Mobil’nye Telesistemy PAO — Mobile TeleSystems PJSC — Q2 2016 Earnings Presentation
29 slides from Mobil’nye Telesistemy PAO's earnings presentation, Aug 18, 2016
Slide 1: Safe harbor
Some of the information in this presentation 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
Slide 2: Table of contents
FINANCIAL & CORPORATE HIGHLIGHTS Key period highlights: 3D Strategy Group financial highlights: revenue Group financial highlights: adjusted OIBDA Group financial highlights: net profit Group mobile subscriber base dynamics Group capital expenditures Group debt at the end of Q2 2016 Group balance sh
Slide 3: Financial & Corporate Highlights
4 FINANCIAL & CORPORATE HIGHLIGHTS
Slide 4: Key Period Highlights: 3D Strategy
Key Period Highlights: 3D Strategy DATA: Growth in a challenging macroeconomic environment Increase in Group revenue through service revenue growth and handset sales despite volatility throughout markets Expansion of LTE networks throughout Russia and development of 3G network throughout Ukraine DIF
Slide 5: Group Financial Highlights: Revenue
Strong Y-o-Y revenue growth due to: Strategic focus on increasing handset sales through aggressive pricing and expanded retail footprint Growth in traffic consumption and expansion of our active subscriber base in Russia as a result of pricing and retail strategy Expansion of 3G services in Ukraine
Slide 6: Group Financial Highlights: Adjusted OIBDA
Russia Period decline in Adjusted OIBDA due to: Lower calling activity in Russia, coupled with lower roaming activity of MTS subscribers, due to macroeconomic volatility; Increased roaming and international calling costs, due primarily to currency volatility; Higher contribution from lower-margin sa
Slide 7: Group Financial Highlights: Net Profit
Net profit on y-o-y basis in Q2 2016 impacted by: OIBDA dynamics Lower non-cash FOREX gain due to currency volatility Accelerated interest expense due to repurchase of USD 267 mln of outstanding 2020 Eurobond Notes MTS continues to see sustained macroeconomic volatility in its markets of operations
Slide 8: Group Mobile Subscriber Base Dynamics
In Russia, MTS continues to attract and retain high-quality subscribers by: Promoting innovative tariff plans; Emphasizing sales through proprietary retail channels; Best-in-class customer service aimed at enhancing customer experience; and Market-leading products and services, like low-priced, high
Slide 9: Group Capital Expenditures
In 2016, MTS plans to reduce CAPEX from RUB 96 bln to around RUB 85 bln due to following factors: End of build-out of GPON in Moscow Incremental build-out of LTE, which is currently present in all of Russia’s regions Lower Y-on-Y 3G CAPEX in Ukraine CAPEX (RUB mln) As % of Sales CAPEX (RUB mln) As %
Slide 10: Group Debt at the End of Q2 2016
Stable debt repayment schedule provides greater flexibility in managing liquidity, meeting obligations, while providing adequate cash flows for both debt obligations and shareholder remuneration strategy Total Group debt was reduced due to: Repurchase of USD 267.4 mln of 2020 Eurobonds Amortized deb
Slide 11: Group Balance Sheet and Net Debt
Net debt/LTM Adjusted OIBDA remained stable at 1.1x Short-term investments include mostly USD-denominated deposits while long-term deposits are all USD-denominated Balance sheet (RUB mln) As of March 31, 2016 As of June 30, 2016 Total debt* 316,891 285,452 Short-term debt 46,273 49,586 Long-term deb
Slide 12: Outlook for 2016
Revised Group Adj. OIBDA Forecast* (in RUB bln) +6.6% GROUP REVENUE: For 2016, MTS amends its Group revenue outlook to 2-3% growth, due to disposal of UMS LLC and expected full deconsolidation of UMS’s financial results in Q3 2016 and other factors: Subscriber growth in Russia; Rising data usage and
Slide 13: Dividend Payout
PAYOUT IN 2016 The Board of Directors recommended that the Extraordinary General Meeting of shareholders (“the EGM”) approve semi-annual dividends of RUB 11.99 per ordinary MTS share (RUB 23.98 per ADR), or a total of RUB 24.0 bln, based on H1 2016 financial results. MTS already paid out RUB 28.0 bl
Slide 14: Key Financial & Operating Results
15 KEY FINANCIAL & OPERATING RESULTS
Slide 15: Russia Financial Highlights: Revenue
Y-o-Y revenue growth driven by: Higher usage of data and messaging products Increased data adoption among subscribers Quality subscriber additions Strong sales of handsets Total Russia Revenue (RUB bln) Russia Financial Highlights +4.3% +3.3% Revenue segment Q1 2015 Q2 2015 Q2 2015 vs Q1 2015 Q1 201
Slide 16: Russia Financial Highlights: OIBDA
Y-on-Y OIBDA decline due to: Expansion of the retail footprint; Aggressive smartphone pricing strategies; Impact of ruble volatility on costs denominated in foreign currencies, including international roaming and calling; and Inflationary pressure among certain SG&A costs Russia Financial Highlights
Slide 17: Russia Fixed Financial and Operating Indicators
B2C Sustained Y-o-Y improvement in B2C revenue attributable to growth in B2C Internet and pay-TV subscriber base in Moscow and the regions, as well as success in upselling existing customers through network modernization Y-o-Y fixed-line growth in B2C reflects the success of GPON project together wi
Slide 18: Russia Retail Network
Smartphones Sales and Penetration MTS Retail Network At the end of Q2 2016, MTS’s retail network comprised 5,838 stores In H1 2016, smartphones accounted for 67% of phones sold in MTS stores in units LTE smartphones accounted for around 50% of smartphones in units sold in the MTS retail chain Beginn
Slide 19: Ukraine Financial Highlights
Year-over-year revenue impacted by: Intensive data traffic growth, due to the widespread 3G roll-out; An increase in bundled voice and data subscribers; A partial re-pricing of tariffs; and Growth of international interconnect revenues. OIBDA decrease driven by: Higher international roaming and inte
Slide 20: Armenia Financial Highlights
Revenue trends reflect lower overall voice activity due to macroeconomic issues, as well as increased data substitution for international dialing and lower on-net pricing on V&D tariff OIBDA trend reflects decline in revenues, including decreased revenues from roaming and international calling Total
Slide 21: Turkmenistan Financial Highlights
Y-o-Y revenue decline due to lower tariff pricing and lower revenues from content Y-o-Y decline in OIBDA due to higher payroll and network costs Total Turkmenistan Revenue (TMT mln) Turkmenistan Financial Highlights -0.6% -7.5% -1.8% Total Turkmenistan OIBDA and OIBDA Margin (TMT mln) +3.1% -17.2% -
Slide 22: Belarus Financial Highlights
Y-o-Y improvement in topline attributable to: An increase in data revenues attributable to the Company’s success in increasing smartphone penetration and customer migration to bundled tariff plans Stronger pricing for data and voice usage Rising sales of handsets as the Company focused on stimulatin
Slide 23: Belarus Financial Highlights
Belarus Financial Highlights Total Belarus Revenue (BYR bin) *+10.9%—,_——+24:3%- 4% [428.8% ee 308 aso 1882 4.a89 2477 ~ = i Total Belarus Adjusted OIBDA' and OIBDA Margin (BYR bin) 48.2% 4p-———$#12.4%$ 8.1% 185% 787 tail 1,438 os 673 673 70. est 530%, 545% 4% 458% STH Cr a CC Ed wi 308 ‘Subsetibors
Slide 24: IFRS and Non-IFRS Financial Measures
In 2010, the Russian State Duma enacted a 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 ended December 31, 2015. To conform
Slide 25: Definitions & reconciliations
Definitions & reconciliations Q4 2015 Q1 2016 Q2 2016 Group RUS UKR ARM TUK UZB Group RUS UKR ARM TUK UZB Group RUS UKR ARM TUK UZB OPERATING MARGIN 16.7% 22.9% 16.7% n/a 23.4% n/a 19.5% 22.4% 9.9% 5.6% 19.4% n/a 18.5% 22.5% 8.8% 6.6% 16.8% n/a Add: Loss from impairment of goodwill in Armenia 3.1% -
Slide 26: Definitions & reconciliations
Definitions & reconciliations RUB mln As of Mar 31, 2016 As of June 30, 2016 Current portion of LT debt and of finance lease obligations 46,273 49,586 LT debt 259,968 225,569 Finance lease obligations 10,650 10,297 Total debt 316,891 285,452 Less: Cash and cash equivalents 44,389 24,956 ST investmen
Slide 27: Definitions & reconciliations
Definitions & reconciliations 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
Slide 28: Contact information
MTS Investor Relations +7 495 223 20 25 ir@mts.ru www.mtsgsm.com Latest Financial Information www.mtsgsm.com/resources/reports/ Official MTS Blog www.mtsgsm.com/blog/ Follow Us twitter.com/JoshatMTS Download the MTS Investor Relations App for iPad: http://goo.gl/oRuyqk Contact information
Slide 29: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MOBILE TELESYSTEMS PJSC By: /s/ Andrei Dubovskov Name: Andrei Dubovskov Title: CEO Date: August 18, 201
Mobile TeleSystems PJSC — Q2 2016 Earnings Presentation on 6ix