Q2 2020 Mobil'nye Telesistemy PAO Earnings Call
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Dear, ladies and gentlemen, welcome to the conference call of more about kind of system.
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[noise] welcome everybody gets a decent amount to discuss yes second quarter, principally into financial and operating there's no. It's either so please be aware that except for historical information any comments made during this call may constitute forward looking statements important factors, including related to the.
Colgate 19, and then what caused the actual results could differ materially from those contained in our projections or forward looking statements.
Ladies and gentlemen flights its Marie and also discussions which are available in our annual report and for think.
Order, but you also have just keep it took me.
These about any obligation to update any pretty good. She may 20, Mcclurkin Stieglitz spoken on this conference call only getting the adjustments to Peter she made statements to reflect changes seem to be.
I also want to remind you that you can find copies of the presentation of materials Houston reference during this conference call on our Investor Relations website.
Today's presenters.
I actually quite yet.
<unk> Chief Executive Officer.
Oh, I Trust, Vice President for custom Ixia, marketing and Echo system development and that's the goal extraordinary vice president for telecommunication.
Let's see Vice President Finance and yes, you are recognized for financial services.
MTS Bank, who will speak in Russia, and I will complete.
First and foremost our guiding principles remain unchanged, but I think though in place support our customers and helps society more broadly.
As we said well now law school in May the pandemic, if we had several major impacts on our company. Most globally is steep drop in international roaming in slowdown in retail sales in the change in Greece Rockpile loan book at Mt has been.
While significant uncertainty remains well have also gained some much needed clarity.
On the retail side to the initial drop in sales and that will recover it kicked off really the continued into June social this dosing is.
Our operations are now mostly back to normal will we see the market rebound continue.
On the connectivity site traffic volatility because mostly baited, while we continue to see resilient demand on both mobile and fixed line services, while limited international travel has resumed roaming headwinds have continued into peak summer travel session seasonal and therefore, we expect.
Them to have a material impact on our results in third quarter.
Finally, I also wanted to highlight that global level. We are now living in that unprecedented time digital acceleration is we'll look at the bigger picture current trends further reinforce my confidence in our to prolong growth strategy.
Firstly, we are maintaining leading network investing in coverage capacity and quality.
Our goal is to provide reliable connectivity when how we made is needed.
Second we continue to move with the pace of transformation Park will laid out last year in since yet or is that when the challenging market cycle the industry rapidly moving toward digital sales banking contactless payments and other areas.
Where we see can compete as you can reach.
Immediate the shift towards video on demand is accelerating incept fundamentally reshape the entertainment industry, and then b to B businesses upper at that prioritizing Angel.
Approaches remote war solutions and cloud based workflows, we expect this trends to continue and I'm confident we're well positioned to capture some of the digital tailwinds.
Turning now to our performance I'm happy to report despite volatility in headwinds, we successfully delivered growth in second quarter.
Group revenue was up 1.3% year over year to reach 117.7 billion rubles importantly, topline growth was driven both by our core telecom business is well it signals beyond connectivity.
The same time, we saw a significant negative impact in retail.
The overall market flow down during the pandemic.
Group adjusted to review the notched up slightly by 0.6% year over year and reach 51.6 billion rubles Workday was supported by core performance and the positive one off while negatively impacted by provisions at Mt has begun.
Andy will go into more the deals last year there.
Finally.
Despite the recent operational challenges, we continue to execute on our strategist base across all fronts.
Let me say just a few recent highlights in July we received the fills fiveg license in Russia.
This realized millimeter wave spectrum.
Well they commit show Fiveg rollout is still sometime away. We are targeting initial limited the use cases and internet of things such as an industrial process automation.
In addition, we'll also launching fiveg smartphone sales in our retail stores to begin driving device penetration on our network.
This summer we're also launch Marvin.
Our in house base mutual as system.
This project builds on the expertise in natural language processing, we gain from developing our own customer support Chubb Board.
Users can communicate with modern via multiple channels, including dedicated that and then MTS branded smart speaker, which is now.
Initial public use.
And then really aware, making steady progress to expand our content offering and strength in partnership with leading players such as channel one vessels most of which the network with debt I will hand, it over to slower who will give a customer experience ILEC assisting update.
Thank you very much Hello, everyone.
As I say said everywhere, we look today the world is becoming more digital successful the capturing that demand requires customer centric approach the cup by World class products and services and that's what we've been doing.
As you know we began his journey several years ago by shifting towards a more.
And then set forward approaching customer engagement.
Example, with accepts the present subscribers for being signed up for adult services, they didn't really want.
And while this is an impact revenue in the short term. It also struck third the brand trust and loyalty.
Which is the foundation for our long term success more recently, we're seeing that other players begin to move in this direction. We welcome the market for toward greater transparency, but we are not standing still we are now moving forward on the next phase, which is leveraging the from the trust.
Build across an upsell services beyond kind of period.
Q2, which are growing adoption across many of our apps and program.
Pay TV subscriber base jumped up around 7% quarter over quarter, Q4 point 9 million years.
This was driven in part by our.
Bundle offer which is of course settled our loyalty program MTS cash back so striking 73% increase in registered users year over year, reaching over 6 million participant.
And we'll continue expanding that program. For example, we recently launched a promo under which new subscribers can convert and use data balances in the cash back rewards. We are also driving penetration of our mobile apps with MTS bank users up nearly 60% year over year and active users of my MTS now topping for into 2 million.
There is a promising trends as we move forward on our field at 2.0 strategy and I also wanted to highlight a few resin major milestones as we take our customers value prop to the next level last week, we launched a partnership in Russia Spotify the world's most popular audio streaming subscription service.
The partnership we're offering six three month of premium service for eligible subscribers with full on payments handled why are they are MTS account. This exclusive offer is great example of how we're strengthening our ecosystem through partnership. It also demonstrates that MTS is leading market position and commitment to compliance.
Unsi makes us a partner of choice for global companies looking to tap into the Russian market.
The only music. We're also moving forward in video fundamentally the media in media. The content is the product and there are two pillars to our content strategy. The first is our content library. This is absolutely critical for customer retention to keep your sappy over the long term, we need a large diverse lineup of in demand title.
We'll have to appeal to every case in every member of the family day in and they out. We've recently concluded multiple agreements with some of the World Top studios that will multiply the size or premium content library several fold.
The second half of the equation is customer acquisition here Defocus exclusivity, we're taking the multi pronged approach that includes first look right joint development on in certain cases, our on production, we're filling up the pipeline and have for half a dozen content projects already underway as they films and mini series.
The year, they will provide a powerful model magnet to draw new years to our CFO platform.
In addition on the technical side, we have unified our distribution back end in more than a dozen large cities. So to sum up we now have all the pieces in place a scalable platform an array of channels on a differentiated pumps on searches that makes it the right time to expand on marketing, which is where we recently launched nationwides advertising campaign.
And focus on the MTS online feeling next year.
Last but not least in July we unveiled MTS premium in you bundle package that combines offers and services from across our ecosystem. It's three for higher revenue subscribers and hundred 90, and I are both from a month for our others that includes a subscription to MTS TV spam coal block in an extra five gigabytes.
Mobile data as well as access to special retail this sounds than privileged rates that MTS bank. We think this will be a compelling offering for many of our subscribers.
As we build out our ecosystem. We are also changing how we internally customer lifetime value and we were already seeing some promising indicators. For example, we see ARPU is 1.57 times higher and churn is among 30% lower for users to their subscribe to two or more MTS services versus a single serves.
As for three and more the gap growth to more than double the ARPU, our churn down by FXR for your more so we're making good products would see we see potential upside and powering our ecosystem the world going forward.
Now, let me hand, it over to method for telecom and be to be up.
Thank you for a while saw them frankly has been a shale John Yes, one thing has been.
Never clean and activity is essential to soliciting essential to the economy and essential to everyday life.
As you know quarter into the recovery.
Habits.
And therefore business has remained we found.
Successful much of our operations to mitigate visitation.
Maybe just give you Shannon well diversified our sales channels in line with our long term entails technology.
Added more than 12000 seemed distribution points in Russia, we have launched new partnership with ecommerce players such as Amazon and while.
And then we have expanded the brick and mortar distribution with partners such as it gets too.
Essex line, we saw so can you add as home connectivity became even more powerful work starting and entertainment.
To our broadband base was up an exceptional 8.7 quarter on quarter and whatnot.
Yes, plus seven altogether fixed line revenue was up more than 5% Albany.
Looking to try to enjoy and leading position in Moscow, where we saw at the biggest transition to remote.
It's an essential estimated market share at all 40% in both broadband and basin.
Turning to our mobile voice on that.
In Q2 of the cap laser focused on supporting customers, including pottery immediately in the cost of traffic Tahitia hotline and that site.
Pardon.
Our approach leveraging data for targeted personalized engagement in Q2 with incremental improvements in customer loyalty quarterly mobile children nods down about a third of the percentage point.
Some extent disliking deflated FEIBA cost them, a look into switch for leidos during that and then despite lower churn we saw our Russian mobile subscribers.
During the one by 1.7% quote unquote.
That said well I think this solid performance when taking into account the drop in.
Greetings, and secondly, inventories as well as obstacle to customer acquisition in the thank.
Despite those sectors, we saw 2% year over year increase international mobile service revenue, reflecting healthy for accretion.
For all of our track to indicate lending our consumers shifting from due to single pay favorably.
He was MTS has this so it Kevin.
While the market remains competitive we continue to feel comfortable in our leading position.
Looking ahead, we expect international enrollment, which is a key margin driver autonomy arbitration in the second half of the it's also important to keep in mind that given our with our subscriber base, we have relatively high holding revenue than some of our.
Great Thats sort impact from what were ordering in Q3 will probably be slightly higher than in kitchen, given the historical concentration of summer travel in July and August.
The same time, there could be some minor offset from greater longer distance Colin as rational off for the needs to applications.
Turning now to retain despite this store closure and freight in foot traffic in April Russia is eliminating one down low single digit as at minus 3.4% year already.
Its sales rebound in late in June.
Wanted to continuously to forge ahead on our optimization strategy by the end of Q2 hour.
Has declined by 600 stores.
Alright, yet that fulfills our initial guidance for year end 2021, not only on track way ahead of our scandal.
Both core and we'll continue to see a long time, a cartoon justify the rightside covenants.
At the same time digital marketing the thousand 20 in highly volatile and there is reduced visibility looking ahead.
Both the quality and when you're talking visitation and so far we have not taken any decisions that sets went into more for that in this direction and could consider additional growth this year.
Thank you situation alone.
So our to continue to do an anthem in.
Channels and form 10-Q two.
Sectional growth in online sales more than doubling year over year at more sense in July launch, our first MTS shouldn't minimal as a collection store to show you our premium offering.
Typically the corporate segment has also negatively impacted not only as companies AG business.
In addition, 50 some pressure on the assembly side given that much more cycle. However, we're also seeing as surging demand in your growth segments. The speakers from Q2 kind for instance, and Thats cloud revenue more than doubled year over year revenue from IOD, smartconnect and vertical solution ones out there.
But you just versus the prior year quarter.
Lithium revenue was also up double digits MKS market keep our marketing service voice in you saw extraordinarily good topline growth.
Big data, which began as internal anymore, so external revenue more than double year over year.
One of the enterprise and BTG side in Q2, one several large contracts work began.
Good to see in particular, we saw reading your up more than a slight year over year include. So this is under.
Thank you treated but addressable market for us.
We keep promising prospects in the space.
The way to bring online social significant facilities.
All such as schools and medical clinics.
To sum up and it headwinds we are demonstrating the time in a changing consumer landscape. We're focused on the condition in retention as a digital extremely well moving forward. So full force to catch a new growth opportunities that well that we had to react or find a pre tax operating.
Specialty units.
Good morning remains intact because of submersible centers, which is seeking qimonda tinsley annually.
Scott This is I see some softness season, but didnt person PDP productivity is substantially reinventing accretion.
Can you remind slingshot because it isn't this mornings press about ratio see a CD and theres been no cause us is continuing Patrick stimulus on other than maybe just quickly.
As we mentioned to our EPS impact was one of the MTR segments, most impacted by call. It in April the Russian banking industry faces decline in demand for credit products. A 17 restrictions linkages. However in me demand begun began to rebound and interest recoveries to ongoing MTS bank followed the overall market.
The strength and we are also gradually restoring consumer lending volumes.
But to your bunkers roughly equal to the Richard is none of us usage.
People didn't but.
The which these.
Issues.
I was interested because you can pass.
My sort of course intelligent, but.
Do you have the two milligrams will be up I haven't been human minivans, and first agreed not to third quarter.
Interoperable Division exactly this movement, you must recover to setting.
Family reunion machining, which did CPG is bunkum. Each dollar amount is not there is suspended the processing center at the piece of machinery.
Over the Busky other banks assets has increased 29.4% with our total gross loan portfolio.
0.6% and the grocery chains on portfolio in particular.
48.1% to 99.3 billion rubles overview demicks load the loan portfolio growth in Q2 actually hope to continue moving towards Precrisis levels, and again see growth accelerating QC enjoy monkey consumer loans issued by MTS bank, particularly it jumped to baseline.
It's about 97% of expressed as well.
Granting of Brinci beauty cost alluded to further can throw canal imaging clean.
In addition to HPG.
Banco de Chile.
Having some quarterly bump initial success and potentially.
As Larry mentioned plant much led means maybe able to distribute sense.
Currently we see actual Fletcher greater share faster acquisition through digital channels today, the bank issues around one third of cash flows through digital channels. In addition in Q2 the bank joined the Russians after payment system, which allows our clients to transfer money quickly and commission free.
Chip patents and the hope.
Yes, most of us automotive reach us on a sort of Suntrust.
We'll go to do seem deeming admittedly some of tone.
Creep up till end of the passage and enough.
Sort of remain discipline is applicator ciesinski empathy silver model for prepaid is basically a chance of land bank Asians sound quite tight but is it better capable cartel bump because I'll just.
Give me level will be.
Net interest income in the first six months of Twentytwenty increased 40% of $7.3 billion, reflecting loan portfolio grows over the past 12 months at the same time loans structuring by certain clients and the overall increased level of credit Suisse led to high band provision in the second quarter.
At the end of the quantifiable reported a net loss of 2.9 billion rubles.
I can answer that is San Francisco, some quarterly reduces the bonds in these areas.
Got a Palestinian season.
But it is a fairly I didn't see patent position reach development, the which does not change portfolio transition, which city SAP is.
During our multi should lead to physician practices, which made impressive motor Christopher's they don't gratifying.
Except of course, the freeze grew in the second quarter due to additional provisions cost decreased for the overall portfolio came in at 11.7% and for retail specifically it was 13.4%. This was above the levels in the first quarter 6.6, and 8.4% respectively. The shelf nonperforming loans.
Retail portfolio was 8.1% versus 6.6 in the first quarter.
At the results in the liquidation confident in this new facility.
Three hearing a little recording.
He was the first because it's our energy and icing on the phone at wish I knew attentiveness issue at this kind of Europe or would it was October.
Our national some computer smarter Dominion is up a bit felt stunning spend the money momentums machinima determines Mike Peterson, our MCU seriously absent that he wasn't parts and service.
It makes sense about cover some markets MME convenient demonstrated to for issues so understanding.
Nearing completion Elizabeth.
In terms of capitalization, we are at the comfortable level at the end of H., one the one one and.
Consolidated regulator capital adequacy, gracious were 8.9, and 16.7%, respectively, which according to our estimate gives and moderate cushion in capital reserves versus the minimum regulatory requirements of 4.5% and 8% respectively refreshes demonstrate that despite the pandemic the Ben.
Since resilience at the present time, we're seeing no need for additional capitalization of the bank.
Third budget mistaken Greg against the features and ask opinion as a potential new is in the Bakken I wouldn't be beams.
That being cognizant admitted leading can answer because actually use puts your partnership amusement they got some bunker printers.
It's also worth mentioning that a few days ago feature and from the banks region as BB minus with a stable outlook now can its strong financial performance and the sustained positive effect of the banks joint integration with MTS group.
Well again about racism smuggling economic conservatively, but could bump if management if they don't Canadian is at this particular monkey focus on that as because of our can now.
I would have difficulty since your capacity Columbus last night, but oceaneerings, particularly.
It was a major also bets on financing capacity given the ongoing economic recovery the banks conservative approach to risk management and consistent implementation of the banks associated with a focus on development on digital channels. We believe our insect vertical kind of a cover relatively quickly from losses incurred as a result of the pandemic NBC operational and financial.
Okay.
Absolutely business will run rate on our cars at the uniqueness of because it's just now let me hand to sandy financially.
Thank you William.
Let me begin by working through some of the impact at the adjusted lead the level and below.
Group adjusted OIBDA increased 2.6% year over year to three to 1.2 billion rubles, primarily driven by solid performance in core services as well as Opex savings.
Savings were in part due to our acquisition efforts. However, we also saw one of reductions in rental and the labor costs and meet the pandemic, reflecting dynamics and leases and sales commissions.
In addition, we also saw a one off positive impact from evolution of provision we had booked previously in relation to reduce the Rockies.
Regarding bulk SMS rates for banks.
Initially had more conservative expectations and we have now adjusted the provision as we gained greater clarity.
At the same time the positive factors were mostly offset by increased 19 related factors in particular, the headwinds in roaming as well as low provisioning at MTS Bank.
Gross profit decreased 7.5% he'll review to 11.8 billion rubles.
Profit was supported by core business performance rumor net interest expenses, reflecting declining industry.
And the positive impact from discontinued operations in Ukraine.
At the same time, we saw a negative impacts from operations with derivatives.
And the fixed effect and the ruble rebounded from lose in March.
On a half year basis. This was partially offset by the positive impact was on Q1 as the ruble weekend.
Net profit was also negatively impacted by enters bank, although we extended the bank to return to profitability only he'll be bases in second half of 2000 Trent.
Turning to kicks.
In the second quarter, we continue to invest heavily in network infrastructure with good cash capex in the first half of this year coming in at the 40.8 billion rubles.
That gives a capex to sales ratio of just over 17%.
Given the traffic dynamics this year as was the competitive situation. We plan to continue investing in the second half of the.
We can fool remains robust at the 24.8 billion rubles for the half of the here.
Compared to last year would be relatively less that's in 2020, although we have also seem to be higher level of working capital.
We continue to have a strong balance sheets ample liquidity and robust cash flows were also maintaining a disciplined approach to dettmann.
We have a full local well into the net debt position.
And we remain opportunistic and there will be bond market.
Mary Lou and demand is healthy.
Second quarter issued or he should nearly 32 billion rubles of both mix and with new repaid the outstanding portion of.
150 million dollar Euro bond, we issued 10 years ago.
Overall, as we discussed before were making good progress.
On a steadily bringing down our cost of.
In second quarter, our gross debt weighted average interest rate declined from 8.1% to 6.7% down more than 1.4 percentage points year over year.
As you recall in 2018, where the first the region, Russia to begin reporting under their first 15 or 16 standards.
The second time in the interest of compare compatibility we continue disclosing our leverage under the prior standards for the past couple of years. However, recently, we have seen many of our global and most of our Luke appears switch to completing leverage based made the including FNF 15 and 16.
In addition, we have also now established a trend line with six quarters of reporting under the new standards on the last 12 month basis. So we feel right time to make the switch as well on this basis in the second quarter, our leverage remains steady at 1.3 times now I'll handle that galaxy for his closing.
Thanks.
Thank you.
I am encouraged by our performance in the first half of the year and I'm proud of the theme for 200 completion I think we can see without the visualization little second quarter. Two we lived up to our slogan to better every day, you will now quarterly release senior increased visibility into.
The second half of the year, we're reaffirming our early guidance of flip to 3% growth in revenue minus two before them adjusted will be the and then around 90 billion rubles in cash Capex cash.
Finally, despite the tough environment.
Non do is delivering record here for shareholder returns we have already pointed out is special dividend visible launched.
Great Eutwenty buyback program.
When completed we aim to fall reviewing a 48 review them based on 2019 results.
In addition, the workers recommend our secondary payment based in first half 2020 results taken together, we expect to retool potentially more than 300 million roubles to shareholders. This year, we're proud to fall preclinical.
In July we remain it took them most popular stock on more Ics.
Retail investors recoup all global Investor base also fields that were delivering so to sum up we successfully mitigated the operational challenges in second quarter.
Good shape is when we came into the second half of the year and we are confident.
We're stronger and well positioned to capture the legacy growth Weve. Thank you and let me hand, it back to Piniella cookies M-.
Thanks.
Thank you to rest of the speakers before we take questions I wanted to give ahead there might be a delay if your question request translation operator, let's open the line.
Lets open the line for the questions.
Thank you ladies and gentlemen, if you have a question for speakers. Please dial a zero and one on your telephone keypad now to enter the Q1 to name happen until you can ask a question.
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And the first question is from.
Thank you Sir your line is now open pits.
Hello and.
Rationalization of the results and thanks for the opportunity to ask questions.
Question or several maybe starting with your EBITDA progression EBITDA guidance in general.
Can I just understand what you expect in the second half because if I sort of break down the drivers here. Your service revenues are growing and likely to continue growing throughout the year. It's the handset sales that are down the low margin cells, there will be down.
The adjusted EBITDA numbers include the provisions from the bank So why exactly.
The second half, Okay second half this year to be.
Much worse than than than what we saw year to date. That's my first question.
Okay.
If the second question excuse me.
Yes, maybe they can.
The service revenue.
You noted at your first quarter results calls.
Oh, sorry that you seem to be out the whereas that compared to April may and June where were much better that the only negative impact that you saw basically was roaming. So I just wanted to confirm that that is still the case and what trends youre seeing in third quarter.
Thank you.
We plan to the personnel.
In respect of what will be the guidance. We think it is too early to be wise our guidance at this stage.
Because the various thing but from roaming revenues stemming from the third quarter.
So Jeff to see yet.
The dynamic.
Four of our business.
In financial services.
Because of.
Mike Micro situation does not allow all year so too.
We expect a much stronger or weaker already comedy.
To sum it up.
We we think areas.
Reasonable to maintaining our guidance speaking.
Third quarter in pockets, which we expect this level.
Dan.
The second the second question some how wrong.
Okay interrelated if.
We hear that right.
He sector for third quarter roofing and track agreement is we do see.
Sam.
Tragic roaming traffic appearing units.
He is the travel restrictions.
Hi rumor.
We historically this third quarter is the highest in terms of will mean that is why in so materiality that.
Carries the biggest impact on the performance.
Okay that is thinking it might make up on the first question. So maybe just any thoughts maybe what's going on with.
Opex items, because again you are high revenue.
Hi margin ready in growing in the low margin revenues that are declining and the adjusted EBITDA actually includes the provisions so what's going on with the other cost items can you give us a bit of a color worldwide.
Margin contraction.
Anything outside of roaming.
That is driving.
Recently, we cannot give that we will fully.
Can you speak up little bit clear in slower sorry for but given the bridge.
Yes, if I could follow up on the first question. Please.
My point is that you are high margin revenue.
Well in the service revenue.
Lower margin revenues are in decline.
Hello.
Cetera.
You adjust for bank divisions in your adjusted EBITDA guidance.
You are guiding for margin contraction, so basically my question.
Lighter roaming is there any other opex impact that you could explain why why this guidance is known for margin contraction, but this year.
Well I think we still have to see.
Recovery even.
On the other side the B there was some positive model for the second quarter.
Which which will mark so.
We don't see other major factors other than lower marketing economic uncertainty.
Our continued pressure even.
India, India.
And.
Yes.
As I said the.
Yeah.
Robotic Dominic.
Alright, thank you.
The next question is from Slava Goldman Sachs Your line.
Okay.
Yes, thanks very much for the translation of a couple of questions.
Okay, how would you assess how much of the cost savings that you de throughout Q2 will have a lost in FX in the medium term and how much of the spending will get back in the second half already.
And secondly, also on the service revenues it looks like your underlying service revenue growth in Russia was very resilient in Q2 is probably not accelerated if we adjust for the timing effect of the tariff revision that you've done in Q1 and also the negative roaming effect in Q2, so what was driving that.
So even acceleration in your view is it higher consumption of the services or anything else. Thank you.
Yes. Thank you very much with a question let me start with the first one.
As I mentioned actually we saw some one off reductions now rent rental and labor costs leads to our retail networks.
Looking forward as the as we are saying that situation is.
Rebounding I think that discussed.
The best So the short answer is that I think the major part of this.
Optimization will loosing the in the second quarter, although we'll need some optimization and that will be also then we'll have in fact in the near term as well, but the minor their Sicily, comparing with the this reductions in rent on labor costs in retail.
Okay I will take the second question regarding service revenue so some summer.
Yeah.
Some clarification on that sounds from outside so first of all we have pretty stable or something.
We see our they're healthy growth, so ARPU you'd still optimization.
Hi.
That is slim.
And.
On top of that we see that first of all the also we see that the chart is declining.
And.
Actually we knew that neutral in terms of trends.
And also an additional one one additional moments, which also mentioned in my speech that.
We see that fact that Matt.
And see more more solar.
Consumers are acuity promised second seed and turning to there.
To answer Sim card as an lean in there as the main in the single line. So that also drives integration of our usage.
Ill indices.
Thanks very much.
And next question is from some evidence.
Okay.
Okay.
Yes, good afternoon.
A couple of questions. Please.
On how would you characterize.
Corporate secretion on their mobile market, obviously megafon beyond the market share.
We feel that Nuffer cornered the market remains pretty stable monolith in line is what we've seen before concrete and.
In aggregate signs.
Accelerate.
Competition, and the market and the related clash here, we feel that they might be an opportunity she.
Terra equally to raise prices again this year like the market there isn't there.
A year.
And my second question, probably follow up on them.
Arjun.
FX.
Can you clarify the EUR 1.7 billion positive impact on I'd coming from that retail when exactly comes from you.
Resists Werent Dick loans, the worse during the period and if that is.
Optimized so some of the cost that automatically mean that these costs will be you optimize in that quarter. This year.
Okay.
Okay.
Okay.
Yes for the competitive environment, we don't see any change in terms of four invensas. Your competition. So overall with say, it's sustainable normal situation.
We still feel.
All of the embarked on in the market which relates in.
Yes, we share.
We should reflect.
As we mentioned already impartially need to be segment as well. So we cannot say the yet that we are fully back to pursue it. However, as I said, we see some recovery in terms of <unk>.
Tragic distribution, we see some recovery in.
You too easily for travel restrictions so that by the fourth quarter, we'll see.
Okay.
Well look to us clearly.
Environment.
We do not see any particular opportunities currently for our Davis.
Increases.
In particular, we.
We've seen.
Which soon there was really we are more of kind of pushing all customers to integrate into high gear. If one reviewed the growth of their consumption is part of our ARPU growth strategy.
Yes and.
Answering your second question in terms of the breakdown of 1.7 billion positive impact on lead the coming from retail I think it's the is driven that was driven by the closure of the stores in the second quarter and in terms of the breakdown the major part fits of coming from the payroll and the rest from the event and the other.
Of course.
So basically if you reopened.
Most of the stores in the fourth quarter that means that this positive impact will be lower.
With that the yet and the satisfied right. Okay. That's yet.
Right.
The next question is from Avon Kim Exelis capital. Your line is now open pit.
Good afternoon to questions from my side. Please.
First on the and just bank provisions in the second half.
So far incremental provisions this year were about two and half.
Can you. Please provide maybe an estimate for what the incremental for other provisions will be in the second half of the year.
And my second question is regarding Capex I think there was a previous Bruce a discussion that some of the our wireless spending can be delayed.
So the question is whether the capex for the year can be lower than that.
Thank you.
I don't understand some.
Deciding intersil is delivering a category.
One of his view on Simpson greed troublesome percentage for middle moving from quarterly.
I will stop Cortana.
The Doom store.
As Heineken batteries for somebody to pool.
So to sum up as would have an uptick quarter, which it.
But again that income.
We think that the majority of the provisions will have access we might have expected to build during the year have been Arabia.
Book said, you're in Q2 and looking at the dynamics in July and August we do expect that in the second half of the offer the full for the full year numbers the band should become.
It is at the level of the net of.
Okay.
Yes and.
Coming to your second second question about potential for Capex.
I mean lower for the here actually for humans any real two sectors. There very minor so we see no changes because of that and as I mentioned in my speech, we actually we continue to invest heavily in our network, which proved to be the right.
The rate cases during the underwriting and we do not change our plan for Capex as mentioned before which is 90 renewables will total year.
Great. Thank you.
And the next question is from Virginia, and Jinko Bank of America. Your line is now open please.
All right, but do you think and thank you for the presentation I have two questions. Please.
First is on MTS bank.
What do you have four net interest margin for each too given falling interest rates and also high share of the impact clause in your book and second in your OIBDA guidance do you assume any visible impact of higher share of your fixed revenue given MGTS generates close to 70% in it.
Margin. Thank you.
Okay.
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It is it almost zero this draft encore abundant in a game such store.
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Good luck rates for hitting distributor.
It would have mentioned it doesn't have as mentioned previously delayed you would do.
Would you estimate that the majority of the provisions we idled much to do have been already booked during his time to do expect them to become.
Fully animals.
Thank you, Sir and whats available.
Margin.
Thanks for your modeling as Matt.
As for off of the your second question.
In relation to guidance.
I'm wondering if of course that includes six revenue.
Maybe we really get.
The question, but of course that includes already reviews.
Ladies and all the elements.
Okay.
We have a follow up question from.
You May ask your line is that.
Yes. Thank you.
Question. Please on the fixed site in Russia.
You saw some pretty good acceleration can you comment a bit on on the outlook and how sustainable that growth rate is.
Essentially for the drivers are et cetera. Thank you.
Solution, even where.
Fixed line.
And the question.
Can you repeat the question sort of.
So my question is on the fixed line in Russia, you saw some significant acceleration my question is how sustainable.
The current growth rate is around 5% because I think.
Our your peers.
Acceleration as well.
How sustainable that is from your view and.
What's potential drivers contribute to that if yes or no. Thank you.
Okay. Thank you I think there.
Great So for us.
Mid single digit are sustainable so this year and we expect to end up with the in the second half of the year.
Somewhere mid single digit in fixed line.
Okay. Thank you.
Ladies and gentlemen, as a reminder, if he would like to ask your question. Please press Sarah and one on your telephone keypad now.
And the next question is from BMO Citibank. Your line is now open. Please go ahead.
Hi, Thanks, very much for that to teach and congratulations Tom so.
My question, perhaps to some on the content strategy.
Ballpark.
Number that youre budgeting as that opex or capex on the content.
I'm looking at Expedia content specifically.
Thanks.
Yes.
Well.
We are starting with our media we are quite.
Yeah.
Conservative.
Now I'll spend.
The content. However, it is part of our strategies. So we have and that included in our guidance for this for this year.
We would do we would prefer not to disclose refuse.
We actually taking that carried situation did impact this part of.
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For businesses will.
Income from production.
Okay, Thanks, and get it just follow up and as it does it tend to be more.
Operating costs or capital investment.
Thanks.
We will be will be world.
There will be.
The significant part of that we'll see.
Visitors.
All right thanks very much.
Ladies and gentlemen, as a final reminder, if you would like to ask a question. Please press zero and one on your telephone keypad now.
And we Havent received any other questions at this point I hand back to the speakers for closing remarks.
Ladies and gentlemen, thank you very much for listening if you have any further questions. Welcome you to contact MTS Investor relations at any time soon.
So this discussion will be available soon on our website. If you wish to replace nickel in the meantime, I appreciate your interest and MTS and wish you happy for rest of the me.
Ladies and gentlemen, thank you for your attendance is going to think concluded you may disconnect now.
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