Q3 2021 Mobil'nye Telesistemy PAO Earnings Call

Yeah.

A kind of a balance of emotions that speaks to house feels.

Feels so they did not come to us for new sites as they come to us for some experiences and sensors and this is what we are driven by.

I would make a kind of a forecast.

On films or is that only are released.

On the digital without going through actual lives cinemas.

And the like T V series for example.

I My focus there is there will be a gotcha.

I think it is unlikely that there will be any major events.

They are now evening out the quality of the offer we are a young.

<unk> platform.

Platform, we will be looking into the market and we are so we are in between.

We should be somewhat practices in terms of the audience expectations and like what number of films on T. V seriously will need for that to about 30 to 40 years I think what are your most successful and unsuccessful project. This year no just in general.

Ah well not completely she didn't stop with what's kind of in play.

Toby.

Twin teen type those are Q1.

Top five is.

Starting oh, well we started in may.

Top five and top five.

In til.

'twenty is our original project.

Of course, there is some flexibility because some projects keep gaining more audience such project says could've Stanley clean.

Clean because shows Oh cleaning costs happiness, because there is no advertisements that's their audience is still increasing.

Perfect.

And we understand that they are good releases.

Our last release from the first of November is she moving inside.

Lady government officials.

All of the seventh of November we saw a great number of views.

Sure.

So it wasn't a maximum in terms of daily views that we saw but there are no particular pets. This is how it works and flexibility.

Now.

Let me take the floor Ivan Kim has one question unanswered is that this buybacks of the company.

In the coming couple of years, a buyback is not a part of our dividend policy. It is.

A case by case decision was made based on the market environment. There is still this option or we cannot say that we have a kind of a preference for buybacks as a company. We do not have any specific plans in mind that's.

For sure. Thank you.

Our next question is from the investment community against Harris, Henrik Herbst analyst at Morgan Stanley Hi, Henrik.

Oh hi.

Thanks, very much I had a couple of them.

Firstly, just in terms of your cash flow and how we should think about it next year you mentioned.

Sure.

2021 was a peak year at least for Capex could you just clarify when you said you start you start on Capex to sales or is it absolute terms as well and then secondly, when we think about your cash flow going into next year are there any other sort of one offs or anything like that or things like that.

We should bear in mind that should improve going into next year.

That was the first one.

Yeah listen I could tell you, but those are not sure. Let's go go ahead no. There is a translation for our Russian speaking audience.

Cash flows.

Secure them.

I thought it would pick up.

Doubling in our cash flows are processed steam cracker analytical the spring in my 10.

Tanisha Daniel Paul can you did on your cash flows historically azure that she could erode the tags with the kita, so shifting even Norfolk, a thought or a mobile titles because that's a lot because of it she doesn't have any gagnon.

As for run off.

So it would be difficult for me to speak about nobody knows what will happen. That's why they are one offs and thus for evolution or dynamics. Let me reiterate this year, we see a significant impact on cash flow of greater investment in Capex that we mentioned about and investment in organic growth.

<unk> emanates.

Those transactions, we spoke about gave quite a considerable impact as well.

We do not take into account our free cash flow is even higher than in 2020, but this is excluding the banks. The bank has its own evolution. So it wouldn't be right to consolidated here.

So there is more acquisitions and more capex. This year talking about comparison, we compare it in absolute figures who saw it on the chart.

The total is 110 billion in Capex as I mentioned in 2022 we expect it to be lower as Torre M.

This is always about an opportunity I'm opportunistic about it if there is a good.

Asset to buy some theories of transaction.

No there are no major transactions that we would.

Forecast for next year and now are back to the question.

N D apex to sales going down or absolute capex going down we believe that we will be showing a lower capex in absolute terms next year, not only capex to sales and we do not have any one offs that would make an impact on that.

2022.

And let me add one particular factor.

Factors that makes an impact on the comparison of cash flow indicators on a quarterly basis and our year to date that this four nine months.

As compared to the same period last year, an additional negative impact this year was nominal or.

So to say optical a different allocation.

Let's keep it quarter to quarter before the end of the previous year. There was a classic old telecom Capex was shifted to quarter four considerably. That's yeah. That's the picture has evened out in the first half of the year as the nominal capex is kind of against us that.

So we are to the end of the year and see more it evens out.

Your question.

Yeah.

And I understand that.

Yes, yes, or follow up I, just wondered if you could talk a little bit.

The ecosystem is obviously a very.

Thanks.

Sure I don't know whats going on there.

The ecosystem, so, let's say very interesting and seem to be some very clear benefits. What I wanted to ask is how you think about that.

I guess the synergies between the services because you've.

We're going into an ecosystem world, but you are at the same time started to report much.

Cologne granular splits between the businesses. So how do you where do you allocate sort of revenues some synergies and costs.

It's practically I guess, you're moving towards one service.

How do you think about I guess, I think you've talked about potentially monetizing some of these pumps.

Much how do you think about that I guess that could also complicate things because we.

If we get sports from the synergies.

Thanks.

It didn't in the probably in the National business. The question is now being translated.

Yes.

But also could kick me finance like Arqiva.

It is mainly about finance.

Yes.

The allocation of revenue among work streams that are reflected in our current format.

Reported.

Okay.

Correct.

Both.

The question is totally about revenue that helps without cause.

Yeah.

And.

A question about this connected with that potential dedicated businesses and they're going to capital markets for example.

Oh.

I'm going to capital markets.

Also raises a certain flags up question says to the interaction of this business and the ecosystem the whole.

It's just a great question.

I would give the price for the first question today.

The thing is.

We do expect that with a more stand alone.

Loan our businesses be more relevant to this issue.

Right now we have a kind of more commercial lives that negotiations within the company. There is of course this concept of a bundle when you chose to sell a bundle it is easier because we can measure CMV end.

In fact on C O V by the various part of parts of the bundle we can allocate very clearly the revenue from the bundle to various businesses. There are models that have been accepted.

That has been.

I forget.

And.

For quantities they are incurred by each business separately, but what we now have is a more challenging situation like ecosystem product premium our cashback programs for example.

Now the way out would be to think about premium products.

Okay.

As able to negotiate with each and every business I mean, the same thing happens in yandex and the other ecosystems.

A.

In the intermediary product is a standalone product as well and it can also be commercial.

Do not actually set a target to earn it is somewhere around zero, but the allocation of revenues via commercial negotiations.

And when not if but when these businesses all made stand alone and potentially find thoughtless through an IPO or another option we.

<unk> radio folks out there.

A unified brand and a unified customer centric approach across the board.

We'll be part of the stand alone businesses as well because the central part of this value is about the omni channel approach and about customers being within the ecosystem.

It will be.

We have.

This is part of two years on behalf already.

We have been trying to balance it all out and I think we have succeeded well let me ask a follow up question right now talking about commercial negotiations between our departments and structural units do I get it right.

He was the south they are built mainly on the basis of consumption.

Patterns within the base within the bundle. Yes. This is what I'm talking about the premium program.

We will not really benefit from having a product in the bundles that will not have demand.

Oh, how advertisement well it is of course about consumption.

And of course, we need to reduce internal I T system, and CRM to be able to calculate all that.

Henrik how we answer to your question.

Yes, I think so.

Quite complicated.

Well that's great. Thank you very much that's C band.

Thank you.

A follow up on <unk> strategy to VHS slots.

They just love you said start you're invited panel of Iranian force out could you shed more light and will the strategy be the same as the dividend strategy.

One would be approved by the board of directors or is it an internal strategy of the company and it doesn't mean approval well why it will be submitted to support of directors for approval at this one of the core parts of the overall MTS strategy and let me emphasize once again that it is getting more and more important.

At this time to shed more light first of all it is about architectural changes and MTS approach because that there's interaction between the businesses internally.

Including a P is those that will be made for outreach to the external world to speed up our time to market.

A lot of our time to market is not that we are quite in line with the market that we believe that it can be further improved and accelerated.

Yeah.

Tomorrow.

We will be we will need to be able to experiment within hours not weeks and.

We should be ready to invest in it yes, it isn't obvious growth area and upside area. Indeed.

The next question is why in my channel again, we have an analyst from HSBC like I think I worked with for a number of years in Morgan Stanley. He is.

Market League, Hi, Maggie I'm really happy to see you go ahead and Thats. Please go ahead industrial question.

Very good thanks.

Thanks for taking my question as well Michelson is oh.

Three areas, what's the I want to understand if you could discuss about the competitor behavior.

Our country book in Moscow, as well as in the regions, especially on the data side.

That's the.

First question Secondly, Ah.

If you could talk about your network capacity utilization right now on both our gain in muscle as well as in the regions.

What.

And there are no free capacity you do have on the network correctly and then second question absolutely part of question is on <unk>.

The <unk> strategy of MBS.

Given youre talking about Capex the way their.

The Capex is going.

<unk>.

I was just wondering just fine.

But you'll see.

Let's say because of <unk> at some point of time or would you rather campaign in the Capex.

With your current.

Level and rather you know kind of pick your five year strategy within your current capex strategy rather than pricing.

And capex are starting to emerge with more aggressive offers.

These practices.

Thank you.

It's a question that is now being translated into remission.

Telecom business some theatre by theatre.

A sudden this tier.

Korean.

And I thought to see transfer didn't must clear didn't forget one of your teammates muscle.

Probably in total across thousands of Washington is Ziggy eastern aesthetic Wuxi a city capacity.

There's not only stem on the pre geely, a primordial elaenia policeman's calculator here if you get in the promoted video display.

Putting a rose petal terminable.

Terminable at leading them instead of Eylea.

Sure.

So I don't know if I can switch to issue because of that and important new foundry technology is Kenya Carchemish suggests more timna.

Our English theater, when you go to technology.

Mr Chair, Kathy because establish Don Blair substandard I should give a suggestion.

Uh huh.

Send that budget and you don't that's just can you let me suggest which are bringing even a flood of them sort of Oh sure Danielle.

I'm, just kind of a decent net finishing it.

Yes.

Unless you know what I see this long that Russia is no doubt a highly competitive market because there are four operator is present.

Developing markets and of course.

They are all at various stages of their successes or failures all the time.

No.

So the market sees some developments from time to time, where you need to be active.

I need to somehow.

Wants to price.

Greg.

<unk> or something.

Searches in sales it is a standard situation for us we have been long presence in this market.

That's by far operators and for year 2021 is not that much different from the previous ones.

2020, it was a kind of a quieter year because.

And simply made an impact in certain activities everybody is working on transformation and making their operations more efficient nobody knew how soon it would end and what kind of an impact. It would have an operating performance. We can see that the international roaming was frozen and the number of businesses.

That means tissues, we started.

'twenty, one quite calmly some regions required more breakfast position of course, but basically we are in the market.

For operators and in outperformance you can see is that we are quite sufficient.

Last year's either no quarters.

Waters with negative dynamics in telecom and this year. We can also you can also see the performance is really good, especially in the third quarter.

And we have things to be proud of.

<unk>.

Two the market capacity to the network capacity question, Yes of course, there is higher consumption.

Experienced traffic and it requires more capacity that what is important is not linear investments in capacity, which we must be reasonable.

Efficient.

Our big data teams and technical teams working on it and my team as well, we keep looking for and finding new efficiency tools.

The projects I have been speaking about smart rollout is aimed at increasing efficiency, while planning investments into network more school is one of the regions.

And we understand there is demand for high speeds and capacities. So we.

For it upfront.

Plant activity proved it in 'twenty 'twenty, and we started developing it in 'twenty or 'twenty one towards the project.

Project.

The project, primarily taking part in most call now as the objective was to complete its really fast.

And we'd be most of the work in 2021.

We can see an increase in the speed and capacity in Moscow.

The effect is really good we are really good with our subscriber base in most client we see that the capacity is.

So she did activities will support.

Our third growth in such a competitive region as most people in.

In other regions of protocol, there is room with our capacity our planning of the network is really high quality answer around nodes educated work streams I do not think we need to them everything is quite well balanced.

Efficient.

And there is some caution in each and every region.

As for investments, we do not contain our investment in five Chi we do not expect as well as with the previous.

Standards, we do not expect that <unk> will be some of them.

Our investment I think it will replace.

Clinton and <unk> and to make our investments more efficient overall, so if it will have an impact it will be a positive one.

And I think there are more questions. So let us give the floor to Boston.

Boston do you have any follow up questions now.

Thank you very much.

You bet.

Invest a bunch right.

Awesome.

Sure.

There are two questions to witness and I just love I think the first one is a resumed integration between Belarus, and Russia, and what about the cost of rolling will it be going down and the next December.

But.

What number of customers so called corporate customers great customer so to say we will have to disconnect.

All of that to enough. So we're thrilled me and I will be able to speak about customers too as far Belarusian all sorts of tariffs has been reduced and stay very used to actually.

Remember a year ago, if my memory doesn't fail me number 2020 and right now those rates are almost the same as in Russia, We do not expect any further.

Decline.

Everything that we.

Hard to do has already been done and it looks like everybody is happy.

Actually everybody would like to ask questions about the customers, but let me use my position to answer. This one I hope we will not have to disconnect anyone in December but.

There is a good word in English encourage I believe thought we encourage everyone to take it seriously.

This is a law and we see some good dynamics in legalization of those Sim cards personal data our field team, we help our clients with it we have informed everyone about it if you have Sim cards that does not have a personal data we hope everyone's pleased to come.

Our mobile outlets, we help you work with the government services platform. So we do hope that we will not have to disconnect anyone.

Taking some preventive measures yes.

You're absolutely right, we are doing our best to make sure that all the clients are comfortable with this.

On the first of December and all of those text messages communications and media and so on.

They should really be taken seriously.

Not.

Leave it until the last day as we are used to please identify yourself proactively and to you.

We'll not actually notice the second of December coming.

Thank you very much if I get it right. There are no more questions from the external audience that actually our Q&A has lasted for almost 40 minutes.

In March.

Dear audience.

Your colleagues, we will be happy to take care of feedback on the new format as usual if you have more questions. Please contact our IR or PR functions out M. T. S. We are always ready to help you and to engage in an ongoing dialogue. Our speakers. Thank you very much and have a very good evening. Thank you goodbye.

Yeah.

Okay.

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Yes.

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