EquityStory.RS, LLC-News: PJSC MegaFon / Key word(s): Quarter
Results/Quarterly / Interim Statement
PJSC MegaFon: MegaFon reports results for Q1 2019 (news with additional
features)
2019-05-30 / 09:00 MSK
The issuer is solely responsible for the content of this announcement.
*MegaFon reports results for Q1 2019*
Press-release
Moscow, Russia (30 May 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 Q1 2019.
*Key financial and operating highlights for Q1 2019*[2]
· Revenue increased by 4.8% y-o-y[3] to RUB 80,128 million
· Including the positive impact of IFRS 16 OIBDA increased by 15.2% y-o-y
to RUB 35,226 million and organic OIBDA was RUB 30,189 million
· OIBDA Margin was 44.0% and organic OIBDA Margin was 37.7% versus 40.0%
in Q1 2018
· Net Profit including the impact of IFRS 16 decreased by 63.8% y-o-y to
RUB 2,187 million and organic Net Profit decreased by 49.7% y-o-y to RUB
3,036 million
· CAPEX decreased by 6.2% y-o-y to RUB 7,963 million
· Free Cash Flow to Shareholders[4] increased by RUB 12,218 million y-o-y
and amounted to RUB 12,065 million
· Net Debt as of 31 March 2019 was RUB 363,294 million
· The number of mobile subscribers[5] as of 31 March 2019 increased by
0.9% y-o-y to 76.9 million
*Gevork Vermishyan, the Group's Chief Executive Officer*, commented on the
financial and operating results as follows:
« *Financial results*
Our financial results in Q1 2019 continued the positive growth
trends from previous quarters and confirmed that our digital
leadership strategy adopted in 2017 was the right choice.
Our revenue is up 4.8% y-o-y to RUB 80.1 billion, while
service revenue is up 2.7% y-o-y to RUB 72.8 billion. Both
increases were supported by a significant growth in mobile
data revenue which is up 8.1% y-o-y to RUB 25.1 billion. Our
mobile data revenue remains the key driver of our wireless
revenue. Continued uptake in our popular services and products
and an upgrade of our 'Vklyuchaisya!' ('Connect!') tariff line
enabled us to strengthen our leadership position in the
industry. Our clients actively use our online services: they
watch films, listen to music and spend more time online. In Q1
2019 each client used on average 10.7 gigabytes of traffic,
i.e. 27,6% more than the year before.
Our efforts to streamline our retail network enabled us to
stabilise and then achieve growth in our revenue from
equipment and accessories, which increased by 31.0% y-o-y to
RUB 7.4 billion.
OIBDA including the positive effect of the implementation of
IFRS 16, the new accounting standard for leases, is up 15.2%
y-o-y to RUB 35.2 billion. Organic OIBDA, calculated without
taking into account the impact of IFRS 16 is RUB 30.2 billion.
*Digital revenue*
As we are implementing our digital strategy, revenue from
digital services is becoming a more significant driver of our
growth. Digital services include various VAS-services, such as
MegaFon TV, games, music and other content services, mobile
finance, M2M-services, IT-services, and information and
communication services such as services rendered under the
State Digital Programme, known as 'Safe City' and 'Smart City'
solutions. As a result of the rapid development of these
services, our digital revenue in Q1 2019 increased by 50.3%
y-o-y.
*Looking to the future*
A digital company is first of all a developed ecosystem of
digital services for clients and the best technologies for
rendering those services. In Q1 we launched large-scale NB IoT
networks in the Sverdlovsk and Khabarovsk regions in order to
promote internet-of-things in Russia. We also completed the
acquisition of Neosprint Spb which owns the 3.4GHz-3.6GHz
frequencies band in St. Petersburg, because we believe that
this purchase will improve the prospects for development of 5G
in the area.
We continue moving forward with respect to 'Smart City'
projects. The latest projects on the map of 'Smart Russia' are
Sochi, and cities in the Kalmykiya, Tula and Ryazan regions
whose local authorities have agreed to a long-term partnership
with MegaFon.
A strategic agreement between 'City innovation technologies',
the largest real estate management company in the North-West
Russia market, MegaFon and NetbyNet will enable the parties to
develop housing and utilities markets at a completely new
technological level, using new technologies, increasing the
quality of service, and introducing new standards of quality
in Russia, by means of the automation of housing and utilities
processes and implementation of our 'Digital managing company'
solution.
*The Company and the Society*
We feel responsible to society and recognise our ability to
provide help in the here and now; therefore we are happy to be
the first company in Russia to provide a fully functioning
solution to search for and rescue lost children and adults.
The unique MegaFon technology, which is based on Big Data
analysis and targeted messaging, has been assisting a
nonprofit organisation "The Centre of lost people search" and
the search-and-rescue volunteer group "Liza Alert" in finding
people across the country for a number of months now.
In early spring we signed an agreement with the "Pan-Russian
organisation of endoscopic surgeons by V. Fedorov" which
enables the best Russian doctors to exchange their experience
in rescuing people across the country and build on their
skills via online translation of surgeries using our
Telemedicine platform -another new project of ours.
This spring we have been confirmed as a telecom partner of the
Russian football team and a partner of the Russian Football
Association until 2021, which is an important achievement for
us, especially following our successes in relation to World
Cup 2018.
*MegaFon for clients*
Our focus on providing leadership in quality of services and
continuous improvement of our service portfolio enables us to
actively develop the digital ecosystem for all categories of
our clients. Introducing new digital services and offers
improves the client experience, increases the loyalty and LTV
of our clients and provides monetisation of data services for
us. Using Big Data analysis we provide our clients with access
to the best innovations, including having the first world
digital finance marketplace right in their smartphones. Thanks
to our partnership with MasterCard our clients have the
ability to access banking services from largest financial
institutions in the country from their personal MegaFon
account.
Thorough analysis of our clients' decision making patterns
enabled us to launch the third generation 'Vklyuchaisya!'
('Connect!') tariff line. This tariff line which was
originally issued in 2017 has now been upgraded to provide a
unique savings opportunity for our clients with cashback now
being granted on various services, including international
calls.
At the end of April MegaFon and KARO cinemas launched a
partnership project which we regard as a trend-setting
precedent for online and offline cinemas collaboration. When
buying a cinema ticket on karofilm.ru viewers can subscribe
for free to the MegaFon.TV bundle 'Films subscription+KARO'
which includes more than 2,000 foreign and domestic films.
With the bundle users also get a 25% discount on KARO cinema
tickets.
As part of our long-term partnership with Mail.Ru Group we
developed a platform for automation of the logistics processes
of transport companies. This innovative solution combines the
latest digital services of both partners and produces instant
comparison of freight costs, provides automatic updates to all
the parties of the transportation process, including delivery
dates and all the information for ordering warehouse passes,
and enables e-signature or mobile signature on transport
documents. Signatures can even be made using the keypad on a
mobile phone. The user-friendly platform is integrated with
DPD and Business Lines transport companies and saves
considerable time on order management.
The platform has been tested and is planned to be launched at
the end of Q2 2019. This product will significantly increase
the efficiency and transparency of the transport process and
logistics, and we expect it to be popular with our B2B
clients.
*Appointment of CFO*
As of 13 May 2019 Nikita Orlov has been appointed chief
financial officer of MegaFon. Mr Orlov has broad managerial
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