Page 186 - RusRPTMay21

9.2.8 Telecoms corporate news
Rostelecom hosted a CMD on April 21 where it presented an upbeat strategy until 2025 and a new dividend policy. The strategy provides upside to our expectations and includes the following ultimate goals for 2025:
Revenues of more than R700bn, 5% CAGR 2020-25, including 4% CAGR for B2C and B2B/G segments and higher growth of digital clusters (data centers and cloud, information security, digital medicine, digital region, e-government and other) that by 2025 should reach 25% of revenues.
OIBDA margin of 40%+, up from 35.5% in 2020. This will be due to growth of operating leverage and tight cost control, including a reduction of staff costs as a percentage of revenues to 20%, from around 25% in 2020.
Reduce the capex/revenue ratio to 19%, from 25% in 2020, which will allow capex to be kept flat at 2020 levels in absolute terms, while the absolute investment in the fastest-growing projects will increase.
Achieve a target net debt/OIBDA of below 2.5.
The main priorities for Rostelecom are:
Smart growth and operating efficiency to provide a higher rate of return on investment and cash flow.
Achieve the top position in each of the digital clusters and grow them to 25% of revenues; monetize through strategic partnerships and IPO.
Preserve and expand its role as a key partner in the digitization of the state.
According to the new dividend policy for 2021-23, the company will strive to pay at least R5 per common share and at least 5% more per share than in the previous reporting year, although the payout should not exceed 100% of IFRS net income.
We see the financial targets presented as upbeat in terms of cash flow (given the upside to our OIBDA margin and the lower capex/revenue ratio), while, in light of the expected FCF growth, we believe that the new dividend policy looks too conservative and might provide upside risk in the future.
Veon reported 1Q21 IFRS. The results were in line with our forecasts, while showing a slight beat vs consensus.
186 RUSSIA Country Report May 2021 www.intellinews.com