MBT Mobile TeleSystems Public Joint Stock Company

FORM 6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer
March 17, 2015

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 Fourth Quarter and Full Year Ended December 31, 2014

March 17, 2015

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 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.

(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.

·                  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.

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 31, 2014. For full disclosure materials, please visit http://www.mtsgsm.com/resources/reports/.

Financial Summary

Russia Highlights

Ukraine Highlights

(3) Revenue, net of intercompany between mobile and fixed

Armenia Highlights

Turkmenistan Highlights

CAPEX Highlights

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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

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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 www.mtsgsm.com.

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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.

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Attachments to the Fourth Quarter and Full Year 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. 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. We use a term Adjusted for OIBDA and operating income when there were significant excluded one off effects. OIBDA can be reconciled to our consolidated statements of operations as follows:

OIBDA margin can be reconciled to our operating margin as follows:

***

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:

Free cash-flow can be reconciled to our consolidated statements of cash flow as follows:

***

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 subscriber’s 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.