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2019 Outlook

Group Revenue:

For FY 2019, MTS forecasts above 3% revenue growth, based on the following factors:

  • Rising data consumption and weaker voice usage, due to voice-data substitution and data adoption;
  • Competitive dynamics in distribution and reduced SIM-card sales in Russia;
  • Changes in regulation, including cancellation of internal roaming and VAT increase in Russia;
  • Increased sales of handsets in Russia;
  • Continued growth in UAH-denominated revenues in Ukraine; and
  • Service revenues in other foreign subsidiaries and currency volatility in relation to the Russian ruble.

Group Adjusted OIBDA:

MTS estimates its outlook on Group Adjusted OIBDA growth rate to be slightly negative with a target to keep the OIBDA flat in consideration of the following factors:

  • High base effect of 2018;
  • Changes in regulatory environment;
  • Competitive factors and on-going uncertainty over potential optimization of retail distribution;
  • Increases in labor costs;
  • Market sentiment and the prospective growth in usage of high-value products like roaming;
  • Developments in foreign subsidiaries; and
  • Macroeconomic developments and currency volatility throughout our markets of operation.

Group CAPEX:

FY2018 – FY 2019 CAPEX spending estimated to be RUB 160 bln, due to a number of factors:

  • Further incremental improvements and enhancements to LTE networks;
  • Implementation of infrastructure and spectrum sharing projects within Russia;
  • Roll-out of LTE services in Ukraine;
  • Evolution of commercial 5G solutions and introduction into Russian market; and
  • Continued investments in digital products and services.

MTS lowers its estimate of an additional investment required to comply with the Yarovaya law from RUB 60 bln to RUB 50 bln over five years starting from July, 2018.

Overall, for 2019 MTS expects its CAPEX spending to be up to RUB 90 bln (including investments required for the Yarovaya Law).

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