Mobile TeleSystems : MTS Reports Q2 2022 Results – Form 6-K







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

Disclaimer

MTS – Mobile TeleSystems OJSC published this content on 18 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2022 14:33:02 UTC.

Publicnow 2022

All news about MOBILE TELESYSTEMS

Sales 2022 574 B
9 499 M
9 499 M
Net income 2022 36 538 M
604 M
604 M
Net Debt 2022 458 B
7 581 M
7 581 M
P/E ratio 2022 5,89x
Yield 2022 12,6%
Capitalization 457 B
7 562 M
7 562 M
EV / Sales 2022 1,59x
EV / Sales 2023 1,45x
Nbr of Employees
Free-Float 25,4%

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Income Statement Evolution

Sell

Buy

Mean consensus OUTPERFORM
Number of Analysts 4
Last Close Price 275,05 RUB
Average target price 337,25 RUB
Spread / Average Target 22,6%


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