Investor Presentation - Investor... · Investor Presentation . 0 170 231 240 78 35 ... exclude mobile…

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  • 0 170 231

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    Investor Presentation

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    www.rostelecom.ru

    Todays Presenters

    2

    Sergey

    Kalugin

    President, CEO

    Ekaterina

    Ustinova

    Head of Investor Relations

    Kai-Uwe

    Mehlhorn

    Senior Vice-President,

    CFO

    Maria

    Florentieva

    Vice-President,

    Strategy and Investor

    Relations

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    www.rostelecom.ru

    51.1%

    20.1%

    28.8%

    Rostelecom at a Glance

    3

    Strong Subscriber Base &

    Market Share3

    Financial Results 1H14

    Broadband

    10.9 mln

    41%

    Shareholder Structure 1

    Other Shareholders

    Treasury shares2

    Strengthened Positions

    in Mobile Business

    Rostelecom holds 45% in T2-RTK (Tele2

    Russia), a national mobile player

    Combined mobile market share3 (by subs)

    156.4*

    RUB bln

    -2% YoY

    REVENUES

    +3% YoY

    fixed

    24.8

    RUB bln

    15.9%

    to Sales

    CAPEX

    -24% YoY

    54.1*

    RUB bln

    34.6%

    margin

    OIBDA

    35.4%

    margin fixed

    176.2

    RUB bln

    1.6x

    to OIBDA

    NET DEBT

    RUB 41.1 bln

    improvement

    State Property

    Agency 47%

    4.1%

    State stake

    B2C 50%

    B2B 23%

    B2G 14%

    B2O 13%

    Revenue Mix by Segments 1H14

    MTS 32%

    Megafon 28%

    Vimpelcom 23%

    T2-RTK 15%

    Other 2%

    * Including effect of RUB 11.1 bln on revenue and effect of RUB 2.8 bln on OIBDA from

    discontinued operations.

    Pay-TV

    7.7 mln

    22%

    Fixed Voice

    25.6 mln

    69%

    1 As of October 1, 2014

    2 Including shares owned by Mobitel

    3 As of the end of 2Q2014

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    Content

    4

    Investment Highlights

    1

    Rostelecom Strategic Priorities

    2

    Financial Results & Outlook

    3

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    1. Investment Highlights

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    Investment Highlights

    6

    2

    3

    4

    5

    6

    1

    Exposure to

    attractive markets

    with strong growth

    profiles

    Leading positions

    in most Russian

    telecom segments

    Unique and largest

    fixed-line network

    in Russia

    Significant upside

    potential from

    operational

    efficiencies

    Robust financial

    profile

    Management team

    with significant TMT

    experience

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    2.3

    4.9 7.2

    9.5 11.8

    14.1

    2013 2014F 2015F 2016F 2017F 2018F

    Exposure to Attractive Markets with Strong

    Growth Profiles

    7

    1

    Pay TV and IPTV penetration in Russia3

    Fixed Broadband Penetration1 (2013)

    VoD Market Volume4 (RUB bln) Mobile Data Market Volume4 (RUB bln)

    ARPU CAGR 2013-2017 = 3%

    5.5 6.6 8.0

    9.5 10.8 12.0

    13.1 14.0

    1.1 2.1

    3.4

    4.4

    5.2

    6.1 6.9

    7.5

    0.4

    0.7

    0.9

    1.1

    1.4

    1.6

    1.9

    6.7

    9.1

    12.1

    14.8

    17.2

    19.5

    21.6

    23.4

    2012 2013 2014F 2015F 2016F 2017F 2018F 2019F

    2Play (BB & Voice) 3Play (BB, TV & Voice) 4Play (BB, TV, Voice & Mobile)

    Bundle subscribers in Russia2 (mln)

    102 129

    157 183

    203 222

    237

    2012 2013 2014F 2015F 2016F 2017F 2018F

    Source:

    1 Company estimates, iKS-Consulting, Pordata.pt, ITU

    2 Ovum

    3 JSon & Partners Consulting

    4 iKS-Consulting

    40% 44% 47%

    49% 50% 50% 53%

    60% 61% 63% 64% 65% 66%

    67% 69% 71%

    82% 83% 89% 89%

    97%

    5%

    7%

    9%

    11% 12%

    13% 14%

    58%

    64%

    70%

    75% 78%

    81% 83%

    2012 2013 2014F 2015F 2016F 2017F 2018F

    IPTV Pay TV

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    Rostelecom 41%/36%*

    ER-Telecom 10%/9%

    Rostelecom 22%/23%

    Tricolor 29%/14%

    Leading Positions in Most Russian Telecom

    Segments

    8

    2

    IPTV

    Broadband B2C

    Pay-TV

    Broadband B2B

    Rostelecom 44%/30%

    MTS 9%/12%

    #1 by subscribers

    & revenue

    #1 by revenue

    Market share by subscribers / by revenue

    Rostelecom 59%/61%

    Vimpelcom 23%/26%

    Estimated market size in 2H2013-1H2014

    * Source: iKS-Consulting, AC&M Consulting for B2C broadband market share by subscribers

    Note: All data shown includes Russia only. For Tricolor TV only paying subscribers are taken into account

    VimpelCom Others Tricolor Megafon ER-Telecom MTS Rostelecom

    112 RUB bln

    55 RUB bln

    58 RUB bln

    9 RUB bln

    #1 by subscribers

    & revenue

    #1 by subscribers

    & revenue

  • www.rostelecom.ru

    Largest Fixed-Line Network in Russia to Support

    Growth

    9

    Growing Demand for Speed and Capacity

    IP Traffic Growth2

    3x

    2013

    2018

    Rostelecom is well positioned to support

    this demand.

    500,000 km of backbone

    Total footprint ~ 55 mln

    Total homes passed ~ 34 mln

    Total households upgraded to fiber by the

    end of 2016 ~ 33 mln

    and monetize its network competitive

    advantages

    Upselling B2C and B2B customers to

    fiber for higher speeds and video products

    Reliable and secure nation-wide

    solutions for B2B and B2G clients

    Implementation of Bridging Digital

    Divide program

    Total capacity required

    in 20151

    > 100 Mb/s

    3

    1 Average capacity required in metropolis area. Source: Company estimates

    2 Source: Cisco

    Fixed Internet Traffic,

    PB per month2

    12 18

    22 28

    35 40

    Average BB Speed

    in CEE, Mbps2

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    Significant Upside Potential from Operational

    Efficiencies

    10

    COST EFFECT

    Network Modernization

    Network

    Maintenance

    Cost

    REVENUE EFFECT

    High End Tariffs & Value

    Added Services

    Personnel Efficiency

    Improvement

    Optimization of Retail Chain

    & Real Estate Portfolio

    Customer Care

    Improvement

    Procurement Optimization

    Excessive

    Functions

    Eliminations Productivity

    Property

    Maintenance

    Cost Income from

    Disposals

    Customer

    Service Cost Customer

    Satisfaction

    Prices Vendor

    compe-

    tition

    Stable

    4

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    32.7

    24.8

    1H13

    1H14

    28.8

    21.2

    1H13

    1H14

    9.0%

    10.8% 2Q14

    2Q13

    7.2

    8.2 2Q14

    2Q13

    4.1

    4.9 2013

    2012

    2.4

    3.1 2013

    2012

    71.0

    72.6 2Q14

    2Q13

    79.9

    76.0 2Q14

    2Q13

    Robust Financial Profile

    1 Consolidated P&L data for 2013 and 1Q14 include the entire mobile business of

    Rostelecom, while the data for 2Q14 exclude mobile subsidiaries transferred to JV with

    Tele2 Russia.

    2 OIBDA = Operating Profit excl. Long-term motivation program accrual expenses plus

    Depreciation & Amortization 11

    Revenue

    Revenue

    fixed-line

    Capex

    Ordinary

    share

    Preferred

    share

    27.5

    26.2 2Q14

    2Q13

    29.1

    27.6 2Q14

    2Q13 OIBDA

    OIBDA

    fixed-line Cap

    ex

    (R

    UB

    bln

    )

    Reve

    nu

    e 1 (

    RU

    B b

    ln)

    Capex

    fixed-line OIB

    DA

    2 (

    RU

    B b

    ln)

    Div

    ide

    nd

    s (

    RU

    B)

    OIB

    DA

    ma

    rgin

    (%

    )

    Net

    Inc

    om

    e &

    ma

    rgin

    38.7%

    36.0% 2Q14

    2Q13