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EquityStory.RS, LLC-News: PJSC MegaFon / Key word(s): Annual Results/Quarter
Results
PJSC MegaFon: MegaFon reports results for Q4 and the full year 2018 (news
with additional features)
2019-03-21 / 10:00 MSK
The issuer is solely responsible for the content of this announcement.
*MegaFon reports results for Q4 and the full year 2018*
*Moscow, Russia (21 March 2019) - PJSC "MegaFon" ("MegaFon" or the "Company"
and, together with its consolidated subsidiaries, the "Group") (MOEX: MFON),
a pan-Russian operator of digital opportunities, announces its financial[1]
and operating results for Q4 and the full year 2018.*
*Key financial and operating highlights for the full year 2018[2]*
- Revenue increased by 4.3% y-o-y[3] to RUB 335,549 million
- OIBDA[4] increased by 1.8% y-o-y to RUB 124,042 million
- OIBDA Margin4 was 37.0% versus 37.9% in 2017
- Net Profit[5] increased by 2.7% y-o-y to RUB 21,068 million
- CAPEX increased by 45.5% y-o-y to RUB 81,456 million
- Free Cash Flow to Shareholders decreased by 86.2% y-o-y to RUB 4,869
million
- Net Debt as of 31 December 2018 was RUB 294,318 million
- The number of mobile subscribers as of 31 December 2018 decreased by 0.3%
y-o-y to 76.9 million[6]
*Key financial and operating highlights for Q4 2018*
- Revenue increased by 4.5% y-o-y to RUB 88,412 million
- OIBDA[7] decreased by 4.5% y-o-y to RUB 27,561 million
- OIBDA Margin7 was 31.2% versus 34.1% in Q4 2017
- Net Profit decreased by 62.7% y-o-y to RUB 1,133 million
- CAPEX increased by 72.9% y-o-y to RUB 38,260 million
- Free Cash Flow to Shareholders decreased by 231.3% y-o-y to RUB (17,071)
million
Gevork Vermishyan, the Group's Chief Executive Officer, commented on the
financial and operating results as follows:
*«* *Financial results*
2018 has been a year of big changes and good results for
MegaFon. Our digital leadership strategy has proved to be
the right choice in the current economic conditions and has
enabled us to move steadily forward towards meeting our
long-term goals. We finished our year with good financial
results and achieved our previously announced KPIs.
Our consolidated service revenue for 2018 increased by 4.7%
y-o-y to RUB 307 billion, in line with our forecast.
Consolidated OIBDA (after taking into account the positive
impact of the new revenue recognition standard IFRS 15)
increased by 1.8% y-o-y to RUB 124 billion. Eliminating the
positive impact of IFRS 15, full year 2018 Organic OIBDA
still increased by 0.2% y-o-y to RUB 122 billion.
Consolidated CAPEX for the year reached a record RUB 81.5
billion, and was used for further LTE network expansion,
improving the reliability of our network and IT
infrastructure, and compliance with the Yarovaya data
storage law.
*B2C*
Our commitment to leadership in quality of service and to
continued development of our product portfolio has enabled
us to actively develop a digital ecosystem for all
categories of clients. Using big data analysis we have been
able to offer our clients the best innovations, such as:
· Our clients were the first to be able to touch pay for
services and goods from their mobile accounts via Apple
Pay, Google Pay and Samsung Pay by using a Mastercard
token.
· We launched a smart service that enables each client to
switch on by one click a personalised set of discounts,
bonuses, additional minutes and internet packages, films,
music, books and media.
· Our tariff line "Vklyuchaisya!" ("Connect!") which we
refreshed in Spring 2018 is now a bestseller. By the end
of the year more than 20.7 million subscribers had opted
for that tariff.
· Our service "MegaFon.Travel" assists clients in planning
trips and at the same time enables them to get cashback on
a mobile account.
· The userbase of "MegaFon.TV" exceeded 5.3 million people
by the end of the year.
*B2X*
We strive to be the number one supporter for entrepreneurs,
private businesses and state companies. Focusing on the
development of IoT and big data services we now offer the
most effective solutions for our clients' business
development and improvement:
· "Mobile Connect" verifies customers on a website by
mobile numbers in just one click, which increases sales
conversion for e-commerce.
· "Business cloud" gives businesses easy access to virtual
platforms, cloud storage, databases, graphic maps and big
data services.
· "Upravlyai!" ("Manage!") is the first flexible tariff
for businesses in the market with a 7% cashback and an
opportunity to customise telecom service for each
employee.
· Our Narrow Band IoT (NB/IoT) solutions meet all the
requirements of businesses and form an important part of
the future digital economy as they guarantee security,
quality and safety of data, even if data gets transmitted
via 2G and 3G networks.
· "Digital managing company" is an integrated housing and
utilities solution, both for business and tenants.
· "MegaFon.Business" is a unique online service for small
and medium-size businesses which permits easy on-click
management of VAS-services using partner and MegaFon
offers.
*Strategic partnerships*
In order to build up momentum on the development of new
digital services, we are actively searching for and finding
new partners. The last year has been marked by a number of
transactions, mergers and new partnerships which will
contribute significantly to the development of the national
digital economy:
· Together with the international e-commerce leader
Alibaba Group, the Russian Direct Investment Fund (RDIF)
and Mail.Ru Group, we signed a letter of intent aimed at
creating an e-commerce joint venture in Russia.
· We believe that our joint venture "MF Technologies" will
combine the best expertise of MegaFon, Gazprombank, Rostec
and USM Holdings, and will enable us to create new
breakthroughs in cross-industry digital, telecom, finance
and hi-tech industries solutions.
· Our obtaining a 25% share in the Svyaznoy/Euroset
combined company, the largest retail company in the world
offering hi-tech tailored services - should enable us not
only to earn profit in the future, but also to focus on
developing our own omnichannel network.
*New opportunities: development of digital infrastructure
and an ecosystem for clients*
Being a digital company, first of all, means "having a
developed ecosystem of digital services for clients and the
best technical solutions for using these services". We are
proud that for the second year in a row MegaFon received
'The fastest mobile internet in Russia' title from Ookla as
the operator with the highest speed of data transfer and
downloads based on independent tests taken by data users on
their devices in all mobile networks in Russia. The key to
our success is having the largest LTE network in Russia with
more than 49,600 base stations. As of the end of the year,
our LTE network reached 79% of the population of Russia
spanning the entire country. Our roaming networks also
enabled our clients to use LTE services in 119 countries
around the world.
We believe that our continued efforts on improving our
connection quality and increasing our network coverage, as
well as our investments in our core network, at a time when
internet traffic and revenues from digital services are
growing, are important factors for future development of the
company and our successful transformation into a digital
operator of the future.
In addition to demonstrating the technical excellence of
MegaFon network during the FIFA World Cup last year, we were
the first in Russia to reach a data transfer speed of 1
Gbit/sec on a smartphone and launched our Enhanced Voice
Service technology for developing a high quality VoLTE
(Voice over LTE) service. In Moscow more than 30% of voice
traffic is already being transmitted via VoLTE technology.
We continue expanding our international network. Last year,
in partnership with Kazakhtelecom and Interoute, we
connected Hong Kong and Frankfurt via a 8 Terabit/sec
fiber-optic line and completed our project with China Mobile
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