Moscow, Russian Federation — 29 May 2002 — Mobile TeleSystems OJSC (NYSE:MBT), Russia’s largest mobile cellular operator, today reports its results for the first quarter 2002.
The company shows a substantial growth of the regional subscriber base which grew by almost 1000% since March last year. Today, the company has 4.05 million active users, 1.83 million of which reside outside of the Moscow licence area.
Financial highlights
| US$ million |
3 months ended
March 31, 2002 |
3 months ended
March 31, 2001 |
Change, % |
|
|
|
|
|
| Net revenue |
247.6 |
166.3 |
49 |
| EBITDA |
117.2 |
78.5 |
49 |
| EBITDA margin |
47.3% |
47.2% |
— |
| Net Income |
43.9 |
31.2 |
41 |
|
|
|
|
|
|
|
Net revenue in the first quarter 2002 was $247.6 million which is an increase of 49% from the same period last year. The substantial growth reflects increasing demand for mobile services in Russia and strengthening of MTS’ leadership in this sector of the market. EBITDA in the first quarter 2002 was $117.2 million, an increase of 49% over the same period last year. EBITDA margin in the first quarter 2002 was 47.3% compared with 47.2% in Q1 2001. Net income for first quarter 2002 was $43.9 million, an increase of 41% over the same period 2001.
Operational highlights
| US$ million |
3 months ended
March 31, 2002 |
3 months ended
March 31, 2001 |
Change, % |
|
|
|
|
|
| Total subscribers, including |
3,527,788 |
1,421,000 |
148% |
| Moscow license area |
2,084,606 |
1,302,000 |
60% |
| Regions |
1,443,182 |
119,000 |
1112% |
| ARPU (US$) |
27 |
40 |
(33%) |
| MOU (minutes) |
142 |
152 |
(7%) |
| Churn rate (%) |
9.8 |
6.1 |
— |
| SAC per gross addition (US$) |
36 |
62 |
(42%) |
|
|
|
|
|
|
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Today, the number of the company’s active subscribers is 4.05 million of which 1.83 live in the regions outside of the Moscow licence area. MTS’ Moscow license area subscriber base amounted to 2.08 million on 31 March 2002. Outside the Moscow licence area the company witnessed an intensive growth of the subscriber base which grew by 1112% over 12 months and to reach 1.44 million on 31 March 2002. In the first quarter 2002 ARPU decreased to $27 compared to $40 for the same period last year. The decrease in ARPU is mostly attributed to a tariff reduction in Q4 2001, and a continuing change in the subscriber mix. MOU per user in the first quarter 2002 was at the level of 142. Subscriber churn rate in the first quarter 2002 was 9.8% compared to 10.57 % in the fourth quarter 2001 which shows a reversal in the former tendency of churn to increase. SAC per gross new additional subscriber in the first quarter 2002 decreased by 42% and was $36 compared to $62 in the first quarter 2001. The current number of MTS base stations is 3,064, including 1,315 in the Moscow licence area and 1,749 in the regions. The company’s investments in the first quarter 2002 were $119 million compared to $79 million for the same period last year. Corporate Governance MTS has traditionally followed a policy of openness and transparency to our shareholders and bondholders. Just recently, this policy has been rewarded — MTS’ corporate governance principles, disclosure standards and reporting transparency were rated by Standard & Poor’s as being in line with the best international practice. In May 2002 Standard & Poor’s assigned a corporate governance score of 7.4 to MTS (on a scale of 1-10), the highest score assigned to any Russian company. Expansion in the regions In March 2002 MTS acquired a controlling stake in Kuban GSM, the financials of which were not previously consolidated in MTS’ reports. The deal allows MTS to extend its footprint in the strategically important regions of the South of Russia, the Krasnodar region and the Republic of Adygeya with a total population of over 5.5 million. Another 5 million Russians visit the region during the vacation season. Kuban GSM network covers the largest cities of the Black sea coast, Novorossiisk, Anapa, Tuapse, Sochi, Adler, Dagomys, Lazarevskoye. In May 2002 MTS gained total control over Bashkortostan’s largest operator BM-Telecom, strengthening its presence in the important Volga macroregion. BM-Telecom’s network covers a territory with over 70% of the Republic’s inhabitants, its share on the local mobile market is 75%. MTS is actively expanding in 13 regions of the company’s license area: Arkhangelsk, Vologda, Kurgan, Orenburg, Tambov, Tyumen, Chelyabinsk regions, as well as in Komi-Permyatsk (Kudymkar), Nenets (Naryan-Mar), Yamalo-Nenets (Salekhard), Khanty-Mansiysk) autonomous districts, Karelia Republic (Petrozavodsk), Republic of Altay (Gorno-Altaysk). The company is also constructing a network in Belarus. Commenting on the first quarter result Mikhail Smirnov, President of MTS said: “This year the company is developing at an unprecedented rate already as a federal network. We are pleased with our results. During this period MTS has moved ahead substantially in the regions, and today we are proud to say that we have significantly neared our aim to become a truly national mobile operator. MTS is constructing the largest network using advanced technology and is committed to offering the best communications and service to our subscribers”.
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For further information contact:
Mobile TeleSystems
Public Relations Director
Kirill Maslentsyn
tel: +7 095 737-4530
e-mail: mkk@mts.ru
Investor Relations
Head of IR
Andrey Braginki
tel: +7095 766-0103
e-mail: ir@mts.ru |
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. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to conform them to actual results. We refer you to the documents MTS files from time to time with the U.S. Securities and Exchange Commission, including our most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, 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, risks associated with operating in Russia, volatility of stock price, financial risk management, and future growth subject to risks.
Mobile TeleSystems OJSC (NYSE: MBT) is Russia’s leading mobile cellular operator servicing 4 million subscribers. MTS has GSM 900/1800 licenses to provide mobile cellular telephony services in 49 regions of the Russian Federation, covering 93.5 million people or 63% of the country’s population. MTS network has operations in 36 regions of the Central (including Moscow and Moscow region, North-West (including the city of St Petersburg), South, Volga, Urals, Siberia and Far-East macro regions, which covers more than 76.8 million people, or 55% of the population of the Russian Federation. In November 2001 MTS gained access to the Republic of Belarus. At present, the company is actively building the network in the region. Since June 2000 MTS ADRs are listed on the NYSE under the ticker MBT. Additional information about MTS can be found on MTS’s website at www.mtsgsm.com |
Mobile TeleSystems consolidated balance sheets at december 31, 2001 and march 31, 2002
Amounts in thousands of U.S. dollars
|
December 31, 2001 |
March 31, 2002 |
|
|
|
|
| CURRENT ASSETS: |
| Cash and cash equivalents |
$219,629 |
$46,037 |
| Short-term investments |
85,304 |
165,166 |
| Trade receivables, net |
24,258 |
31,980 |
| Accounts receivable, related parties |
2377 |
4907 |
| Inventory, net |
26,184 |
25,874 |
| Prepaid expenses |
22,712 |
24,935 |
| VAT receivable |
82,216 |
113,772 |
| Deferred tax asset |
12,040 |
13,910 |
| Other current assets |
8374 |
8749 |
| Total current assets |
483,094 |
435,330 |
|
|
| PROPERTY, PLANT AND EQUIPMENT |
841,308 |
962,005 |
|
|
| OTHER INTANGIBLE ASSETS |
83,507 |
84,578 |
|
|
| LICENSES |
297,490 |
426,033 |
|
|
| GOODWILL |
22,411 |
22,411 |
|
|
| DEBT ISSUANCE COSTS |
3997 |
4251 |
|
|
| INVESTMENTS IN AND ADVANCES TO AFFILIATES |
740 |
925 |
|
|
| Total assets |
$1,732,547 |
$1,935,533 |
|
|
|
|
|
|
Mobile TeleSystems consolidated balance sheets at december 31, 2001 and march 31, 2002
Amounts in thousands of U.S. dollars
|
December 31, 2001 |
March 31, 2002 |
|
|
|
|
| CURRENT LIABILITIES: |
| Accounts payable, related parties |
$6142 |
$7489 |
| Trade accounts payable |
106,068 |
69,998 |
| Deferred connection fees |
21,419 |
21,656 |
| Subscriber prepayments and deposits |
63,741 |
79,693 |
| Debt, current portion |
18,245 |
18,425 |
| Promissory Notes, current portion |
580 |
— |
| Short term portion of future lease payments |
14,401 |
12,211 |
| Income tax payable |
23,078 |
40,632 |
| Accrued liabilities |
51,626 |
66,834 |
| Other payables |
3357 |
5905 |
| Total current liabilities |
308,657 |
322,843 |
|
|
| LONG-TERM LIABILITIES: |
| Bonds payable, principal |
248,976 |
306,856 |
| Debt, net of current portion |
30,150 |
64,307 |
| Long term portion of future lease payments |
7696 |
6340 |
| Promissory notes payable |
5792 |
1023 |
| Deferred connection fees, net of current portion |
26,269 |
25,109 |
| Deferred taxes |
72,192 |
107,439 |
| Total long-term liabilities |
391,075 |
511,074 |
| Total liabilities |
699,732 |
833,917 |
|
|
| COMMITMENTS AND CONTINGENCIES |
| MINORITY INTEREST |
12,999 |
36,919 |
|
|
| SHAREHOLDERS’ EQUITY: |
| Common stock: (2,096,975,792 shares with a par value of 0,1 rubles authorized and 1,993,326,138 shares issued as of June 30, 2001 and December 31, 2000, 345,244,080 of which are in the form of ADS) |
50,558 |
50,558 |
| Treasury stock (9,966,631 common shares at cost) |
(10,206) |
(10,206) |
| Additional paid-in capital |
555,794 |
556,145 |
| Shareholder receivable |
(38,958) |
(38,288) |
| Retained earnings |
462,628 |
506,488 |
| Total shareholders’ equity |
1,019,816 |
1,064,697 |
| Total liabilities and shareholders’ equity |
$1,732,547 |
$1,935,533 |
|
|
|
|
|
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Mobile TeleSystems unaudited consolidated statements of operations for the three months ended march 31, 2001 and 2002
Amounts in thousands of U.S. dollars
| |
March 31, 2001 |
March 31, 2002 |
|
|
|
|
| NET REVENUES |
|
|
| Service revenues, net |
$155,315 |
$228,072 |
| Connection fees |
4146 |
6541 |
| Equipment sales |
6842 |
12,991 |
|
166,303 |
247,604 |
|
|
| COST OF SERVICES AND PRODUCTS |
|
|
| Interconnection and line rental |
14,415 |
23,715 |
| Roaming expenses |
13,497 |
17,116 |
| Cost of equipment |
7299 |
18,118 |
|
35,211 |
58,949 |
|
|
| OPERATING EXPENSES |
30,029 |
39,846 |
|
|
| SALES AND MARKETING EXPENSES |
20,770 |
25,301 |
|
|
| DEPRECIATION AND AMORTIZATION |
27,304 |
41,008 |
|
|
| Net operating income |
52,434 |
82,500 |
|
|
| CURRENCY EXCHANGE AND TRANSLATION LOSSES |
624 |
831 |
|
|
| OTHER EXPENSES (INCOME): |
|
|
| Interest income |
(3917) |
(3404) |
| Interest expenses, net of amounts capitalized |
950 |
9603 |
| Other expense (income) |
561 |
1857 |
| Total other expenses (income), net |
(2406) |
8056 |
| Income before provision for income taxes and minority interest |
54,216 |
73,613 |
|
|
| PROVISION FOR INCOME TAXES |
23,001 |
26,159 |
|
|
| MINORITY INTEREST |
|
3594 |
|
|
| NET INCOME |
$31,215 |
$43,860 |
|
|
| Weighted average number of shares outstanding |
1,993,326,138 |
1,983,399,507 |
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