may differ. Operating Income Before Depreciation and
Amortization (OIBDA) and OIBDA margin. OIBDA represents operating income
before depreciation and amortization. OIBDA margin is defined as OIBDA as a
percentage of our net revenues. OIBDA may not be similar to OIBDA measures of
other companies, is not a measurement under accounting principles generally
accepted in the United States and should be considered in addition to, but
not as a substitute for, the information contained in our consolidated
statement of operations. We believe that OIBDA provides useful information to
investors because it is an indicator of the strength and performance of our
ongoing business operations, including our ability to fund discretionary
spending such as capital expenditures, acquisitions of mobile operators and
other investments and our ability to incur and service debt. While
depreciation and amortization are considered operating costs under generally
accepted accounting principles, these expenses primarily represent the
non-cash current period allocation of costs associated with long-lived assets
acquired or constructed in prior periods. Our OIBDA calculation is commonly
used as one of the bases for investors, analysts and credit rating agencies
to evaluate and compare the periodic and future operating performance and
value of companies within the wireless telecommunications industry. OIBDA can
be reconciled to our consolidated statements of operations as follows:
DEFINITIONS & RECONCILIATIONS Q3 2013 Q2 2014 Q3 2014 RUB mln Group RUS
UKR ARM TUK Group RUS UKR ARM TUK Group RUS UKR ARM TUK ADJUSTED OPERATING
INCOME/LOSS 27,395 25,167 3,397 601 305 24,973 24,150 2,153 347 354 29,153
28,249 2,071 642 352 ADD: D&A 18,895 16,356 2,165 382 4 18,258 16,159
1,665 419 23 19,033 17,188 1,410 425 27 ADJUSTED OIBDA 46,290 41,523 5,562
983 309 43,231 40,309 3,818 766 377 48,186 45,437 3,481 1,067 379 Q3 2013 Q2
2014 Q3 2014 Group RUS UKR ARM TUK Group RUS UKR ARM TUK Group RUS UKR ARM
TUK ADJUSTED OPERATING MARGIN 26.5% 27.5% 31.4% 33.2% 37.8% 25.3% 26.7% 28.1%
21.7% 41.6% 27.2% 28.5% 25.5% 32.9% 38.7% ADD: D&A 18.3% 17.9% 20.0%
21.2% 0.5% 18.5% 17.9% 21.7% 26.2% 2.7% 17.8% 17.3% 17.4% 21.8% 3.0% ADJUSTED
OIBDA MARGIN 44.8% 45.4% 51.5% 54.4% 38.3% 43.7% 44.6% 49.8% 47.9% 44.3%
45.0% 45.8% 42.9% 54.6% 41.7%
|
|
DEFINITIONS
& RECONCILIATIONS RUB mln As of Dec 31, 2013 As of Sep 30, 2014 Current
portion of LT debt and of capital lease obligations 25,064 11,431 LT debt and
capital lease obligations 194,083 222,369 Total debt 219,147 233,800 Less:
Cash and cash equivalents 30,612 45,937 ST investments 14,633 23,999 Net debt
173,903 163,864 Free cash flow is represented by net cash from operating
activities less cash used for certain investing activities. Free cash flow is
commonly used by investors, analysts and credit rating agencies to assess and
evaluate our performance over time and within the wireless telecommunications
industry. Because free cash flow is not based in US GAAP and excludes certain
sources and uses of cash, the calculation should not be looked upon as an
alternative to our Consolidated statement of cash flows or other information
prepared in accordance with US GAAP. RUB mln For nine months ended Sep 30,
2013 For nine months ended Sep 30, 2014 Net cash provided by operating
activities from continuing operations 121,602 120,548 Less: Purchases of
property, plant and equipment (35,967) (40,771) Purchases of intangible
assets (7,946) (13,056) Proceeds from sale of property, plant and equipment
270 506 Investments in and advances to associates (5 ,089) (2,862) Free cash
flow from continuing operations 72,870 64,365 Net debt represents total debt
less cash and cash equivalents and short-term investments. Our net debt
calculation is commonly used as one of the bases for investors, analysts and
credit rating agencies to evaluate and compare our periodic and future
liquidity within the wireless telecommunications industry. The non-GAAP
financial measures should be considered in addition to, but not as a
substitute for, the information prepared in accordance with US GAAP.
|
|
LTM OIBDA can
be reconciled to our consolidated statements of operations as follows: RUB
mln Three months ended Dec 31, 2013 Nine months ended Sep 30, 2014 Twelve
months ended Sep 30, 2014 A B C = A + B Adjusted net operating income 27,219
77,562 104,781 Add: D&A 17,769 55,306 73,075 Adjusted LTM OIBDA 44,988
132,868 177,856 DEFINITIONS & RECONCILIATIONS
|
|
DEFINITIONS
& RECONCILIATIONS Average monthly service revenue per subscriber (ARPU).
We calculate our ARPU by dividing our service revenues for a given period,
including interconnect, guest roaming fees and connection fees, by the
average number of our subscribers during that period and dividing by the
number of months in that period. Average monthly minutes of usage per
subscriber (MOU). MOU is calculated by dividing the total number of minutes
of usage during a given period by the average number of our subscribers
during the period and dividing by the number of months in that period.
Subscriber. We define a subscriber as an organization or individual, whose
SIM-card: shows traffic-generating activity or accrues a balance for services
rendered or is replenished or topped off Over the course of any three-month
period, inclusive within the reporting period, and was not blocked at the end
of the period. Churn. We define our churn as the total number of
subscribers who cease to be a subscriber as defined above during the period (whether
involuntarily due to non-payment or voluntarily, at such subscribers
request), expressed as a percentage of the average number of our subscribers
during that period. Subscriber acquisition cost (SAC). We define SAC as total
sales and marketing expenses and handset subsidies for a given period. Sales
and marketing expenses include advertising expenses and commissions to
dealers. SAC per gross additional subscriber is calculated by dividing SAC
during a given period by the total number of gross subscribers added by us
during the period.
|
|
CONTACT
INFORMATION MTS Investor Relations +7 495 223 20 25 ir@mts.ru www.mtsgsm.com
Latest Financial Information www.mtsgsm.com/resources/reports/ Official MTS
Blog www.mtsgsm.com/blog/ Follow Us twitter.com/JoshatMTS
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
MOBILE TELESYSTEMS OJSC |
|
|
|
|
|
|
|
By: |
/s/ Andrei Dubovskov |
|
|
Name: |
Andrei Dubovskov |
|
|
Title: |
CEO |
|
|
|
|
Date: November 25, 2014 |
Mobile TeleSystems Publi... (NYSE:MBT)
Historical Stock Chart
From Oct 2024 to Oct 2024
Mobile TeleSystems Publi... (NYSE:MBT)
Historical Stock Chart
From Oct 2023 to Oct 2024