MOSCOW, November 25, 2014 /PRNewswire/ --
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 of 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.
- 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 Bank's additional shares issuance
for RUB 3,639,286,560.
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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
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."
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.
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/ .
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