Investor Presentation July 2013 www.rt.ru Disclaimer By attending - - PowerPoint PPT Presentation
Investor Presentation July 2013 www.rt.ru Disclaimer By attending - - PowerPoint PPT Presentation
Investor Presentation July 2013 www.rt.ru Disclaimer By attending any meeting where this presentation is made, or by reading any part of this presentation, you acknowledge and agree to be bound by the following: This presentation has been
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By attending any meeting where this presentation is made, or by reading any part of this presentation, you acknowledge and agree to be bound by the following:
- This presentation has been prepared by OJSC Rostelecom (the “Company”). This presentation is strictly confidential to the recipient, may not be
distributed to the press or any other person, and may not be reproduced in any form, in whole or in part.
- The Company has included its own estimates, assessments, adjustments and judgments in preparing certain market information herein, which have not
been verified by an independent third party. Market information included herein is, therefore, unless otherwise attributed exclusively to a third party source, to a certain degree subjective. While the Company believes that its own estimates, assessments, adjustments and judgments are reasonable and that the market information prepared by the Company appropriately reflects the industry and the markets in which it operates, there is no assurance that the Company’s own estimates, assessments, adjustments and judgments are the most appropriate for making determinations relating to market information.
- Neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.
- This presentation is confidential and does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an
- ffer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any
- jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any
contract or commitment or investment decision whatsoever.
- This presentation is not intended for publication or circulation in the United States. This presentation does not constitute and should not be construed as
an offer to sell or the solicitation of an offer to buy securities in the United States or to any U.S. person (as defined in Regulation S under the US Securities Act of 1933 (the “Securities Act”)). No securities of the Company have been, nor will be, registered under the Securities Act or the securities laws of any state of the United States, and unless so registered may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This presentation does not constitute a public offering or an advertisement of securities in the Russian Federation and does not constitute an offer or a proposal to make offers or to acquire any securities in the Russian Federation.
- In any member state of the European Economic Area, this Presentation is made to and directed only at persons who are qualified investors within the
meaning of article 2(1)(e) of the Prospectus Directive (2003/71/EC) (“Qualified Investors”). In addition, in the United Kingdom, this Presentation is made to and directed at: (i) investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) and (ii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within article 49(2)(A) to (D) of the Order (such persons together with Qualified Investors, being “Relevant Persons”). In these jurisdictions, persons who are not Relevant Persons must not rely on or act upon the information contained in this presentation or any of its contents. Any investment or investment activity to which this Presentation relates is only available to Relevant Persons and will be engaged in only with Relevant Persons. The recipients of the information contained herein should not base any behavior that would amount to market abuse for the purposes of the Financial Services and Markets Act 2000 (“FSMA”) and the Code of Market Conduct made pursuant to the FSMA on the information in this Presentation or any information provided or discussed in connection with it.
- This presentation is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state,
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Disclaimer
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Rostelecom Today
Unique infrastructure
~ 500,000 km of national backbone and unique “last mile” infrastructure with almost 34 mln households passed
Strong subscriber base
~ 27 mln fixed – line subs, 9.51 mln broadband subs,6.81 mln pay-TV subs and 13.61mln mobile voice subs
Positive Financial Results
Revenue2012 : RUR 321.3 bln OIBDA2012 : RUR 118.6 bln OIBDA margin2012: 36.9%
Blue chip
- Currently traded on MICEX-RTS
- Rostelecom is included in MSCI Large Cap. Current weight in MSCI Russia is
1.65%1
- Investment rating “BBB-” from Fitch Rating (obtained in May 2012), credit
rating “BB+” from S&P rating agency (confirmed in June 2013) Net Income2012 : RUR 35.2 bln Cash CAPEX2012 : RUR 91.2 bln Net debt/OIBDA31.12.2012: x1.7
1 – as of 1Q 2013 2 - as of July, 03, 2013
Leading Universal
- perator
- Rostelecom networks and services cover all Federal districts of Russia,
including Moscow
- Strong market positions in most of the telecom segments
- 70% market share in fixed voice
- 40% market share in fixed Broadband
- 49% market share in IPTV
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- Purchase of a 100% stake in SkyLink, which
provided Rostelecom with access to 3G licenses in 65 regions of Russia
- Obtaining LTE federal licenses
- Test runs of 3G networks in 24 Russian regions
- Test runs of LTE base stations in Krasnodar and
Sochi
- Commercial launch of 3G networks in 17 Russian
regions
- Placement of bond issues totalling to RUB 40 billion
- Approval of the updated strategy for 2013/2017 by
the Board of Directors
- Successful implementation of video surveillance
- ver the Russian President elections on March 4,
2012
- The decree on merger of Rostelecom and Svyazinvest
was signed by the President of the Russian Federation
- Governmental approvals of SkyLink purchase, an
additional issue of Svyazinvest shares and transfer of Svyazinvest’s additional telecommunications assets were
- btained
- Svyazinvest additional issue. Rostelecom additionally
purchased 140,315,416 shares in Svyazinvest to maintain its 25% stake + 1 share until the merger
- The Rostelecom Board of Directors approved the buyback
price for one ordinary (RUB 136.05) and one preferred (RUB 95.24 ) shares.
- On June 26, 2013 the shareholders approved the merger
- f Rostelecom and Svyazinvest. Shareholder who voted
against or abstained from get the right to submit their shares for obligatory buy-back at price set by the Board. REORGANIZATION BUSINESS DEVELOPMENT
Achievements in 2012 and 1Q2013
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Key Priorities and Plans for Further Development
Speed up fixed and mobile network modernization
The Company has a wide telecommunications network covering all Russian regions. There is a shift in the Russian market to a new technological cycle, and operators are investing less in networks. This gives us an opportunity to improve our technical conditions to exceed the level of market peers. Currently The Company is currently reviewing its CAPEX program to optimize expenditures and increase the volume of construction.
Improvement of client service
- SLA implementation;
- Modernization of service systems OSS/BSS to improve planning of telecoms
resources, manage quality of service delivery, as well as control fraud of telecom data, forecast and support demand for services.
Development of unique service bundles and attractive tariff plans
- Ideal balance of price and service in phone, internet and pay-TV bundles;
- The Company’s scale will allow it to develop (together with rights holders) and offer
unique and price-attractive products
Improvement of business administration
- Profound improvement of business processes;
- Simplification of management structure;
- Employees’ engagement in the Company’s goals;
- Personnel development and recruitment of new highly-qualified people.
Improvement of
- perational efficiency
- Efficiency improvement in the fixed segment across the Company will be possible
following modernization, centralization and the reduction of management levels;
- Cutting real estate management fees.
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Profitable Growth Chapter 1
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Info & communications services market trends CAGR 2012/2017
Rostelecom is leading Telecom Operator
Fixed-line market shares in revenues, 2012, % Mobile market shares in revenues, 2012, % Rostelecom MTS VympelCom Megafon Er-telecom Others MTS VympelCom Megafon Tele2 Rostelecom Others
Source: iKS-Consulting, J’son Consulting, IDC, OVUM
RUB Bln +6%
- 5%
+4% +15%
- 4%
- 2%
674 668 658 645 624 600 244 233 222 212 205 200 50 47 45 43 41 39 176 190 199 206 212 216 50 58 65 71 77 83 198 236 289 343 393 393 105 141 170 209 267 312 1 498 1 574 1 647 1 729 1 817 1 843 2012А 2013F 2014F 2015F 2016F 2017F
Mobile voice and VAS Fixed-line Telephony Operators segment Fixed Broadband Pay-TV Mobile broadband
+10% +24%
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5,8 5,8 1,8 2,8 7,6 8,6
2011 2012 Общая Медь Оптика
8
The market share in terms of revenues is four times higher than the nearest competitor The increase in the optic network subscribers is almost twice as high as for the nearest competitor 1.7-times revenues growth from fiber subscribers y-o-y 1.6-times growth in number of fiber subscribers y-o-y
2012 performance:
27,0 26,0 5,0 8,6 32,0 34,6
2011 2012 Общая Медь Оптика
1 3 2 4
+55%
+73%
Broadband access B2C market shares in terms of revenues in 2012, % Optic fibre broadband access subscriber increase, 2012 vs 2011, mln subs Rostelecom B2C subscriber base, mln subs Rostelecom revenues, B2C, RUB bln*
1,7 times higher
Rostelecom VimpelCom Er-telecom MTS Others
1 3 2 4
Leading positions in B2C Broadband Access
Total Copper Fibre Total Copper Fibre 1,6 times higher 0,2 0,4 0,6 1,0 МТС Вымпелком Эр-телеком Ростелеком
Rostelecom Er-telecom VimpelCom MTS
Source: Rostelecom, IKS-Consulting, AC&M *Management accounting
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Rostelecom is the leader on the Pay TV market, with a 20% market share in revenues in 2012 Rostelecom is a market leader in Interactive TV, with a 49% market share in 2012 Growth in revenues from the Interactive TV by 125% compared to 2011 Growth in the Interactive TV subscriber base since 2011 by 102%
9
Rostelecom is the Leader on the Pay TV and Interactive TV market
2012 performance:
1 3 2 4
5,9 6,6 0,7 1,4
2011 2012 Платное ТВ вкл. Интерактивное ТВ
6,9 9,0 0,9 2,1
2011 2012 Платное ТВ вкл. Интерактивное ТВ
Pay TV market shares in 2012, % Interactive TV market shares in 2012, %
1 3 2 4
+31%
+102%
+125%
Rostelecom B2C revenues, RUB bln* Rostelecom B2C subscriber base, mln subs
2.3 times higher 2.0 times higher
Rostelecom Tricolor MTS NTV+ Er-telecom Acado Others Rostelecom VimpelCom Others
Pay TV Pay TV Interactive TV Interactive TV
Source: Rostelecom, IKS-Consulting, AC&M *Management accounting
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Rostelecom in the Mobile Segment
Rostelecom’s market share in terms
- f subscribers is 6%
The market share in terms of revenues is over 5% The annual revenues growth is 5% 4% subscriber base increase: the growth has accelerated.
Source: Rostelecom, IKS-Consulting, AC&M
2012 performance:
1 3 2 4
5,9 6,6 0,7 1,4
2011 2012 Платное ТВ вкл. Интерактивное ТВ 6,9 9,0 0,9 2,1 2011 2012 Платное ТВ вкл. Интерактивное ТВ
Market shares in Revenues in 2012, %
+4%
Rostelecom revenues, RUB billion
+5%
1 3 2 4
Rostelecom subscriber base, mln subs
MTS VimpelCom Megafon Tele2 Rostelecom Others MTS VympelCom Megafon Tele2 Rostelecom Others
Market shares in subs in 2012, %
Key activities in 2012 and 1Q 2013: Rebranding of mobile assets is completed Change in the roaming tariff policy Commercial launch of Rostelecom’s 3G+ network in 17 regions; test launches in 24 regions Commercial launch of LTE in Sochi (7 more regions to follow before the end of 2013).
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Mobile Segment Development
Key focus for mobile segment development is mobile data to ensure universal internet access via both mobile and fixed devices Mobile Segment (mln subs) KEY DATA
- In 2012, Rostelecom had GSM networks in 30 Russian regions with
a total population of around 60 mln people and a market share of 20-50% (in those regions);
- Although the Company did not operate 3G networks, we managed
to increase the subscriber base by 3% y-o-y (pure organic growth);
- As of June 01, 2013, we are performing 3G+ construction in 24
Russian regions, with commercial operations launched in 17 of them.
3G Construction and Commercial Launches in 2013
As of June 01, 2013 3G+ commercial launch in 17 regions Green fields
- Moscow and
Moscow region
- Saint-Petersburg
and Leningrad region
- Samara region
- Novosibirsk region
- Krasnodar Krai
Current market share – 0% Population ~37 mln
- Irkutsk region
- Ulyanovsk region
- Samara region
- Orenburg region
- Saratov region
- Nizhny Novgorod
region
- Tatarstan
- Penza region
- Perm Krai
- Primorsky Krai
- Sverdlov region
- Kurgan region
- Chelyabinsk region
- Tyumen region
- Yamalo-Nenetskiy
Okrug
- Volgograd region
13,3 13,5 13,5 13,6 13,6 1Q2012 2Q 2012 3Q 2012 4Q 2012 1Q2013
3% y-o-y
- We plan to launch 6 more regions by the end of
this year, Moscow and Moscow region is expected in 2014.
- The Company also operates LTE networks in
Sochi (commercial launch in June 2013). 7 more1 LTE regions are planned till the end of 2013.
1 -Khanty-Mansi Autonomous Okrug-Yugra, Republic of Khakassia, Republic of North Ossetia–Alania, Sakhalin Oblast, Chukotka Autonomous Okrug, Nenets Autonomous Okrug and the Jewish Autonomous Oblast.
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Rostelecom is the absolute market leader in B2B and B2G, with 51% market share Leader in B2O segment with 18% market share 19% annual revenue growth in B2B and B2G 9% annual growth in B2O
1 3 2 4
Rostelecom revenues in B2O, RUB billion B2B and B2G market in Revenues, % B2O market in Revenues, %
4 1 2
Rostelecom revenues in B2B and B2G, RUB billion
3
+19% +9% Rostelecom Other
- perators
Rostelecom Other
- perators
Rostelecom in B2B and B2G, B2O segments
Source: Rostelecom, IKS-Consulting, AC&M
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E-government United portal for public services Public services in e-format 70
- ut
- f
83 regions already subscribed (200K total in all levels)
- O7. Medicine
United electronic medical card E-front desk Medicine info systems
- O7. Education
E-School and E-Nursery Social network for school students Educational TV channel
- O7. Housing
Tariff and budget control Payments and financial assets Market potential
- ver
100K service companies
- O7. City
City infrastructure monitoring Predicting and prevention of emergency situations
- O7. 112
United contact number for admission and processing of messages Special services coordination
- O7. DOC
Office administration Document exchange
- O7. Business
Automation of key business processes Virtual office
Cloud & IT services: competitive advantage to become the unchallenged leader
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Clear Outcome of Structural Changes Chapter 2
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Current structure Target structure
>50%2 <50%2
Other Shareholders
1- Percentage of voting shares 2 - Will depend on the valuation of Svyazinvest assets & Rostelecom
Shareholders’ structure: current and target
State stake
State Property Agency
25%+1 55,59%1 40,2%1 4,21%
Other Shareholders
Other telecom assets
Mobitel
State stake
100% 99,99%
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Key goals of Reorganization
- Elimination cross-ownership between Rostelecom and Svyazinvest
- Acquisition of new telecom assets with the aggregate annual revenues of approx. RUB 10 billion,
incl:
- A 80% stake in Central Telegraph, the backbone network in Moscow and Moscow Region,
a corporate customer base and a complex of 35,000+ sq.m. buildings in close proximity to the Kremlin
- A 28.2% stake in Bashinformsvyaz OSJC, the main fixed-line telephony provider in
Republic of Bashkortostan. It is an excellent supplement to the current 39.8% stake held by Rostelecom and would enable to consolidate the Company’s financial and operating results
- Decrease in the number of shares after partial cancellation of treasury shares will enable to
increase the value company’s assets per share
- Potential growth in dividend payments per share as a result of the decreased number of shares
- Merger with a number of Rostelecom’s 100% subsidiaries to streamline the Group’s legal
structure
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Merger with Svyazinvest: Key Steps
Svyazinvest’s additional issue Rostelecom’s additional issue
Svyazinvest carries out an additional issue. Rostelecom buys 140,315,416 shares in Svyazinvest to maintain its stake at 25% + 1 share until the merger Rostelecom conducts an additional issue in favour of the Federal Property Management Agency
Mandatory redemption of shares from minority shareholders
Rostelecom will spend up to 10% of its net assets value on mandatory redemption of shares from the shareholders who vote against the merger or do not vote at all, within 45 days from the shareholders’ meeting.
Shareholders’ meeting
Both companies hold shareholders’ meetings to obtain the merger approval
Corporate appraisal
The two companies are appraised by an independent advisor
Conversion of shares
Conversion of Rostelecom’s shares; the plan is also to cancel treasury shares resulting from the conversion All of the necessary governmental approvals have been obtained
Signing the Presidential decree
On March 24, 2012 the President of RF signed a Decree No. 340 to merge Svyazinvest and Rostelecom
Finalized Finalized Finalized Finalized
Obtained approvals for SkyLink purchase, Svyazinvest’s additional share issue and transfer of additional telecom assets from Svyazinvest to Rostelecom
Acquisition of SkyLink from Svyazinvest
A non-monetary transaction for a 1.91% of treasury shares held on the balance sheet of Mobitel LLC (Rostelecom’s 100% subsidiary)
Finalized Finalized By mid-Sept 2013 Autumn 2013 Autumn 2013
17
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Group’s dividends
Dividends (RUB bln) KEY DATA
- In April 2012 the Board of Directors proposed to approve 2012 dividend
payment in the total amount of RUB 8,2 bln or 25% of RAS net income for 2012 or:
- RUB 4.1022 for 1 preferred share of class A (total payment of
3,05% of RAS net income or 2,87% of IRFS net income)
- RUB 2.4369 for 1 ordinary share (total payment of 21,95% of RAS
net income or 20,64% IRFS net income)
- Dividends were approved during shareholders’ meeting in June 2013.
- Dividend payment was effected by network modification and upcoming
- bligatory buy-out of minority shareholder who will vote against
reorganization or will not participate in the voting. Total amount spent for buy-out will not exceed RUB 30,3 bln (10% of NAV as of 31/03/2013)
Dividend for 2012
- RUB 4,1022 for 1 preferred share
- f class A
- RUB 2,4369 for 1 ordinary share
% of net income RAS / IRFS 25% / 24% 46% / 34%
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Chapter 3 Operational and Financial Data
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Key Operational and Financial Results for 1Q 2013
Revenue (RUB bln) OIBDA (RUB bln) and OIBDA margin (%) Fixed Broadband including Fibre Optic (mln subscribers) Pay-TV including IPTV (mln subscribers) Mobile Segment Development (mln subscribers)
12% y-o-y 13% y-o-y Intensive 3G launches starting 1Q 2013
RUB 80 bln average per quarter OIBDA margin of 36.9% in 2012
Net Income (RUB bln)
NI margin
* *
* - without Svyazinvest 25% share in RTKM net income
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P&L Statement
1Q 2013
2013 Grwoth rates
1Q 2012 2Q 2012 3Q 2012 4Q 2012
2012 Grwoth rates Revenue (see breakdown below)
77,067
77,067
- 9,7%
85,319 76,387 76,985 82,560
321,251 6,6% Operating Expenses
(65,585)
(65,585)
- 2,9%
(67,527) (61,619) (63,551) (74,606)
(267,303) 10,8% Wages, salaries, other benefits and payroll taxes (see breakdown below)
(21,924)
(21,924) 0,1%
(21,893) (20,025) (19,327) (22,942)
(84,187) 10,4% including stock option program 0,000
0,000 0,000
0,000 Depreciation and Amortization
(17,355)
(17,355) 4,4%
(16,616) (15,493) (15,992) (16,628)
(64,729) 12,5% Interconnect Charges
(10,168)
(10,168)
- 10,3%
(11,334) (10,513) (12,612) (12,853)
(47,312) 16,1% Materials, utilities, repair and maintenance
(5,949)
(5,949)
- 18,1%
(7,264) (6,600) (7,134) (6,360)
(27,358)
- 0,5%
Other operating income
2,483
2,483
- 4,4%
2,597 3,725 4,023 3,523
13,868
- 5,7%
Other operating expense, including:
(12,672)
(12,672)
- 2,7%
(13,017) (12,713) (12,509) (19,346)
(57,585) 6,6% Impairment of property, plant & equipment (PPE) 0,000
0,000 0,000 0,000
0,000 Loss on sale and disposal of PPE
(0,054)
(0,054)
- 85,9%
(0,383) 0,100 (0,257) (0,282)
(0,822) 3,8% Bad debt reserve
(0,430)
(0,430)
- 1,8%
(0,438) (0,207) (0,521) (0,152)
(1,318) 130,6% Operating Profit
11,482
11,482
- 35,5%
17,792 14,768 13,434 7,954
53,948
- 10,4%
Operating Profit margin
14,9%
14,9%
20,9% 19,3% 17,5% 9,6%
16,8% OIBDA
28,837
28,837
- 16,2%
34,408 30,3 29,426 24,582
118,677 0,8% OIBDA Margin
37,4%
37,4%
40,3% 39,6% 38,2% 29,8%
36,9%
- 5,4%
Income from equity accounted investees
0,169
0,169
- 7,1%
0,182 0,669 1,259 0,807
2,917
- 34,8%
Finance costs
(3,912)
(3,912) 6,7%
(3,666) (4,100) (4,398) (3,841)
(16,005) 22,5% Other Investing and financial gains
0,585
0,585
- 41,0%
0,991 (0,060) 0,860 (0,351)
1,440
- 30,7%
Foreign exchange loss, net
(0,142)
(0,142)
- 121,8%
0,650 (0,805) 0,479 0,156
0,480
- 227,3%
Profit before income tax
8,182
8,182
- 48,7%
15,949 10,472 11,634 4,725
42,780
- 19,7%
Income tax expense
(1,769)
(1,769)
- 49,2%
(3,481) (2,703) (1,732) (0,111)
(8,027)
- 25,4%
Net Profit
6,413
6,413
- 48,6%
12,468 7,769 9,902 4,614
34,753
- 18,3%
Net Profit margin
8,3%
8,3%
14,6% 10,2% 12,9% 5,6%
10,8%
- 23,3%
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Revenue structure
Revenue / Breakdown
1Q 2013
2013 Grwoth rates
1Q 2012 2Q 2012 3Q 2012 4Q 2012
2012 Grwoth rates By services: Local Telephone services
21,399
21,399
- 0,9%
21,604 21,719 21,125 21,286
85,734
- 2,6%
Intra-Zonal
4,194
4,194
- 12,6%
4,797 4,720 4,568 4,669
18,754
- 12,3%
DLD / ILD
4,651
4,651
- 15,0%
5,471 5,070 4,863 4,986
20,390
- 15,3%
Interconnect and traffic transit
5,376
5,376 10,0%
4,889 5,146 5,418 5,550
21,003 6,2% Mobile communication services
9,503
9,503
- 5,3%
10,031 10,446 10,512 10,172
41,161 1,2% Rent of channels
2,608
2,608
- 9,9%
2,894 2,918 3,014 2,443
11,269 8,8% Broadband Internet
13,354
13,354 9,8%
12,158 12,386 12,367 12,886
49,797 7,3% Pay-TV
2,772
2,772 34,9%
2,055 2,143 2,394 2,555
9,147 36,4% Data services
5,335
5,335 6,8%
4,995 4,957 5,149 5,714
20,815 10,3% Other
7,875
7,875
- 52,1%
16,425 6,882 7,575 12,299
43,181 71,3% % of total Revenues Local Telephone services
27,8%
27,8%
25,3% 28,4% 27,4% 25,8%
26,7% Intra-Zonal
5,4%
5,4%
5,6% 6,2% 5,9% 5,7%
5,8% DLD / ILD
6,0%
6,0%
6,4% 6,6% 6,3% 6,0%
6,3% Interconnect and traffic transit
7,0%
7,0%
5,7% 6,7% 7,0% 6,7%
6,5% Mobile communication services
12,3%
12,3%
11,8% 13,7% 13,7% 12,3%
12,8% Rent of channels
3,4%
3,4%
3,4% 3,8% 3,9% 3,0%
3,5% Broadband Internet
17,3%
17,3%
14,3% 16,2% 16,1% 15,6%
15,5% Pay-TV
3,6%
3,6%
2,4% 2,8% 3,1% 3,1%
2,8% Data services
6,9%
6,9%
5,9% 6,5% 6,7% 6,9%
6,5% Other
10,2%
10,2%
19,3% 9,0% 9,8% 14,9%
13,4% By customers: B2C
40,806
40,806
- 0,7%
41,081 40,680 40,163 40,569
162,493
- 1,9%
B2B
17,287
17,287 5,6%
16,364 17,156 16,844 18,651
69,015
- 0,8%
B2G
10,378
10,378
- 45,3%
18,965 9,445 10,191 14,851
53,452 55,0% B2O
8,596
8,596
- 3,5%
8,909 9,106 9,787 8,489
36,291 14,0% B2C
52,9%
52,9%
48,1% 53,3% 52,2% 49,1%
50,6% B2B
22,4%
22,4%
19,2% 22,5% 21,9% 22,6%
21,5% B2G
13,5%
13,5%
22,2% 12,4% 13,2% 18,0%
16,6% B2O
11,2%
11,2%
10,4% 11,9% 12,7% 10,3%
11,3%
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Revenue structure
The revenue structure is changing towards share increase for key growth drivers segments (broadband, pay-TV, innovations) 1Q 2012 1Q 2013
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Balance Sheet
BALANCE SHEET
31.03.2013 31.03.2012 30.06.2012 30.09.2012
31.12.2012
31.03.2011 30.06.2011 30.09.2011
31.12.2011 Assets Current Assets Cash & cash equivalents
4,008 10,370 9,396 3,369
10,370
8,423 8,754 6,141
7,380 Other investments
1,137 0,952 2,939 0,656
0,952
7,938 2,364 1,455
3,926 Prepayments
3,331 3,912 3,956 4,445
3,912
5,691 5,378 2,390
2,706 Prepaid income tax
3,608 2,921 3,089 1,753
2,921
1,354
3,309 Inventories
4,139 4,534 5,070 5,316
4,534
4,907 5,725 6,279
4,763 Trade and other accounts receivable
38,778 33,992 38,980 35,834
33,992
33,153 30,876 30,855
28,790 Other current assets
1,325 1,258 2,602 2,837
1,258
2,580 1,303 1,201
1,268 Total current assets
56,326 57,939 66,032 54,210 57,939 62,692 54,400 49,676
52,142 Non-current assets PPE & Intangible assets
383,424 385,994 346,053 358,260
385,994
303,943 304,492 319,094
335,205 Investment property
0,254 0,274 0,256 0,186
0,274
0,292 0,309 0,333
0,259 Goodwill and other intangible assets
85,240 87,830 87,006 86,778
87,830
60,004 62,320 83,818
88,937 Investment in associates
5,354 5,179 34,142 34,726
37,389
28,789 32,759 33,032
34,746 Other investments
2,471 2,498 2,209 2,691
2,498
3,359
3,635 Other non-current assets
8,220 8,107 16,666 15,259
8,107
20,956 20,145 5,945
14,689 Total non-current assets
484,963 489,882 486,333 497,900 522,092 413,984 420,025 445,582
477,472 Total assets
541,289 547,821 552,365 552,110 580,031 476,676 474,425 495,258
529,613 Liabilities Current Liabilities Accounts payable
49,402 59,889 58,012 50,842
59,889
34,625 37,994 38,745
39,196 Short-term loans and borrowings
55,319 63,499 69,868 73,963
63,499
51,519 48,117 67,202
80,972 Other current liabilities
8,570 10,038 8,219 9,621
10,038
7,708 10,389 7,064
8,537 Total current liabilities
113,291 133,426 136,100 134,426 133,426 93,852 96,500 113,010
128,705 Non-current Liabilities Shareholders equity
0,106 0,106 0,106 0,106
0,106
0,100 0,106 0,106
0,106 Treasury shares
(35,445) (36,615) (36,307) (36,707)
(36,615)
(25,416) (25,416) (17,437)
(17,161) Additional paid in capital
7,119 7,119 34,739 34,842
34,839
33,424 33,424 34,739
34,736 Retained earnings and other reserves
260,917 254,457 241,977 253,529
257,143
215,582 224,737 231,509
247,253 Non-controlling interest
0,471 0,493 0,355 0,438
0,493
4,600 8,045 7,804
7,784 Long-term loans
156,130 150,907 136,965 127,655
150,907
119,208 102,127 87,620
91,851 Employee benefits
11,045 10,997 12,180 12,399
12,130
16,123 16,671 17,226
11,752 Deferred tax liabilities
22,650 22,565 22,109 21,067
23,236
16,609 16,435 18,317
20,813 Other non-current liabilities
5,005 4,366 4,142 4,356
4,366
2,594 1,796 2,363
3,774 Total non-current liabilities
427,998 414,395 416,266 417,685 446,605 382,824 377,925 382,248
400,908 Total equity & liabilities
541,289 547,821 552,365 552,110 580,031 476,676 474,425 495,258
529,613 Net Debt
206,304 203,084 194,498 197,593 203,084 154,366 139,126 147,226
161,516 Net Debt / OIBDA LTM
x 1,8 x 1,6 x 1,6 x 1,6 x 1,7 x 1,5 x 1,3
x 1,4
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Cash Flow statement
CASH FLOW STATEMENT
1Q 2013 1Q 2012 1H 2012 9M 2012
2 012
1Q 2011 1H 2011 9M 2011
2 011 Cash flows from operating activities Profit before income tax
8,181 15,949 27,674 39,308
44,033
12,646 23,600 35,195
53,295 Adjustments to reconcile profit before taх to cash generated from operations: Depreciation and amortization
17,355 16,616 32,109 48,101
64,729
13,862 29,794 45,079
57,524 Loss on sale of property, plant and equipment
0,054 0,383 0,283 0,540
0,822
0,005 0,586 0,967
0,792 Impairment losses /(reversal of impairment losses)
0,000 0,000
Finance costs excluding finance costs on pension and other lt social liabilities
3,725 3,429 7,297 11,464
15,054
3,529 6,102 9,263
12,030 Other non-cash (gains) / loss
(0,525)
Other investing and financing gains
(0,585) (0,991) (0,931) (1,791)
(1,440)
(0,090) (0,469) (1,426)
(2,078) Other cash flows from operating activities
0,403 (0,394) (1,427) (2,644)
(3,455) (2,647) (2,926)
(1,793)
(3,525) Share-based payment expenses
0,041 0,041 0,041
0,018
0,000 0,411 0,513
0,588 Changes in net working capital:
(1,326) (5,035) (9,220) (5,594) (0,591) (8,667) (4,553) (6,413)
(11,955) Cash generated from operations
27,807 29,998 55,826 89,426 119,170 18,113 52,545 81,385
106,671 Interest paid
(3,962) (3,529) (7,470) (11,757)
(16,015)
(3,562) (6,430) (9,544)
(12,230) Income tax paid
(2,538) (2,233) (4,348) (4,495)
(6,924)
(2,691) (3,244) (8,995)
(9,064) Net cash provided by operating activities
21,307 24,236 44,008 73,174 96,231 11,860 42,871 62,846
85,377 Cash flows from investing activities Purchase of PPE and intangible assets
(24,889) (20,426) (41,858) (63,460)
(91,181)
(15,332) (26,745) (42,647)
(83,231) Proceeds from sale of property, plant and equipment
0,316 0,049 0,147 1,225
1,864
0,325 0,629 0,752
1,486 Acquisition of financial assets
(0,161) (3,578) (3,509) (3,764)
(4,436)
(2,793) (4,054) (5,456)
(8,565) Proceeds from disposals of financial assets
0,076 4,296 5,513 7,991
8,300
0,705 6,008 8,041
9,176 Purchase of subsidiaries, net of cash acquired
(0,021) (0,986) (1,175) (1,287)
(1,287)
(29,967) (30,005) (32,285)
(32,281) Other cash flows from investing activities
0,003 0,069
1,145 2,232 Acquisition of equity accounted investees (1,908)
(0,103) (3,640) (3,640)
(3,640) Net cash used in investing activities
(24,681) (20,576) (40,684) (58,184) (87,503) (46,765) (56,443) (73,570)
(114,823) Cash flows from financing activities Purchase of treasury shares
(18,975) (21,367) (21,928)
(22,126)
(0,006) (0,006) (0,006)
(1,487) Sale of treasury shares
0,499 1,338 2,224 2,224
2,775 1,754 Proceeds from bank and corporate loans
97,428 110,589 247,216 380,463
532,663
62,745 95,518 167,438
296,398 Repayment of bank and corporate loans
(125,159) (80,557) (209,045) (343,289)
(491,724)
(27,602) (79,350) (150,061)
(250,410) Repayment of bonds
(0,398) (0,659) (3,377) (6,436)
(7,285)
(3,300) (3,706) (8,398)
(13,932) Proceeds from promissory notes
7,650 21,882 22,863
22,863
12,050 13,146 13,490
12,050 Repayment of promissory notes
(2,250) (21,863) (22,946)
(22,939)
(12,093) (13,539) (14,840)
(15,984) Dividends paid to shareholders of the Group
(0,001) (0,362) (12,808)
(12,131)
(0,113)
(0,116) Other cash flows from financing activities
24,636 (14,333) (16,627) (17,135) (7,818) (1,007) (2,291) (3,324)
(4,115) Net cash used in financing activities
(2,993) 2,802 (1,319) (18,990) (5,722) 30,787 9,772 4,185
24,158 Net (decrease)/increase in cash and cash equivalents
0,006 6,441 2,005 (4,000)
2,990
(4,118) (3,800) (6,538)
(5,314) Effect of exchange rate changes on cash and cash equivalents
(6,362) (0,021) 0,011 (0,011)
(0,016)
(0,041) (0,056) (0,015)
(0,026) Cash and cash equivalents at beginning of year
10,370 7,380 7,380 7,380 7,380 12,694 12,694 12,694
12,694 Cash and cash equivalents at the end of year
4,008 13,821 9,396 3,369
10,370
8,535 8,838 6,141
7,380
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Attachment Other Information
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Rostelecom is recognized as:
- a natural monopoly
- an operator with a strong foothold in the
common use network
- a business entity dominating on commodity
markets
Company’s regulated business
Rostelecom is subject to general industrial requirements to:
- Licensing of and access to the numbering
resource and the radio frequency resource
- Network construction and commissioning
- Service quality/ provision procedure
Rostelecom is a full-service operator The Company has commitments in connection with participation of the Russian Federation in its share capital Regulatory efforts:
- Setting tariffs for regulated services
- Anti-trust price control
- Public access to infrastructure and services
- Control over major transactions and purchases
- Requirements to the network architecture and radio
frequency technologies
1 2 3 4 6%7%
Share of revenues from regulated services in total revenues, 2012 Share of costs determined by the company’s specific legal status in total costs, 2012
Participation in the all-purpose communications service Indirect regulation of inter-connection
Rostelecom Current Regulation Mode
46%
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AGM Annual General Shareholders Meeting BB Broadband BoD Board of Directors CDMA Code Division Multiple Access (3G) CAPEX Capital Expenditures DLD Domestic Long Distance DTH Direct To Home FMC Fixed/mobile convergence FTTx Fiber to the x FX Foreign Exchange GSM Global System for Mobile Communication (2G) HH Households ILD International Long Distance IPTV Internet Protocol Television RTO Interregional Company LTE Long Term Evolution (4G) LTM Last Twelve Month MSCI Morgan Stanley Capital International MVNO Mobile Virtual Network Operator NGN Next Generation Network OIBDA Operating Profit Before Depreciation and Amortization RTCM Rostelecom SG & A Selling, General and Administrative expenses SME Small and Medium – size Enterprise