FORM 6-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Issuer
March 21, 2016

 

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

 

Commission file number:  333-12032

 

Mobile TeleSystems PJSC

(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, 2015

 

March 21, 2016

 

Moscow, Russian Federation — Mobile TeleSystems PJSC (“MTS” NYSE: MBT; MOEX: MTSS), the leading telecommunications provider in Russia and the CIS, today announces its audited IFRS financial results for the three months and full year ended December 31, 2015.

 

Key Financial Highlights of FY 2015

 

·                  Consolidated group revenue increased 5.0% y-o-y to RUB 431.2 bln

 

·                  Total revenue in Russia rose 4.4% y-o-y to RUB 391.2 bln

 

·                  Mobile service revenue in Russia improved 2.0% y-o-y to RUB 296.2 bln

 

·                  Data traffic revenue in Russia grew 19.8% y-o-y to RUB 77.2 bln

 

·                  Handset sales in Russia increased 37.4% y-o-y to RUB 40.3 bln

 

·                  Active subscriber base grows 3.5% for the Group to 107.8 mln

 

·                  Group adjusted OIBDA declines 2.0% y-o-y to RUB 175.5 bln

 

·                  OIBDA in Russia steady y-o-y at RUB 165.1 bln

 

·                  MTS sets its Group guidance for 2016:

 

·                  Group revenue growth of more than 4%

 

·                  Group adjusted OIBDA growth of -2 to +1%

 

·                  Reduction of Group CAPEX to RUB 85 bln

 

Key Corporate and Industry Highlights

 

·                  Won a federal spectrum auction in Russia and gained a lot in the 2.6 Ghz frequency range to provide services on the LTE-TDD standard

 

·                  Acquisition of the licenses to provision mobile telecommunications services in the GSM standard, LTE standard and its subsequent modifications in the 1710-1785 MHz and 1805-1880 MHz ranges in Amur Region, North-Ossetia-Alania, Orenburg Region, Perm Krai and in Komi-Perm District, for a total amount of RUB 1.91 bln through an auction held by The Federal Service for Supervision in the Sphere of Communications, Information Technologies and Mass Media (Roskomnadzor)

 

·                  Agreement with VimpelCom PJSC (the Beeline brand) to share LTE spectrum in the 2600 MHz range in 20 Russian regions beginning in 2016. Spectrum sharing will allow operators to double data transfer speeds available to the subscribers at peak speeds of 150 Mb/s

 

·                  Together with nine leading operators launched a new Partnering Operator Alliance that will allow partner businesses to more efficiently and quickly bring innovative products and services to customers around the world. Companies represented in the partnership can reach a potential customer base of around one billion customers in more than 80 countries around the world

 

1



 

·                  Completion of acquisition of 100% of shares of NVision Group JSC (“NVision Group”), from subsidiaries of Sistema JSFC (LSE: SSA), the parent company of MTS, in accordance with the agreements signed and disclosed on July 17, 2015

 

·                  In December, MTS also finalized the merger of 4 wholly owned operational subsidiaries — Penza GSM JSC, Smarts-Ufa JSC, Smarts-Ivanovo JSC and Comstar-Regions CJSC, which continues its policy of simplifying its corporate structure and consolidating subsidiaries

 

·                  Paid out record dividend amount of RUB 25.17 per share, or a total of RUB 52.0 bln, during calendar year 2015

 

Commentary

 

Mr. Andrei Dubovskov, President and CEO, commented, “We are pleased to announce the conclusion of another successful year of growth for MTS. Group revenue increased 5% to over RUB 431 bln as we continue to execute on our 3D strategy. We see sustained demand for data throughout our markets of operation, and we were pleased to finally be able to bring high-speed data services to our customers in Ukraine with the acquisition of a 3G license early last year.”

 

Mr. Dubovskov continued, “Despite continued macroeconomic volatility, we finished the year 0.7 percentage points above our forecasted Adjusted OIBDA margin of 40%. For the year, adjusted Group OIBDA declined slightly by 2% to RUB 175.5 bln, primarily due to macroeconomic factors, regulatory changes in Ukraine and aggressive behavior by our competitors in retail distribution in Russia.”

 

Mr. Vasyl Latsanych, Chief Marketing Officer, commented, “For the year, total revenue in Russia increased by 4.4% to over RUB 391 bln. Over the course of the year, we saw a number of macroeconomic factors impact our business, but our overall robust mobile business overcame these challenges. Our mobile business revenue increased 5.2% not only due to the sustained growth in our active subscribers but also to the impact of increasing data traffic revenue, driven by the rise in smartphone penetration and data adoption.

 

Mr. Latsanych continued, “In our fixed-line business, revenue fell slightly in 2015 by 1.5%. However, we were encouraged by growth of 2.9% year-over-year in Q4 2015. This was driven by our steady growth in B2C market share; over the quarter, we increased our broadband subscriber base by close to 100,000 subscribers.”

 

In Ukraine, revenue for the year declined slightly by 0.6% to above UAH 10 bln. We have been steadily building out3G throughout Ukraine and launched in every major metropolitan market under the Vodafone brand, so that by the end of the year we could boast a network on par with our major competitor.

 

Among our foreign subsidiaries, we note that revenue in Armenia fell year-over-year by over 8% as macroeconomic factors impact usage of services like international calling and roaming. In Turkmenistan, revenue jumped 3.9% for the year, which was driven largely by increased usage. In Uzbekistan, however, we saw impressive revenue growth of over 51% Q-on-Q as we exceeded 1 million subscribers in Q4.

 

Mr. Alexey Kornya, Vice President, Finance and Investments and Chief Financial Officer, further commented, “Group net income declined 3.5% for the year to 49.5 billion rubles. In addition to OIBDA trends, primary factors for the decline include increased depreciation and amortization costs as we expand our networks and higher financing costs. Other market-specific items include an impairment charge related to our Armenia business; and losses from renewed operations in Uzbekistan.

 

Free cash flow for the year amounted to close to RUB 51 bln. This slight decline from 2014 primarily reflects OIBDA trends, but we obviously saw pressure from our Russian commercial strategy as higher handset sails negatively impact working capital. CAPEX overall was slightly higher than we anticipated largely due to currency volatility within our markets.

 

Recently, as part of our commitment to shareholder returns, we acquired shares representing 3.29% of MTS’s share capital as part of our liquidation of MTS Bermuda, a subsidiary which we established to execute a share

 

2



 

buyback program in 2006. Since the shares are now held in treasury by PJSC MobileTeleSystems, they have no voting rights and, as such, we are not permitted to take dividends on these shares.

 

By the end of the period, total debt stood at RUB 348 bln. Our net debt/LTM OIBDA remains constant at 1.2x, a comfortable level for the Company and low by industry standards. Recent growth in this coefficient is largely currency-driven due to ruble volatility, but we remind investors that 97% of our non-ruble debt position is currently covered by a combination of short-term deposits and stable long-term investments all of which are denominated in US dollar or Euro. We remain focused on sustaining a strong balance sheet and identifying further ways to optimize our debt portfolio.

 

Mr. Dubovskov continued, “Looking ahead to 2016, we expect growth in Group revenue to exceed 4%. Key factors will include:

 

·                  overall business activity and customer behavior in this volatile macro environment

 

·                  growth of data usage in our markets of operation

 

·                  handset sales and commercial strategies in response to our competitors’ aggressiveness in retail; and

 

·                  growth of B2C broadband and pay-tv services in Russia.

 

As for adjusted Group OIBDA, we anticipate growth in a range from -2% to +1% for the year. Our markets remain volatile due to a number of factors, including:

 

·                  heightened competition in retail distribution in Russia due to aggressive behavior by our competitors;

 

·                  the build-out of 3G in Ukraine and non-market factors impacting our profitability;

 

·                  developments in other foreign subsidiaries; and

 

·                  macroeconomic factors and currency volatility throughout our markets of operation.

 

We also anticipate reducing spending on capital investments by RUB 11 bln to RUB 85 bln for the upcoming year.

 

Additional Information

 

MTS continues to see sustained macroeconomic volatility in its markets of operations that may impact the financial and operational performance throughout the Group.

 

3



 

Conference Call

 

The conference call will start today at:

 

18:00 hrs (Moscow time)

15:00 hrs (London time)

11:00 hrs (US Eastern time)

 

To take part in the conference call, please dial one of the following telephone numbers and quote the confirmation code, 1907472

 

From Russia + 7 495 705 9450

From the UK: + 44(0)20 3427 1911

From the US: + 1212 444 0896

 

The conference call will also be available at: http://www.mtsgsm.com/news/reports/ via audio webcast.

 

A replay of the conference call will be available for seven days on the following telephone numbers:

 

From the US: +1 347 366 9565 PIN 1907472

From the UK: +44(0)20 3427 0598 PIN 1907472

 

This press release provides a summary of some of the key financial and operating indicators for the period ended December 31, 2015. For full disclosure materials, please visit http://www.mtsgsm.com/resources/reports/.

 

4



 

Financial Summary

 

RUB mln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues

 

113,325

 

107,202

 

+5.7

%

115,034

 

-1.5

%

431,232

 

410,780

 

+5.0

%

Adjusted OIBDA

 

43,495

 

44,346

 

-1.9

%

48,019

 

-9.4

%

175,546

 

179,127

 

-2.0

%

- margin

 

38.4

%

41.4

%

-3.0

pp

41.7

%

-3.3

pp

40.7

%

43.6

%

-2.9

pp

Operating profit

 

18,876

 

22,852

 

-17.4

%

27,319

 

-30.9

%

87,859

 

105,702

 

-16.9

%

- margin

 

16.7

%

21.3

%

-4.6

pp

23.7

%

-7.0

pp

20.4

%

25.7

%

-5.3

pp

Net profit

 

7,135

 

1,381

 

+416.6

%

14,393

 

-50.4

%

49,489

 

51,307

 

-3.5

%

- margin

 

6.3

%

1.3

%

+5.0

pp

12.5

%

-6.2

pp

11.5

%

12.5

%

-1.0

pp

 

Russia Highlights

 

RUB mln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues(1)

 

102,537

 

98,043

 

+4.6

%

103,917

 

-1.3

%

391,214

 

374,893

 

+4.4

%

- mobile

 

74,928

 

74,621

 

+0.4

%

77,967

 

-3.9

%

296,165

 

290,371

 

+2.0

%

- fixed

 

15,513

 

15,966

 

-2.8

%

15,076

 

+2.9

%

61,614

 

62,533

 

-1.5

%

-sales of goods

 

13,840

 

9,220

 

+50.1

%

12,615

 

+9.7

%

40,320

 

29,351

 

+37.4

%

OIBDA

 

41,116

 

41,365

 

-0.6

%

44,527

 

-7.7

%

165,058

 

165,032

 

0.0

%

- margin

 

40.1

%

42.2

%

-2.1

pp

42.8

%

-2.7

pp

42.2

%

44.0

%

-1.8

pp

Net profit

 

11,817

 

4,522

 

+161.3

%

13,448

 

-12.1

%

53,120

 

44,368

 

+19.7

%

- margin

 

11.5

%

4.6

%

+6.9

pp

12.9

%

-1.4

pp

13.6

%

11.8

%

1.8

pp

 

 

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

2014

 

2015

 

ARPU (RUB)

 

336,5

 

315,4

 

323,6

 

341,3

 

323,2

 

338,2

 

325,7

 

MOU (min)

 

393

 

367

 

388

 

386

 

387

 

372

 

381

 

Churn rate (%)

 

11.0

%

10.1

%

9.1

%

9.7

%

10.8

%

41.1

%

39.6

%

 

Ukraine Highlights

 

UAH mln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues

 

2,405

 

2,282

 

+5.4

%

2,572

 

-6.5

%

10,027

 

10,084

 

-0.6

%

Adjusted OIBDA

 

885

 

963

 

-8.1

%

1048

 

-15.6

%

4,113

 

4,691

 

-12.3

%

- margin

 

36.8

%

42.2

%

-5.4

pp

40.8

%

-4.0

pp

41.0

%

46.5

%

-5.5

pp

Net profit

 

412

 

(141

)

n/a

 

569

 

-27.6

%

2,290

 

2,425

 

-5.6

%

- margin

 

17.1

%

n/a

 

n/a

 

22.1

%

-5.0

pp

22.8

%

24.0

%

-1.2

pp

 

 

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

2014

 

2015

 

ARPU (UAH)

 

34,8

 

42,7

 

39,2

 

41,7

 

38,8

 

39,7

 

40,6

 

MOU (min)

 

480

 

508

 

502

 

500

 

523

 

554

 

508

 

Churn rate (%)

 

17.6

%

5.5

%

5.6

%

6.9

%

6.6

%

34.2

%

24.5

%

SAC (UAH)

 

69,3

 

69,2

 

86,7

 

76,2

 

83,4

 

57,6

 

79,5

 

- dealer commission

 

40

 

44,6

 

48,7

 

47,7

 

48,6

 

34,2

 

47,5

 

- adv&mktg

 

20,3

 

16,6

 

25,8

 

17,1

 

20,9

 

15,4

 

20,0

 

- handset subsidy

 

2,8

 

0,2

 

1,9

 

1,5

 

1,1

 

1,4

 

1,6

 

- SIM card & voucher

 

6,2

 

7,7

 

10,4

 

9,9

 

12,8

 

6,5

 

10,4

 

 


(1)  Revenue, net of intercompany operations

 

5



 

Armenia Highlights

 

AMD mln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues

 

16,481

 

19,572

 

-15.8

%

19,296

 

-14.6

%

71,177

 

77,651

 

-8.3

%

Adjusted OIBDA

 

7,629

 

9,112

 

-16.3

%

9,984

 

-23.6

%

34,251

 

38,014

 

-9.9

%

- margin

 

46.3

%

46.6

%

-0.3

pp

51.7

%

-5.4

pp

48.1

%

49.0

%

-0.9

pp

Net profit

 

(17,119

)

(897

)

n/a

 

4,107

 

n/a

 

(6,514

)

14,410

 

n/a

 

- margin

 

n/a

 

n/a

 

n/a

 

21.3

%

n/a

 

n/a

 

18.6

%

n/a

 

 

 

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

2014

 

2015

 

ARPU (AMD)

 

2,957

 

2,565

 

2,836

 

2,940

 

2,494

 

2,993

 

2,706

 

MOU (min)

 

523

 

493

 

536

 

545

 

533

 

508

 

524

 

Churn rate (%)

 

9.5

%

8.7

%

8.4

%

8.3

%

8.7

%

33.9

%

34.0

%

SAC (AMD)

 

6,262

 

5,546

 

5,767

 

5,096

 

5,598

 

5,363

 

5,488

 

 

Turkmenistan Highlights

 

TMT mln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues

 

75

 

76

 

-0.8

%

75

 

0.5

%

293

 

282

 

+3.9

%

OIBDA

 

28

 

30

 

-6.4

%

29

 

-2.9

%

110

 

117

 

-5.3

%

- margin

 

37.9

%

40.2

%

-2.3

pp

39.3

%

-1.4

pp

37.7

%

41.3

%

-3.6

pp

Net profit

 

15

 

17

 

-10.6

%

16

 

-2.6

%

56

 

65

 

-13.5

%

- margin

 

20.3

%

22.4

%

-2.1

pp

20.9

%

-0.6

pp

19.2

%

23.0

%

-3.8

pp

 

 

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

2014

 

2015

 

ARPU (TMT)

 

14,8

 

13,7

 

14,4

 

15,4

 

15,5

 

13,8

 

14,7

 

MOU (min)

 

553

 

504

 

515

 

511

 

499

 

563

 

501

 

Churn rate (%)

 

10.3

%

12.1

%

13.0

%

12.0

%

12.6

%

43.3

%

49.2

%

SAC (TMT)

 

26,1

 

28,9

 

28,3

 

25,8

 

24,6

 

25,2

 

26,8

 

 

Uzbekistan Highlights

 

UZS mln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues

 

82,384

 

4,547

 

+1711.8

%

54,443

 

+51.3

%

193,517

 

4,547

 

+4155.9

%

OIBDA

 

2,583

 

(28,666

)

n/a

 

(5,473

)

n/a

 

(63,944

)

(28,666

)

n/a

 

- margin

 

3.1

%

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

Net profit

 

(22,071

)

(25,057

)

n/a

 

(28,648

)

n/a

 

(120,695

)

(25,057

)

n/a

 

- margin

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

 

 

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

2014

 

2015

 

ARPU (UZS)

 

n/a

 

21,027

 

23,373

 

23,976

 

27,101

 

n/a

 

24,717

 

MOU (min)

 

445

 

356

 

462

 

530

 

527

 

445

 

501

 

Churn rate (%)

 

n/a

 

8.4

%

13.0

%

14.3

%

17.1

%

n/a

 

59.2

%

 

Belarus Highlights

 

BYR bln

 

Q4’15

 

Q4’14

 

y-o-y

 

Q3’15

 

q-o-q

 

2015

 

2014

 

y-o-y

 

Revenues

 

1,542

 

1,327

 

+16.2

%

1,440

 

+7.1

%

5,459

 

4,974

 

+9.7

%

Adjusted OIBDA

 

700

 

667

 

+5.0

%

673

 

+4.1

%

2,687

 

2,562

 

+4.9

%

- margin

 

45.4

%

50.3

%

-4.9

pp

46.7

%

-1.3

pp

49.2

%

51.5

%

-2.3

pp

Net profit

 

513

 

529

 

-3.1

%

469

 

+9.3

%

1,828

 

1,487

 

+23.0

%

- margin

 

33.3

%

39.9

%

-6.6

pp

32.6

%

+0.7

pp

33.5

%

29.9

%

+3.6

pp

 

 

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

2014

 

2015

 

ARPU (BYR 000’s)

 

74.3

 

68.8

 

73.3

 

75.6

 

76.3

 

69.0

 

73.5

 

MOU (min)

 

480

 

448

 

470

 

472

 

468

 

482

 

463

 

Churn rate (%)

 

5.8

%

5.1

%

4.7

%

4.9

%

5.1

%

22.3

%

19.7

%

SAC (BYR 000’s)

 

189.1

 

201.5

 

222.8

 

217.1

 

216.8

 

157.5

 

214.8

 

 

6



 

CAPEX Highlights

 

RUB mln

 

FY 2014

 

FY 2015

 

Russia(2)

 

85,491

 

79,619

 

- as % of rev

 

22.8

%

20.4

%

Ukraine(3)

 

4,210

 

12,427

 

- as % of rev

 

12.8

%

44.1

%

Armenia

 

1,142

 

1,371

 

- as % of rev

 

16.0

%

15.2

%

Turkmenistan

 

1,084

 

500

 

- as % of rev

 

28.4

%

9.8

%

Uzbekistan

 

1

 

2,195

 

- as % of rev

 

0.6

%

47.6

%

Group

 

91,929

 

96,111

 

- as % of rev

 

22.4

%

22.3

%

 

* * *

 

For further information, please contact in Moscow:

 

Joshua B. Tulgan

Director, Corporate Finance & Investor Relations

Mobile TeleSystems PJSC

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

 

* * *

 

Mobile TeleSystems PJSC (“MTS” - NYSE:MBT; MOEX:MTSS) is the leading telecommunications group in Russia, Central and Eastern Europe.  We provide wireless Internet access and fixed voice, broadband and pay-TV to over 100 million customers who value high quality of service at a competitive price. Our wireless and fixed-line networks deliver best-in-class speeds and coverage throughout Russia, Ukraine, Armenia, Turkmenistan, Uzbekistan and Belarus. To keep pace with evolving customer demand, we continue to grow through innovative products, investments in our market-leading retail platform, mobile payment services, e-commerce and IT solutions. For more information, please visit: 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.

 


(2)  Excluding costs of RUB 3.381 mln related to the acquisition of a 4G license in Russia in 2015

(3)  Excluding purchase of 3G license in Ukraine in the amount of RUB 7,044 mln in 2015

 

7



 

Attachments to the Fourth Quarter 2015

Earnings Press Release

 

Attachment A

 

Non-IFRS financial measures. This presentation 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.

 

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 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 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 a term Adjusted for OIBDA and operating income when there were significant excluded one off effects.  OIBDA and Adjusted OIBDA can be reconciled to our consolidated statements of operations as follows:

 

Group (RUB mln)

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating profit

 

22,852

 

19,163

 

22,501

 

27,319

 

18,876

 

Less: Gain from reentrance in Uzbekistan

 

(3,130

)

 

 

 

 

 

Add: Provision for cash balances deposited in distressed Ukrainian banks

 

5,138

 

1,698

 

 

 

 

Add: Loss from impairment of goodwill in Armenia

 

 

 

 

 

3,516

 

Adjusted operating profit

 

24,860

 

20,861

 

22,501

 

27,319

 

22,392

 

Add: D&A

 

19,486

 

20,448

 

20,221

 

20,700

 

21,103

 

Adjusted OIBDA

 

44,346

 

41,309

 

42,722

 

48,019

 

43,495

 

 

Russia (RUB mln)

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating profit

 

24,299

 

21,091

 

23,728

 

27,275

 

23,481

 

Add: D&A

 

17,065

 

17,080

 

17,517

 

17,252

 

17,634

 

OIBDA

 

41,365

 

38,171

 

41,245

 

44,527

 

41,115

 

 

Ukraine (RUB mln)

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating profit/(loss)

 

(3,468

)

693

 

1,190

 

1,675

 

1,158

 

Add: Provision for cash balances deposited in distressed Ukrainian banks

 

5,138

 

1,698

 

 

 

 

Adjusted operating profit

 

1,670

 

2,391

 

1,190

 

1,675

 

1,158

 

Add: D&A

 

1,448

 

1,344

 

1,107

 

1,358

 

1,390

 

Adjusted OIBDA

 

3,118

 

3,735

 

2,297

 

3,032

 

2,548

 

 

Armenia (RUB mln)

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating profit

 

464

 

436

 

412

 

680

 

(3,122

)

Add: Loss from impairment of goodwill in Armenia

 

 

 

 

 

3,516

 

Adjusted operating profit

 

464

 

436

 

412

 

680

 

394

 

Add: D&A

 

523

 

623

 

525

 

626

 

656

 

Adjusted OIBDA

 

986

 

1,059

 

937

 

1,306

 

1,050

 

 

8



 

Turkmenistan (RUB mln)

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating profit

 

329

 

252

 

237

 

326

 

330

 

Add: D&A

 

177

 

205

 

165

 

203

 

209

 

OIBDA

 

506

 

458

 

402

 

529

 

538

 

 

Uzbekistan (RUB mln)

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating profit

 

 

(2,134

)

(1,373

)

(1,404

)

(1,163

)

Add: D&A

 

 

1,209

 

917

 

1,275

 

1,228

 

OIBDA

 

 

(925

)

(455

)

(128

)

65

 

 

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

 

Group

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating margin

 

21.3

%

19.1

%

21.9

%

23.7

%

16.7

%

Less: Gain from reentrance in Uzbekistan

 

(2.9

)%

 

 

 

 

Add: Provision for cash balances deposited in distressed Ukrainian banks

 

4.8

%

1.7

%

 

 

 

Add: Loss from impairment of goodwill in Armenia

 

 

 

 

 

3.1

%

Adjusted operating margin

 

23.2

%

20.8

%

21.9

%

23.7

%

19.8

%

Add: D&A

 

18.2

%

20.4

%

19.7

%

18.0

%

18.6

%

Adjusted OIBDA margin

 

41.4

%

41.2

%

41.6

%

41.7

%

38.4

%

 

Russia

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating margin

 

24.8

%

23.3

%

25.2

%

26.2

%

22.9

%

Add: D&A

 

17.4

%

18.9

%

18.6

%

16.6

%

17.2

%

OIBDA margin

 

42.2

%

42.2

%

43.7

%

42.8

%

40.1

%

 

Ukraine

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating margin

 

(46.4

)%

8.8

%

20.2

%

22.5

%

16.7

%

Add: Provision for cash balances deposited in distressed Ukrainian banks

 

68.8

%

21.5

%

 

 

 

Adjusted operating margin

 

22.4

%

30.2

%

20.2

%

22.5

%

16.7

%

Add: D&A

 

19.4

%

17.0

%

18.8

%

18.2

%

20.0

%

Adjusted OIBDA margin

 

41.7

%

47.3

%

38.9

%

40.7

%

36.7

%

 

Armenia

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating margin

 

21.7

%

19.8

%

20.1

%

26.9

%

n/a

 

Add: Loss from impairment of goodwill in Armenia

 

 

 

 

 

155.0

%

Adjusted operating profit

 

21.7

%

19.8

%

20.1

%

26.9

%

17.4

%

Add: D&A

 

24.4

%

28.3

%

25.7

%

24.8

%

28.9

%

Adjusted OIBDA margin

 

46.1

%

48.1

%

45.8

%

51.7

%

46.3

%

 

Turkmenistan

 

Q4’14

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

Operating margin

 

26.2

%

19.8

%

22.0

%

24.3

%

23.4

%

Add: D&A

 

14.1

%

16.1

%

15.4

%

15.1

%

14.8

%

OIBDA margin

 

40.2

%

36.0

%

37.4

%

39.4

%

38.1

%

 

***

 

9



 

Attachment B

 

Net debt represents total debt less cash and cash equivalents and short-term investments, long-term deposits and effect of hedging of non-ruble denominated debt. 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-IFRS financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS.

 

Net debt can be reconciled to our consolidated statements of financial position as follows:

 

RUB mln

 

As of Dec 31, 2014

 

As of Dec 31, 2015

 

Current portion of LT debt and of finance lease obligations

 

41,955

 

54,346

 

LT debt

 

240,860

 

282,435

 

Finance lease obligations

 

8,857

 

11,231

 

Total debt

 

291,672

 

348,012

 

Less:

 

 

 

 

 

Cash and cash equivalents

 

61,410

 

33,464

 

ST investments

 

9,942

 

49,840

 

LT deposits

 

13,671

 

30,677

 

Effects of hedging of non-ruble denominated debt

 

21,936

 

18,174

 

Net debt

 

184,713

 

215,857

 

 

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

 

RUB mln

 

For twelve months
ended Dec 31, 2014

 

For twelve months
ended Dec 31, 2015

 

Net cash provided by operating activities

 

158,979

 

144,088

 

Less:

 

 

 

 

 

Purchases of property, plant and equipment

 

(73,573

)

(76,671

)

Purchases of intangible assets(4)

 

(18,356

)

(19,440

)

Proceeds from sale of property, plant and equipment

 

619

 

2,988

 

Investments in and advances to associates

 

(7,767

)

 

Acquisition of subsidiaries, net of cash acquired

 

(2,755

)

 

Free cash flow

 

57,147

 

50,965

 

 


(4)  Excluding purchases of 3G license in Ukraine (RUB 7.044 bln) and 4G license in Russia (RUB 3.4 bln )

 

***

 

10



 

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.

 

***

 

11



 

MOBILE TELESYSTEMS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of December 31,2015 AND As of December 31,2014

 

(Amounts in millions of RUB)

 

 

 

As of December 31,

 

As of December 31,

 

 

 

2015

 

2014

 

NON-CURRENT ASSETS:

 

 

 

 

 

Property, plant and equipment

 

302 662

 

299 023

 

Investment property

 

364

 

290

 

Intangible assets

 

109 064

 

98 520

 

Investments in associates

 

9 299

 

15 217

 

Deferred tax assets

 

9 287

 

6 186

 

Other non-financial assets

 

480

 

 

Other investments

 

34 667

 

17 065

 

Accounts receivable (related parties)

 

3 335

 

 

Other financial assets

 

25 203

 

21 950

 

Total non-current assets

 

494 361

 

458 251

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Inventories

 

14 510

 

7 509

 

Trade and other receivables

 

34 542

 

34 463

 

Accounts receivable (related parties)

 

6 326

 

4 525

 

Short-term investments

 

49 840

 

9 942

 

VAT receivable

 

9 815

 

8 071

 

Income tax assets

 

5 190

 

8 656

 

Assets held for sale

 

549

 

2 136

 

Advances paid and prepaid expenses, other current assets

 

4 781

 

4 341

 

Cash and cash equivalents

 

33 464

 

61 410

 

Total current assets

 

159 017

 

141 053

 

 

 

 

 

 

 

Total assets

 

653 378

 

599 304

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

Equity attributable to owners of the Company

 

160 115

 

168 829

 

Non-controlling interests

 

8 256

 

9 793

 

Total equity

 

168 371

 

178 622

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

Borrowings

 

292 168

 

248 549

 

Deferred tax liabilities

 

27 346

 

24 809

 

Provisions

 

2 565

 

2 838

 

Other financial liabilities

 

676

 

522

 

Other non-financial liabilities

 

4 342

 

4 584

 

Total non-current liabilities

 

327 097

 

281 302

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Borrowings

 

53 701

 

41 416

 

Provisions

 

7 863

 

8 684

 

Trade and other payables

 

57 756

 

52 811

 

Accounts payable (related parties)

 

1 809

 

4 674

 

Income tax liabilities

 

831

 

1 368

 

Other financial liabilities

 

9 778

 

5 220

 

Other non-financial liabilities

 

26 172

 

25 207

 

Total current liabilities

 

157 910

 

139 380

 

 

 

 

 

 

 

Total liabilities and equity

 

653 378

 

599 304

 

 

12



 

MOBILE TELESYSTEMS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND TWELTH MONTHS ENDED DECEMBER 31, 2015 AND 2014

 

(Amounts in millions of RUB except per share amount)

 

 

 

Twelve months
ended

 

Twelve months
ended

 

Three months
ended

 

Three months
ended

 

 

 

December 31,
2015

 

December 31,
2014

 

December 31,
2015

 

December 31,
2014

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

 

 

 

 

 

 

 

 

Service revenue

 

390 690

 

381 245

 

99 518

 

97 912

 

Sales of goods

 

40 542

 

29 535

 

13 807

 

9 290

 

 

 

431 232

 

410 780

 

113 325

 

107 202

 

Operating expenses

 

 

 

 

 

 

 

 

 

Cost of services

 

(130 592

)

(119 567

)

(33 739

)

(32 504

)

Cost of goods

 

(36 580

)

(25 450

)

(13 130

)

(7 677

)

Selling, general and administrative expenses

 

(89 302

)

(88 275

)

(22 996

)

(24 003

)

Depreciation and amortization expense

 

(82 473

)

(75 021

)

(21 103

)

(19 486

)

Other operating expense

 

(2 669

)

(1 819

)

(896

)

(384

)

Operating share of the profit of associates

 

3 457

 

3 458

 

931

 

1 712

 

Provision for investments in distressed Ukrainian banks

 

(1 698

)

(5 138

)

 

(5 138

)

Impairment of goodwill in Armenia

 

(3 516

)

 

(3 516

)

 

Gain from re-entrance into Uzbekistan

 

 

6 734

 

 

3 130

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

87 859

 

105 702

 

18 876

 

22 852

 

 

 

 

 

 

 

 

 

 

 

Currency exchange loss

 

(6 213

)

(17 911

)

(2 975

)

(8 822

)

 

 

 

 

 

 

 

 

 

 

Other (expenses)/income:

 

 

 

 

 

 

 

 

 

Finance income

 

8 368

 

4 519

 

1 670

 

1 106

 

Finance costs

 

(26 630

)

(17 260

)

(7 250

)

(4 421

)

Other expenses

 

(2 711

)

(7 569

)

(1 067

)

(6 779

)

Total other expenses, net

 

(20 973

)

(20 310

)

(6 647

)

(10 094

)

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

60 673

 

67 481

 

9 254

 

3 936

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(13 269

)

(15 985

)

(2 481

)

(2 830

)

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

47 404

 

51 496

 

6 773

 

1 106

 

 

 

 

 

 

 

 

 

 

 

Loss/(profit) for the period attributable to non-controlling interests

 

2 085

 

(190

)

362

 

275

 

 

 

 

 

 

 

 

 

 

 

Profit for the period attributable to owners of the Company

 

49 489

 

51 306

 

7 135

 

1 381

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss)/income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

1 465

 

10 948

 

1 921

 

15 552

 

Unrecognised actuarial gain

 

86

 

278

 

86

 

278

 

Net fair value (loss)/gain on financial instruments

 

(3 223

)

2 664

 

(236

)

(1 634

)

Other comprehensive (loss)/income

 

(1 672

)

13 890

 

1 771

 

14 196

 

Total comprehensive income for the period

 

45 732

 

65 386

 

8 544

 

15 302

 

Less comprehensive loss/(income) for the period attributable to the noncontrolling interests

 

1 455

 

(2 335

)

205

 

(1 871

)

 

 

 

 

 

 

 

 

 

 

Comprehensive income for the period attributable to owners of the Company

 

47 187

 

63 051

 

8 749

 

13 431

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding, in millions - basic and diluted

 

1 989

 

1 989

 

1 989

 

1 989

 

Earnings per share attributable to the Group - basic:

 

24,88

 

25,80

 

3,59

 

0,69

 

Earnings per share attributable to the Group - diluted:

 

24,87

 

25,78

 

3,59

 

0,69

 

 

13



 

MOBILE TELESYSTEMS

CONSOLIDATED  STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2015 AND 2014

 

(Amounts in millions of RUB)

 

 

 

Twelve months ended

 

Twelve months ended

 

 

 

December 31, 2015

 

December 31, 2014

 

 

 

 

 

 

 

Profit for the period

 

47 404

 

51 496

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Non cash gain from re-entrance into Uzbekistan

 

 

(6 724

)

Non cash provision for investment in Delta Bank

 

 

5 061

 

Depreciation and amortization

 

82 473

 

75 021

 

Impairment of goodwill in Armenia

 

3 516

 

 

Finance income

 

(8 368

)

(4 519

)

Finance costs

 

26 630

 

17 260

 

Income tax expense

 

13 269

 

15 985

 

Currency exchange loss

 

6 213

 

17 911

 

Amortization of deferred connection fees

 

(2 362

)

(1 912

)

Share of the loss of associates

 

324

 

3 080

 

Change in fair value of financial instruments

 

(1 014

)

95

 

Inventory obsolescence expense

 

384

 

357

 

Allowance for doubtful accounts

 

3 221

 

3 270

 

Change in provisions

 

7 265

 

8 965

 

Other non-cash items

 

(562

)

(31

)

 

 

 

 

 

 

Movements in operating assets and liabilities:

 

 

 

 

 

Decrease in trade and other receivables

 

2 781

 

5 412

 

(Increase)/Decrease in inventory

 

(5 998

)

731

 

Increase in VAT receivable

 

(642

)

(1 058

)

Decrease in prepaid expenses and other assets

 

574

 

1 217

 

Decrease in trade and other paybles and other current liabilities

 

(4 449

)

(12 790

)

 

 

 

 

 

 

Dividends received

 

3 269

 

2 650

 

Income taxes paid

 

(9 643

)

(9 906

)

Interest received

 

4 760

 

3 752

 

Interest paid (net of interest capitalised)

 

(24 957

)

(16 344

)

Net cash provided by operating activities

 

144 088

 

158 979

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchase of subsidiaries, net of cash acquired

 

0

 

(2 755

)

Purchases of property, plant and equipment

 

(76 671

)

(73 573

)

Purchases of intangible assets (net of purchases of 3G licences in Ukraine and 4G licences in Russia)

 

(19 440

)

(18 356

)

Purchases of 3G licences in Ukraine

 

(10 426

)

 

Proceeds from sale of property, plant and equipment and assets held for sale

 

2 988

 

619

 

Purchases of short-term investments

 

(33 014

)

(36 013

)

Proceeds from sale of short-term investments

 

31 572

 

47 619

 

Purchase of other investments

 

(40 471

)

(34 613

)

Proceeds from sale of other investments

 

106

 

19 831

 

Investments in associates

 

 

(7 767

)

Net cash used in investing activities

 

(145 356

)

(105 008

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Repayment of notes

 

(24 018

)

(23 153

)

Notes and debt issuance cost paid

 

(1 244

)

(360

)

Finance lease principal paid

 

(409

)

(227

)

Dividends paid

 

(50 786

)

(49 921

)

Cash flows from transactions under common control

 

(4 821

)

508

 

Proceeds from loans

 

63 162

 

69 179

 

Repayment of loans

 

(16 132

)

(29 235

)

Cash inflow under guarantee agreement related to foreigh-currency hedge

 

6 706

 

 

Other financing activities

 

(53

)

(3

)

Net cash used in financing activities

 

(27 595

)

(33 212

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

761

 

10 195

 

 

 

 

 

 

 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS:

 

(28 102

)

30 954

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, at beginning of the year, including cash and cash equivalents within assets held for sale of 156 and nil, respectively

 

61 566

 

30 612

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, at end of the year

 

33 464

 

61 566

 

Less cash and cash equivalents within assets held for sale

 

 

(156

)

CASH AND CASH EQUIVALENTS, end of the year

 

33 464

 

61 410

 

 

14



 

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:   March 21, 2016

 

15