ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: ROSTELECOM FINANCIAL AND OPERATING RESULTS 4Q AND FY 2021

04-March-2022 / 09:40 MSK
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


 

 

 Revenue increased by 6% in 2021; OIBDA[1] up 13%; FCF[2] up by 43%.

Moscow, Russia - March 4, 2022 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia's largest integrated digital company, today announces its consolidated financial results for the fourth quarter and the full year of 2021 prepared in accordance with IFRS.

FOURTH QUARTER 2021 KEY FINANCIAL HIGHLIGHTS

  • Revenue grew by 3% to RUB 168.3 billion compared to 4Q 2020:
  • OIBDA up by 10% to RUB 49.1 billion;
  • OIBDA margin up by 1.9 p.p. to 29.2%;
  • Net profit of RUB 0.5 billion compared to net loss of RUB (1.5) billion in 4Q 2020;
  • CAPEX[3] excluding state programmes increased by 18% to RUB 42.5 billion (25.3% of revenue) compared to 4Q 2020;
  • FCF of RUB 15.9 billion compared RUB 19.6 billion in 4Q 2020;

 

FULL YEAR 2021 FINANCIAL HIGHLIGHTS

  • Revenue increased by 6% to RUB 580.1 billion;
  • OIBDA grew by 13% to RUB 218.8 billion;
  • OIBDA margin improved by 2.2 p.p to 37.7%;
  • Net profit increased by 26% to RUB 31.8 billion;
  • CAPEX excluding state programs increased by 11% to RUB 118.7 billion (20.5% of revenue);
  • FCF increased by 43% to RUB 32.5 billion;
  • Net Debt[4] including lease liabilities increased by 8% since the beginning of the year to RUB 505.2 billion, resulting in a Net Debt/OIBDA ratio of 2.3x.

 

 

 

 

 

 

 

Key figures for 4Q 2021, RUB mln

RUB million

4Q 2021

4Q 2020

 change, y-o-y

Revenue

168,332

163,009

3%

OIBDA

49,116

44,491

10%

OIBDA margin %

29.2%

27.3%

-

Operating Income

8,009

7,295

10%

Operating margin %

4.8%

4.5%

-

Net Income

0.450

(1,507)

-

% of revenue

0.3%

(0.9%)

-

Capital Expenditure excl. state programs

42,548

36,162

18%

% of revenue

25.3%

22.2%

-

Net debt

505,197

466,035

8%

Net debt/ annualised OIBDA

2.3

2.4

-

FCF

15,938

19,644

(3,706)



Key figures for FY 2021, RUB mln

RUB million

2021

2020

 change, y-o-y

Revenue

580,092

546,889

6%

OIBDA

218,814

194,050

13%

OIBDA margin %

37.7%

35.5%

-

Operating Income

73,707

68,965

7%

Operating margin %

12.7%

12.6%

-

Net Income

31,832

25,363

26%

% of revenue

5.5%

4.6%

-

Capital Expenditure excl. state programs

118,740

107,139

11%

% of revenue

20.5%

19.6%

-

Net debt

505,197

466,035

8%

Net debt/ annualised OIBDA

2.3

2.4

-

FCF

32,499

22,659

9,840

 

 

 

 

 

 

 

 

 

 

 

 

Mikhail Oseevskiy, President of Rostelecom, commented: "A number of strategic and structural changes have made it possible for Rostelecom to achieve its financial and operational targets set for 2021. We have successfully expanded and improved our product line, with an increased share of innovative digital services in the range as well as grown size of the business, while strengthening its market position in key segments. As a result, we managed to post positive performance across all key financial indicators. Solid growth was also demonstrated by FCF - over 40%. Strong 2021 results provide the basis for an increase in shareholder payouts relative to the lower limit set by the dividend policy. Therefore, management considers it possible to recommend to increase dividend payments to 6 rubles per share for 2021."

 

 

Sergey Anokhin, Senior Vice-President and Chief Financial Officer added: "In 2021, Rostelecom continued to show stable business growth and a high level of cost control, which together ensured decent financial results. We also managed to meet our guidance in terms of revenue and OIBDA growth for 2021, while substantial cash flow has enabled us to implement some of the planned investment projects ahead of schedule while keeping the targeted range of CAPEX/Sales ratio. We enhanced our operations both in mature core and new growing areas coupled with increased internal efficiency as well as streamlined and downsized business model. We also aimed at decreasing our OPEX and optimizing the company's debt structure to improve its cost and ensure resilience over the market volatility. On the financial front, these efforts have led to marginality growth, solid FCF generation as well as debt burden reduction. Operationally, they have enabled the company to further sustain and invest into growing promising areas. At the same time, the complex nature of the geopolitical context and uncertainty of the macroeconomic risks which can have a negative impact on the dynamics of the results of subsequent periods, we will take some time before discussing the potential prospects for 2022 until we see stabilisation and certainty and lower volatility in the financial markets."

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY OPERATING HIGHLIGHTS

Fixed services business

Number of subscribers (million):

4Q 2021

4Q 2020

change, y-o-y

FIBRE-BASED SERVICES

Internet access

10.8

10.4

4%

B2C: Broadband

9.8

9.5

4%

B2B/G: Broadband

0.7

0.6

10%

B2B/G: Broadband + VPN

1.0

0.9

10%

IPTV

6.4

6.1

5%

Hosted PBX

0.218

0.160

37%

TRADITIONAL SERVICES

 

 

 

Local telephony services

12.5

14.0

(11%)

B2C

9.9

11.3

(12%)

B2B/G

2.6

2.7

(6%)

Broadband xDSL

 

 

 

B2C: Broadband xDSL

2.5

3.0

(15%)

B2B/G: Broadband xDSL

0.2

0.2

(17%)

Cable TV

4.5

4.7

(6%)

 

ARPU[5] (RUB):

4Q 2021

4Q 2020

change, y-o-y

FIBRE-BASED SERVICES

Internet access

380

377

1%

B2C: Broadband

2,868

2,764

4%

B2B/G: Broadband

4,066

4,298

(5%)

B2B/G: Broadband + VPN

306

307

(0,3%)

IPTV

907

1,108

(18%)

Hosted PBX

 

 

 

TRADITIONAL SERVICES

 

 

 

Local telephony services

223

227

(2%)

B2C

575

585

(2%)

B2B/G

 

 

 

Broadband xDSL

462

450

3%

B2C: Broadband xDSL

1,527

1,324

15%

B2B/G: Broadband xDSL

191

186

3%

Cable TV

380

377

1%

 

Mobile business

 

4Q 2021

4Q 2020

change, y-o-y

Data Traffic, incl. MVNO,Pb

1,856

1,442

29%

Churn, %

(8.05%)

(8.09%)

0.04 p. p.

Growth of active Internet users, %

17.6%

20.0%

(2.4 p. p.)

Subscriber base, mln

47.5

46.6

2%

 

 

 

 

  1. The total number of fibre optic broadband internet subscribers among households grew by 4% to 9.8 million in the fourth quarter of 2021 compared to the corresponding period of 2020; ARPU grew by 1% to RUB 380.
  2. The total number of fibre optic broadband internet and VPN subscribers in B2B and B2G increased by 10% year-on-year to 0.7 million; ARPU was up by 3% to RUB 2,868.
  3. The number of IPTV users grew by 5% to 6.4 million users compared to the corresponding period of last year, with average ARPU of RUB 306;
  4. The number of active mobile Internet users grew in 4Q 2021 by 17.6% compared to the corresponding period of 2020. The mobile Internet data traffic growth reached 29%; at the same time, cellular customer base churn was 8.05%.The mobile subscriber base grew by 2% to 47.5 million users in 2021.

 

KEY EVENTS RELATING TO 2021 AND AFTER THE END OF THE REPORTING PERIOD

Business news

  • Rostelecom continues to develop and expand its range of products and services:
  • Wink:
    • New services:
      • "Film Swap" for free exchange of a purchased movie within the first 20 minutes of watching;
      • Mobile data exchange for movie minutes;
    • New subscription offers and packages "Transformer", "Maximum", "Premium", Wink+more.tv;
    • Partnership-based integration of Wink and VK Combo;
    • Seamless migration of all IPTV subscribers to Wink.

Wink was among top three leaders for the number of paying OTT subscribers posting a five-fold growth of the subscriber base[6]; the total number of active Wink users surpassed three million in FY 2021;

  • As part of the gaming product line expansion, with the Gaming tariff as a core service:
    • New gaming option launched to provide clients with a second account and share benefits with friends;
  • Expanded functionality and added options within Rostelecom.Key:
    • Video analytics and traffic control functions for special vehicles;
    • Wider range of compatible equipment and an integrated intercom panel Sputnik;
    • Omnichat options added to the mobile app for technical support and expanded functionality;

Rostelecom.Key currently covers over 242,000 apartments, while the number of video cameras connected to the 'Key' platform has exceeded 10,000.

  • As part of Smart Home solutions:
    • Face Detection service introduced with an option to programme the recording;
    • Further improvements to adhoc options, allowing for cloud recording only if an activity is recorded;

Three-fold growth of revenues from services compared to 2021.

  • Further improvements of the B2B product offering:
    • New services:
      • Wi-Fi 2.0 platform for B2B with an extended functionality for analysis of public Wi-Fi network users' activity;
      • Smart Office cloud service for remote control and administration of service facilities from anywhere in the world provided there is Internet access;
      • Transport monitoring service for assessing the fleet quality and state;
      • Ad designer service allowing clients to publicise content and control TV-sets remotely within the TV for corporates product;
      • Data Science powered personified solutions for SMEs;
      • Digital Contract Signing solution for SMEs;
      • Additional options for Hosted PBX, including voice analytics, voice-activated digital assistants, integration with mobile numbers and automatic analysis of calls;
  • Rostelecom continues to grow its digital segment:
  • As part of cloud and data center services:
    • All Rostelecom data centers are now PCI DSS[7] compliant;
    • Technical compatibility of the software for TIONIX VDI remote and virtual workstations and the Russian processors Baikal-T and Baikal-M;
    • New platform 'Public cloud platform' launched in a Moscow data center (Kurchatovsky);
    • Newly launched:
      • Second queue of the Udomlya data center for 800 racks;
      • New Novosibirsk data center for 304 racks;
      • New Tier III accredited data center for 207 racks launched in Moscow;
    • New facility acquired in the south of Moscow for the construction of four more data centers with a total rack capacity of 7,000.
    • CloudLine services launched in the Novosibirsk data centers;
    • Rostelecom ranked first in the rating of largest Russian data center operators based on CNews Analytics;

 

  • As part of cybersecurity services:
    • News services launched:
      • Solar advisor - employee efficiency monitoring system;
      • Solar Mss Sandbox service for protection against advanced cyber-attacks;
      • Cryptographic protection for the communication channels of Virtual Data Center users;
    • Projects realised:
      • Integration of a DLP-system Solar Dozor for Unipro, Zenith football club, Rosatom, National Bank of Kazakhstan;
      • Monitoring and emergency response within the infrastructures of Rosseti Ural and GLONASS;
      • Seven large contracts signed for the launch of Solar appScreener in the APAC region, including state bodies and Singapore airlines;
      • Adversary Emulation trainings for sector red teams under Ministry of Energy and cross-sector trainings for TMK and the Sinara group;
    • Center of expertise for cybersecurity services Solar MSS opened in Samara;
    • Solar JSOC was transformed into a center for cyber-attacks response;
    • The Moscow Institute of Engineering Physics test and certification center has chosen Solar appScreener for analysis of its software for compliance with the information security certification requirements of the Federal Service for Technical and Export Control of Russia;
    • Pilot launch of the Cyber Polygon training project;
  • Operator business segment highlights:
  • O2O[8] project:
    • revenues grew by 14% in FY 2021;
    • Fibre-optic line servicing expanded to 192.4 km (+6.1% compared with FY 2020);
    • Base stations servicing expanded to 103,500 units (+45% compared with FY 2020);
  • As part of international partners engagement:
    • Two 100 GBs channels provided to China Telecom for a long-term lease;
    • IP-transit for the Kyrgyzstani telecom leader Alfa Telecom (TM Megacom);
  • As part of Russian partners engagement:
    • Long-term contract signed with Megafon for a new service "Provision of an optic fibre segment".
    • Fibre opitics lease agreement signed with ER Telecom Holding for 17 segments of the transmission network.
    • Vladivostok-Tokyo channel with 10GBs in speed set up for VimpelCom;
  • As part of large projects and contracts:
    • Contract signed with Russian Post for provision of communications services for the country's largest corporate data network;
    • Rostelecom supplied Hosted PBX for over 1,800 offices of the Federal Treasury;
    • Rostelecom and Danone signed an agreement for supply and installation of TV-sets and other equipment to monitor health and wellbeing of visitors and employees;
    • Rostelecom supplied infrastructure for automated workspaces for Rskhb-Intekh;
    • Rostelecom has signed a contract for provision of cloud access to Carsharing Russia (Delimobil).
  • Mobile business with Tele2 at its core continues to progress:
  • New solutions for clients:
    • Option to exchange mobile minutes for movies, coffee and Xiaomi smartphones;
    • Option to save up minutes of gigabytes with no expiry date;
    • Family and friends discounts;
    • Option to use Telegram and Viber messengers, as well as smart parking assistant with zero balance on the account;
    • Register sim-cards remotely using unqualified electronic signature function in the GosKey app;
    • Option to purchase sim-cards on Yandex.Lavka, Yandex.Market and AliExpress;

 

Other news

  • Rostelecom presented its 2025 Strategy and the 2021-2023 Dividend Policy following the approval by the Board of Directors;
  • Rostelecom's Board of Directors has extended Michael Ossevsky's tenure as company president until 2027;
  • Acquisition of BFT Group, the leading digitisation provider for state management
  • Acquisition of TBE-Telecom, a provider of MVNE platform;
  • Consolidation of 100% of Rostelecom Digital Technologies;
  • Rostelecom achieved Resg1 rating by AK&M for its ESG reporting and disclosure;
  • Rostelecom tops the ESG rating by the National Rating Agency;
  • Rostelecom has been included in the Bloomberg Gender-Equality Index for the third consecutive year;
  • The company was named the best employer in the telecom sector, while Tele2 Russia assumed leadership among mobile operators based on hh.ru rating, and has received two gold and three silver awards at the Global Top Ranking Performers Awards;
  • Wink has won two awards for best OTT-service at Golden Ray and the Big Digit National awards.

 

 

 

 

 

 

 

 

 

OPERATING REVIEW

Revenue analysis

Revenue structure by services

RUB million

4Q 2021

4Q 2020

 change

2021

2020

 change

Mobile

 50,734  

 47,275  

7%

 194,345  

 176,958  

10%

Broadband

 27,256  

 23,625  

15%

 99,947  

 90,377  

11%

Digital

 37,942  

 30,442  

25%

 88,399  

 77,298  

14%

TV services

 10,172  

 9,792  

4%

 39,913  

 38,004  

5%

Wholesale services

 17,396  

 20,116  

(14%)

 74,075  

 74,762  

(1%)

Interconnect and traffic transit services

 4,313  

 4,593  

(6%)

 17,760  

 17,803  

0%

VPN

 5,986  

 8,216  

(27%)

 29,729  

 29,722  

0%

Rent of channels

 2,348  

 2,575  

(9%)

 9,707  

 10,095  

(4%)

Rent and maintenance of telecommunications infrastructure

 4,749  

 4,732  

0,4%

 16,879  

 17,142  

(2%)

Fixed telephony

 11,831  

 13,356  

(11%)

 48,862  

 54,620  

(11%)

Other services

 13,001  

 18,403  

(29%)

 34,551  

 34,870  

(1%)

Total

 168,332  

 163,009  

3%

 580,092  

 546,889  

6%

 

 

 

 

 

 

 

Revenue structure by segments and clusters

RUB million

4Q 2021

4Q 2020

 change

2021

2020

 change

1. Segments

90,449

93,602

(3%)

333,277

323 187

3%

B2C[9]

34,717

35,134

(1%)

138,430

138,290

0.1%

B2B/G[10]

39,853

43,044

(7%)

136,360

130,185

5%

B2O[11]

15,879

15,424

3%

58,487

54,712

7%

2. Digital Clusters

41,481

35,024

18%

89,569

75,656

18%

Data centers and cloud

12,512

11,678

7%

35,276

29,981

18%

Digital Region

10,255

9,604

7%

23,568

22,082

7%

Cyber Security

4,818

4,054

19%

8,856

6,024

47%

Others

13,896

9,688

43%

21,869

17,569

24%

3. Mobile

53,813

49,673

8%

205,283

185,765

11%

4. Other

3,969

4,046

(2%)

14,917

17,380

(14%)

Eliminations and corrections

(21,379)

(19,335)

-

(62,954)

(55,099)

-

Total

168,332

 163,009  

3%

580,092

546,889

6%

 

In the fourth quarter of 2021, revenue increased by 3% to RUB 168.3 billion, compared to the fourth quarter of 2020, as a result of the following factors:

  • a 25% increase in revenue from digital services, mainly due to the growth of public platform solutions, video surveillance, and the promotion of data centre services;
  • a 15% increase in revenue from broadband reflecting the proceeds from Internet connection contracts, growth of client base in fibre optic tariff plans and ARPU;
  • a 7% increase in mobile business, driven by an increase in mobile Internet use and basic voice services.

Core contribution to revenue in the fourth quarter of 2021 came from Digital clusters, Mobile business as well as connectivity services, predominantly in B2B/G segment

 

During the twelve months of 2021, revenue increased by 6% to RUB 580.1 billion, year-on-year, as a result of the following factors:

  • a 10% increase in mobile business, driven by an increase in mobile Internet use and basic voice services;
  • a 14% increase in revenue from digital services, mainly due to the growth of public platform solutions, video surveillance, and the promotion of data centre services and cloud;
  • a 11% increase in revenue from broadband reflecting the proceeds from Internet connection contracts, growth of client base in fibre optic tariff plans and ARPU.

Core contribution to revenue in the FY 2021 came from Mobile, Digital clusters (including Public Services and InfoSec), as well as B2B/G.

 

Operating income analysis

Operating expenses structure 

 

RUB million

4Q 2021

4Q 2020

 change

2021

2020

change

 

Personnel costs

(39,361)

(40,303)

(2%)

(137,209)

(136,389)

1%

 

Depreciation, Amortization and impairment losses

(39,428)

(35,245)

12%

(140,059)

(119,702)

17%

 

Interconnection charges

(25,114)

(26,482)

(5%)

(96,816)

(95,635)

1%

 

Materials, repairs and maintenance, utilities

(13,001)

(12,382)

5%

(43,426)

(40,302)

8%

 

Gain on the disposal of PPE and intangible assets

1,674

2,151

(22%)

9,051

5,992

51%

 

Impairment loss of financial assets measured at amortized cost

(123)

(4,030)

(97%)

(1,911)

(7,165)

(73%)

 

Other operating income

4,922

6,603

(25%)

20,736

21,883

(5%)

 

Other operating expenses

(49,892)

(46,026)

8%

(116,751)

(106,606)

10%

 

Total operating expenses

(160,323)

(155,714)

3%

(506,385)

(477,924)

6%

 
 

 

 

 

 

 

 

                           

In the fourth quarter of 2021, operating expenses increased by 3% compared to the corresponding period of 2020 and amounted to RUB 160.3 billion, largely due to the following factors:

  • a 12% increase (of RUB 4.2 bln) in depreciation, amortization and impairment losses, due to shorter useful life for a number of core objects financial assets and intangible assets;
  • an 8% increase (of RUB 3.9 bln) in other operating expenses, partially due to the formation of additional reserves, as well as promotion and marketing expenses;
  • a 25% decrease (of RUB 1.7 bln) in other operating income, mainly due to a rescheduled payment plan for the proceeds from the Bridging the Digital Divide project for future periods;
  • a 97% decrease (of RUB 3.9 bln) in impairment losses of financial assets measured at amortized cost, partially due to recovery of reserves for certain assets.

In the twelve months of 2021, operating expenses increased by 6% compared to the corresponding period of 2020 and amounted to RUB 506.4 billion due to the following factors:

  • a 17% increase (of RUB 20.4 bln) in depreciation, amortization and impairment losses, due to an increase in depreciation charges for new items of fixed assets, intangible assets and leases;
  • a 10% increase (of RUB 10.1 bln) in other operating expenses, partially due to the formation of additional reserves, as well as promotion and marketing expenses;
  • an 8% increase (of RUB 3.1 bln) in materials, repairs and maintenance and utilities, partly due to an increase in utility bills;
  • a 73% decrease (of RUB 5.3 bln) in impairment losses of financial assets measured at amortized cost, partially due to recovery of reserves for certain assets;
  • a 51% increase (of RUB 3.1 billion) in gain on the disposal of PPE and intangible assets, mainly due to improved performance in real estate portfolio management.

OIBDA structure by segments and clusters

RUB million

4Q 2021

4Q 2020

 change

2021

2020

 change

1. Segments

24,430

21 027

16%

110,952

97,515

14%

B2C

6,306

6,525

(3%)

36,734

33,556

9%

B2B/G

13,479

10,486

29%

57,231

49,522

16%

B2O

4,645

4,015

16%

16,987

14,437

18%

2. Digital Clusters

12,700

9,013

41%

25,438

20,586

24%

Data centers and cloud

5,236

3,980

32%

15,245

12,450

22%

Digital Region

1,919

1,196

60%

5,094

4,415

15%

Cyber Security

2,204

1,852

19%

3,216

1,752

84%

Others

3,341

1,985

68%

1,883

1,970

(4%)

3. Mobile

21,806

17,878

22%

88,082

75,051

17%

4. Other

(6,469)

593

-

1,699

6,024

(72%)

Eliminations and corrections

(3,351)

(4,020)

 

(7,357)

(5,126)

 

Total

49,116

44,491

10%

218,814

194,050

13%

Operating profit increased by 10% in 4Q 2021 to RUB 8.0 billion and increased by 7% to RUB 73.7 billion in FY 2021 year-on-year.

OIBDA for 4Q 2021 increased by 10% to RUB 49.1 billion and by 13% to RUB 218.8 billion in FY 2021 year-on-year. OIBDA dynamics were influenced by revenue growth, and the above-mentioned changes in operating expenses. The OIBDA margin in 4Q 2021 increased by 1.9 p.p. to 29.2% compared to the 4Q 2020. OIBDA margin in FY 2021 increased by 2.2 pp to 37.7% compared to FY 2020. Higher OIBDA in FY 2021 was mainly influenced by higher revenues in the mobile and B2B/G segments.

Net Income Analysis

In 4Q 2021, loss before tax stood at RUB (0.6) billion, compared to RUB (0.7) billion in the corresponding period of 2020. In FY 2021, profit before tax increased by 20% to RUB 40.8 billion compared to FY 2020. Loss before tax in 4Q 2021 was caused by uneven distribution of certain expenses across the calendar year. The dynamics of profit before tax in FY 2021 was driven by higher operating income and no foreign exchange losses in 2021.

The recovery of income tax in 4Q 2021 was RUB 1.1 billion compared to income tax of RUB 0.8 billion in 4Q 2020. In FY 2021, income tax was RUB 9.0 billion compared to RUB 8.7 billion in FY 2020. The recovery of income tax in 4Q 2021 was driven by the tax effect related to one-off accruals. The dynamics of income tax in FY 2021 was driven by changes in profit before tax, as well as expenditures, which are not deductible for tax purposes.

Net income in 4Q 2021 stood at RUB 0.5 billion, compared to RUB (1.5) billion the corresponding period of 2020, and in FY 2021 - net income increased by 26% to RUB 31.8 billion versus the FY 2020.

Financial review

Net operating cash flow in 4Q 2021 remained almost intact and reached RUB 59.3 billion, compared to the corresponding period of 2020. In FY 2021 net operating cash flow increased by 11% to RUB 152.5 billion compared to FY 2020.

Cash outflow for investments in non-current assets excluding state programmes in 4Q 2021 increased by 18% to RUB 42.5 billion (25.3% of revenue) and including state programmes it increased by 9% to RUB 56.6 billion (33.6% of revenue). Cash outflow for investments in non-current assets excluding state programmes in FY 2021 increased by 11% to RUB 118.7 billion (20.5% of revenue) and including state programmes it increased by 9% to RUB 147.8 billion (25.5% of revenue).

FCF in 4Q 2021 totalled RUB 15.9 billion compared to RUB 19.6 billion in 4Q 2020. Free cash flow in FY 2021 increased by RUB 9.8 billion (+43% year-on-year) and reached RUB 32.5 billion. The FCF dynamics in 4Q 2021 and FY 2021 was driven by OIBDA growth, changes in working capital, mainly due to higher advance payments for platform solutions projects for the digital government. This in turn determined a more intensive investment programme in the end of 2021.

Free Cash Flow (RUB, billion)

 

As at December 31, 2021, including lease liabilities, the Group's total debt increased by 12% and amounted to RUB 568.7 billion, partially driven by the increase in lease liabilities following the reconsideration of capitalisation terms in rent contracts. 100% of the Group's total debt remained rouble-denominated as at December 31, 2021.

As at December 31, 2021, the Group's net debt, including lease liabilities, increased by 8% compared to the beginning of the year and amounted to RUB 505.2 billion. The net debt /OIBDA ratio[12] decreased to 2.3x from 2.4x for the last twelve months.

 

* * *

APPENDICES

  1. Reconciliation of OIBDA;
  2. Statement of Comprehensive Income for FY 2021;
  3. Statement of Cash Flows for FY 2021;
  4. Statement of Financial Position for FY 2021.

APPENDIX 1: RECONCILIATION OF OIBDA

OIBDA is a non-U.S. GAAP and non-IFRS financial measure, which the Company defines as operating income before depreciation and amortisation as well as some certain expenses. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance capital expenditures, acquisitions and other investments and our ability to incur and service debt.

The following indicators are not taken into account in the calculation of OIBDA:

  • Expenses related to the long-term management incentive programme, implying accruals in personnel costs line;
  • Expenses related to non-government pension insurance.

 

RUB million

4Q 2021

4Q 2020

change

2021

2020

change

Operating income

8,009

7,295

10%

73,707

68,965

7%

Plus amortisation

(39,428)

(35,245)

12%

(140,059)

(119,702)

17%

Plus expenses related to the long-term management incentive programme

(1,243)

(1,679)

(26%)

(3,744)

(4,205)

(11%)

Plus expenses related to non-government pension insurance

(436)

(272)

60%

(1,304)

(1,178)

11%

OIBDA

49,116

44,491

10%

218,814

194,050

13%

OIBDA margin, %

29.2%

27.3%

 

37.7%

35.5%

 

 

 

APPENDIX 2: Statement of Comprehensive Income for FY 2021

 

 

 

Year ended 31 December

 

 

2021

2020

(restated)

Revenue

 

580,092

546,889

 

 

 

 

Operating expenses

 

 

 

Wages, salaries, other benefits and payroll taxes

 

(137,209)

(136,389)

Depreciation, amortization and impairment losses

 

(140,059)

(119,702)

Interconnection charges

 

(96,816)

(95,635)

Materials, utilities, repairs and maintenance

 

(43,426)

(40,302)

Gain on disposal of property, plant and equipment and intangible assets

 

9,051

5,992

Impairment loss of financial assets measured at amortized cost

 

(1,911)

(7,165)

Other operating income

 

20,736

21,883

Other operating expenses

 

(116,751)

(106,606)

Total operating expenses, net

 

(506,385)

(477,924)

Operating profit

 

73,707

68,965

 

 

 

 

Share of net profit of associates and joint ventures

 

261

969

Financial income

 

2,205

2,032

Finance costs

 

(38,923)

(36,670)

Other investing gain/(loss), net

 

3,230

(91)

Foreign exchange gain/(loss), net

 

336

(1,183)

Profit before income tax

 

40,816

34,022

Income tax expense

 

(8,984)

(8,659)

Profit for the year

 

31,832

25,363

Other comprehensive income/(loss)

 

 

 

Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods

 

 

 

Exchange differences on translation of foreign operations

 

196

181

Net other comprehensive income to be reclassified to profit or income in subsequent periods

 

196

181

Other comprehensive income/(loss) not to be reclassified to profit or loss in subsequent periods

 

 

 

Remeasurement of defined benefit pension plans

 

75

21

Share of other comprehensive income of associates

 

57

-

Income tax on remeasurement of defined benefit pension plans

 

(15)

(4)

Net other comprehensive income not to be reclassified to profit or loss in subsequent periods

 

117

17

Other comprehensive income for the year, net of tax

 

313

198

Total comprehensive income for the year

 

32,145

25,561

 

 

 

 

Profit attributable to:

 

 

 

Equity holders of the Group

 

28,549

23,326

Non-controlling interests

 

3,283

2,037

 

 

 

 

Total comprehensive income attributable to:

 

 

 

Equity holders of the Group

 

28,862

23,524

Non-controlling interests

 

3,283

2,037

Earnings per share attributable to equity holders of the Group -
basic (in roubles)

 

8.50

7.43

Earnings per share attributable to equity holders of the Group -
diluted (in roubles)

 

8.40

7.32

 

APPENDIX 3: Statement of Cash Flows for FY 2021

 

 

 

Year ended 31 December

 

 

2021

2020 
(restated)

Cash flows from operating activities

 

 

 

Profit before tax

 

40,816

34,022

 

 

 

 

Adjustments to reconcile profit before tax to cash generated from operations

 

 

 

Depreciation, amortization and impairment losses

 

140,059

119,702

Gain on disposal of property, plant and equipment and intangible assets

 

(9,051)

(5,992)

Impairment loss of financial assets measured at amortized cost

 

1,911

7,165

Share of net profit of associates and joint ventures

 

(261)

(969)

Finance income

 

(2,205)

(2,032)

Finance costs excluding finance costs on employee benefit obligations

 

38,889

36,622

Other investing gain/(loss), net

 

(3,230)

91

Foreign exchange (gain)/loss, net

 

(336)

1,183

Share-based motivation program

 

3,508

3,860

 

 

 

 

Increase in accounts receivable and contract assets

 

(13,004)

(7,278)

Increase in employee benefits

 

236

321

Increase in inventories

 

(1,769)

(243)

Increase in accounts payable, provisions and accrued expenses

 

11,182

11,094

Increase in contract costs, prepayments and other assets

 

(17,022)

(16,873)

Increase/(decrease) in other liabilities

 

10,690

(2,064)

Net cash generated from operations before income tax and interests paid

 

200,413

178,609

 

 

 

 

Interest paid

 

(39,043)

(35,594)

Income tax refund

 

42

1,706

Income tax paid

 

(8,942)

(7,931)

Net cash from operating activities

 

152,470

136,790

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment and intangible assets

 

(147,840)

(135,987)

Proceeds from sale of property, plant and equipment, intangible assets and assets held for sale

 

10,333

6,236

Acquisition of financial assets

 

(24,356)

(14,196)

Proceeds from disposals of financial assets

 

19,253

11,461

Interest received

 

1,118

719

Subsidy from Government

 

16,418

14,901

Dividends received

 

444

569

Purchase of subsidiaries and business, net of cash acquired

 

(2,661)

(119,444)

Distribution received from joint venture

 

399

1,665

Proceeds from disposals of equity accounted investees

 

462

-

Proceeds from disposal of subsidiaries, net of cash disposed

 

195

(74)

Acquisition of equity accounted investees

 

(722)

(1,574)

Net cash used in investing activities

 

(126,957)

(235,724)

 

 

 

 

Cash flows from financing activities

 

 

 

Issue of share capital

 

-

66,000

Purchase of treasury shares

 

(4,343)

-

Proceeds from bank and corporate loans

 

591,793

847,214

Repayment of bank and corporate loans

 

(566,040)

(852,883)

Proceeds from bonds

 

14,944

50,000

Repayment of bonds

 

(1,945)

(1,934)

Repayment of vendor financing payable

 

-

(2)

Proceeds from / (repayment of) other non-current financing liabilities

 

-

(29)

Proceeds from sale of non-controlling interests

 

-

35,000

Repayment of lease liabilities

 

(18,560)

(14,682)

Acquisition of non-controlling interests

 

(4,480)

(36)

Dividends paid to shareholders of the Group

 

(16,797)

(16,664)

Dividends paid to non-controlling shareholders of subsidiaries

 

(1,750)

(1,433)

Net cash (used in)/from financing activities

 

(7,178)

110,551

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

20

(357)

Net increase in cash and cash equivalents

 

18,355

11,260

 

 

 

 

Cash and cash equivalents at beginning of the year

 

31,215

19,955

Cash and cash equivalents at the end of the year

 

49,570

31,215

 

APPENDIX 4: Statement of Financial Position for FY 2021

 

 

31 December

2021

31 December

2020

(restated)

 

 

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

 

607,638

575,851

Goodwill and other intangible assets

 

149,007

141,184

Right of use assets

 

113,202

95,733

Trade and other accounts receivable

 

7,174

6,317

Investments in associates and joint ventures

 

14,056

10,896

Other financial assets

 

3,017

815

Other non-current assets

 

13,063

12,900

Deferred tax assets

 

10,666

9,027

Contract assets

 

439

972

Contract costs

 

16,749

16,326

Total non-current assets

 

935,011

870,021

 

 

 

 

Current assets

 

 

 

Inventories

 

12,572

10,792

Contract assets

 

7,758

6,710

Contract costs

 

947

674

Trade and other accounts receivable

 

59,190

50,166

Prepayments

 

11,429

8,953

Prepaid income tax

 

1,842

1,377

Other financial assets

 

13,965

11,482

Other current assets

 

9,888

7,892

Cash and cash equivalents

 

49,570

31,215

Asset classified as held for sale

 

716

831

Total current assets

 

167,877

130,092

Total assets

 

1,102,888

1,000,113

 

 

 

 

Equity and liabilities

 

 

 

Equity attributable to equity holders of the Group

 

 

 

Share capital

 

95

95

Treasury shares

 

(13,345)

(14,374)

Retained earnings and other reserves

 

200,726

194,424

Total equity attributable to equity holders of the Group

 

187,476

180,145

Non-controlling interests

 

39,926

37,604

Total equity

 

227,402

217,749

 

 

 

 

Non-current liabilities

 

 

 

Loans and borrowings

 

342,136

372,406

Lease liabilities

 

103,722

86,392

Employee benefits

 

6,906

6,670

Deferred tax liabilities

 

44,641

41,851

Accounts payable and accrued expenses

 

1,047

1,580

Contract liabilities

 

15,300

15,811

Provisions

 

5,730

5,848

Other non-current financial liabilities

 

21,443

10,774

Other non-current liabilities

 

43,286

32,831

Total non-current liabilities

 

584,211

574,163

 

 

 

 

Current liabilities

 

 

 

Loans and borrowings

 

102,271

32,535

Lease liabilities

 

20,603

17,399

Accounts payable and accrued expenses

 

82,401

96,082

Income tax payable

 

3,365

3,023

Contract liabilities

 

42,512

34,680

Provisions

 

22,816

9,413

Other financial liabilities

 

-

1,914

Other current liabilities

 

17,307

13,155

Total current liabilities

 

291,275

208,201

Total liabilities

 

875,486

782,364

Total equity and liabilities

 

1,102,888

1,000,113

 

PJSC Rostelecom is the largest integrated digital services and products provider, operating in all segments of the telecommunications market in Russia. The Company serves millions of households, state and private enterprises across the country.

Rostelecom is Russia's undisputed market leader, providing high-speed Internet access and pay-TV. The total number of fibre broadband users stands at c.11 mln users, it has 11 mln pay-TV customers, over 6.4 mln of which are subscribed to Rostelecom's IPTV services. Tele2 Russia, a Rostelecom subsidiary, is a major player in the mobile market with over 47.5 mln subscribers and the industry-leading NPS, a customer satisfaction benchmark.

During the FY 2021, the Group generated RUB 580.1 bln of revenues, RUB 218.8 bln of OIBDA (37.7% of revenue) and RUB 31.8 bln of net income.

The Group is the leading provider of telecommunications services to government bodies and corporates of all levels.

Rostelecom is a key strategic innovator that provides solutions in the following fields: E-Government, cybersecurity, data-centres and cloud computing, biometry, healthcare, education and housing & utility services.

 

*   *   *

Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and intended to be covered by the safe harbours created thereby.

Those forward-looking statements include, but are not limited to:

  • Assessment of PAO Rostelecom's (the Company) future operating and financial results as well as forecasts of the present value of future cash flows and related factors;
  • The Company's plans to take ownership stakes in other organisations;
  • the Company's anticipated capital expenditures and plans to construct and modernize its network;
  • the Company's expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing;
  • the Company's plans with respect to improving its corporate governance practices;
  • the Company's expectations as to its position in the telecommunications market and forecasts on the development of the market segments within which the Company operates;
  • economic outlook and industry trends;
  • the Company's expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company's activity;
  • other statements regarding matters that are not historical facts.

 

Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:

  • risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;
  • risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies;
  • risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company's services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market;
  • technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies;
  • other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company's Annual Report and the Company's other public filings.

Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances upon the annual report publication or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.

 


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

[2] 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.

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

[4] Here and below, Net Debt is calculated as long-term and short-term loans and borrowings, (a) plus long- and short-term lease liabilities, (b) minus cash and cash equivalents, and (c) minus other financial assets.

[5] Average revenue per user

[6] Based on GFK data

[7] Payment Card Industry Data Security Standard

[8] Operator to Operator

[9] Customers

[10] Corporate and government clients

[11] Operators

[12] OIBDA for the last twelve months



ISIN: US7785291078
Category Code: ACS
TIDM: RKMD
LEI Code: 2534001D752JPNM0H170
Sequence No.: 146813
EQS News ID: 1294351

 
End of Announcement EQS News Service

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