Mobile TeleSystems Announces Financial Results for the Third
Quarter Ended September 30, 2012
MOSCOW, November 14, 2012 /PRNewswire/ --
Mobile TeleSystems OJSC ("MTS" - NYSE:
MBT), the leading telecommunications provider in Russia and the CIS, today announces its
unaudited US GAAP financial results for the three months ended
September 30, 2012.
Key Financial Highlights of Q3
2012
- Consolidated revenues of $3,132
million stable q-o-q
- Consolidated adjusted OIBDA[1] of $1,379 million stable q-o-q with 44.0% OIBDA
margin
- Consolidated net income[2] of $630 million
- Free cash-flow[3] positive with $1.6 billion for the nine months ended
September 30, 2012
Key Corporate and Industry
Highlights
- Obtained license and frequencies to provide LTE
telecommunication services in Russia in the FDD (frequency division
duplexing) standard
- Announced the withdrawal of operating licenses of Uzdunrobita
FE LLC ("MTS-Uzbekistan"), MTS's wholly owned subsidiary in
Uzbekistan
- Completed the dividend payment of RUB
14.71 per ordinary MTS for the 2011 fiscal year, amounting
to a total of RUB 30.4 billion
- Resumed operations in Turkmenistan
- Repurchased the series 05 ruble-denominated bond in the amount
of approximately RUB 13.2 billion and
changed the bond's coupon rate from an annual rate of 14.25% to
8.75%
- Launched MVNO LTE network in Kazan
- Launched Russia's first TDD (time division duplexing) LTE
network in Moscow and the
Moscow region
- Acquired a 100% stake in Elf group of companies, a fixed
broadband and pay-TV services provider in Belgorod and the Belgorod
region, for RUB 220 million
- Acquired a 100% stake in LLC "Intercom", a broadband and cable
TV provider in the Mari El Republic, for RUB
90 million
- Signed a non-binding indicative offer between MTS, MTS Bank and
Sistema JSFC to purchase up to 25.095% stake in MTS Bank through a
share issuance for up to RUB 5.09
billion
- Pursuant to the decision of the appeals court of the Tashkent
City Criminal Court the amount of penalties to be paid by
MTS-Uzbekistan was determined at approximately $600 million and the previously arrested assets
of MTS-Uzbekistan were unfrozen
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1. See Attachment A for definitions and reconciliation of
adjusted OIBDA and adjusted OIBDA margin to their most directly
comparable US GAAP financial measures.
2. Attributable to the Group.
3. See Attachment B for reconciliation of free cash-flow
to net cash provided by operating activity.
Commentary
Mr. Andrei Dubovskov, President
and CEO of MTS, commented, "Group revenue for the quarter was
stable quarter-on-quarter at just over $3.1
billion due to negative ruble dynamics vs. US dollar during
the period despite positive seasonal factors and higher consumption
of voice and data products. Group revenue was also significantly
impacted by loss of Uzbekistan
revenue due to the suspension of our operating license in July. We
continue to witness steady subscriber growth and signs of stability
and moderate competitive pressures in our markets of operation. For
the period, total revenues in Russia increased in ruble terms by 8%
year-over-year to 88.3 billion rubles driven by steady voice usage,
continued adoption of data services and an increase in our
subscriber base and handset sales, including sales of higher-value
smartphones due to seasonal factors and expansion of the retail
footprint."
Mr. Alexey Kornya, MTS Vice
President and Chief Financial Officer, said, Group OIBDA rose
slightly to nearly $1.38 billion in
line with our revenue performance. Our adjusted OIBDA margin for
the period reached 44.0%. Overall we are seeing results of our
efforts to increase profitability in our business and realize
greater efficiencies across the Group. In Russia, OIBDA rose 9% year-over-year to 40.1
billion rubles. OIBDA margin in Russia increased from 44.6% in Q2 to 45.4% in
Q3, an improvement which reflects seasonal trends and cost
efficiencies despite significantly higher retail costs. Still, our
margin is pressured by increase in labor costs, that have advanced
50 basis points year-over-year as a percentage of revenue
reflective of higher payroll taxes and social contributions;
increase in rent and maintenance costs on the back the expansion of
our mobile and fixed network; and continued expansion of the retail
footprint. However, we are confident despite these factors we will
deliver strong margins and are comfortable with raising our OIBDA
margin guidance to over 42% for 2012."
He continued, "Year-to-date CAPEX exceeded $1.81 billion. Investments are largely being
focused on expanding our 3G network and preparing for our 4G
roll-out: identifying new sites, connecting base stations to fiber,
and proceeding with the implementation of our GPON project in
Moscow. Overall, however, we feel
it prudent to raise our CAPEX guidance for the year from 20-22% of
sales to 23-24% of sales or roughly $2.9
billion. This increase is due to the effects of currency on
our equipment costs and services since we first guided at the
beginning of the year, as opposed to any dramatic change in our
investment plans."
Mr. Dubovskov added, "Over the past quarters, we have seen clear
volatility in our net income over currency fluctuations related to
our debt composition and other one-time factors, including
developments in our Central Asia
markets. In this difficult currency environment, we have come to
the conclusion that net income is not the best metric to use as a
basis for the calculation of our dividend. We are currently
devising a new policy that ties dividend amount to free cash flow
which, in our view, constitutes a clearer, more transparent basis
for determining our return to shareholders. We expect to propose
the new policy to our Board of Directors for adoption prior to the
final determination of our FY2012 dividend. For now, we can say
that we intend to increase our cumulative dividend payout over the
next three years by at least 25% in relation to the roughly 91
billion rubles we have paid out since fiscal year 2009. This
implies a total cumulative dividend of at least 114 billion rubles
for the fiscal years 2012 to 2014 or a payout per share of at least
18 rubles 30 kopeks. We believe that this level, which should
constitute a sizable portion of our free cash flow, will allow us
over the next three years to meet our investment needs, maintain
our relative debt levels and demonstrate our commitment to
shareholder value."
This press release provides a summary
of some of the key financial and operating indicators for the
period ended September 30, 2012. For
full disclosure materials, please visit
http://www.mtsgsm.com/resources/reports/.
Learn more about MTS. Visit the official blog of the Investor
Relations Department at http://www.mtsgsm.com/blog/ and follow us
on Twitter: JoshatMTS
* * *
Mobile TeleSystems OJSC ("MTS") is the leading
telecommunications group in Russia
and the CIS, offering mobile and fixed voice, broadband, pay TV as
well as content and entertainment services in one of the world's
fastest growing regions. Including its subsidiaries, the Group
services nearly 100 million mobile subscribers. The Group has been
awarded GSM licenses in Russia,
Ukraine, Turkmenistan, Armenia and Belarus, a region that boasts a total
population of more than 200 million. Since June 2000, MTS' Level 3 ADRs have been listed on
the New York Stock Exchange (ticker symbol MBT). Additional
information about the MTS Group can be found at
http://www.mtsgsm.com.
* * *
Some of the information in this press release may contain
projections or other forward-looking statements regarding future
events or the future financial performance of MTS, as defined in
the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. You can identify forward looking
statements by terms such as "expect," "believe," "anticipate,"
"estimate," "intend," "will," "could," "may" or "might," and the
negative of such terms or other similar expressions. We wish
to caution you that these statements are only predictions and that
actual events or results may differ materially. We do not undertake
or intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. We refer you to the documents
MTS files from time to time with the U.S. Securities and Exchange
Commission, specifically the Company's most recent Form 20-F. These
documents contain and identify important factors, including those
contained in the section captioned "Risk Factors" that could cause
the actual results to differ materially from those contained in our
projections or forward-looking statements, including, among others,
the severity and duration of current economic and financial
conditions, including volatility in interest and exchange rates,
commodity and equity prices and the value of financial assets; the
impact of Russian, U.S. and other foreign government programs to
restore liquidity and stimulate national and global economies, our
ability to maintain our current credit rating and the impact on our
funding costs and competitive position if we do not do so,
strategic actions, including acquisitions and dispositions and our
success in integrating acquired businesses, potential fluctuations
in quarterly results, our competitive environment, dependence on
new service development and tariff structures, rapid technological
and market change, acquisition strategy, risks associated with
telecommunications infrastructure, governmental regulation of the
telecommunications industries and other risks associated with
operating in Russia and the CIS,
volatility of stock price, financial risk management and future
growth subject to risks.
* * *
SOURCE Mobile TeleSystems OJSC