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ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: ROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING
RESULTS FOR THE SECOND QUARTER OF 2018
02-Aug-2018 / 13:10 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
rostelecom announces its ifrs financial and operating results for the SECOND
quarter of 2018
PAY-TV SUBSCRIBER BASE EXCEEDED 10 MILLION USERS
Moscow, Russia - August 2, 2018 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX:
ROSYY), Russia's national telecommunications operator, today announces its
consolidated financial results for the second quarter of 2018 prepared in
accordance with IFRS[1],[2].
KEY ACHIEVEMENTS
- Revenue grew by 3% year-on-year in the second quarter of 2018 with
average annual revenue growth of 5% over the last four quarters;
- The digital segment's[3] contribution to total revenue reached 53%;
- Pay-TV subscriber base exceeded 10 million users;
- 1 million clients use Rostelecom's mobile communication services;
- Consistently high growth rates in FTTx Broadband clients (+7%) and in
IPTV subscribers (+11%), while ARPU continues to grow in our core
broadband and IPTV segments;
- Increase in revenues from VAS and cloud services amounted to 34% in the
second quarter of 2018, as a result of "Smart City" projects, and the
promotion of cloud services and data centre services.
SECOND QUARTER 2018 FINANCIAL HIGHLIGHTS
- Revenue grew by 3% to RUB 77.4 billion compared to the second quarter of
2017;
- OIBDA[4] of RUB 23.7 billion;
- OIBDA margin of 30.6%;
- Net profit increased by 9% to RUB 3.1 billion compared to the second
quarter of 2017;
- CAPEX[5] increased by 16% to RUB 14.4 billion (18.7% of revenue) from
RUB 12.5 billion (16.6% of revenue) in the second quarter of 2017;
- Consolidated Free Cash Flow (FCF) improved to RUB (0.8) billion[6]
compared to RUB (1.6) billion in the second quarter of 2017;
- Net debt[7] increased by 7% since the beginning of the year and amounted
to RUB 193.5 billion, resulting in a Net Debt/OIBDA ratio of 2.0x.
Key figures for 2Q 2018, RUB mln
RUB million 2Q 2018 2Q 2017 % change, y-o-y
Revenue 77,365 75,166 3%
OIBDA 23,659 24,599 (4%)
OIBDA margin % 30.6% 32.7% -
Operating Income 8,342 11,304 (26%)
Operating margin % 10.8% 15.0% -
Net Income 3,094 2,826 9%
% of revenue 4.0% 3.8% -
Capital Expenditure 14,442 12,451 16%
% of revenue 18.7% 16.6% -
Net debt 193,497 185,463 4%
Net debt/ annualised OIBDA 2.0 1.9 -
FCF (832) (1,644) +RUB 812 million
FIRST HALF YEAR 2018 FINANCIAL HIGHLIGHTS
? Revenue increased by 5% to RUB 153.6 billion compared to the first half
of 2017;
? OIBDA increased by 1% year-on-year to RUB 46.9 billion compared to the
first half of 2017;
? OIBDA margin of 30.5% compared to 31.7% in the first half of 2017;
? Net profit increased by 16% to RUB 7.0 billion compared to the first
half of 2017;
? CAPEX decreased by 2% year-on-year to RUB 29.6 billion (19.3% of
revenue) from RUB 30.2 billion (20.7% of revenue) in the first half of
2017;
? Free Cash Flow (FCF) of RUB (6.7) billion compared to RUB (4.0) billion
in the first half of 2017;
Key figures for 1HY 2018, RUB mln
RUB million 1HY 2018 1HY 2017 % change, y-o-y
Revenue 153,568 145,602 5%
OIBDA 46,852 46,168 1%
OIBDA margin % 30.5% 31.7%
Operating Income 16,699 19,397 (14%)
Operating margin % 10.9% 13.3%
Net Income 6,958 5,976 16%
% of revenue 4.5% 4.1%
Capital Expenditure 29,567 30,165 (2%)
% of revenue 19.3% 20.7%
Net debt 193,497 185,463 4%
Net debt/ annualised OIBDA 2.0 1.9
FCF (6,680) (3,953) -RUB 2,727 million
Mikhail Oseevsky, President of Rostelecom, commented:
"The Q2 2018 results came in line with our expectations. Rostelecom has
gained momentum: revenue has been growing at a solid average annual rate of
5% in the last 12 months. Our digital segment, which currently accounts for
53% of our top-line, has contributed significantly to this growth. Our
growth engine is delivering and we are also increasing our competitive
positions in the key pay-TV and broadband segments, thanks to a growing
subscriber base and higher ARPU. This was achieved by promoting new services
such as "Smart Home" video surveillance, where we saw the subscriber base
grow three-fold in the reporting period. Higher demand for cloud services,
data centers and information security solutions is also contributing to our
top-line and is coming from corporate and government clients. We are
strengthening our competences in the key growing areas, including cyber
security business stream, which is why we acquired Solar Security, a
technological leader in target monitoring and information security
operational management. Solar Security will make a substantial contribution
to this strength and will allow us to boost our presence in the market
thanks to its reputation for delivering a reliable and trustworthy suite of
services and products. Solar Security will evolve into Russia's national
cybersecurity operator which will cover three key areas, including
"Services", "Brand new products" and "Full-scale cybersecurity solutions".
We continue to successfully implement the Russian government's state
projects of high strategic importance. Public funding enabled us to further
expand the number of high-speed connections in Russian healthcare centres
and across remote areas during the second quarter. We also successfully
delivered the video surveillance of the Unified State Exam, which
contributed over RUB 1 billion of revenue.
Serving as regional sponsor to World Cup 2018 has had a significantly
marketing contribution for Rostelecom. We were deploying Wi-Fi spots in the
majority of sites, provided the Organisation Committee and FIFA with video
conferencing services, arranged for steady Internet connection in the
stadiums and launched a number of remarkable promotion campaigns during the
World Cup. We did our best to ensure comfort and provide high quality
services for fans from all over the world, to maintain our reputation of one
of the leading digital providers.
In June this year the AGM approved that 100% of net income would be
distributed across shareholders at RUB 5.05 per a preferred and ordinary
share, which resulted in a high level of dividend yield. We strongly believe
that consistent implementation of our robust business development strategy
will pave the way for further attractive dividend payments."
Sergei Anokhin, Senior Vice-President and Chief Financial Officer, added:
"Rostelecom's results for the second quarter of 2018 reflect our confident
outlook for future developments of the digital segment. We expect our
performance to continue to improve across all key financial indicators. We
therefore confirm our full year forecast for revenue growth, and anticipate
an increase of more than 2%. OIBDA margin is expected to be above 31.5% in
2018 with CAPEX of RUB 60-65 billion, excluding the implementation of
government programmes."
KEY OPERATING HIGHLIGHTS
1) The total number of Internet subscribers grew by 2% to 13.0 million in
the second quarter of 2018 compared to the corresponding period of last
year;
? The B2C subscriber base grew by 1% to 12.0 million, whilst the number of
subscribers connected by fibre optic increased by 6% year-on-year to 7.9
million (66% of the subscriber base);
2) The number of pay-TV subscribers grew by 5% to 10.0 million households
compared to the corresponding period of last year;
? The number of IPTV subscribers increased by 11% to 5.1 million;
3) The number of MVNO subscriber base reached 1 million users, a more than
two-fold increase within 1 year;
4) The number of local telephony subscribers decreased by 8% to 18.3
million.
Number of 2Q 2018 2Q 2017 % change, 1Q 2018 % change,
subscribers y-o-y y-o-y
(million):
Internet access 13.0 12.8 2% 12.9 0.1%
B2C: Broadband 12.0 11.8 1% 12.0 0.03%
B2B: Broadband 1.0 0.9 2% 1.0 2%
+ VPN
Pay TV 10.0 9.5 5% 9.9 1%
Incl. IPTV 5.1 4.6 11% 5.0 2%
MVNO 1.0 0.5 107% 0.9 10%
subscribers
Local telephony 18.3 19.9 (8%) 18.7 (2%)
services
KEY EVENTS RELATING TO 2Q 2018 AND AFTER THE END OF THE REPORTING PERIOD
Business news
? Rostelecom continues to develop and expand its range of services:
- Rostelecom's "Smart Home" video surveillance service was upgraded with 5
new detectors and safety actuators, and customers now also have the option
to buy smart periphery online. Users now have access to smarter solutions to
further automate their households to increase comfort and security;
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August 02, 2018 06:11 ET (10:11 GMT)
