MOSCOW, August 20, 2014 /PRNewswire/ --
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
June 30, 2014.
Key Financial Highlights of Q2 2014
- Consolidated Group revenues increased 1.4% y-o-y to
RUB 98.9 billion
- Mobile service revenue in Russia rose 6.3% y-o-y to RUB 70.9 billion
- Data traffic revenue in Russia
grew 39.7% y-o-y to RUB 15.3
billion
- Fixed-line revenue in Russia
grew 2.6% q-on-q to RUB 15.6
billion
- Consolidated Group OIBDA net of one-off effect due to
compensation for the settlement over Bitel LLC[1] down
0.6% y-o-y to RUB 43.2 billion
- Group OIBDA margin net of one-off effect due to compensation
for the settlement over Bitel LLC fell slightly 0.9 pp to
43.7%
- Consolidated net income[2] of RUB 21.1 billion
- Free cash-flow from continuing operations[3]
adjusted for the compensation for the settlement over Bitel LLC
increased 12.0% to RUB 46.0 billion
for the six months ended June 30,
2014
Key Corporate and Industry Highlights
- MTS`s brand was included in the BrandZ™ Top 100 Most
Valuable Global Brands 2014 ranking for the seventh consecutive
year and placed ninth among the Top 10 leading
telecommunications brands in the world. MTS ranked #80 overall
among the top 100 global brands.
- Acquired a 10.82% stake in Ozon Holdings ("Ozon"), the leading
Russian e-commerce company
- Sold a remaining 49% stake in Business-Nedvizhimost CJSC to
Sistema JSFC for RUB 3.1
billion
- Redeemed the remaining amount of RUB
15.0 billion series 04 bond
- Completed dividend payment of RUB
18.6 per ordinary MTS share (RUB
37.2 per ADR), or a total of RUB 38.4
billion, based on the full-year 2013 financial results.
- Launched LTE networks in 25 regions throughout Russia
- Semi-annual dividend recommendation by the MTS Board of
RUB 6.2 per ordinary MTS share
(RUB 12.4 per ADR) amounting to the
total of RUB 12.8 billion on the
basis of the H1 2014 results. The EGM to approve the dividends
will be held on September 30,
2014
- Signed a settlement agreement with the Republic of Uzbekistan, which may allow the Company to
relaunch operations through a joint venture with the government of
Uzbekistan
- Moody`s Investor Service has upgraded MTS's senior unsecured
issuer rating from Ba2 to Baa3 with a stable outlook. This
represents a two-notch upgrade and classifies MTS as investment
grade
- Standard & Poor's Ratings Services raised MTS`s corporate
credit rating to 'BBB-' from 'BB+'. The outlook on the foreign
currency rating is negative and that on the local currency rating
is stable. Ratings on the Company's senior unsecured debt were
raised to 'BBB-' from 'BB+'. This represents a one-notch upgrade
and classifies MTS as investment grade
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1. See Attachment A for definitions and reconciliation of
OIBDA and OIBDA margin to their most directly comparable US GAAP
financial measures.
2. Attributable to the Group.
3. See Attachment B for reconciliation of free cash-flow
to net cash provided by operating activity.
Commentary
Mr. Andrei Dubovskov, President
and CEO of MTS, "During the quarter we increased our Group revenues
by 1.4% year-over-year to RUB 98.9
billion. We realized strong growth in our core Russian
market and saw positive dynamics in Ukraine, Armenia and Turkmenistan despite macroeconomic issues.
Growth in our markets, however, was offset by significant hryvna
depreciation in Ukraine, while in
Armenia, slight year-on-year
weakness was mitigated by strong sequential growth."
Mr. Vasyl Latsanych, MTS Vice
President for Marketing, said, "In Q2, our Russian business grew
4.5% year-over-year to RUB 90.4
billion. Driving this growth were exceptionally strong
mobile service revenues, which increased by 6.3% year-over-year.
Key drivers included: greater adoption of data plans as smartphone
penetration among our active subscribers reached 37.0%; upselling
existing subscribers on data plans; increase in the subscriber base
as we added 5.6 million subscribers during the year; and stable
churn dynamics. We continued to see greater challenges in our
Ukraine business unit, but we
delivered growth year-over-year. In local currency, its revenues
grew 2% year-over-year UAH 2.6 billion as MTS expanded its
subscriber base."
Mr. Alexey Kornya, MTS Vice
President and Chief Financial Officer, said, "In Q2 2014, Group
OIBDA declined by 2.6% year-over-year to over RUB 43.2 billion. In the second quarter of 2013
we realized one-off gain related to the compensation we received
for the settlement over Bitel LLC. Without this effect, our OIBDA
declined by 0.6%. The decline was largely attributable to
macroeconomic factors impacting our business in Ukraine and greater G&A expenses due to
roll-out of our mobile and fixed networks in Russia. Our OIBDA margin net of the Bitel LLC
settlement declined year-over-year by merely 0.9pp to 43.7%. In
Russia, OIBDA grew by 2.8%
year-over-year to RUB 40.3 billion.
This reflects our sustained revenue growth and increased share of
high-margin data revenues in the revenue mix. In Ukraine, OIBDA declined by 3.1% to nearly UAH
1.3 billion. During the quarter, profitability was pressured by an
increase in frequency fees and higher electricity costs. We also
saw a currency devaluation effect as some of cost items, including
roaming and SIM cards, are denominated in non-hryvna currencies."
He continued, "For the period, Group net income from continuing
operations increased Q-o-Q by 61.9% to RUB
21.1 billion. Primarily we benefitted from a non-cash FOREX
gain in the amount of RUB 4.2 billion
due to ruble appreciation versus the previous quarter. Operating
cash flow from continuing operations for the first six months of
2014 increased slightly by 2.7% relative to the same period in
2013. Free cash flow for the first six months of 2013 adjusted for
compensation for the settlement over Bitel LLC received in Q2 2013
- increased by 12.0% year-over-year."
Mr. Andrei Dubovskov, President
and CEO of MTS, added, "For now, as our results indicate, our
business remains strong. However, macroeconomic weakness and
uncertain political environment in Ukraine, however, force us to alter our full
year guidance. While we expect Russia still to grow at the high end of
our initial guidance of 3-5%, developments in Ukraine will limit Group growth to at least 1%
in revenue for 2014. We should anticipate stable OIBDA
year-over-year. Growth in our Russian markets will be offset
by the decrease in profitability in our non-Russian assets, as well
as the absence of certain positive one-offs we realized in 2013.
Our CAPEX spending too should come in at 90 billion rubles,
which is consistent with the guidance we gave at the beginning of
the year."
Additional Information
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
June 30, 2014. For full disclosure
materials, please visit
http://www.mtsgsm.com/resources/reports/.
* * *
Learn more about MTS. Visit the official blog of the Investor
Relations Department at http://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 world's
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
http://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 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 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.
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
SOURCE Mobile TeleSystems OJSC