MTS blog


MTS Q3 2009 RESULTS

Monday, November 16, 2009
On November 13, we disclosed our financial results for the third quarter 2009. As always, we posted a wealth of information about the results on our website – the press release, the presentation and the Excel spreadsheet with summary financial information for 2004-2009

As was stated during the conference call, we had a good quarter with revenues for the Group growing 12% q-on-q to nearly $2.3 billion on the back of healthy subscriber additions, a seasonal increase in usage, rising data consumption and a growing contribution from our retail sales. The Group’s OIBDA increased 11% q-on-q to $1.1 billion with an overall margin of 46.9%. Less the effect of our retail investments, the margin improved from Q2 2009 to 50.7%.

Though we continue to see an impact from macroeconomic uncertainty, we realized growth q-on-q in our Russian operations of 10% to 56 billion rubles. In addition to the seasonal dynamics of our business, we are succeeding in driving our active subscriber base and realizing 50% year-over-year growth in both data content and traffic revenues. We also witnessed a greater contribution from handset sales, which exceeded 3.2 billion rubles or 5.7% of revenue.

In Ukraine, we saw growth of 12% q-on-q to reach 2.2 billion hryvnas. We attribute this growth to seasonal factors, including increased usage and roaming, as well as certain marketing initiatives that adjust limits to our unlimited tariff plans. Changes to these tariff packages are allowing us to better monetize our customer base, while we are seeing a steady improvement in our brand perception and active subscriber base.

This was a busy quarter at MTS. As we discussed at our recent Analyst and Investor Day, we are focusing on a number of key initiatives to realize our 3i Strategy: the acquisition of 50.91% stake in Comstar-UTS and development of fixed-line broadband and pay-TV services in our markets; the continued roll-out of 3G and promotion of data and content services to our customers; the on-going development of our retail sales channels; the launch of our online portal, Omlet.ru; activity on the local and international capital markets; plus our ongoing focus on cost effectiveness.

During the conference call Mikhail Shamolin, President and CEO of MTS, also noted that contrary to speculation, the Company has no plans to enter into the Indian market. The management is continuously looking at markets abroad, but the focus remains on developing markets in Russia and the CIS for telecommunications services. This is the very essence of our 3i Strategy and in our view the best way to maximize value for all of our shareholders.

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READING METERS WITH MTS

Monday, November 09, 2009
This week we announced a joint project with the Moscow United Energy Company (MOEK) to deploy an Automatic Control and Production Management System in a Moscow neighborhood Chertanovo. It is expected that the project will expand to all other properties served by MOEK, the largest provider of thermal energy in Moscow, that delivers water and heating to around 70% of residential and commercial properties in the city.

Under the current project, MTS will install SIM-cards into energy and water meters, enabling MOEK to collect data from their properties and receive real-time updates on usage trends. Wireless transmission of metering data will significantly increase the efficiency of energy planning and allow savings of up to 10% on energy consumption (according to experts quoted in the Energorynok magazine). While already popular in Western Europe and the US, smart metering is just taking off in Russia, and the new monitoring project we are launching with MOEK will be the largest in Moscow.

We believe that machine-to-machine communications will be an important part of our industry’s future, and MTS has already launched several projects in this area. For instance, we are working with DHL to track deliveries and provide instant updates about the location of couriers. We are also working with the Moscow Metro and the Zelenograd Bus Depot (Zelenogradskiy Avtokombinat), where in-built SIM-cards are used to monitor locations of trains and buses to increase efficiency of their movement from the control center.

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RECOGNITION OF MTS IR DEPARTMENT

Friday, October 30, 2009


On October 27, IR Magazine Russia & CIS held its annual award ceremony, where we were honored with the grand prix for the best overall IR.

An article in the IR Magazine talks about the award:

“Investor relations in Russia can be tough. The country’s stock market is still in its infancy and remains far more volatile than other major country’s bourses. One consistent performer amid these conditions is Mobile TeleSystems (MTS), which this week picked up another award for its IR department.

The mobile phone operator won the grand prix for best overall IR at the IR magazine Russia & CIS awards in Moscow on Tuesday. Joshua Tulgan, the company’s director of IR, was present to accept the award. With this prize, MTS builds on its success last year, when it picked up best IR by a Russian company at the IR Magazine Continental Europe Awards.”

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PHOTOS AND AUDIO FROM THE ANALYST AND INVESTOR DAY

Tuesday, October 27, 2009

Following the 2009 Analyst and Investor Day in Moscow, we have posted audio recordings of each session on our website.

Below you can find a few photos from the event.


Mikhail Shamolin, President and CEO of MTS, opening the first session, "Corporate Strategy 2009+"


Alexey Kornya, acting Chief Financial Officer, presenting during the second session, "Group Financial Overview"


Session 3, "Overview of the Russian Market"
From left to right: Aleksander Popovskiy, Head of MTS Russia; Andrei Ushatskiy, Vice President and Chief Technology Officer; Pavel Roytberg, Director of Product Development; Garrett Johnston, Director of Strategic Marketing

Additional photos are available here: http://picasaweb.google.com/ir.mtsgsm/MTSAnalystAndInvestorDay2009

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MTS ANALYST AND INVESTOR DAY 2009

Tuesday, October 20, 2009
Yesterday, we held the 2009 Analyst and Investor Day in Moscow with participation of close to 100 members of the investment community both foreign and local. The interactive format of the event provided an opportunity for those in attendance to closely interact with MTS’ top management. A range of important topics was discussed including the Company’s new 3i Strategy, integration of Comstar, financial management and guidance for 2009, as well as the developments in our markets of operation.

For those unable to join us at the event, presentations were made available on our website. Later this week, we will be posting audio recordings of the sessions and a few photos from the event.

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GTB INTERVIEWS MIKHAIL SHAMOLIN

Tuesday, September 29, 2009


Global Telecom Business, a leading telecommunications trade magazine, recently interviewed Mikhail Shamolin, President and CEO of MTS. The interview is now available on GTB’s website, where Shamolin discusses the acquisition of Comstar and MTS’ plans for delivering content to subscribers.

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GUEST POST FROM IDC: MTS AND SMALL BUSINESSES

Friday, September 25, 2009
By Timothy Doherty, Research Analyst for Small and Medium Business Mobility Markets for IDC

IDC has recently published a report examining the small and medium business initiatives of MTS, and we wanted to share the key insights here on the MTS IR Blog.

As in other regions worldwide, the small and medium-business (SMB) market in Russia represents a significant untapped revenue opportunity for operators, but presents a number of challenges. SMBs typically have fewer IT resources than large enterprises to rely on when making technology purchase decisions, making customer education vital. Although the SMB market in aggregate constitutes a substantial opportunity, each individual customer represents a relatively modest volume; efficiencies in marketing and ongoing customer support are therefore of paramount importance. MTS has implemented a number of strategies in its core Russian market to target the small and medium-sized business market.

Like SMB-savvy operators in the United States and Western Europe, MTS is leveraging an SMB web portal to better manage its SMB customers. Online portals not only allow direct payments, but also let customers explore and opt in and out of services. Given the vast size of Russia, the web portal is one of the efficient ways MTS can interact with subscribers and provide customer support.

While enterprises frequently have a dedicated operator support representative to rely on, this model is not cost-effective for SMBs. Still, to cultivate customer loyalty and sell deeper into customers, some sort of support relationship must exist. Akin to small business specialists at other operators in more developed markets in North America and Europe, MTS has small business curators: development managers who analyze service usage by customers and promote the benefits of additional services. The curator program allows MTS to educate its existing customer base and sell through additional phone lines and services; since the launch of the program, MTS reports that a typical small business customer initially purchases two lines, but adds another four lines inside the first 6 months.

To get more insight into the MTS work in the SMB market, please refer to our recent report.

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RED ENERGY ADVERTISING CAMPAIGN

Tuesday, September 22, 2009


In early September, we launched the new Red Energy tariff, aimed at the youth segment. The ad above is currently running on Russian television.

As part of the new advertising campaign, our marketing team implemented an innovative way to interact with customers, merging the print ad medium and the website, called augmented reality. Application of augmented reality in marketing is still in its infancy, and we are proud to be the first company in Russia to apply it. We have recorded a video with our partners, JWT International and Lemonade Animation, explaining how it works.



Check out the promotional website where you can test augmented reality (in Russian).

Click here for key facts about the Red Energy tariff (in English).

Update October 1, 2009: An article in Mobile Marketer about our augmenter reality implementation.

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MTS LAUNCHES CONTENT STORE

Thursday, September 17, 2009


Last week, we launched Omlet.ru – an online and mobile content portal that offers the largest selection of licensed videos, music and games. The goal behind this is to further stimulate our content revenues, which already contribute significantly to our performance. For example, content revenues for the full year 2008 were around 9 billion rubles with the second quarter 2009 revenues growing 31% year-on-year.

The new content portal is unique to our markets as it offers a high degree of interoperability between mobile devices and PCs / laptops as well as the necessary flexibility in terms of access network (e.g. EDGE vs. 3G) and phone model. Omlet.ru also offers a “dual delivery” system, whereby purchased music tracks can be downloaded to both a mobile device and a computer.

Given the nature of our business, MTS is best positioned to offer paid content as we already have the necessary financial arrangements with our subscribers and can utilize their pre-paid accounts for content purchases. This differs from the Western markets where the vast majority of content stores rely on credit card payments whereas the Russian credit market is still its early development stages.

By the virtue of our customer base and brand recognition, our content portal has already become a major force in the Russian Internet space. In test mode since April 2009, the portal attracted around 1.5 million users. It must be noted that there is a lack of legal content providers in Russia at the moment, and piracy is widespread. MTS is one of a few companies able to sign partnerships with the entertainment industry’s major players. Recently, we signed an agreement with Paramount Pictures that allows our customers to watch streaming videos for free and download them for a price lower than they would pay for a pirated copy on the streets.

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NEW DEVICES AT MTS STORES

Tuesday, September 08, 2009

As we have discussed before on this blog, we believe that distribution of exclusive and innovative handsets through the MTS monobrand retail network is key to subscriber acquisition, usage growth and customer retention. For Russian consumers, the purchase of a handset is very much an emotional purchase that we see as being key in strengthening their ties with MTS in order to encourage more loyal behavior. By signing exclusive deals with leading device manufacturers, we will be able to drive greater customer traffic to MTS stores and gain competitive advantage over our peers. Selling handsets through MTS stores will also allow us to customize these phones and pre-install handset-specific software and applications to drive data and content usage.

Over the past couple of weeks, we have launched a number of new phones:


The new MTS-branded phone, MTS 236, is the first device to be sold in Russia under the MTS brand through the partnership with Vodafone. The phone was developed by ZTE for Vodafone. MTS 236 is an entry-level phone, priced at RUB 890 (around $28), that will be offered with a Super Zero tariff.


HTC Hero (promo site: http://hero.mts.ru), the first Android phone to be sold in Russia, is arriving to our retail network this week. For the first month, the phone will be sold exclusively through our stores with an introductory offer of free 100 Mb Internet traffic for three months. The phone features such high-end specifications as multi-touch touchscreen, 3G HSDPA/WCDMA capability, Wi-Fi and a 5 megapixel camera with autofocus. It will be sold for RUB 22,990 (around $733).


Samsung BEATDJ (promo site: www.omlet.ru/samsung), the new flagship Samsung device aimed specifically at music fans. The phone is to be sold exclusively at MTS stores for a month following the launch, and we are offering a few music tracks for free to encourage usage of our online content store, Omlet.ru (more on that in upcoming blog posts). The phone features multi-touch touchscreen, 3G HSDPA/WCDMA access, 3 megapixel camera and a 50 Mb internal storage capacity. It is priced at RUB 14,990 (around $478).

By the end of the year, we will launch more MTS-branded phones that we will deliver through the Vodafone partnership. We aim to continue to offer exclusive flagship devices such as Nokia N97 or HTC Hero in our markets.

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Follow me, Josh Tulgan, MTS Director for Corporate Finance and Investor Relations, on twitter

Twitter January 17, 10:45
#AI, #VR, #AR, healthcare poised to be next #digital #disruptors via @forbes https://t.co/72zRptDX3m

Twitter January 17, 07:55
#Internet penetration in #Russia reached 72.8% in 2017 with 87mn total #internet users https://t.co/jug4E6cAuM

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#MTSS opened telecom lab for students in Tambov $MBT https://t.co/F4JSErTcbG

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Mobile internet in #Moscow is the cheapest among large cities https://t.co/6kjzXsn2jv

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