MTS blog


Thursday, August 13, 2009
Russia Today, the leading English-speaking TV channel based in Russia, has reported on our Q2 results and the intent to acquire a controlling stake in COMSTAR-UTS.

You can check out the video on their website, featuring an interview with our President and CEO, Mikhail Shamolin.

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Thursday, August 13, 2009
On August 11, we disclosed our financial results for the second quarter 2009. As always, we posted a lot of information about the results on our website – the press release, the presentation and the Excel spreadsheet with summary financial information for 2004-2009. In the presentation, we have included detailed slides about our future strategic priorities, logic behind the intent to acquire a controlling stake in COMSTAR-UTS (see the original press release), as well as more insight into our retail development and handset distribution in Russia.

On the conference call, we have commented that there was a general improvement in our operating environment in Q2, aided by seasonal and organic growth factors. The Group recorded 12% q-o-q revenue growth to over $2.0 billion US dollars, driven by 2.8 million new subscribers and a seasonal improvement in usage.

Group OIBDA increased by 15% q-o-q to $953.8 million. Margin on our service revenue was over 50% as growth was aided by the seasonal pick-up in revenue, tighter cost control on SG&A expenses and the appreciation of the Russian ruble during the period. As we have forecasted, our build-out of our monobrand retail has put additional cost pressures on our margins, with the cumulative negative effect on the Group margin of 3.4 percentage points for a total margin of 47.2%. We witnessed significant improvement in the profitability of our Ukrainian business unit as well.

Our revenues in Russia grew 9% q-o-q to 51 billion rubles due to strong subscriber additions and a positive impact from seasonal usage. We are seeing significant subscriber additions through our greater use of alternative sales channels, such as temporary stands, kiosks and so forth. At the same time, we are currently in the build-out stage of our monobrand network, which delivers higher-value customers as ARPUs are 20% higher on average.

Given the changes we see in our markets and the initiatives by which we are fostering growth in our markets, we also elaborated on our strategic direction, introducing our concept of 3i to our shareholders. 3i focuses on three principles that will govern future growth at MTS: integration, Internet and innovation. Be sure to check out our presentation for more information.

With the disclosure behind us, we will be posting more information here on our blog about our new monobrand stores and overall retail strategy, as well as updates about our proposed acquisition of Comstar-UTS, in the coming weeks. Будем на связи (Budem na svyazi!), or we'll be in touch soon!

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Wednesday, July 01, 2009
Today we have launched a unique pilot project in the Republic of Bashkortostan (Bashkiria), whereby subscribers are offered mobile and fixed telephony as well as broadband Internet services under the MTS brand on a single bill. These services are provided on an opt-in basis to both private and corporate subscribers, offering the ease of use of a single billing system and the greater affordability of the bundled solution.

In Bashkiria, we have deployed one of the fastest broadband solutions currently available, FTTC / VDSL2, with download speeds of up to 100 Mbit / second. This type of connection allows us to bring a multitude of services to subscribers, including HDTV, broadband Internet and fixed telephony. We aim to launch IPTV services in Bashkiria this year as well.

We are the first company in Russia to offer one bill for mobile services, fixed telephony and broadband Internet. We are launching a range of tariff plans for each service with discounts for choosing multiple options. For instance, subscribers to all three services will have a 20% discount on the total bill, and subscribers to two services will get a 10% discount.

We have been developing convergent solutions in Bashkiria since the acquisition of Bashcell in late 2007. Bashcell had the licenses and the networks to provide fixed-line telephony and broadband access, which we have since successfully upgraded to offer best-in-class bundled solutions.

The pilot project in Bashkiria will help us test the demand for convergent solutions in Russia and develop a better customer proposition for future deployment in the country. Given the low penetration of broadband and the reputation of our Company, we believe that bringing high-speed Internet service will be one the key drivers of our growth in the future.

More information about the 3+1 tariffs and services is available here (in Russian).


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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.

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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.

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Tuesday, April 07, 2009

2008 was a successful year for MTS.

Our Group revenues grew 24.2% to over $10.2 billion US dollars year-over-year in 2008 as we generated strong, profitable growth in each of our markets of operations. We were successful in delivering on our profitability goal of a 50% OIBDA margin for the year, an indication that we are controlling costs where possible in what is both a volatile economic situation and an industry that is undergoing potentially profound change.

In the current environment, currency volatility is a pre-eminent short-term risk for MTS; it impacts both our clients’ consumption patterns and our results through translation policies, not to mention financial and cash-management practices. As such, we feel it is prudent to address our business unit performance in terms of local currency to demonstrate the true performance of our operations.

The materials we produce and circulate to the investment community – the press release, the presentation and our historical financial statements – will now feature local currency results, as well as the USD translation.

For full disclosure materials please visit

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Recent Tweets

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

Twitter March 19, 15:04
#MTS FY2017 Grp Rev +1.7% Grp Adj OIBDA +6.2% NProf +15.6% FCF +52.2% RUS Rev +2.9% UKR Rev +6.8% RUS OIBDA +5.7% UKR OIBDA +36.6 $MBT $MTSS

Twitter March 16, 22:16
RT @eurocomms: MTS taps majority shareholder for new CFO

Twitter March 15, 19:41
@Rudnit And on our networks they will roam!

Twitter March 14, 10:50
#Russia is the largest #cybersport market in Europe $58 mln @PayPal, @_SuperData, #e sport через @ru_rbc

Twitter March 14, 10:33
Andrei Ushatsky, CTO, speaks with @mobileeurope about #5G, #WorldCup2018, #IoT $MTSS, $MBT

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