UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 6-K
Report
of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities
Exchange Act of 1934
For the month
of August, 2022
Commission File
Number: 001-15094
Mobile TeleSystems
Public Joint Stock Company
(Translation of
registrant’s name into English)
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 ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
MTS Reports Q2 2022
Results
| · | Q2
2022 Consolidated Group Revenue increased 0.7% year-over-year to RUB 127.8 bn. Consolidated
Group revenue for 6M 2022 increased 4.2% to RUB 259.7 bn. |
| · | Q2
2022 Group Adjusted OIBDA1 amounted to RUB 51.8 bn. Group Adjusted OIBDA
for 6M 2022 amounted to RUB 108.2 bn. |
| · | Q2
2022 Group Net Profit2 amounted to RUB 10.9 bn. Group Net Profit for 6M
2022 amounted to RUB 14.8 bn. |
MOSCOW, August 18,
2022 — Mobile TeleSystems Public Joint Stock Company (“MTS” or “the Company”) (MOEX: MTSS), a leading provider
of digital and media services and Russia’s largest mobile operator, announces its second-quarter 2022 financial and operating results.
In Q2 2022, Consolidated
Group Revenue increased 0.7% year-over-year to RUB 127.8 bn, driven primarily by the performance in the Company’s Telecom,
Fintech, and Media3 verticals. Group Adjusted OIBDA amounted to RUB 51.8 bn on the back of provisions accrual in the Fintech
segment, reflecting challenging macroeconomic environment. In Q2 2022, Group Net Profit came to RUB 10.9 bn.
Viacheslav Nikolaev,
President & CEO, commented: “In the second quarter of 2022, MTS largely adapted to the new macroeconomic environment.
Communication services have always been and will continue to be a basic human necessity, and our primary goal remains to ensure uninterrupted
network connectivity regardless of economic constraints.
MTS’s strategy
to develop a digital product ecosystem based on a strong telecoms platform is proving relevant in the new economic environment. We have
seen stable demand for connectivity services from private and corporate customers alike and continue to see growth in the popularity
of our MTS Premium subscription service. We are also launching new products and continue to invest in new areas, some of which are showing
double-digit revenue growth.
I am confident
that our expertise and ability to provide uninterrupted, high-quality services will enable us to overcome challenges and will be the
key to the sustainability of our business.”
1 Adjusted OIBDA for 2Q 2022 doesn't include a loss from impairment of non-current assets of RUB 282 m.
2 Attributable to owners of the
Company.
3 The financial results for the Media operating segment are presented in the «Other» category in the Group’s
consolidated financial statements.
Business-lines highlights
Telecom
| · | Russia
connectivity services revenue increased 4.2% year-over-year to reach RUB 106.1 bn in
Q2 2022. |
| · | The
number of Russia three-month active mobile subscribers remained stable quarter-on-quarter,
totaling to 80.0 m. |
| · | Russia
sales of handsets and accessories declined 47.4% year-over-year to RUB 7.9 bn in Q2 2022. |
| · | The
number of monthly active MyMTS app users decreased slightly to 25.8 m as of the end of
the reporting period. |
Fintech
| · | Fintech
revenue increased 37.2% year-over-year in Q2 2022 to reach RUB 15.9 bn. |
| · | The
number of MTS Bank clients grew 18.6% year-over-year to 3.1 m as of the end of the quarter. |
| · | The
number of MTS Bank mobile app 3-month active users increased 36.5% year-over-year to
1.9 m as of the end of the period. |
Media
| · | The
number of over-the-top media subscribers increased 4.8% quarter-on-quarter, reaching
4.9 m as of the end of Q2 2022. |
| · | The
number of total media pay-TV viewers increased 3.4% quarter-on-quarter to 9.3 m by the
end of Q2 2022. |
Ecosystem
| · | The
number of MTS ecosystem clients surged to 12.3 m as of the end of Q2 2022, up 66% compared
with the same period a year earlier. |
| · | The
average number of products per customer increased to 1.55, up from 1.37 in the same period
last year. |
Financial results
Consolidated MTS Group key figures4
(RUB bn)
| |
| 2Q22 | | |
| 2Q21 | | |
| Change,
% | |
Revenue | |
| 127.8 | | |
| 126.9 | | |
| 0.7 | % |
o/w Russia | |
| 126.0 | | |
| 125.3 | | |
| 0.6 | % |
Adjusted OIBDA5 | |
| 51.8 | | |
| 57.1 | | |
| -9.2 | % |
o/w Russia | |
| 51.2 | | |
| 56.0 | | |
| -8.5 | % |
Operating profit | |
| 22.3 | | |
| 30.4 | | |
| -26.4 | % |
Profit attributable to owners of the Company | |
| 10.9 | | |
| 17.2 | | |
| -36.4 | % |
Cash CAPEX6 | |
| 22.0 | | |
| 25.8 | | |
| -14.6 | % |
Net debt7 | |
| 419.0 | | |
| 348.5 | | |
| 20.2 | % |
Net debt / LTM Adjusted OIBDA | |
| 1.9 | | |
| 1.6 | | |
| 0.3 | x |
6M 2022 highlights | |
| 6M22 | | |
| 6M21 | | |
| Change, % | |
Group Revenue | |
| 259.7 | | |
| 249.3 | | |
| 4.2 | % |
Group Adjusted OIBDA8 | |
| 108.2 | | |
| 112.3 | | |
| -3.6 | % |
Operating cash flow | |
| 54.0 | | |
| 48.2 | | |
| 12.0 | % |
Free cash flow ex-Bank & cash proceeds from sale of VF Ukraine | |
| -5.3 | | |
| 16.8 | | |
| n/a | |
For Q2 2022, Group
Revenue increased 0.7% to RUB 127.8 bn driven primarily by growth in core connectivity services as well as at Fintech and other businesses,
which offset a decline in sales of handsets & accessories.
Group Adjusted
OIBDA amounted to 51.8 bn, with a positive contribution coming from telecom and media services. At the same time, MTS Bank provisions,
inflated due to the more challenging macroeconomic conditions during the first half of 2022 more than offset positive Adjusted OIBDA
drivers.
Group Net Profit
totaled RUB 10.9 bn. versus the year-ago period, pressure came from increased financing costs amid a higher interest rate environment;
greater MTS Bank provisions in the current macroeconomic conditions; higher level of depreciation & amortization reflecting
recent CAPEX intensity.
Q2 2022 Group
Cash Capital Expenditures amounted to RUB 22.0 bn, with a decrease of 14.6% compared with the same period a year earlier, largely
due to the restrictions imposed on purchases of network equipment in 2022.
At the end of Q2
2022, MTS’s Net Debt6 stood at RUB 419.0 bn with a net debt weighted average interest rate of 7.6%. The decrease
of 1.3 p.p. from the prior quarter was influenced largely by the easing of monetary policy and the gradual reduction in CBR rate. The
Group’s Net debt ex-LL to Last-Twelve-Months Adjusted OIBDA ratio stood at 1.9x.
4 Financials for 2021 and 1Q 2022 have been restated due to the deconsolidation of NVision a.s. (Czech Republic).
5 Adjusted OIBDA for
2Q 2022 doesn't include a loss from impairment of non-current assets of RUB 282 m.
6 Net of cash proceeds under sharing agreement.
7 Excluding
lease obligations.
8 Adjusted OIBDA for 6 months 2022 doesn't include a loss from impairment of non-current assets of RUB 489 m.
Russia results (accounts for
over 98% of Group revenue)
(RUB bn) | |
| 2Q22 | | |
| 2Q21 | | |
| Change, % | |
Revenue | |
| 126.0 | | |
| 125.3 | | |
| 0.6 | % |
B2C | |
| 85.9 | | |
| 86.2 | | |
| -0.3 | % |
Connectivity | |
| 65.0 | | |
| 63.6 | | |
| 2.2 | % |
sales of handsets | |
| 6.6 | | |
| 12.6 | | |
| -47.4 | % |
bank revenue | |
| 13.4 | | |
| 9.8 | | |
| 37.1 | % |
other | |
| 0.9 | | |
| 0.2 | | |
| 367.7 | % |
B2B/G | |
| 27.6 | | |
| 24.9 | | |
| 11.0 | % |
Connectivity (ex bulk sms) | |
| 17.2 | | |
| 15.3 | | |
| 12.2 | % |
Marketer | |
| 5.5 | | |
| 4.6 | | |
| 21.5 | % |
sales of handsets | |
| 1.2 | | |
| 2.4 | | |
| -47.3 | % |
bank revenue | |
| 2.1 | | |
| 1.7 | | |
| 26.5 | % |
cloud&other | |
| 1.6 | | |
| 1.0 | | |
| 56.9 | % |
B2O | |
| 18.4 | | |
| 18.4 | | |
| 0.3 | % |
Eliminations | |
| -5.9 | | |
| -4.1 | | |
| 43.9 | % |
Adjusted OIBDA9 | |
| 51.2 | | |
| 56.0 | | |
| -8.5 | % |
margin | |
| 40.6 | % | |
| 44.7 | % | |
| -4.1 | p.p |
Net profit | |
| 12.0 | | |
| 16.9 | | |
| -29.0 | % |
margin | |
| 9.5 | % | |
| 13.5 | % | |
| -4.0 | p.p |
Number of MTS Retail stores10 | |
| 5420 | | |
| 5338 | | |
| 1.5 | % |
Informative: connectivity revenue | |
| 106.1 | | |
| 101.8 | | |
| 4.2 | % |
Connectivity
services revenue in Russia grew 4.2% year-over-year in Q2 to RUB 106.1 bn supported by solid core telecom performance, including
both mobile and fixed-line services and the expansion of Marketer services. Income from banking services continued to see solid
year-over-year growth, up 35.5% to reach RUB 15.5 bn. In retail, sales of handsets and accessories in Russia declined 47.4% year-over-year
to RUB 7.9 bn for the quarter.
9 Adjusted OIBDA for 2Q 2022 doesn't include a loss from impairment of non-current assets of RUB 282 m.
10 Number of owned and franchised
MTS stores in operation at the end of the reporting period.
Shareholder returns
In June, at the
Annual General Meeting of Shareholders (AGM), MTS shareholders approved annual dividends of RUB 33.85 per ordinary MTS share based on
the Company’s full-year 2021 financial results, equivalent to a total of RUB 66.3 bn (RUB 66,334,910,976.95) when including quasi-treasury
shares owned by MTS subsidiaries. FY2021 dividend payments in the amount of RUB 48,2bn were completed by August 16, 2022. Holders
of American Depositary Receipts (ADR) will have the right to receive dividends after conversion of the depositary receipts into ordinary
shares according to the current Russian legislation, subject to legal and regulatory limitations and restrictions that exist and/or may
appear in the future. Under the currently closing down MTS ADR program, the period for the conversion of ADRs into MTS ordinary shares
will generally end by January 12, 2023 (inclusive), subject to newly enacted by various authorities laws and regulations that may
accelerate or delay this anticipated timeline.
Other country markets
Armenia
(AMD bn) | |
| 2Q22 | | |
| 2Q21 | | |
| Change, % | |
Revenue | |
| 12.6 | | |
| 12.1 | | |
| 3.3 | % |
OIBDA | |
| 6.8 | | |
| 6.9 | | |
| -1.5 | % |
margin | |
| 53.9 | % | |
| 56.6 | % | |
| -2.7 | p.p |
Net profit | |
| -0.2 | | |
| -0.3 | | |
| 34.8 | % |
margin | |
| n/a | | |
| n/a | | |
| n/a | |
In Armenia,
revenue in Q2 2022 grew 3.3% year-over-year to reach AMD 12.6 bn on the back of growing demand for mobile connectivity and fixed business
solutions as well as increased guest roaming services. For the quarter, Armenia OIBDA amounted to AMD 6.8 bn, reflecting continuing costs
optimization. In Q2 2022, the number of mobile subscribers in Armenia amounted to 2.3 m.
Belarus
(BYN m) | |
| 2Q22 | | |
| 2Q21 | | |
| Change, % | |
Revenue | |
| 334 | | |
| 322 | | |
| 3.7 | % |
OIBDA | |
| 185 | | |
| 170 | | |
| 8.8 | % |
margin | |
| 55.3 | % | |
| 52.8 | % | |
| 2.5 | p.p |
Net profit | |
| 77 | | |
| 85 | | |
| -9.4 | % |
margin | |
| 23.1 | % | |
| 26.4 | % | |
| -3.3 | p.p |
In Belarus,
which is not consolidated, revenue in Q2 2022 increased 3.7% year-over-year to reach BYN 334 m. Belarus OIBDA increased 8.8% to BYN 185
m, reflecting solid core business performance (growth in revenue from data transfer). The number of mobile subscribers in Belarus remained
largely unchanged at 5.7 m as of the end of the reporting period.
Recent
company news
Corporate
developments
In
May, the Russian Government Commission on Monitoring Foreign Investment (“the Commission”) approved the Company’s request
to maintain its American Depositary Receipts (ADR) program. The Commission’s decision provided for the continuation of circulation
of MTS ADRs until July 12, 2022 (inclusive).
In
June, MTS informed JPMorgan Chase Bank, N.A., the depositary under the existing MTS ADR program, of its intention to terminate the Deposit
Agreement effective as of July 13, 2022.
In
July, MTS was notified by the New York Stock Exchange (“NYSE”), that the staff of NYSE Regulation had determined to commence
proceedings to delist the Company’s ADRs. Under the terms of the Deposit Agreement, the conversion of MTS’s ADRs into MTS’s
ordinary shares shall be completed within six months after July 12, 2022, i.e., by January 12, 2023 (inclusive).
In
August, MTS filed an application with J.P. Morgan Bank International of the launch of MTS ADR automatic conversion into ordinary shares
under the current Russian legislation. J.P. Morgan Bank International is the Russian depositary which accounts for American Depositary
Receipts (ADR) of MTS under MTS ADR Program held by JPMorgan Chase Bank, N.A. (JPMorgan). During the automatic conversion process, all
Russian depositaries that currently account for ADRs will write ADRs off from the holders' accounts and credit MTS ordinary shares instead.
No action is required on the part of ADR holders, independently on if they are residents or non-residents of Russian Federation. The
entire conversion process should take approximately 3 weeks, starting from August 16, 2022.
***
In
June, the MTS Armenia CJSC Board of Directors approved the appointment of Armen Avetisian as the CEO of MTS Armenia CJSC. Mr. Avetisian
started his career in the telecom and IT industry in 2004 and has led the commercial and technical departments at several large telecom
and IT companies. He was the head of MTS’s branch in Krasnoyarsk from 2013 to 2016, and was MTS’s Director for Regional Development
from 2016 to 2021. He built the new Internet of Things business stream at MTS in the position of Vice President for the Internet of Things
and Industrial Automation, which he held from March 2021 until his appointment as CEO.
***
In
June, the Company held its Annual General Meeting of Shareholders (the “AGM”) in absentia. The AGM approved final annual
FY2021 dividends of RUB 33.85 per ordinary MTS share based on the Company’s full-year 2021 financial results, equivalent to a total
of RUB 66.3 bn (RUB 66,334,910,976.95) when including quasi-treasury shares owned by MTS subsidiaries. FY2021 dividend payments in the
amount of RUB 48.2 bn were completed by August 16, 2022. Holders of ADRs will have the right to receive dividends after conversion
of the depositary receipts into ordinary shares according to the current Russian legislation, subject to legal and regulatory limitations
and restrictions that exist and/or may appear in the future.
In
addition, the AGM approved: (1) the Company’s Annual Report and Annual Financial Statements; (2) Business
Solutions and Technologies JSC as MTS’s auditor; (3) the MTS Charter as revised; and (4) the composition of the MTS
Board of Directors and Audit Commission.
***
In
June, following the AGM the MTS Board of Directors re-elected Felix Evtushenkov as Chairman of the Board and Regina von Flemming as Deputy
Chairperson of the Board. The Board also approved the membership of its committees as well as the composition of the MTS Management Board.
***
In
June, MTS announced the successful passing of a compliance management surveillance audit under ISO. The auditors recognized that MTS
operated in line with international standards on compliance management. As a result of this recognition, MTS was successfully transferred
the ISO 37301:2021 (formerly ISO 19600:2014) standard “Compliance Management Systems” and had confirmed its compliance with
international standards concerning anti-bribery management systems (ISO 37001:2016).
***
In
June and July, MTS announced new appointments to the management team:
| - | Yury
Samoylov was appointed as a Management Board member – Vice President for Infrastructure
Development. Since 2007, Mr. Samoylov has led the cloud and commercial data-center provider
DataLine LLC, which has been part of the Rostelecom Data Centers group of companies since
2020. From 2005 to 2007, he served as CEO of IBS DataFort, having previously held various
senior positions at the company from 2000 to 2005. |
| - | Marina
Nastasenko was appointed to a new position as a Management Board member – Vice President
for Digital Products, effective September 5. Before the appointment, she served as General
Director of Salyut for Business, a part of the Sber ecosystem. |
| - | Evgeniya
Naumova, former Executive Vice President for Corporate Business of Kaspersky Lab, was appointed
to the new position of Director for Cybersecurity. |
| - | Andrey
Rego, previously head of the Department of Regulatory Policy and Interaction with Federal
Authorities at MTS, was appointed Vice President for Government Relations. Ruslan Ibragimov,
the former Vice President for Government Relations and Board member of MTS, is leaving the
company due to the expiration of his employment contract. |
Debt
In
June, MTS issued RUB 10bn series 001P-21 exchange-traded bonds on MOEX with a maturity of four years and a coupon rate of 9.65%. MTS
intends to use the funds for general corporate purposes and optimization of its debt portfolio.
***
In
August, MTS successfully completed the simultaneous placement of bonds from two issuers that are full-fledged participants of the same
ecosystem – MTS and MTS Bank. MTS issued RUB 20 bn series 001P-22 exchange-traded bonds with a maturity of two years and a coupon
rate of 8.30% per annum and MTS Bank issued – RUB 7 bn series 001P-02 exchange-traded bonds with a maturity of three years and
a coupon rate of 9.55% per annum.
M&A
In
April, MTS announced that the MTS Venture Fund had invested RUB 72 m in Bartello, an online food and beverage ordering service. Bartello,
which allows restaurant customers to order and pay for refreshments without calling a waiter, will be integrated into the MTS Live app
to allow attendees to place online orders during concerts, music festivals, and other events.
***
In
April, MTS announced the acquisition of a stake in Gulfstream Security Systems JSC (operating under the Gulfstream brand), one of Russia’s
leading providers of digital safeguard systems for residential households, automobiles, and commercial real estate, in a move aimed at
expanding MTS’s Smart Home business vertical. Under the terms of the deal, MTS acquired 58.38% of the shares in the company for
approximately RUB 2.0 bn. Gulfstream provides comprehensive solutions to safeguard against burglary, theft, fire, and water damage, as
well as an IT platform for digital smart home services. The company’s advanced solutions cover a full range of customer needs,
from private homes and apartments to retail stores and corporate offices.
***
In
July, MTS announced the acquisition of a 100% stake in Bronevik Online LLC and Bronevik Company LLC (Bronevik Group, one of the market
leaders in online hotel booking). The acquisition is aimed at developing a new business line, MTS Travel, in the tourism industry. Bronevik
Group was founded in 2008 and today is one of the market leaders in online hotel booking, transfer and related services. It develops
private and business tourism by providing accommodation booking services in Russia, neighboring countries and beyond. The Group’s
database includes more than thirty five thousand accommodation facilities in more than three thousand communities.
***
In
July, MTS announced the acquisition of a controlling stake in the Webinar group of companies (the Webinar Meetings, Webinar.ru, We.Study
and COMDI brands), the largest Russian developer of services for online meetings, events, training and webinars. Founded in 2008, today
it is the leader among Russian videoconferencing solutions and video services for corporations. Over the previous 12 months, more than
22 million users had used Webinar products, and more than 10,000 organizations had become clients during the period. Webinar services
are included in the register of domestic software and have their own server infrastructure in Russia.
***
In
July, MTS acquired a 25% stake in New Digital Solutions LLC, a joint venture to develop 5G technology, which brings together Russia’s
largest telecom operators. The goal of the joint venture is to provide radio frequency resources to build 5G mobile networks in Russia.
***
In
August, MTS Corporate Venture Fund invested in the Belarusian start-up LogicLike, an online educational platform for the development
of logic and reasoning in children. Now, LogicLike’s interactive courses and games for children’s comprehensive educational
development are available to both new and existing subscribers of MTS’s ‘NETARIF’ Junior.
Cloud &
IoT
In
June, MTS launched a cloud-based video surveillance service as an off-the-shelf solution enabling business customers to quickly set up
round-the-clock video monitoring of any facility with a minimum of costs and equipment.
***
In
June, MTS completed the deployment of the largest nationwide network using the NB-IoT standard for the Internet of things in all regions
of its operations. The company plans to become a key provider of IoT services for energy, industrial, and agricultural companies, as
well as large federal smart city projects.
***
In
June, MTS announced that the GreenBushDC data center, part of the MTS infrastructure network, had been certified by the Uptime Institute,
an independent international certification body, for Tier III fault tolerance. This status confirms that the data center meets standards
for the highest degree of reliability in terms of protecting customer data and equipment.
***
In
August, MTS announced the launch of its proprietary Smart Lock, the first IoT solution in Russia for keyless access at protected facilities.
The solution is a vandal-resistant lock with a built-in NB-IoT radio module that can be opened and locked remotely from a mobile application,
via a web interface or by calling an operator.
Innovation
In
June MTS launched MTS Remote Play, a service for remote use of computing capabilities of computers via wired and mobile networks
based on edge computing technologies. As a result, users will be able to remotely run “heavy” games with a high level of
signal delay requirements on any gadgets, work with programs for editing graphics, video and other services installed on PCs.
Partnerships
In
August, MTS announced the development of a new type of partnerships with regional operators to create and promote joint convergent products.
The project will enable MTS together with high-quality local operators to offer popular products and digital services (fixed broadband,
mobile connectivity, KION OTT platform and/or IPTV) on regional markets.
Q2
2022 Conference Call Details
MTS
management will be holding a conference call on August 18, 2022 to discuss the results beginning at: 6:00 p.m Moscow time (MSK).
The
discussion will be the webcast in English and Russian, where viewers will also be able to participate in a question and answer session
via chat section, at the following link:
https://mtsgroup.comdi.com/watch/enmt0mrm
Cautionary
note on forward-looking statements
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
Company’s 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 the ongoing geopolitical situation relating to the situation in Ukraine, the expansion of sanctions and
restrictive measures imposed on the Russian Federation and a number of Russian legal and natural person by the United States,
European Union, United Kingdom and certain other states, responsive measures of regulatory, legislative and other nature made by
Russian authorities as a reaction to foreign sanctions and restrictive measures, volatility in interest and exchange rates
(including fluctuations of the value of the Russian ruble against the U.S. dollar and the Euro), commodity and equity prices and the
value of financial assets; impact of decisions by a number of foreign suppliers of goods, works, services and software to suspend or
stop providing the supply of goods, works, services and software to Russian legal and natural persons 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, as well as potential aggravation of existing risk factors or appearance of new.
Note
on financial measures & definitions
This
press release includes financial information prepared in accordance with International Financial Reporting Standards, or IFRS, as well
as other financial measures referred to as non-IFRS. The non-IFRS financial measures should be considered in addition to, but not as
a substitute for, the information prepared in accordance with IFRS. Due to the rounding and translation practices, Russian ruble and
functional currency margins, as well as other non-IFRS financial measures, may differ.
OIBDA
and Adjusted OIBDA can be reconciled to our consolidated statements of profit or loss as follows11:
Group (RUB bn) | |
Q2’21 | | |
Q3’21 | | |
Q4’21 | | |
Q1’22 | | |
Q2’22 | |
Operating profit | |
| 30.4 | | |
| 33.4 | | |
| 25.7 | | |
| 26.7 | | |
| 22.3 | |
Add: D&A | |
| 26.7 | | |
| 27.8 | | |
| 29.6 | | |
| 29.5 | | |
| 29.2 | |
Loss from impairment of non-current assets | |
| - | | |
| - | | |
| - | | |
| 0.2 | | |
| 0.3 | |
Adjusted OIBDA | |
| 57.1 | | |
| 61.3 | | |
| 55.4 | | |
| 56.4 | | |
| 51.8 | |
Russia (RUB bn) | |
Q2’21 | | |
Q3’21 | | |
Q4’21 | | |
Q1’22 | | |
Q2’22 | |
Operating profit | |
| 29.8 | | |
| 32.8 | | |
| 25.3 | | |
| 25.7 | | |
| 22.2 | |
Add: D&A | |
| 26.2 | | |
| 27.2 | | |
| 29.0 | | |
| 28.9 | | |
| 28.7 | |
Loss from impairment of non-current assets | |
| - | | |
| - | | |
| - | | |
| 0.2 | | |
| 0.3 | |
Adjusted OIBDA | |
| 56.0 | | |
| 60.0 | | |
| 54.4 | | |
| 54.9 | | |
| 51.2 | |
Armenia (RUB m) | |
Q2’21 | | |
Q3’21 | | |
Q4’21 | | |
Q1’22 | | |
Q2’22 | |
Operating profit | |
| 463 | | |
| 390 | | |
| 346 | | |
| 528 | | |
| 528 | |
Add: D&A | |
| 517 | | |
| 632 | | |
| 594 | | |
| 595 | | |
| 462 | |
OIBDA | |
| 980 | | |
| 1022 | | |
| 940 | | |
| 1123 | | |
| 990 | |
11 Totals may add up differently due to rounding.
OIBDA
and OIBDA margin can be reconciled to our operating margin as follows12:
Group | |
Q2’21 | | |
Q3’21 | | |
Q4’21 | | |
Q1’22 | | |
Q2’22 | |
Operating margin | |
| 23.9 | % | |
| 24.5 | % | |
| 18.1 | % | |
| 20.2 | % | |
| 17.5 | % |
Add: D&A | |
| 21.1 | % | |
| 20.4 | % | |
| 20.9 | % | |
| 22.4 | % | |
| 22.9 | % |
Loss from impairment of non-current assets | |
| | | |
| | | |
| | | |
| 0.2 | % | |
| 0.2 | % |
Adjusted OIBDA margin | |
| 45.0 | % | |
| 44.8 | % | |
| 39.0 | % | |
| 42.7 | % | |
| 40.6 | % |
Russia | |
Q2’21 | | |
Q3’21 | | |
Q4’21 | | |
Q1’22 | | |
Q2’22 | |
Operating margin | |
| 23.8 | % | |
| 24.3 | % | |
| 18.1 | % | |
| 19.8 | % | |
| 17.6 | % |
Add: D&A | |
| 20.9 | % | |
| 20.2 | % | |
| 20.7 | % | |
| 22.3 | % | |
| 22.8 | % |
Loss from impairment of non-current assets | |
| - | | |
| - | | |
| - | | |
| 0.2 | % | |
| 0.2 | % |
Adjusted OIBDA margin | |
| 44.7 | % | |
| 44.5 | % | |
| 38.8 | % | |
| 42.2 | % | |
| 40.6 | % |
Armenia | |
Q2’21 | | |
Q3’21 | | |
Q4’21 | | |
Q1’22 | | |
Q2’22 | |
Operating margin | |
| 26.7 | % | |
| 20.2 | % | |
| 18.4 | % | |
| 25.4 | % | |
| 28.7 | % |
Add: D&A | |
| 29.8 | % | |
| 32.8 | % | |
| 31.6 | % | |
| 28.6 | % | |
| 25.1 | % |
OIBDA margin | |
| 56.6 | % | |
| 53.0 | % | |
| 49.9 | % | |
| 54.0 | % | |
| 53.8 | % |
Free
cash flow ex-Bank can be reconciled to our free cash flow as follows:
Group (RUB bn) | |
| 6m21 | | |
| 9m21 | | |
| 12m21 | | |
| 3m22 | | |
| 6m22 | |
Group free cash flow | |
| -10.0 | | |
| -5.9 | | |
| 27.7 | | |
| -33.6 | | |
| -13.6 | |
Less: Bank free cash flow | |
| -28.1 | | |
| -30.1 | | |
| -27.5 | | |
| -13.6 | | |
| -8.3 | |
Less: Сash proceeds from sale of VF Ukraine | |
| 1.3 | | |
| 1.3 | | |
| 1.3 | | |
| - | | |
| - | |
Free cash flow ex-Bank and cash proceeds from sale of VF Ukraine | |
| 16.8 | | |
| 22.9 | | |
| 53.9 | | |
| -20.0 | | |
| -5.3 | |
Definitions
Total
debt. Total debt represents short-term and long-term debt excluding lease obligations and debt issuance costs.
Net
debt. Net debt represents total debt less cash and cash equivalents, short-term investments, long-term deposits, swap and currency
hedging. 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. Our net debt calculation may not be similar
to the net debt calculation of other companies. The non-IFRS financial measures should be considered in addition to, but not as a substitute
for, the information prepared in accordance with IFRS.
12 Totals may add up differently due to rounding
Free Cash Flow.
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. Our free cash flow calculation may not be similar to the free cash flow calculation of other companies.
Because free cash flow is not based in IFRS 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 IFRS.
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 IFRS and should be considered in addition to, but not as a substitute for, the information contained in our
consolidated statement of profit or loss. 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 IFRS, 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. We use the term Adjusted for OIBDA and operating profit where there were
items that do not reflect underlying operations that were excluded.
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.
Consolidated financial statements
MOBILE
TELESYSTEMS |
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME |
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021 |
|
(Amounts
in millions of RUB except per share amount) |
| |
Six months
ended | | |
Six months
ended | | |
Three months
ended | | |
Three months
ended | |
| |
June 30, 2022 | | |
June 30, 2021 | | |
June 30, 2022 | | |
June 30, 2021 | |
Service revenue | |
237,604 | | |
218,336 | | |
119,922 | | |
111,776 | |
Sales of goods | |
22,135 | | |
30,916 | | |
7,851 | | |
15,172 | |
Revenue | |
259,739 | | |
249,252 | | |
127,773 | | |
126,948 | |
| |
| | |
| | |
| | |
| |
Cost of services | |
(73,954 | ) | |
(61,844 | ) | |
(37,587 | ) | |
(31,609 | ) |
Cost of goods | |
(20,054 | ) | |
(30,242 | ) | |
(6,999 | ) | |
(14,912 | ) |
| |
| | |
| | |
| | |
| |
Selling, general and administrative expenses | |
(50,866 | ) | |
(45,637 | ) | |
(26,612 | ) | |
(24,185 | ) |
Depreciation and amortization | |
(58,755 | ) | |
(53,487 | ) | |
(29,210 | ) | |
(26,731 | ) |
Operating share of the profit of associates and joint ventures | |
2,294 | | |
2,994 | | |
954 | | |
1,700 | |
Impairment of non-current assets | |
(489 | ) | |
9 | | |
(282 | ) | |
4 | |
Other operating expenses | |
(8,925 | ) | |
(2,209 | ) | |
(5,697 | ) | |
(856 | ) |
Operating profit | |
48,990 | | |
58,836 | | |
22,340 | | |
30,359 | |
| |
| | |
| | |
| | |
| |
Other non- operating income / (expenses): | |
| | |
| | |
| | |
| |
Finance income | |
356 | | |
1,557 | | |
(47 | ) | |
693 | |
Finance costs | |
(30,958 | ) | |
(19,066 | ) | |
(16,608 | ) | |
(9,601 | ) |
Other non-operating income | |
5,392 | | |
1,333 | | |
9,862 | | |
1,015 | |
Total other non-operating expenses, net | |
(25,210 | ) | |
(16,176 | ) | |
(6,793 | ) | |
(7,893 | ) |
| |
| | |
| | |
| | |
| |
Profit before tax from continuing operations | |
23,780 | | |
42,660 | | |
15,547 | | |
22,466 | |
| |
| | |
| | |
| | |
| |
Income tax expense | |
(5,979 | ) | |
(9,287 | ) | |
(3,465 | ) | |
(5,138 | ) |
| |
| | |
| | |
| | |
| |
Profit for the period from continuing operations | |
17,801 | | |
33,373 | | |
12,082 | | |
17,328 | |
| |
| | |
| | |
| | |
| |
Discontinued operation: | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
Profit after tax for the period from discontinued operation | |
(2,666 | ) | |
439 | | |
(967 | ) | |
140 | |
| |
| | |
| | |
| | |
| |
Profit for the period | |
15,135 | | |
33,812 | | |
11,115 | | |
17,468 | |
| |
| | |
| | |
| | |
| |
Profit for the period attributable to non-controlling interests | |
(330 | ) | |
(422 | ) | |
(166 | ) | |
(246 | ) |
| |
| | |
| | |
| | |
| |
Profit for the period attributable to owners of the Company | |
14,805 | | |
33,390 | | |
10,949 | | |
17,222 | |
| |
| | |
| | |
| | |
| |
Other comprehensive (loss) / income | |
| | |
| | |
| | |
| |
Items that may be reclassified subsequently to profit or loss | |
| | |
| | |
| | |
| |
Exchange differences on translating foreign operations | |
(5,268 | ) | |
496 | | |
(7,715 | ) | |
248 | |
Net fair value (loss)/income on financial instruments | |
(85 | ) | |
- | | |
1,400 | | |
- | |
Other comprehensive (loss) / income for the period | |
(5,353 | ) | |
496 | | |
(6,315 | ) | |
248 | |
| |
| | |
| | |
| | |
| |
Total comprehensive income for the period | |
9,782 | | |
34,308 | | |
4,800 | | |
17,716 | |
Less comprehensive income for the period attributable to the noncontrolling interests | |
(330 | ) | |
(422 | ) | |
(166 | ) | |
(246 | ) |
| |
| | |
| | |
| | |
| |
Comprehensive income for the period attributable to owners of the Company | |
9,452 | | |
33,886 | | |
4,634 | | |
17,470 | |
| |
| | |
| | |
| | |
| |
Weighted average number of common shares
outstanding, in thousands - basic Earnings per share attributable to the Group - basiс: | |
1,674,569 | | |
1,715,450 | | |
1,684,311 | | |
1,704,085 | |
EPS from continuing operations | |
10.43 | | |
19.21 | | |
7.07 | | |
10.02 | |
EPS from discontinued operation | |
(1.59 | ) | |
0.26 | | |
(0.57 | ) | |
0.08 | |
Total EPS - basic | |
8.84 | | |
19.47 | | |
6.50 | | |
10.10 | |
| |
| | |
| | |
| | |
| |
Weighted average number of common shares outstanding, in
thousands - diluted Earnings per share attributable to the Group - diluted: | |
1,700,788 | | |
1,717,143 | | |
1,709,952 | | |
1,705,433 | |
EPS from continuing operations | |
10.27 | | |
19.19 | | |
6.97 | | |
10.02 | |
EPS from discontinued operation | |
(1.57 | ) | |
0.26 | | |
(0.57 | ) | |
0.08 | |
Total EPS - diluted | |
8.70 | | |
19.45 | | |
6.40 | | |
10.10 | |
MOBILE
TELESYSTEMS |
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION |
AS
OF JUNE 30, 2022 AND AS OF December 31, 2021 |
|
(Amounts
in millions of RUB) |
| |
As of June 30, | | |
As of December 31, | |
| |
2022 | | |
2021 | |
NON-CURRENT ASSETS: | |
| | | |
| | |
Property, plant and equipment | |
| 313,617 | | |
| 311,250 | |
Investment property | |
| 1,995 | | |
| 2,498 | |
Right-of-use assets | |
| 123,665 | | |
| 132,343 | |
Intangible assets | |
| 153,207 | | |
| 142,951 | |
Investments in associates | |
| 6,839 | | |
| 8,735 | |
Other investments | |
| 8,025 | | |
| 4,591 | |
Deferred tax assets | |
| 13,356 | | |
| 11,683 | |
Accounts receivable, related parties | |
| 1,420 | | |
| 5,000 | |
Bank loans to customers and interbank loans due from banks | |
| 118,116 | | |
| 118,342 | |
Other financial assets | |
| 3,428 | | |
| 9,335 | |
Other non-financial assets | |
| 5,873 | | |
| 5,790 | |
Total non-current assets | |
| 749,541 | | |
| 752,518 | |
| |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Inventories | |
| 13,748 | | |
| 18,981 | |
Trade and other receivables | |
| 33,641 | | |
| 37,897 | |
Accounts receivable, related parties | |
| 3,567 | | |
| 2,287 | |
Bank loans to customers and interbank loans due from banks | |
| 85,501 | | |
| 87,594 | |
Short-term investments | |
| 20,607 | | |
| 28,972 | |
VAT receivable | |
| 10,185 | | |
| 11,746 | |
Income tax assets | |
| 1,532 | | |
| 2,021 | |
Assets held for sale | |
| 2,132 | | |
| 549 | |
Cash and cash equivalents | |
| 57,850 | | |
| 40,590 | |
Other financial current assets | |
| 23,199 | | |
| 27,349 | |
Advances paid and prepaid expenses, contract and other non-financial current assets | |
| 11,955 | | |
| 5,314 | |
Total current assets | |
| 263,917 | | |
| 263,300 | |
| |
| | | |
| | |
Total assets | |
| 1,013,458 | | |
| 1,015,818 | |
| |
| | | |
| | |
EQUITY: | |
| | | |
| | |
Equity attributable to owners of the Company* | |
| -35,123 | | |
| 9,766 | |
Non-controlling interests | |
| 5,167 | | |
| 4,838 | |
Total equity | |
| -29,956 | | |
| 14,604 | |
| |
| | | |
| | |
NON-CURRENT LIABILITIES: | |
| | | |
| | |
Borrowings | |
| 357,343 | | |
| 350,300 | |
Lease obligation | |
| 126,709 | | |
| 135,800 | |
Bank deposits and liabilities | |
| 2,042 | | |
| 14,313 | |
Deferred tax liabilities | |
| 19,687 | | |
| 17,901 | |
Provisions | |
| 10,329 | | |
| 7,288 | |
Other financial liabilities | |
| 2,841 | | |
| 180 | |
Other non-financial liabilities | |
| 1,985 | | |
| 2,012 | |
Total non-current liabilities | |
| 520,936 | | |
| 527,794 | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Trade and other payables | |
| 101,504 | | |
| 72,078 | |
Accounts payable, related parties | |
| 1,590 | | |
| 4,107 | |
Borrowings | |
| 139,815 | | |
| 111,839 | |
Lease obligation | |
| 18,414 | | |
| 18,709 | |
Bank deposits and liabilities | |
| 200,882 | | |
| 207,055 | |
Income tax liabilities | |
| 1,379 | | |
| 768 | |
Provisions | |
| 14,240 | | |
| 17,479 | |
Other financial liabilities | |
| 176 | | |
| 202 | |
Other non-financial and contract liabilities | |
| 44,478 | | |
| 41,183 | |
Total current liabiliites | |
| 522,478 | | |
| 473,420 | |
| |
| | | |
| | |
Total equity and liabilities | |
| 1,013,458 | | |
| 1,015,818 | |
MOBILE TELESYSTEMS |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021 |
|
(Amounts in millions of RUB) |
| |
Six months ended | | |
Six months ended | |
| |
June 30, 2022 | | |
June 30, 2021 | |
Profit for the period | |
15,135 | | |
33,812 | |
| |
| | |
| |
Adjustments for: | |
| | |
| |
Depreciation and amortization | |
58,825 | | |
53,545 | |
Finance income | |
(356 | ) | |
(1,557 | ) |
Finance costs | |
30,969 | | |
19,070 | |
Income tax expense | |
5,934 | | |
9,254 | |
Net foreign exchange gain and change in fair value of financial instruments | |
(4,024 | ) | |
(1,630 | ) |
Share of the (profit) / loss of associates | |
(2,412 | ) | |
(3,082 | ) |
Inventory obsolescence expense | |
1,002 | | |
637 | |
Allowance for doubtful accounts | |
1,225 | | |
62 | |
Bank reserves | |
11,762 | | |
4,690 | |
Change in provisions | |
(3,315 | ) | |
1,334 | |
Impairment of non-current assets | |
489 | | |
(9 | ) |
Other non-cash items | |
163 | | |
(3,555 | ) |
| |
| | |
| |
Movements in operating assets and liabilities: | |
| | |
| |
(Increase)/Decrease in trade and other receivables and contract assets | |
1,217 | | |
(4,072 | ) |
Increase in bank loans to customers and interbank loans to banks | |
(13,799 | ) | |
(43,851 | ) |
Decrease/(Increase) in inventory | |
3,453 | | |
(1,481 | ) |
Decrease/(Increase) in VAT receivable | |
1,566 | | |
(1,382 | ) |
Decrease in advances paid and prepaid expenses | |
1,819 | | |
1,388 | |
(Decrease)/Increase in trade and other payables, contract liabilities and other liabilities | |
(14,510 | ) | |
1,397 | |
(Decrease)/Increase in bank deposits and other bank liabilities | |
(9,138 | ) | |
6,932 | |
| |
| | |
| |
Dividends received | |
2,057 | | |
2,062 | |
Income taxes paid | |
(5,864 | ) | |
(7,615 | ) |
Interest received | |
513 | | |
1,013 | |
Interest paid, net of interest capitalised | |
(28,718 | ) | |
(18,732 | ) |
Net cash provided by operating activities | |
53,994 | | |
48,230 | |
| |
| | |
| |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | |
| |
Aquisition of subsidiary, net of cash acquired | |
(7,134 | ) | |
(4,621 | ) |
| |
| | |
| |
Purchases of property, plant and equipment | |
(40,599 | ) | |
(35,698 | ) |
Purchases of other intangible assets (excl. cost to obtain contracts) | |
(18,811 | ) | |
(19,450 | ) |
Cost to obtain and fulfill contracts, paid | |
(2,109 | ) | |
(1,823 | ) |
Proceeds from sale of property, plant and equipment and assets held for sale | |
1,842 | | |
2,177 | |
Purchases of short-term and other investments | |
(1,304 | ) | |
(7,586 | ) |
Proceeds from sale of short-term and other investments | |
7,681 | | |
6,214 | |
Investments in associates | |
(700 | ) | |
(60 | ) |
Cash payments related to swap contracts | |
(821 | ) | |
(108 | ) |
Proceeds from sale of subsidiaries | |
(86 | ) | |
1,272 | |
Other investing activities | |
379 | | |
125 | |
Net cash used in investing activities | |
(61,662 | ) | |
(59,558 | ) |
| |
| | |
| |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
| |
Repayment of loans | |
(11,512 | ) | |
(2,680 | ) |
Proceeds from loans | |
47,383 | | |
1,714 | |
Repayment of notes | |
(20,523 | ) | |
(10,813 | ) |
Proceeds from issuance of notes | |
29,900 | | |
4,350 | |
Notes and debt issuance cost paid | |
(135 | ) | |
(96 | ) |
Lease obligation principal paid | |
(7,837 | ) | |
(8,465 | ) |
Dividends paid | |
(9 | ) | |
(1 | ) |
Repurchase of common stock | |
- | | |
(15,691 | ) |
Other financing activities | |
(1,900 | ) | |
- | |
Net cash provided by / (used in) financing activities | |
35,367 | | |
(31,682 | ) |
| |
| | |
| |
Effect of exchange rate changes on cash and cash equivalents | |
(10,436 | ) | |
(133 | ) |
| |
| | |
| |
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS: | |
17,263 | | |
(43,143 | ) |
| |
| | |
| |
CASH AND CASH EQUIVALENTS, at beginning of the period | |
40,590 | | |
85,469 | |
| |
| | |
| |
CASH AND CASH EQUIVALENTS, at end of the period | |
57,853 | | |
42,326 | |
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 PUBLIC JOINT STOCK COMPANY |
|
|
|
|
By: |
/s/ Vyacheslav Nikolaev |
|
|
Name: |
Vyacheslav Nikolaev |
|
|
Title: |
CEO |
|
|
|
|
Date:
August 18, 2022 |
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