MOSCOW, March 17, 2015 /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 and full
year ended December 31,
2014.
Key Financial Highlights of Q4 2014 and FY 2014
- Consolidated group revenue for FY 2014 increased 3.1% y-o-y to
RUB 410.8 bln
- Total revenue in Russia for FY
2014 increased 5.6% y-o-y to RUB 374.9
bln
- Data traffic revenue in Russia
for FY 2014 grew 35.9% y-o-y to RUB 64.4
bln
- Consolidated Group Adjusted OIBDA[1] for FY 2014 up
0.3% y-o-y to RUB 175.5 bln
- OIBDA in Russia for FY 2014
increased 4.5% y-o-y to RUB 164.8
bln
Outlook for 2015
- Group revenue may increase >2%
- Group OIBDA margin will be greater than 40%
- Total Russia revenue may
increase > 3%
- Group CAPEX spending will be approximately RUB 85 bln[2]
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.
Key Corporate and Industry Highlights
- Launched commercial operations in Uzbekistan.
- Partnered with VimpelCom to jointly roll-out and utilize LTE
networks in 36 Russian regions.
- Acquired regional assets of SMARTS OJSC In Penza Region,
Ivanovo Region and Bashkiria for a price of RUB 3.1 bln including debt
- Completed dividend payment of RUB
6.2 per ordinary MTS share (RUB
12.4 per ADR), or a total of RUB 12.8
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 50.0 bln
and amended terms of an existing credit agreement in the amount of
RUB 20.0 bln.
- Acquired 952,000 ordinary shares of the MTS-Bank's additional
shares issuance for RUB 3.6 bln.
- Won a tender for a nationwide license for the provision of 3G
telecommunications services in the 1950-1965 MHz/2140-2155 MHz in
Ukraine. The cost of the license
amounted to UAH 2.7 bln.
- Launched LTE network in the 1800 MHz range in Moscow and LTE network in the 800 MHz range
throughout the Moscow region.
- Launched LTE network in the 1800 MHz rage in Saint Petersburg and the Leningrad
Region.
--------------------------------------------------
[1] OIBDA net of gain in the amount of RUB 6.7 bln from reentrance into Uzbekistan and excluding provision for
investments in JSC DeltaBank in Ukraine of RUB
5.1bln.
[2] Excluding cost of 3G license and investments in 3G network
in Ukraine.
Commentary
Mr. Andrei Dubovskov, MTS
President and CEO, commented, "For the quarter, Group revenues
increased by 2.3% year-over-year to RUB
107.2 bln. We delivered strong revenue growth in our
business units in Russia and
Turkmenistan, but saw a slight
decline in Armenia and sustained
weakness in our operations in Ukraine due to macroeconomic and political
factors. In Russia, we continue to
outperform the market and strengthen our leadership. For the
quarter, revenues increased by 4.1% year-over-year to RUB 98.0 bln. For the year, Russia revenue increased 5.6% driven by
network improvements through the build-out of LTE networks in 76 of
the Russia's regions, development
of our 3G networks and roll-out of fiber-optic lines across the
country; the success of the market's leading offerings in
integrated voice and data tariff plans; and strong retail
operations, which allow us to promote sales of high-quality,
affordable smartphones and tablets."
Mr. Vasyl Latsanych, MTS Vice
President for Marketing, said "In Q4, we continued to capitalize on
trends we'd seen from previous quarters. Revenues in our core
mobile business improved 4.5% year-over-year driven by migrating
customers from feature phones to smartphones by focusing on data in
our marketing communications and working closely with handset
vendors to create unique products in the market. The growth was
aided by rising penetration of our voice & data Smart tariffs
in the base, higher messaging revenues due to increased sales of
SMS packages; strong subscriber additions as we increased our
subscriber base by roughly 5 million subscribers; and high-quality
of subscriber additions as showcased by the lowest level of churn
in the market."
Mr. Alexey Kornya, MTS Vice
President for Finance and Investments, added, "In Q4 2014, we
witnessed both seasonal weakness and a number of one-off factors in
our operating income. For the quarter, our Adjusted OIBDA
declined 5.3% to RUB 42.6 bln. Our
profitability reflects revenue dynamics in each of our markets of
operation, including higher sales of handsets in Russia; the impact of hryvna and ruble
volatility on our operating expenses, including international
roaming and calling; increased taxes and spectrum fees in
Ukraine; the effects of a planned
salary increase implemented in September
2014; rising general & administrative costs due to
the enhancement of our mobile and fixed networks in Russia and inflationary pressure; and costs
related to the launch of our operations in Uzbekistan. Overall, this translated to an
OIBDA margin of 39.7% for the Group. In Russia, OIBDA increased by 0.5% year-over-year
to RUB 41.3 bln. We continue to
benefit from sustained growth in mobile service revenues and
increased contribution from high-margin data revenues. Positive
trends were offset by inflationary pressure, the impact of ruble
devaluation on costs denominated in foreign currencies, primarily
related to international roaming and international calling, and
impact of higher low-margin handset sales. On a quarterly basis,
OIBDA fell by 9.1% due to seasonal factors, including lower
revenues from roaming, and a periodic increase in payroll, with an
OIBDA of at 42.1%. For the year, however, Group OIBDA was up
slightly to RUB 175.5 bln for the
year, a strong sign of the strength and efficiency of the
organization and our markets."
He continued, "In Q4 2014, net income fell year-on-year to
RUB 1.6 bln. In addition to the
aforementioned developments to our adjusted OIBDA, other
extraordinary factors influencing our bottom line include: a
reserve of RUB 5.1 bln rubles based
on UAH 1.4 bln held at DeltaBank, which was declared insolvent in
early March; an impairment of our stake in MTS Bank in the amount
of RUB 3.2 bln; and a gain in the
amount of RUB 3.1 bln from the
reentrance into Uzbekistan. For
the period, we recognized a non-cash FOREX loss of roughly
RUB 9 bln due to the impact of ruble
depreciation on our non-ruble debt portfolio. Additional factors
impacting our net income include the performance of investments in
MTS Bank and Ozon, as well as the contribution from our minority
stake in MTS Belarus. Despite the operating challenges throughout
our markets, MTS continues to generate significant operating cash
flows. Exclusive of one-offs, as well as investments in associates
and acquisitions of subsidiaries, operating cash flow from
continuing operations improved 1.8% compared to 2013. This led to a
strong free cash flow of RUB 57.0
bln."
Mr. Andrei Dubovskov, MTS
President and CEO, concluded, "And despite the challenges, over the
past year, we saw in our markets core revenue growth; generally
stable market shares among key competitors; sustained levels of
investment; and strong levels of profitability. This gives us
confidence looking ahead to 2015 and beyond. For Russia, we anticipate revenue growth of over
3% in 2015 driven by continued migration to data plans and rising
data usage. For the Group we see the revenue growing by more than
2% driven by the improvement in data revenues in our key markets,
and we are cautiously targeting Group OIBDA margin of over 40%.
Obviously macroeconomic issues and currency stability remain the
key factors, which may influence our revenue and margins. Our plans
for CAPEX in 2015 are to decrease slightly in the absolute amount
of capital expenditures to roughly RUB 85
bln. Ruble volatility does imply that we will purchase
less equipment, but we feel that we are best prepared for such a
scenario. In 2014, we launched and developed LTE in 76 regions and
installed over 15,000 3G/4G base stations, a record for MTS.
Network build-out allowed us to dramatically increase data transfer
speeds and improve customer experience as indicated by high levels
of satisfaction among MTS customers measured by various marketing
metrics. Thus, we feel comfortable about our competitive position
as we economize on network investments."
Additional Information
In 2010, the Russian State Duma enacted the law requiring
Russian companies, which have securities traded on the Moscow
Exchange, to prepare consolidated financial statements under
International Financial Reporting Standards (IFRS) beginning from
the financial year ending on December 31,
2015. To conform to this requirement, the Group will prepare
its financial statements for the year ended December 31, 2015 with comparable data for the
year ended December 31, 2014 under
IFRS.
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
December 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