Page 8 - bne_Tech_04_2020

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April 2020 www.intellinews.com I Page 8
Russia's MTS mobile major posts solid results in 4Q19, considers buyback
Russian mobile major Mobile TeleSystems (MTS) has reported its 4Q19 IFRS results, with revenues up 4% year on year to RUB127bn ($1.74bn), the key driver being service revenues n Russia (3.3% gain y/y). The company's Ebitda was up 1% y/y to RUB52bn, making a 42% margin.
Following the recent sale of its Ukrainian division, net profit halved to RUB5.5bn due to the one-off loss of RUB4.5bn on discontinuing the operations. At the same time, the consolidation of MTS Bank continued to support the parent with a 44% y/y gain in banking and fintech revenues.
As reported by bne IntelliNews, MTS is Russia's most valuable telecom brand and at the end of 2019 it presented a new strategy, called CLV 2.0 (customer lifetime value), which will replace the previous 3D strategy (data, digital, dividends).
The company guides for its 2020 revenues to grow 3% y/y, with Ebitda at least flat, and capex of RUB90bn (RUB83bn in 2019).
MTS management considers its shares to be currently undervalued and plans to propose
a RUB15bn buyback programme to the BoD, while seeing the Fx CapEx and debt exposure
as hedged. Current dividend policy stipulates
a payout of at least RUB28 per share a year (RUB56 per ADR), implying a 10% dividend yield, Sberbank CIB estimated on March 13.
MTS "business fundamentals remain fairly solid, while the company believes its FX exposure is mostly hedged. That the company is considering a buyback may be supportive for the share price," BCS Global Markets commented on March 13, seeing the 4Q19 results as positive, and reiterating a Hold recommendation for
the shares.
"The 2020 guidance was quite conservative and below our forecasts," Sberbank notes. The bank believes that the "key thing to look out for now is an update on when the buyback programme will start."
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