Half Year 2022 Mobil'nye Telesistemy PAO Earnings Call

[music].

Nobody again.

Good afternoon, and good evening.

I'm really happy to welcome to all our listeners abuse.

I don't have a session for those who do not know me I am Philina agreement I'm director for Investor Relations here at M. T. S N to die at MTS is happy to disclose its operational and financial results for Q2, 2022.

MTS is one of the few original companies.

To keep it.

This is not telling about the financial results and we are almost the only company.

Hum.

Well I did to resume its almost reached to the market. After a sudden break for me. This speaks.

It speaks for the fact that three either rates that we men sign top notch transparency.

Corporate governance and openness.

And our investors.

Long as full to die.

To remind you that the management of the company may make certain forward looking statements. These statements reflect management's understanding of the current status and development of the business and in our today's materials and in our website. It is stated that hum actual situation may differ from the one <unk>.

Such forward looking statements because of external.

And plans to die with half a whiteboard and Russian institutional investors international investors today for the first time without Russian retail investors welcome and also an ethical where how the journalists from the leading mass media will start today's call with a brief presentation of the main language at this.

For instance, depression will have simultaneous interpretation.

During the presentation. After the presentation you are welcome to ask your questions in the child that you can see on your screens myself and my colleagues are saying he blogging Oh Wow.

All director, who has recently joined our team.

<unk> will be aggregated and send the ryzen washingtons and transfer them to our speakers aggregated man itself will help will have an open and productive dialogue to die.

Hum for me because I, just love to make life I'd like to see Oh, and Andre can ask our CFO and also on the call would have aleksey bursting young VP pool.

Corporate and legal matters.

It will probably join us on the Q&A session if need be in case, where require some legal support so to speak now I'm happy to.

And it over to you just lost a president's at MTS got yourself, Hello, I'm really happy to welcome you. Indeed, Q2 has been a challenge and Russia's economy and M D.

Due to this fact quite a few companies stopped disclosing their results arena is totally right.

That's we believe that we see.

Must not.

Thought from standards of corporate governance, and transparency that has been established.

You know the company for a long time, so we decided to take you through the details of how the company is navigating through this challenging period and.

Oh decided to also address some technical questions in particular related to the situation with the 10 and 19 O P. M. T S ADR program and will focus.

Focus on it as much as we can now.

You too.

I believe Q2 may be called for any company may be called me the return to normal with flu.

As a resilience tests and the theory is adapting to the new market environment and I can tell you that MTS has accomplished this test for.

<unk> successfully at what telecom is operate in steadily Oh gave you some details of that.

Media.

It's also quite well off the most affected to some extent.

The retail and Fintech domains with other business things like link with MTS Bank in retail that's obvious.

Come in.

Got it.

We've just had.

Supply disruptions.

No price hikes.

However, running a bit ahead, I would like to say that this.

Yourself, but has not but the movie did you Oh led to a reduction of our real free cash flow you will see later on on our slides and the same is the case with Fintech.

There's no way, that's when the key rate hiked to 20%.

The lending markets new originated new loan originations market, that's really reduced aneel on the one hand and on the other hand the.

Rules and regulations require the risk assessments and legacy loans.

So.

Nicole with this reduced net income of the bank in a row.

Group and also.

In fact, it Oh, why EBITDA and net income of the group as a whole. However, this has not had an impact on our free cash flow.

Because this was driven by.

Additional provisioning and we are pretty optimistic about the outlook of the situation and going forward. So we believe everything will.

To be quite good.

Good going forward than the telecom.

Now a few details about telecom.

We actually have been doing over the past three months.

So you will sell telecom.

Folks, we're capable of keeping me chariots delivering its humanitarian function so to speak because telecom is different from quite a few processes.

Meaning that telecom, Florida connects people cannot meet your SKU.

Which is especially important amidst.

Yes.

With the economic crisis.

For now.

What was telecom to me, but it works seamlessly instantly and think about the future in March when we had any opportunity we made massive procurement hardware procurements, especially and in terms of hardware, we addressed that one needs for at least a year ahead, and we keep swapping equipment in.

The regions on our to do list on the one hand, improving quality in the regions and on the other hand re leasing older equipment that weekend redirects to other regions.

It also helps US you know.

Which helps us which makes us more optimistic about telecoms future.

Shelly pulled him out to remind you.

Almost luxury was stuck at the beginning of the Covid pandemic a couple of years ago I'm sure you see traffic.

Excuse me skyrocketed and.

Redistributes it a lot.

And in 'twenty to 2020 to 'twenty, one we've not made a massive upgraded by one that works. So we were well prepared for that but now we are even better prepared thanks to that massive upgrade exercise. So now this makes us even more confidence in the future.

Because oh now in spring 'twenty to 'twenty, two traffic reduced a bit just on like.

At the beginning of the pandemic and now traffic has started getting back to normal but the overall activity.

Shell a sudden decline and this is something that can be seen almost no bullshit.

But I mean with the example of if you tell us metrics I will mention.

A little bit later today.

Now we are not making any detailed guidance to tie on possible results of the company. This year, but in terms of Capex I can tell you upfront that we promised to the market. That's a 2021 would be a peak here and now we can see.

But then the closing of that in 2022 U M. T. S. K pix will be lower than it was last year in 'twenty to 'twenty one.

Oh, we need to live up to our promise also let me emphasize on additional real of rules and regulations amidst the current environment and the government and the state helping us a lot.

For example, they transferred for next year, what commitments on LTE coverage of federal highways, which.

Helped us streamline our Capex bought if you.

Bill and renewables this year we are.

Working to fix some vision that's the technical.

<unk>.

Issues now I'm sure you can see our quarterly the whole of the relevant part of the presentation, Let me Kip.

In my store and now connectivity revenue was up 4.2% Vietnam phone when they look and this is indeed, great. This is great news.

Because.

Whoops I'm not according to market research, we can see that in the markets. We can see some reductions.

In volume times, I mean in the number of customers make an actual calls someone volume times. There is a decline in the market and competitively a M T S.

Has proven to be more resilient than the others.

And this has certainly been supported by the indexation exercise we did earlier in the year and also of course.

We are powerful and that's proven to be resilient in terms of the number if the tribes in number of customers. Our b to B segment is growing steadily.

Especially you services are all performing well the MTS market to service is posting a double digit growth rate in cloud services.

Also following suit to showcase and double digit growth for flu choice Telecom business of his show in its traditional topnotch resilience among the other business domains, especially amidst.

A challenging environment.

And this.

And labels at MTS.

But if you go to look positively into the future.

And in terms of how we're going to take.

Jacob system outlook underpinned by a strong telecom now this is further underpinned by our successful M. A nice in this reporting.

Reporting period with.

No. If you M&A is let me tell me about a couple of them. The first one is gulfstream.

This is a well established company in this market place of this deals in private real estate Securities shows, but also this has been developing and drilling actively in smart home solutions.

And that we believe the competence and the assets that we've acquired me.

<unk> form and rates in there just with some established assets and competent says on that MTS has already ahead on their pets.

It's including Iot and video analytics and cloud solutions. So we have decided to.

<unk> Oh.

Smart home developments on Gulfstream that with recently acquired and hopefully you'll soon see and <unk> product in the market that the company is currently working to develop also will have acquired the company called webinar.

Dealing in video conferences and their stand as we speak we're actually delivering a well talk to.

The only numbers that idea.

Webinars seemingly solutions and this is a great addition to our portfolio and spoofed E S.

They form quite a good replacements at quite if your service is established in the market because a few solutions has taught titration of the sherwin.

That's the bottom or not but I wouldn't have done that as each reliability now our ecosystem development strategy.

And is it relevant to die South Dakota.

Just let me tell you that's what you currently see on the screen does prove that our ecosystem strategy is pilot relevant first double digit growth rates in the number of ecosystem customers.

Hum.

You're.

Taken alone when you're below this maybe not that impressive unless you check out the C. L. The chart.

This is a new metric and about communication with U C. L. V is an estimated cash flow evolution, but not to be obtained by MTS going forward from suggests that I should pay such that each and every specific customer. This is a pretty.

Precise.

It pretty precise estimated metric finally got off the board now you can see that ecosystem customers to control his arm and then buy.

By the way great value for MTS, then guest them is using just one product. This is why this great performance in telecom because you know.

And usually with ecosystem customers. The churn rate is wait little work done with customers using just one service.

This recent quarter, we'd seen a business of finding mutually come up with trade development of our businesses beyond telecom because before telecom used to be the core four.

Source of ecosystem customers, who originally who are we.

Nathan from Telecom and then add in the second and third products. This was predictable and natural but now we are starting but he's getting ecosystem guesstimates from other verticals. If our business first of all this is the case with our media vertical and with our banking business. Please check out the numbers create CRO.

Rage.

Media and key on is.

Standalone Commons Qian you pause post and really great results in terms of the number of users the hours viewed and are in all the metrics. The stream minutes service Tesla crate and apart from that I would like to say that its especially important that.

<unk> content.

Each of them is rated Oh flips over she loves CRH him really well no. This is top grade the cross the board she has to go up.

By selecting US please see bottom left.

And also that's because of some stupid because.

Our presentation today is very informative well I'll tell you about capex and all the metrics and you will see that MTS media, but he is ready to go.

It is still a very disciplined content generator.

At the business you know one.

Sure, let's start that does business off investors were kind of careful awesome questions, but ah once if we are not over.

Sure.

On this business.

That's time has proven that's a great choice of the team to deal in this type of business.

Business vertical has been the success of our Capex.

This business has been really noticed it before ones is just trade to play with.

Including.

The rates if echo system guest them is coming from the media from key on the retail has already been mentioned today.

That was great and all the drop in revenue.

However, this has not had an <unk>.

Impact on Oh, why be today, why the weight in the first half year, we already achieved.

Standalone O Y beads, a breakeven run rate, including the leases in our initial plan was to achieve this target towards the year end. So we achieved it earlier.

So retail.

If not growing is really cool medium healthy.

So to sum it up.

Here.

Understood.

Because I mean, we.

Habitual title so to keep it.

We are a steady evolution of revenue. This is not that stable I would say because a habitual growth place is set at higher used to let them get that here you can see that the most negative impact and the revenue has come from retail.

This has not reduced our real free cash flow.

Which he I'm sure genetics is pretty calm looking at the numbers and we believe pretty soon things will get to normal and we'll get back to the metrics, which are more habitual to us. The same can be said about Hawaii, but July and net income even though the core.

Hmm pressure on Oh, why has it been exerted by Fintech as you can see.

From the Middle of this chart.

And I have already said that this has been driven by a non cash item which is.

Additional provisioning which way.

No.

We'll have to have due to a key rate hike and this will sequentially.

Sequentially is make sure we get back to normal going forward.

I'm done here and now I'm happy to hand, it over to our CFO Andre Kamensky, Andrey Kamensky Hello colleagues.

I will talk more about finance Slava has mentioned quite if you keep metrics of a company revenue you know why EBITDA, let me summarize it.

We believe the reporting quarter is quite a success what's happening is.

Certainly being reflected in his this is affecting us negatively.

A lot of it has already mentioned that Oh Wow were negative factors in a fintech. This is the core pressure that we see has existed and as this has been.

Driven by the additional provisions that we had to accrue in Q2.

Provisions the provisions reflect the higher cost of risk. This peaked in Q2 as you can see on the chart.

Provisions.

With our crude.

Barb.

And as a result of a solid large loan portfolio came your way to where the bank in the loan portfolio itself practically did not grow in the first half year and this is indeed, another reflection of the overall situation in the country right now.

Looking a bit to have them in July and August the situation is more optimistic we see credit demand.

Rick gathering so the evolution that we've seen in the first half year and makes us optimistic though.

But in the future.

But as you may know the recent guidance.

Guidance by Central Bank in light Gray.

We're optimistic in terms of demand recovery for loans for credit.

That's mix. This is still the same I mean, maybe they practically.

We still have most of our commitments are nominated in rubles is split nearly 46%.

Irrespective of the bonds and bilateral loans.

Peak of key rate that we saw in Q1 or in.

The first half yeah.

In fact, it is pretty significantly just like every company in the market.

It's just been talking about.

Income that has been one of the drivers why religion at Inc, and reduced.

Yeah. This has been spearheaded by higher interest expense.

And.

By higher.

Key rage now the situation is that time the key rate is now lower than it used to be in the year. Even in Q2, you can say that the situation starts to stabilize them rates were.

Lower than Q1.

Lisa rates at the end of the quarter during the quarter they were suddenly high.

We've done a lot in there.

What is that in order to.

T D.

Offset.

The high interest expense with the help of subsidies, where we could we did use this instrument. This has not yet been recognized in our results. So we expect it to be recognized in our results here in Q3.

Talking about hotel investments allocate X.

Here with shell in the trend.

Three years.

With spend 60 deal in rubles of the rest in six months and this reality rates flowers idea, though it's massive procurements of I T. All equipment.

So that was the case in Q1, we actually addressed their equipment needs for you had so we are going with that.

Just come right out with an active continuing our I'm glad India, because all of the construction of the network.

I'm talking about L. A.

F C F impact you can see that.

It got reduced to me seem to want to do in the key.

The drivers are increased interest expenses higher capex. However, talking about Capex. You know are we already mentioned that went at 121 was a peak here and for this year, we have planned Oh smaller amounts and we can now re iterate our expectation.

Well the guidance that the 20 to 22 K Ebix will be low what then in 'twenty. One is we want also to Slava has mentioned, though I'm a night.

Hum.

Gulfstream and vision labs a bottleneck.

So oh Wow I mean, your free cash flow has been impacted by them.

Uh huh.

It was little category I'll work.

Mr Schott imports reduced.

Payment conditions settlement conditions changed what Hudson migrate from ex post payments to prepayments on this hard and this also had an impact on our working.

Working capital and.

Cash flow now with dividend in June our shareholders have approved a dividend payout to the tune of $33 85 rubles per share. This dividend has been paid out in fact, the payout amount equaled four to $8 2 billion, including quasi treasury shares and this was not completed in Maine.

Now dividend policy.

We.

Expected to prove a new dividend policy at the beginning of the year. However, due to the Carrington Redmond, we have postponed the approval of a new dividend policy. This is still in our to do list.

And your dividend policy will be approved this is only a matter of time now a separate token our ADR program. Our initial idea was too focused separately on the a D. R.

That's not because this is a hot topic. These days. So we just wanted to share more information with you in case the right questions, we'll be happy to address them. This page shows 60 program. He had a sudden schedule approaches of our ADR termination program you know that at the listen law came into effect.

So we relevant applied with a given mental commission and the ATM program.

My grandmother.

Governmental Commission decided to maintain our ADR program until July .

Hum.

And yes.

Some of her grandmother.

Since that time.

The termination of the ADR program started this process will take some six months. The deadline is the 12th of January which is the last day for the conversion of MTS aid the ours into the underlying ordinary shares subject to the.

Stand in deposit agreement with.

Within this period of time them chess received a delisting notice from them now.

Nice also.

In August we notify the deposits the automatic conversion of ADR is capped with Russian deposits. There is I will tell you more about that as commented on the next slide according to our estimates.

The died when the automatic conversion must and is the fifth of September . So the 11th of October is the deadline. The loves die what request submission for fourth conversion there are differences between the first conversion and automatic conversion.

And this difference is actually commented upon.

On the next slide so three branches three cases of scenarios, depending on where a D ours, maybe how old.

The different scenarios different perils such as the first case.

We're 80 ours are held with the Russian broker in Russia.

And the chain of custody of the chain of holders include the National settlement Depository in this case automatic conversion. It lies which has been yeah.

Already triggered by the government regulation and this is exactly what I've mentioned on the 16th of the list with notified with deposit the Red Bank.

Automatic conversion, we as the issue you have initiated that this requires no additional actions on the part of the ADR holders. So automatic conversion how's it been launched already but this is only the case with ADR is held in Russia and the Russian broken.

In case of them, the two where a D ours are held.

International abroad.

And he has the right to solve cases, that's not the case number one where blue block on the measures that lie I think of.

But the more apply to eight eight.

Hey, All Inc. A participant of the.

And of course today this triggers.

Force conversion not automatic conversion difference is the following full automatic conversion.

It's enough to.

But because the top initiation for them is the issue, whereas full force conversion at confirmation from the hold is needed Thursday of I've got to confirm that the how the 80 ours is at a certain date and also hum and notice is necessary from deposit to Rebecca J P. Morgan.

So this is the fourth.

The dozen case, which presupposes active actions on the part of the ADR hold or unlike in neither case one.

And Sop case number two.

Unless the.

Blogging restrictive measures this.

With me.

When did you teach us mi in this case the standard conversion process. It lives. This is now in progress we are following that we're monitoring that position.

Positions and this missed.

And scheduled before the 12th of January next year.

Within the dice commented upon.

During the previous slide now applicable regulatory restrictions test type C accounts non residents of the Russian Federation.

When converting the 80 ours received their shares in a type C depo accounts.

You need to reduce the dividend.

Dividends maybe.

Transferred.

Oh, sorry chairs now savings limit post conversion.

But she is resulting from conversion of 80 ours.

Wired on or after the 27th of April plants. It wants to do a subject to say the restrictions so.

These are subject to sales restrictions and.

Just in terms of.

Damon dividends.

Well here I must say that starting.

On July the 15th until the conversion of 80 ours, no dividends will be paid.

On the 80 ours to their holders both conversion.

The shareholders will have the right to claim unpaid dividends within three years from the diet of dividend payout decision. This is just in a nutshell the rules and regulations that currently apply and that currently apply to dividend accrual and.

A D. Our disposition. So this is basically it will be happy to take your questions plenty I think he Andre. Thank you Slava. This ends our presentation and we are hoping to start our Q&A session. Now we have investors analysts and journalists you made.

You may ask your questions in the chats aware already see quite a few questions and the child and a well articulated questions I mean myself and our sunny and we'll do that in Russia with simultaneous interpretation.

Slava, Washington from Interfax, Anastasia, which Oscar a question is why.

Have you decided to do list from.

Nice.

<unk> went to stay just in Milwaukee or idle looking for a new venue.

You know decided is the keyword here, we always act under the government's regulatory requirements. So there are regulatory requirements and so we.

Hum.

Did the dual listing.

Now what all was Oh look out to the widest possible.

From if opportunities.

Empty as chairs one of the most exciting most attractive chairs in the Russian market and you can see it by the you got the share price evolution as well.

Are we.

By the way have quite a few business lines business domains Hum.

It's got a swing of stuff will be able to you know gain their food held on new van use separately independently.

Our next question.

Could you please update us on the <unk>.

Golden objectives of surrendered decided a security company establishment when they go into take your product to the market I go in to attract professional co investors or you're going to develop this business on your own and how much. They go into invest in this new business line not quite a few questions and one well.

The brief first the establishment of the day every company now.

Out of the way, it's a while ago, we realized that develop in Manila and you know you do make them. So many businesses with a pneumonia law and there wasn't one of them. The same M. T S company becomes.

Inefficient at the point.

So this is part of our strategy and we are not migrating to Holden.

We've been good at structure, so to speak but.

I'd, rather not the financial holding company, but the customer centric holding company. So we are developing several of our businesses and separate companies, where local management is incentivized for.

The performance whichever Golden objectives, those campaigns and then the management is incentivized.

For Oh.

Somewhat taken those companies public through options and so on cyber security is a very exciting it's fair which is.

In my opinion.

On the valued in the Russian market, especially on the one hand and on the other hand. This is really close to our capabilities to our competences that have already been established with other company because telecom.

Cannot.

Exist without top notch cybersecurity.

Hum.

This is pretty much alike banking sector, and you know quite a few banks, who also established their own cybersecurity arms now talking about investments I will not give you any number.

Today, but this is a pretty serious strike so.

Investments will come and we expect the investments to pay off quite soon because this isn't unique to them.

Economics, not the old economics, another question from Interfax.

You saw what business is it still relevant.

Still hold the negotiations or the perspective buyers.

Answer well.

Oh sale is relevant at that 0.1. This is beneficial for the company you know and as such infrastructural moves that you saw you've got to wait for the.

Economy, and the financial markets stabilize however, there is a counter trend so to speak we.

Sleep in Russia.

That's.

Rick why it's a lot of research with.

Baidu money. That's firstly people are looking to invest in exciting targets. So it's an exciting offer comes which is beneficial to MTS will continue this movement as we speak we are not.

We're working on a smile.

That should so.

So we are taking.

The required call protections and will be pop it to resume negotiations now a couple of questions about the bank. The provisions is it a precautionary measure.

Is it.

The real result of.

Mpls.

Oh boy, perhaps anything application, but can you get them in the Soma will there be a reduction in the second half year and if the lots are what's the current.

M P L. A ratio as we speak well, let me answer that as I have said this is a regular that's really driven measure this is a regulatory measure.

Situation cannot be flat across the board, but the N P L.

That we've seen recently in July and August are really minor.

Yeah. So.

The additional provisions established because those numbers do not reflect the minor NPL numbers that we'd see in our opinion, we get that the country and I.

Ah cautiously expect is zero dynamics deer in the year in this scenario.

Respect remedies to food you the follow up question from John Lewis on your dividend policy.

Oh, what do we get to try that we are not expecting any dividend post the first half year. It went to 22 now we have been pretty clear that a little on your own.

The dividends that we've already paid out.

As ever.

Everything that we were.

We're planning to pay out this year before we used to split the dividend payout now amidst this uncertainty we decided to make a one off dividend payments.

They are one time payments. So this year, we're not going to pay any more dividend.

Another few questions about dividends are the first one is.

It's clear that your dividend policy has not yet been approved but in your future dividend policy.

Just give him a which.

Parameters, which metrics over the previous dividend policy will be kept you know we have not approved a dividend policy. So.

We cannot disclose any parameters, but let me put it the following way well have a good.

Track record.

So in Europe with MTS.

This is a company.

No that made it shareholders unhappy with dividends payout based on the great performance of our management team. So in the future well I hope it will not make any one unhappy now.

Talking about total cash distributions for shareholders as these have been reduced in 'twenty to under 100.

And then in Atlanta.

One to 266, and we effectively paid out with a bit less so what's the trend going forward what should we expect that in the future.

Now the trend is pretty clear there is a dividend policy our dividend policy are used to presuppose a sudden dividend payout.

As a minimum level a certain number of rubles per share we used to tie with a more usual where there were some extra payments for example in 'twenty or 'twenty. One there was a payout related.

Related to the Ukraine sale.

Hum.

So in absolute numbers in 'twenty to 'twenty one.

Actual payout was quite big and so this year, we're talking about a.

The dividend payout.

So this standalone dividend is even higher than the minimal level set in the previous dividend policy.

Another question from Interfax and spraying the board of Directors has approved a new MTS strategy.

For 2022 and 'twenty to Wednesday for what they ask themselves in your strategy and is it.

Yeah.

Different from the previous strategy, well interfax must have an exclusive.

Access to our sine NEPOOL, which so we just quit well that's a good question for half an hour talk but let me try.

<unk> got this long story short in general our overall strategy has not changed and I'm sure you'll do.

That's what I mentioned this in our previous occasions.

Such as Jillian.

Bush at some now with <unk>.

I'm, making a large emphasis on the.

Governments and management system of the company, we keep building a strong ecosystem.

Come on the basis of what telecom backbone business, just I notice and we see quite a few businesses on the what belt they come in.

Large enough.

That makes them eligible for indirect management and governance through the board of directors and this requires a separate incentive she would frame works and regardless of the current challenges. We believe these companies will answer.

But better than market on their own independently.

In this new strategy, we emphasize the importance of I T transformation.

Continuing in the company and this is seen as a base.

This facilitates our Minogue beautiful 10 in the solid company of MTS in a holding company United.

Owned and ecosystem core United by a customer focused policy, which makes us optimistic about the future of our telecom back bone and of our other businesses and the other question that indirectly related to.

Shareholder benefits the company has a large.

Negative equity I'm not sure that it's.

Not huge but anyway, that's negative on the the ifas, what they are going to do with that and what's your equity under the local GAAP onto the rest of America.

Now in terms of dividend. The key driver is the net income that we generate used to genomic publicly yet and that's the evolution that was mentioned there is a quarterly evolution quarterly trend and we feel pretty well in terms of net income and free cash flow was talking about equity. This is a function of especially if they don't use the buyback.

<unk> that we've been doing over the recent three to four years and in times of financial statements. This does affect our equity, but this is not an issue.

Also mentioned that's sure.

That one's buyback.

Negative impacts and act, what's the under the RFS, but this is not the case under local under the Russian gap. This is one of the reasons that we articulated before.

Oh, why we could not and would not like to redeem treasury shares because under the Russian legislation this would rich.

Strict as in dividend payout, even regardless of the high free cash flow generated a couple of technical.

Technical questions.

Yes. Please.

Please tell me.

Yeah, you almost got what the driver of cost of growth.

In Q1 and Q2 this year.

Absolute numbers there.

5.9 billion.

Variables I mean this is all the operating income I expect this is mostly the bank's provisions.

Oh I'd be July and operating income. This is mostly a reflection of the provisions established at MTS Bank and the key growth as a quarter on quarter, but you're only either in no sharp moves.

Thank you Olivia.

Hello.

What's the optimal size of retail network retail chain.

Uh huh.

Does it make sense to keep the current number of stores given the changes in our market for devices and also has MTS startup federal imports of smartphones and other devices if not I'll go into do this in the near future. This is a super question.

I would look at it.

The angle of telecom, it's not a secret to anyone that's large.

Retail chain.

Watch retail chains, all telecom operators used to have this thing all of their own or franchise anyway themed card distribution retail chains have always been large, especially with the case of Russia.

A lot of Sim cards.

We're sold them not all of them are live with forlorn you know it could be referred to as a washing machine. That's constantly spends that does not create value. So now that I believe.

That the.

At east to them the cost of Sim cards with some operators.

China has grown exponentially, sometimes there's got to be done about it.

So in terms of Sim card sales it seems to me that you.

Beyond traditional Muslims teach us the volume of sales may now be reduced so it's time to reduce it the studios and the.

What's more.

With MTS will have benefits from ecosystem effects, yeah, who reduce churn rates.

And so the reduction of absolutely brick and mortar stores.

Great It migration ties towards online lowest themed cards files that each well.

Help us reduce our ROE and points of sale and.

Telecom.

I'm not saying that's a one month delay from retail you know it depends on a specific campinas strategist may differ but in terms of telecom I think this is.

A very relevant question. This is high time and this continued with the students who would be the right move for the overall market and we will go in that direction I hope our market peers will not like behind because this is indeed became an increasingly expensive.

The costly and not that efficient and what about apparel imports I'm, sorry, well, yeah I cannot give you the details off the top of my hand, a procurement is underway vendor follow says for Russia differ So you know Joe.

We do not have any shortage will do not have a shortage of goods well enough on the other hand, we now see increase in numbers.

And.

Rangers of smartphones, especially from new brands that she used to be not that popular in Russia, but do they get an increasingly popular in that I get an increase affordable.

And that's to be almost allude to challenging economic time.

<unk> Com and you know this is high time to update this.

Sales mix, because you know people.

Usually change brands very carefully.

And this is trades that we are recovering sales dynamics, thanks to the new brands coming in.

Our next question is from Andrea from Russian and international investors.

Could you please tell.

Tell us how we Gotta go into service here, you're a bond and a follow up from an nonresident.

Rescind coupon that you tied on a euro bond.

Yeah.

So I'll, let him was not received by some of the investors. They were not able to do that and have you addressed this issue in which currency how are you.

Laid out with the open have you accrued the coupon payment on type C. Accounts went on the residence and what are you going to do just obviously, a eurobond going forward. Thanks.

Zee you rebound.

Coupon situation, we've settled our coupon payment obligations on time in due time as per the.

Requirements that apply in fact, we see programming transferred them on it to the payments agent the money it was accrued.

Hum, but easily payment agency counts, but.

Due to the current situations demand that did not follow through and we are now working to.

The address the situation the situation is really challenging and this is not just the.

The case, that's about what is the case is pretty similar for all the issues of your reports of similar programs. So we are now working to address and settled Australia talking about the next payment coupon payment that is scheduled in November .

If you're alternative cases that we're currently considering installed and in order to make sure no payment is effected towards all the holders, but again, let me see what I can repeat it the situation where this is actually pretty much the same.

As with all the all the Russian fishers.

Camping is choose a specific way, but for now we.

If you did not know about any 100% successful cases, they start the rest of them technical swap cases, but for now.

When you might have in the civil claim does situation is.

I've said November will come pretty soon so we're doing our best in order to effect payments on time. Thank you very much like Washington for the task.

From Alexia Isabella.

Yeah.

Network upgrade plans in the regions, which regions are you going to focus first and foremost.

Can you tell about it Uh huh okay.

Well quite a while ago, we see already established.

The best analytics system, that's a C T and you pull out just in Russia.

Internationally.

Which Mr.

That helps us know, where the next base station mezz pools across Russia.

As the case with upgrades. So this is not their metro specific regions.

Swap.

We are running our swap.

Program, where.

Equipment from one vendor is swapped for.

Weapon from another vendor because the former equipment ozelle dated and this is beneficial for us to install the lots of equipment and the equipment. The older equipment released will be re directed to another region, where it's needed. The swap program is nearing completion in Moscow, you know many of us.

Live in Moscow and.

Thank you.

Mr. <unk>, we have already experienced this.

Good increases in quality.

Sure Kai full HD Lewis can be viewed across multiple social. Thank you. Your next question. The rumor has it that MTS has developed in certain Oh apps for what are the plans what are the.

Prospects.

Oh I'm sorry, you know we're now active make.

Making quite a few developments such a pretty weak across a variety of I T streams and the siem.

It seems to me that in App store may be quite an exciting addition, quite an exciting opportunity, especially if that says well it just gets sick children with the merged.

With planet.

The payments agent capabilities. So the plans are relevant and these are quite quick so to speak and the results will come soon.

Yeah.

Let me ask a follow up on the equipment in the regions in Capex as a whole the sluggish it plays all diets on.

As you know.

He's yourself commitments on LTE coverage for federal highway from this side.

If you postpone this portion of Capex to 'twenty to 'twenty, three which the amount of Capex, where we have to invest into it in 'twenty to 'twenty three 'twenty to 'twenty two the Cape Expulsions lost once or twice a segue because Boston. We just went through two months or three months that Oh I cannot give you the deals off the top of my habit.

Is there not some these did not add up.

This is a very.

If you build in not tens.

Tens of billions and the App.

Number.

It does depend on collaborations of operators in terms of LTE gathering.

Federal highways.

The government has acted.

As facilitator in this process.

Saying to operators that Guy is it's more beneficial if we it's more efficient for you to address it.

Actively together as soon as the program is finalized we'll know the ultimate number but this will not make us exceed our capex plan.

I think you pick up the second question for Andre.

Our dividends have they been yet in your handset or have they stayed where they can paint Andre they have not been transferred they now form our obligation our liability I mentioned that were paid out four to 8 billion. So the bait and mound attributes.

Two eight.

E D ours. So this amount has not been paid this has stayed in our books, but this is recognized as a liability. So when our 80 ours are converted into ordinary shares the holders will have the right to claim the unpaid dividend within three years, and we will be transferring the unpaid portion another technical question.

From a nonresident.

Sure enough Egypt players.

Repeat once again Hau Thai C.

Counts work all this like this and the Vesta holds though 80 ours through international structure, what has got to be done to have it unpacked.

To have an unpacked. It you have to open up a type C accounts for ordinary shares to be accrued to the accounts I'm not sure. If you see the relative side of the presentation, but you know the type C accounts.

Our subject if you restrictions.

Dividends may be accrued to type C accounts.

Knee.

Okay.

<unk>.

Against this happens post conversion so.

When you have converted the eight years that ordinary shares you started getting dividends what wasn't rushes and also type C. The counts.

Pro habits sales and purchases of shares without a relevant.

It doesn't even mention from the governmental commission.

This is in this would be indeed, Atlanta talks I mean in case, the rest specific Washington will be happy to address them that are currently there is quite a big regulatory base that describes in detail how types of accounts west like Washington from Forbes.

How the pump has the current situation impacted.

Impacted MTS startup hub will Ya <unk>.

Continue your venture investments or will you invest at later stages gunsmith sufficient for greater reliability, we'll keep investing that's a and we now see the startup markets.

Revive a bit.

People are active people work and we will continue working in this direction and also.

I've said that that recently with.

<unk> seen our I T domain.

To date, it would be much too.

And this.

Makes a helps us deal more actively.

I T N in startups and I Bill with MTS will be quite attractive for the partners as well.

Well I cannot see Washington is that we have not addressed.

If you.

Really technical questions related to ADR conversion in particular from international investors.

I suggest that those investors contact our IR at I R. M. T. As Don are you will address your specific technical questions offline as to what's a you've got to do in order to have your secured just unpack them by the way some.

Washington's will be posted in the Q&A session, yeah by the way with already posted the first portion of how to instructions.

Uh huh.

You have to have ADR on tact.

This is about the first parts of Andreas talk.

Uh huh.

What do you do to have your ADR is unpacked, if you're a nonresident. So the first Boston has been already posted in the coming days, we'll update.

The person to the effect of the recent regulatory changes.

And will it.

Post also information on automatic and fourth conversion, but please email us at <unk> are empty as Don are you well will take you through the difficult mechanics of the process as well.

I reckon. This is basically it's I cannot really see any questions that we have not addressed I think we'd and conclude our session of photo dice lava Andrea. Thanks, a lot are suddenly a thanks a lot for help and support we are.

Always open for communication, but with our IR and PR functions Ah. Thank you very much what having joined us have a good evening bye.

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