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    RTKM   RU0008943394

PUBLIC JOINT STOCK COMPANY ROSTELECOM

(RTKM)
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Public Joint Stock Rostelecom : Rostelecom financial and operating results for the fourth quarter and full year of 2020

08/24/2021 | 07:44am EST
Print version09.03.2021 Revenue increased by 15%; OIBDA [1] up 14%; net profit up 16%.
Revenue and OIBDA exceed guidance for FY2020.

Moscow, Russia - March 9, 2020 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest digital service provider in Russia, today announces its consolidated financial results for the fourth quarter and the full year of 2020 prepared in accordance with IFRS[2].

In accordance with the accounting policy of the Group, the acquisition of Tele2 Russia has been recognized as a business combination under common control. According to this method the merger of businesses arising from a transfer of entity stakes under common control of the Group's shareholders, is presented as if the merger took place in the earliest period of the statements, or, if later, effective from the date that common control was put into effect; for this purpose comparatives are revised. Rostelecom's consolidated financial statements for 2019 have therefore been revised to incorporate Tele2 Russia's performance as if the acquisition had been completed on 1 January 2019.

Besides, the Group made a number of revisions to its 2019 statements following the IFRS Interpretations Committee decision on lease terms of contracts with renewal and termination options. Please find more details on the revisions in Note 6 of the consolidated financial statements for 2020.

Fourth quarter 2020 key financial highlights
  • Revenue grew by 23% to RUB 163.0 billion compared to 4Q 2019:
    • mobile services revenue grew 15% year-on-year;
    • digital services revenue grew 53% year-on-year;
  • OIBDA up by 10% to RUB 44.5 billion;
  • OIBDA margin of 27.3% compared to 30.6%;
  • Net loss of up to RUB (2.1) billion compared to RUB (0.8) billion in 4Q 2019;
  • CAPEX[3] excluding state programs decreased by 16% to RUB 36.2 billion (22.2% of revenue) compared to 4Q 2019;
  • FCF[4] of RUB 17.9 billion compared RUB 15.7 billion in 4Q 2019;
  • Net Debt[5] increased by 9% since the beginning of the year to RUB 362.2 billion, resulting in a Net Debt/OIBDA ratio of 1.9x. During 4Q 2020 Net Debt decreased by 13%, resulting in a Net Debt/OIBDA ratio decrease from 2.2x to 1.9x.
Key figures for 4Q 2020, RUB mln

RUB million

4Q 2020

4Q 2019

change, y-o-y

Revenue

163,009

132,896

23%

OIBDA

44,491

40,627

10%

OIBDA margin %

27.3%

30.6%

-

Operating Income

8,374

9,792

(14%)

Operating margin %

5.1%

7.4%

-

Net Income

(2,083)

(790)

164%

% of revenue

(1.3%)

(0.6%)

-

Capital Expenditure excl. state programs

36,162

42,863

(16%)

% of revenue

22.2%

32.3%

-

Net debt

362,244

333,007

9%

Net debt/ annualised OIBDA

1.9

2.0

-

FCF

17,925

15,697

2,228

Full year 2020 financial highlights
  • Revenue increased by 15% to RUB 546.9 billion compared to 2019;
  • OIBDA grew by 14% to RUB 194.1 billion;
  • OIBDA margin of 35.5% compared to 35.9% in 2019;
  • Net profit increased by 16% to RUB 25.3 billion;
  • CAPEX excluding state programs of RUB 107.1 billion (19.6% of revenue) compared to RUB 105.7 billion (22.2% of revenue) in 2019;
  • FCF of RUB 22.7 billion compared to RUB 30.3 billion in 2019;
  • Net Debt increased by 9% since the beginning of the year to RUB 362.2 billion, resulting in a Net Debt/OIBDA ratio of 1.9x.


Key figures for the full year of 2020, RUB mln

RUB million

2020

2019

change, y-o-y

Revenue

546,889

475,752

15%

OIBDA

194,050

170,703

14%

OIBDA margin %

35.5%

35.9%

-

Operating Income

68,965

61,280

13%

Operating margin %

12.6%

12.9%

-

Net Income

25,348

21,878

16%

% of revenue

4.6%

4.6%

-

Capital Expenditure excl. state programs

107,138

105,657

1%

% of revenue

19.6%

22.2%

-

Net debt

362,244

333,007

9%

Net debt/ annualised OIBDA

1.9

2.0

-

FCF

22,659

30,253

(7,594)

Mikhail Oseevskiy, President of Rostelecom:

'Rostelecom evidenced its resilience to major global challenges in 2020. Despite the constantly changing backdrop, we remained nimble enough to take steps to maintain our leading position in the market and achieve excellent financial results. Our revenue grew by 15%, operating profit before depreciation increased by 14%, and we grew net profit by 16%. By consolidating 100% of Tele2 Russia, Rostelecom became the largest integrated digital provider in the country, with revenues of more than half a trillion roubles generated from a diverse range of cutting-edge services.

In April 2021, we plan to announce our renewed strategy outlining high-level strategic focus on digital business that will better position our company for changing markets and align with customer needs. Our focus will continue to be on new points of growth and expansion of Rostelecom's fast-growing portfolio.

At the end of 2020, we closed a landmark deal with VTB Bank, who came on board as a strategic partner to help support the development of our data centres and cloud services. Not only did we secure the financial resources and a reliable joint partner, but we also demonstrated a new significantly enhanced market value and potential that the business segment carries, and there is more to come from other digital divisions.

We expect that the IPO of the cloud segment, as well as further possible placements involving other promising digital clusters, will deliver significant shareholder value due to the higher multiples applicable to growing digital companies unlocking the fair value presented by Rostelecom as a group.'

Vladimir Kirienko, First Vice-President of Rostelecom:

'The strong financial results for 2020 evidence how Rostelecom has become truly digital. Over a long period of time, Rostelecom has systematically expanded its range of advanced digital services, enabling the company to embark on a trajectory of sustainable double-digit growth, that exceeds rates of growth achieved by other market players.

We have invested a lot in enhancing our data centers and cloud services, cybersecurity solutions, regional digital projects, e-government, video surveillance and analytics, and smart services for households and businesses. The results of these efforts are coming into fruition: the digital segment is growing at an impressive rate, providing the company with tens of billions of roubles of additional revenue, with areas such as cybersecurity are multiplying in size every year.

Despite our achievements, we are never complacent and understand that we must continue to look at new areas of growth to preserve our leadership in the space. To that end, we continue to expand our digital offering to maintain exponential growth dynamics. We have done so by acquiring developers of proprietary software products in the field of housing and communal services (Forkam and Fastek companies), a leading developer in the field of digitalization of waste management and ecology, we have formed a partnership with Doctis to create telemedicine services and we have a joint venture with YADRO to expand the line of PaaS solutions as well as a number of similar partnerships and activities that will cement our leading position in the space.

Coupled with the phenomenal success of Tele2 Russia, which is the only player with double-digit growth in an already mature market and the fastest growing mobile operator in the world, our achievements in transforming Rostelecom into a digital giant enables us to be ambitious in shaping our strategic plans for digital services for years to come.'

Sergey Anokhin, Senior Vice-President and Chief Financial Officer:
'The company demonstrated strong growth in key financial indicators and exceeded the forecast of its 2020 targets. Despite the continued uncertainty about the future dynamics of macroeconomic indicators, progress achieved in 2020 means we can reasonably expect the continued growth of our business in 2021. The company's management expects an increase both in consolidated revenue and OIBDA by at least 5%; СAPEX is planned within the range of 110 - 115 billion roubles (excluding the implementation of state programs).'

Key operating highlights

Number of subscribers (million):

4Q 2020

4Q 2019

change, y-o-y

3Q 2020

change, y-o-y

Internet access

13.5

13.2

2%

13.4

1%

B2C: Broadband

12.4

12.2

2%

12.3

1%

B2B: Broadband + VPN

1.1

1.1

5%

1.1

2%

Pay TV

10.8

10.4

4%

10.7

1%

Incl. IPTV

6.1

5.6

9%

5.9

3%

Hosted PBX

0.160

0.097

65%

0.147

9%

Local telephony services

14.0

15.6

(10%)

14.5

(3%)

ARPU[6] (RUB):

4Q 2020

4Q 2019

change, y-o-y

3Q 2020

change, y-o-y

Internet access

B2C: Broadband

395

402

(2%)

390

1%

B2B: Broadband + VPN

3,372

3,455

(2%)

3,231

4%

Pay TV

250

255

(2%)

245

2%

Incl. IPTV

302

320

(5%)

298

2%

Hosted PBX

1,186

1,238

(4%)

1,119

6%

Blended ARPU[7]

546

553

(1%)

537

2%

Mobile business

4Q 2020

4Q 2019

change, y-o-y

3Q 2020

change, y-o-y

Data Traffic, incl. MVNO,Pb

1,442

977

48%

1,351

7%

Churn, %

(8.1%)

(9.5%)

(1.5 p. p.)

(7.3%)

0.8 p. p.

Growth of active mobile Internet users, %

20.0%

39.6%

(19.6 p. p.)

25.5%

(5.5 p. p.)

Subscriber base at the end of period

46.6

46.0

1.5%

-

-

  1. The total number of Internet subscribers among households grew by 2% to 12.4 million in the fourth quarter of 2020 compared to the corresponding period of last year; ARPU was RUB 395.
  2. The total number of Internet and VPN subscribers in B2B increased by 5% year-on-year to 1.1 million; ARPU was RUB 3,372.
  3. The number of pay-TV subscribers grew by 4% to 10.8 million users compared to the corresponding period of last year, with average ARPU of RUB 250 across B2C;
    • the number of IPTV subscribers increased by 8% to 6.1 million, and ARPU was RUB 302 across B2C;
  4. The mobile subscriber base grew to 46.6 million users in 2020, while the number of active mobile Internet users increased by 20% in 4Q 2020 compared to the corresponding period of 2019. The mobile Internet data traffic growth reached 38%; at the same time, cellular customer base churn decreased to 8.1%;
  5. The number of local telephony subscribers decreased by 10% to 14.0 million.


Press-release on 4q 2020 financial results



[1] Here and below, please refer to Attachment 1 of this statement for a full definition of OIBDA. Note that the company changed the methodology for calculating OIBDA changed in 3q 2018 having excluded expenses related to non-government pension insurance. Historical OIBDA numbers for 2018 and relevant periods of 2017 were recalculated in line with the renewed methodology.

[2] International financial reporting standards.

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

[4] 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.

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

[6] Average revenue per user

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

Disclaimer

OAO Rostelecom published this content on 24 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 August 2021 11:43:03 UTC.


© Publicnow 2021
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Financials
Sales 2021 579 B 7 821 M 7 821 M
Net income 2021 36 470 M 492 M 492 M
Net Debt 2021 439 B 5 929 M 5 929 M
P/E ratio 2021 8,14x
Yield 2021 6,73%
Capitalization 288 B 3 884 M 3 886 M
EV / Sales 2021 1,25x
EV / Sales 2022 1,18x
Nbr of Employees 133 700
Free-Float 30,8%
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Mean consensus OUTPERFORM
Number of Analysts 13
Last Close Price 86,13 RUB
Average target price 116,27 RUB
Spread / Average Target 35,0%
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Managers and Directors
Mikhail Eduardovitch Oseevskiy President, Chairman-Management Board & Director
Sergey N. Anokhin Chief Financial Officer & Senior Vice President
Sergei Borisovich Ivanov Chairman
Alexey V. Sapunov Senior Vice President-Technical Infrastructure
Kirill A. Menshov Senior Vice President-Information Technology