Rostelecom financial and operating results for the third quarter and nine months of 2021

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Third quarter revenue increased by 5%, with OIBDA[1] up 9%

Moscow, Russia November 9, 2021 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest digital service provider in Russia, today announces its consolidated financial results for the third quarter and nine months of 2021 prepared in accordance with IFRS.

Third quarter 2021 financial highlights

  • Revenue increased by 5% to RUB 141.2 billion compared to 3Q 2020;
  • OIBDA up 9% to RUB 58.3 billion;
  • OIBDA margin up 1.5 p.p. to 41.3%;
  • Net profit of RUB 8.4 billion, compared to RUB 11.8 billion reported in 3Q 2020;
  • CAPEX[2] excluding state programs increased by 1% year-on-year to RUB 24.6 billion (17.4% of revenue);
  • FCF[3] of RUB 13.3 billion, compared to RUB 18.9 billion for the same period of 2020;
  • Net Debt[4] (including lease liabilities) increased by 8% YTD, amounting to RUB 502.5 billion, resulting in a Net Debt (including lease liabilities)/OIBDA ratio of 2.3x.

Key financial highlights for nine months of 2021

  • Revenue increased by 7% to RUB 411.8 billion compared to the nine months of 2020;
  • OIBDA increased by 13% year-on-year to RUB 169.7 billion compared to the nine months of 2020;
  • OIBDA margin increased by 2.3 p.p. to 41.2% compared to the nine months of 2020;
  • Net profit increased by 17% to RUB 31.4 billion compared to the nine months of 2020;
  • CAPEX excluding state programs increased by 7% year-on-year to RUB 76.2 billion (18.5% of revenue);
  • FCF improved by RUB 13.5 billion, to amount to RUB 16.6 billion.

Key figures for 3Q 2021, RUB mln

RUB million

3Q 2021

3Q 2020

change, y-o-y

Revenue

141,213

134,988

5%

OIBDA

58,323

53,678

9%

OIBDA margin %

41.3%

39.8%

-

Operating Income

21,228

23,423

(9%)

Operating margin %

15.0%

17.4%

-

Net Income

8,398

11,768

(29%)

% of revenue

5.9%

8.7%

-

Capital Expenditure excl. state programs

24,638

24,326

1%

% of revenue

17.4%

18.0%

-

Net debt (incl. lease liabilities)

502,487

501,593

0.2%

Net debt (incl. lease liabilities)/ OIBDA

2.3

2.6

-

FCF

13,339

18,939

(5,600)

Key figures for 9M 2021, RUB mln

RUB million

9M 2021

9M 2020

change, y-o-y

Revenue

411,760

383,880

7%

OIBDA

169,698

149,559

13%

OIBDA margin %

41.2%

39.0%

-

Operating Income

65,698

61,670

7%

Operating margin %

16.0%

16.1%

-

Net Income

31,382

26,870

17%

% of revenue

7.6%

7.0%

-

Capital Expenditure excluding state programmes

76,192

70,977

7%

% of revenue

18.5%

18.5%

-

Net debt (incl. lease liabilities)

502,487

501,593

0.2%

Net debt (incl. lease liabilities)/ OIBDA

2.3

2.6

-

FCF

16,561

3,015

13,546

Mikhail Oseevskiy, President of Rostelecom:
In the third quarter of 2021, Rostelecom continued to grow steadily, having achieved its key financial and operational targets. Revenue grew by 5%, OIBDA increased by 9%, and the company continues to increase its free cash flow, which reached almost RUB 17 billion during the 9 months of 2021, which will support our plans to increase dividend payments for the current year (of RUB 6 per share) and beyond.

A key strategic initiative for the period was the recent acquisition by Rostelecom of BFT, a leading public services digitisation provider. Our focus on identifying promising and fast-growing digital business segments is a significant part of our transformation.

Vladimir Kirienko, First Vice-President of Rostelecom:
The development of our brand-new services and solutions helps us generate additional value through our segment & cluster management model.. Our main goal is to strengthen our digital leadership by providing innovative products that are rising in demand as well as to ensure stable growth and efficiency in our core business. This has enabled us to perform well across our key financial metrics in absolute terms as well as to post OIBDA margin increase by solid 1.5 p.p."

Sergey Anokhin, Senior Vice-President and Chief Financial Officer:
The Company continued to demonstrate stable business growth and a high level of cost control during the third quarter, which ensured that we remain within our budget for 2021. The successful fulfilment of our plans during the 9 months of 2021, and the moderate macroeconomic risk outlook enables us to look more optimistically at our anticipated results for the whole Full Year. As a result of this, we are improving our previously published forecast for OIBDA growth in 2021 to 10-12% y-o-y. In terms of revenue, the Company continues to plan for growth of at least 5% and we expect CAPEX in the range of 110-115 billion rubles (excluding the implementation of state programs)."

Key operating highlights

Fixed business

Number of subscribers (million):

3Q 2021

3Q 2020

change, y-o-y

Internet access

13.5

13.4

0.4%

B2C: Broadband

12.4

12.3

0.05%

B2B: Broadband + VPN

1.1

1.1

4%

Pay TV

10.9

10.7

2%

Incl. IPTV

6.3

5.9

7%

Hosted PBX

0.198

0.147

35%

Local telephony services

12,9

14,5

(11%)

ARPU[5] (RUB):

3Q 2021

3Q 2020

change, y-o-y

Internet access

B2C: Broadband

393

390

1%

B2B: Broadband + VPN

3,584

3,566

1%

Pay TV (B2C)

252

245

3%

Incl. IPTV

299

298

1%

Hosted PBX

945

1,119

(16%)

Blended ARPU[6]

551

537

3%

Mobile business

3Q 2021

3Q 2020

change, y-o-y

Data Traffic, incl. MVNO,Pb

1,750

1,351

30%

Churn, %

(8.0%)

(7.3%)

0.6 p.p)

Growth of active mobile Internet users, %

18.5%

25.5%

(7.0 p.p.)

  1. The total number of Internet subscribers among households grew to 12.4 million in the third quarter of 2021 compared to the corresponding period of last year. ARPU increased by 1% year-on-year to RUB 393;
  2. The total number of Internet and VPN subscribers in B2B increased by 4% year-on-year to 1.1 million; ARPU increased by 1% year-on-year to RUB 3,584;
  3. The number of pay-TV subscribers grew by 2% to 10.9 million users compared to the corresponding period of last year, with average ARPU of RUB 252 in B2C;
    • the number of IPTV subscribers increased by 7% to 6.3 million, and ARPU was RUB 299 in B2C;
  4. The number of active mobile Internet users increased by 18.5% year-on-year during 3Q 2021. Year-on-year growth in mobile Internet data traffic reached 30% during the third quarter of 2021; while cellular customer base churn amounted to 8.0%/

Press-release on 3q 2021 financial results



[1] Here and below, please refer to Attachment 1 of this statement for a full definition of OIBDA.

[2] Here and below, capital expenditure (CAPEX) comprises cash spent on fixed assets and intangible assets.

[3] Here and below Free Cash Flow (FCF) is calculated as net cash from operating activity minus CAPEX, plus proceeds from selling fixed assets and intangible assets, plus interest received, plus subsidy from government.

[4] Here and below, Net Debt is calculated as total debt (including long-term and short-term lease liabilities) less cash, cash equivalents and short-term investments (other financial assets).

[5] Average revenue per user

[6] Blended ARPU includes revenue from one user subscribed to a number of services simultaneously, including broadband, IPTV and digital cable TV