Key results for Q4 20191:
- Revenue increased by 5.4% y-o-y to RUB 93.2 billion
- Service revenue increased by 1.3% y-o-y to RUB 80.4 billion
- Revenue from sales of equipment and accessories is up by 41.5% to RUB 12.8 billion
- OIBDA increased by 39.8% y-o-y to RUB 38.5 billion, while OIBDA Margin was 41.3%2.
- Adjusted Net profit increased by 78.5% y-o-y to RUB 2.0 billion3
- Net debt decreased by 8.5% to RUB 320.4 billion
- In Q4 2019 service revenue increased by 1.3% y-o-y to RUB 80.4 billion mainly driven by data revenue growth as a result of an upgrade of the tariff line «Vklyuchaisya!» («Connect!») incorporating the latest technological solutions and partner services. The Company also introduced a cross-discount system for its subscribers, and was the first in the market to offer cash rebates on its services which can be used for purchasing the Company’s products. Those and some other initiatives resulted in an increase in the number of data service users by 6.7% to 34.9 million; while the number of its mobile subscribers in Russia remained stable at 75.2 million. An increase in revenue from information and communication technologies (ICT) services provided to B2G clients also had a positive impact on both wireless and wireline revenue. Total service revenue for the year reached RUB 310.8 billion, an increase of 1.2% y-o-y.
Stores of the future
- In Q4 2019 MegaFon continued the development of its retail network by the introduction of a new generation of stores emphasising top quality client service and a unique customer experience. The average number of customers at such stores is up 20%, and the average daily revenue is up between 30% and 40%, in each case as compared with the corresponding figures for traditional format stores.
- MegaFon is also developing new service concepts at its retail chain. In November 2019 the Company opened the first «experience store» in Russia focused on providing an enhanced digital experience for clients. This store has a new format, with a sales floor four times bigger than average and an open display of goods, digital price tags, interactive client service interfaces and self-service technologies. The experience store also consists of five theme zones: smartphones, smart home technologies, TV and gaming, travel and healthy lifestyle, and kids’ entertainment.
The best mobile network in Russia and development of 5G networks
- In Q4 2019 CAPEX was RUB 31.3 billion, down 18.2% y-o-y. It was possible to reduce CAPEX as a result of the significant investments in upgrading the billing platform which were made in 2018. In 2019 the Company’s main focus was on the continued development and improvement of the reliability of its networks, raising the quality of its services, and enhancing the client experience. In Q4 2019 approximately 2,470 new LTE and LTE Advanced base stations were placed into service. The Company is actively preparing for implementation of the 5G technology and the development of 5G networks in Russia.
- MegaFon continues to work on reducing its leverage, using part of its profits to pay down the debt. The Company’s net debt for the reporting period decreased by RUB 29.9 billion to RUB 320.4 billion. This enabled MegaFon to reduce its Net debt/LTM OIBDA ratio from 2.49x in Q3 2019 to 2.11x in Q4 2019. Adjusted net profit in Q4 went up by 78.5% y-o-y. Net profit for the year was still significantly impacted by increased finance costs, especially earlier in the year, relating to the loans raised to finance the Tender Offer for shares and GDRs completed in September 2018, the Mandatory Offer completed in Q1 2019 and the buy-back of shares from the remaining non-affiliated shareholders completed in Q2 2019.
1Based on the IFRS consolidated financial statements audited by JSC «KPMG». Due to rounding actual numbers and calculations for financials and KPIs may differ from those set forth in this release. Year over year («y-o-y») stands for the same periods in the current and previous year on either a quarterly or yearly basis.
2 OIBDA is shown including the positive impact of IFRS 16. Organic OIBDA was RUB 33.0 billion, and OIBDA Margin was 35.4%.
3Adjusted Net Profit is also shown taking into account the impact of IFRS 16. Adjusted organic Net Profit was 2.9 billion.
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