Mobile TeleSystems Announced Financial Results for Q1 2008
OREANDA-NEWS. On 21 May 2008 Mobile TeleSystems OJSC, announced its unaudited consolidated US GAAP financial results for the three months ended March 31, 2008.
Key Financial Highlights of Q1 2008
• Consolidated revenues up 37% y-o-y to \\$2,379 million
• Consolidated OIBDA1 up 30% to \\$1,176 million y-o-y with 49.4% OIBDA margin
• Consolidated net income up 36% y-o-y to \\$610 million
• Free cash-flow2 generation of \\$632 million
Key Corporate and Industry Highlights
• Appointment of Mr. Andrei Dubovskov as the new head of MTS Ukraine
• MTS first Russian company named as BRANDZ™ Top 100 Most Powerful
Brands by Millwood Brown and Financial Times
• Consolidation of remaining stake in the Omsk subsidiary
• Redemption of the \\$400 million Eurobond issued in 2003
• Announcement of recommended dividend payment for FY 2007 of \\$1.2 billion or
\\$3.12 per ADR3
Leonid Melamed, President and Chief Executive Officer, highlighted, “We are pleased to deliver on our promise of profitable growth throughout the Group’s operations. In Russia, we are witnessing clear momentum as we continue to add subscribers and realize the benefits of increasing voice and data usage. In Ukraine, we see positive trends in usage growth and service adoption, while in our remaining CIS markets, we are building out our networks to bring mobile service deeper into the local populations. In all, we are confident that we can sustain this momentum to continue executing on our corporate strategy.”
1 See Attachment A for definitions and reconciliation of OIBDA and OIBDA margin to their most directly comparable US GAAP financial measures.
2 See Attachment B for reconciliation of free cash-flow to net cash provided by operating activity.
3 According to the Russian Central Bank exchange rate of 23.7939 RUR/\\$ as of May 5, 2008.
Group Operating Review
Mobile penetration4 in markets of operation was:
• Down from 119% to 116% in Russia;
• Down from 120% to 119% in Ukraine;
• Up from 22% to 25% in Uzbekistan;
• Up from 7% to 10% in Turkmenistan;
• Up from 58% to 60% in Armenia;
• Up from 73% to 75% in Belarus.
The Company added approximately 3.0 million new customers during the first quarter of 2008 on a consolidated basis that were all added organically. During the quarter MTS:
• Added 2.5 million subscribers in Russia;
• Churned 0.4 million in Ukraine;
• Added 0.8 million subscribers in Uzbekistan;
• Added 110 thousand subscribers in Turkmenistan;
• Added 34 thousand subscribers in Armenia.
Our Belarus operations added approximately 140 thousand subscribers during the quarter.
Since the end of the first quarter to April 30, 2008, MTS has organically added a further 0.74 million users, expanding its consolidated subscriber base to 85.68 million.
MTS was able to maintain its leading position in the majority of its markets of operation during the first quarter:
• Increased from 33% to 36% in Russia;
• Decreased from 36% to 35% in Ukraine;
• Increased from 50% to 52% in Uzbekistan;
• Decreased from 88% to 85% in Turkmenistan;
• Decreased from 74% to 73% in Armenia.
In Belarus, the market share increased to 54% from 53%.
Subscriptions to MTS’ pre-paid tariff plans accounted for 86% of gross additions in Russia and 94% in Ukraine in the first quarter. At the end of the quarter, 88% of MTS’ customers in Russia were signed up to pre-paid tariff plans. In Ukraine, the share of customers signed to pre-paid tariff plans remained at 92%.
Group Financial Position
MTS’ expenditure on property, plant and equipment in the first quarter totaled approximately \\$282 million, of which \\$151 million was invested in Russia, \\$103 million in Ukraine, \\$11 million in Uzbekistan, \\$15 million in Turkmenistan and \\$2 million in Armenia.
MTS spent approximately \\$61 million on the purchase of intangible assets during the quarter of which \\$54 million was spent in Russia, \\$6 million in Ukraine and \\$1 million in Armenia.
As of March 31, 2008, MTS’ total debt10 was at \\$3.1 billion, resulting in a ratio of total debt to LTM OIBDA11 of 0.7 times. Net debt amounted to \\$2.5 billion at the end of the quarter and the net debt to LTM OIBDA of 0.6 times.