Friday, June 26, 2009
Corporate Social Responsibility is not a common term in our markets of operations, but this is mostly due to the difficulty of translation rather than a lack in effort.
The essential function of our company is to provide people with easy and affordable access to some of the most advanced communications channels such as mobile telephony, data and the Internet. With an ambition to become a communications provider of choice, MTS is keen to support activities aimed at improving the lives of communities in our markets of operations. More about our CSR policy can be found here
Our Armenian subsidiary provides a great case study of a local CSR effort. VivaCell-MTS is one of the most admired companies in Armenia as has been shown in its ability to gain market share and build strong relationships with the subscribers
VivaCell-MTS takes deliberate efforts to integrate CSR activities in its day-to-day operations in order to ensure resilient economic and social ties with the local community.
In 2008, our efforts in Armenia were primarily directed at the rural development under the “VivaCell-MTS to the regions” program. MTS helped to connect the local villages to gas and water supply systems, as well as renovate a number of schools and hospitals. In doing so, we were able to provide the population with much needed utilities such as electricity and heating.
In 2009, the theme for our social activities is “VivaCell-MTS to children” that will concentrate on the education, health and overall children’s well-being. We are already actively involved in programs to lower child mortality rates and in promoting environment education in schools throughout Armenia. Given the importance of social, health, environment and other projects to VivaCell-MTS, the Company has formally decided to rename Corporate Social Responsibility (CSR) into Corporate Responsibility (CR), highlighting the fact that our activities spread beyond pure social programs.
Wednesday, June 17, 2009
On June 11, 2009, MTS began selling the Nokia N97 mobile computer in Russia. Of more than 75 countries
, Russia became one of the first markets to offer the device.
Based on the strategic partnership agreement
with Nokia, the N97 will be initially sold exclusively through the MTS retail chain, as well as Nokia stores, across Russia. To support the introduction, MTS launched a special website to help subscribers familiarize themselves with the device – http://www.n97.mts.ru
MTS has developed a range of exclusive applications for the N97 that includes weather updates, FOREX rates, newsfeeds, blogging tools, maps and dictionaries. These applications will be distributed on a free 2 GB micro-SD memory card to all subscribers purchasing the new phone at the MTS stores.
In addition, we have initiated a joint marketing campaign with Nokia in Russia to promote the device, our first effort in promoting an exclusive device under the MTS brand (an example of a billboard ad can be seen below).
Monday, June 15, 2009
This summer we are launching contract sales through payment terminals. Our first partner is OSMP
, the leading payment terminal company in Russia. Their consumer brand, QIWI
, is the largest network of terminals accepting payments for a wide range of services, including mobile telephony, Internet services, subscription TV and utilities. The network has around 87,000 terminals in Russia, of which over 20,000 are in Moscow.
Customers topping up their accounts through QIWI terminals will be offered our Super Nol’
tariff plan and a new mobile number. The new MTS subscriber will receive the SIM card and the contract by a courier.
We are launching the test project this summer and expect to sell over 87,000 contracts over the first month. Depending on the interest of QIWI customers and the pattern of sales, we will review our relationship with the terminal providers.
It should be noted that while many Western European mobile operators have a high share of sales through the Internet, the low penetration of broadband in Russia limits the effectiveness of that channel. At the same time, over the last few years, payment terminals have expanded throughout Russia and are currently present in the majority of locations with high pedestrian traffic, including grocery stores, Metro stations and other popular public areas.
Thursday, June 11, 2009
, Chief Commercial Officer of MTS, was interviewed in the June issue
of Total Telecom
, one of the most respected telecommunications magazines. Mikhail met with the Total Telecom
editor to discuss the BrandZ 2009 ranking, where MTS became the 71st most valuable brand globally and one of the 10 most valuable telecom brands, worth $9.2 billion (see press release
, BrandZ website
and the report in the Financial Times
Building the leading communications brand in the CIS has been one of the key objectives of MTS corporate strategy following the launch of the current brand over 3 years ago. This year, we are actively developing our retail presence, by building our own MTS stores and acquiring retailers, such as Telefon.Ru
. By moving into retail, the MTS brand will increase visibility and allow consumers a greater degree of interaction with the Company.
The efforts to create the most powerful and recognized brand in our markets of operations reflect the goal of MTS to maintain its position as the leading mobile operator in Eastern Europe and Central Asia. Strong brand is fundamental to a solid business with long-term goals and our brand valuation reflects its importance in stimulating future growth of the Company.
Monday, June 08, 2009
During the first week of June, MTS participated in the St. Petersburg International Economic Forum. At the Forum, MTS management hosted over 40 investors as part of Renaissance Capital 13th Annual Investor Conference, discussing Q1’2009 results, retail strategy and potential opportunities in the fixed broadband market.
MTS and Nokia sign partnership agreement. From left to right: Niels Nielsen, General Manager, Nokia Russia; Victor Saeijs, Vice-President, Sales, Eurasia, Nokia; Mikhail Shamolin, President and CEO, MTS.
Mikhail Shamolin, President and CEO of MTS, was heavily involved in the Forum program. On June 5, he participated in “The Power of Innovation” panel, speaking alongside with Anatoly Chubais, General Director of the Russian Nanotechnology Corporation, Jean-Philippe Courtois, President of Microsoft International and Craig R. Barrett, Chairman of the Board at Intel Corporation, among others.
On the second day of the Forum, Mikhail spoke at “The Future of Payment Systems” panel, discussing innovation in payment methods and particularly the role mobile industry can play. Other panelists included Tatyana Chugunova, Deputy Chairman of the Central Bank of Russia, Hans Morris, President of Visa Inc. and James Turley, Chairman & CEO of Ernst & Young.
In addition, during the Forum Mikhail participated in the signing of a strategic partnership with Nokia on the direct delivery of Nokia devices to MTS’ retail network.
Mikhail Shamolin, President and CEO of MTS, at "The Power of Innovation" panel.
Monday, June 01, 2009
On May 22, 2009, we have disclosed financial results for the first quarter of 2009. A wealth of information about the results is available on our website – the press release, the presentation and the excel spreadsheet with summary financial information for 2004-2009. Of particular interest, we suggest reviewing the slides in the presentation on the decomposition of our revenue dynamics in Russia and OIBDA margin dynamics for the Group, as well as MTS Russia retail development.
In Q1, Group’s revenues fell 24% year-on-year to $1.8 billion US dollars. The primary driver for this loss was the depreciation of our core currencies as the Russian ruble declined year-on-year by 40% and the Ukrainian hryvna by 52% versus the US dollar. In each of our markets of operation, we continue to see an impact on consumption patterns due to sustained global macroeconomic volatility, but overall usage and subscriber additions remain strong and in line with seasonal expectations.
Our Russian business delivered year-over-year growth of 7.5% despite both the ruble volatility and increased competitiveness in the market. In general, consumption of higher-value products, like roaming, long-distance and mobile-to-fixed calling was significantly lower in the beginning of the period, due to an overall drop in business activity, but these figures stabilized during the last month. We do see migration trends to lower-value tariffs as customers are more conscious of their spending. Otherwise, we see usage trends in the future following seasonal patterns until the overall macroeconomic environment changes significantly.
Recently, we announced our dividend for FY2008. In line with our policy, we will pay out 60% of our net income or a total of 39.4 billion rubles or roughly $1.2 billion. This year, we will also not pay dividends to those shares repurchased through our mandatory buy-back offer in August 2008. This equals roughly 1.9% of total shares outstanding. This will in turn increase the dividend yield by about 15 basis points. This translates to a greater shareholder benefit from our share buyback program.
Balancing growth and shareholder returns is a cornerstone of our financial and operating strategy. This is a clear differentiator for MTS as an investment. Our recent actions - relatively modest investments in proprietary distribution, tapping local credit markets and successfully refinancing our existing debt – are aimed to both ensure growth and sustain profitability, both of which allow us to make substantial returns to shareholders both now and in the future.
Monday, June 01, 2009
Per requests from our followers, we have compiled additional information about the changes in our Balance Sheet in Q1 2009.
In 2007-2008, FASB recommended changes to how certain equity investments were recognized. Beginning from Q1 2009, MTS was required to apply EITF D-98 ("Classification and measurement of redeemable securities") to fulfill our obligations under US GAAP accounting. The addition of "Redeemable non-controlling interests" line item supersedes Minority Interest (as of 31 Dec 2008 roughly $23.5mln), and the changes in the figures simply relates to the retroactive application of Topic D-98. In the case of MTS, both of these items referred to our stakes in K-Telecom (MTS Armenia) and Dagtelecom, a small regional player acquired in 2006.
As it relates to MTS, the changes are as follows:
- As of 31 Dec 2008, we arrive at the total sum of $143.7 mln in Redeemable non-controlling interests, of which $102 mln relates to our 20% non-controlling interest in K-Telecom (MTS Armenia) and $42 mln relates to our 25.01% redeemable non-controlling interest in Dagtelecom;
- As of 31 Mar 2009, the sum equals $100.5 million due to the fact that the option on Dagtelecom was exercised, compelling MTS to buy back the remaining interest in Dagtelecom.
To give you a sense of how this works, the Dagtelecom transaction and quarterly revaluation of K-Telecom prompted the following reconciliation:
- decrease in Additional Paid-in Capital of $41.4 mln (due to Dagtelecom non-controlling interest revaluation) and
- decrease in Retained Earnings of $78.8 mln (due to K-Telecom non-controlling interest revaluation)
For detailed information, please review the following excel sheet.
Tuesday, April 07, 2009
We are delighted to inform you that MTS was recognized at a ceremony hosted at the Radisson SAS Slavyanskaya in Moscow, Russia, and was awarded three “Crystal Headsets.” Our macro-region North-West call center (located in Saint Petersburg) and its head Ms. Elena Kopshar won in the “Best Internal Relations in a Call Center” and “Best Team Leader” nominations respectively. Our colleagues at the MTS Ukraine call center won in the “Best Call Center Infrastructure” category.
MTS Russia has a total of 10 call centers with over 3,000 employees servicing subscribers in 11 times zones and responding to an average of 16 million calls per month. Our North-West macro-region call center has a total of 250 employees and is responsible for subscribers in nine federal regions making up Russia’s North-West. MTS Ukraine has a total of 3 call centers located in Kyiv, Lvov and Donetsk with over 1,000 employees.
Photo: Team spirit training by the North-West call center.
Photo: Head of North-West call center, Ms. Elena Kopshar.
Tuesday, April 07, 2009
We have recently signed a partnership agreement with FC Zenit St. Petersburg, one of the most successful football clubs in Russia. As the official partner of the club, MTS will provide Zenit with mobile communications services and will participate in various projects aimed at promoting the club.
Zenit has recently become one of the most recognized Russian sports brands, winning both the 2008 UEFA Cup and the 2008 UEFA Super Cup. We decided to become partners with Zenit due to its unique appeal in St. Petersburg and growing presence in the international football community.
MTS has a long and successful history of supporting sports. Most recently, we were the general partner of the Russian Olympic Committee and the official mobile communications provider of the Russian team during the 2008 Summer Olympic Games in Beijing. We have also supported Olympic Committees across the CIS countries where our network is present – in Ukraine, Uzbekistan, Armenia and Belarus.
MTS banners have already appeared at Zenit’s home stadium in St. Petersburg as was evident during a recent game with the Italian side Udinese Calcio in the 2009 UEFA Cup competition (http://www.uefa.com/competitions/uefacup/fixturesresults/round=15287/match=304837/index.html):