REG-Rostelecom OJSC 1st Quarter Results <Origin Href="QuoteRef">RTKM.MM</Origin>

Rostelekom PAOAnnouncement

17/05/2016 13:10

      1st Quarter Results    
ROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING RESULTS FOR THE       FIRST QUARTER OF 2016
REVENUE GREW BY 1.1% TO RUB 72.5 BILLION IN 1Q 2016
NET PROFIT INCREASED BY 43% TO RUB 3.0 BILLION
Moscow, Russia  May 17, 2016 - Rostelecom PJSC (MOEX: RTKM,       RTKMP; OTCQX: ROSYY), Russias national telecommunications operator,       today announces its consolidated financial results for the first quarter       of 2016 prepared in accordance with IFRS1.    
KEY ACHIEVEMENTS
        The digital segments2 contribution to total revenue         reached 42%;      
        Rostelecom accounted for half of the new subscriptions achieved in the         pay-TV3 market;      
        Total fibre optic network coverage reached 31.1 million households by         the end of the first quarter of 2016;      
        Strong financial results.      
FIRST QUARTER 2016 FINANCIAL HIGHLIGHTS
        Revenue grew by 1.1% to RUB 72.5 billion;      
        OIBDA4 increased by 1% and amounted to RUB 24.7 billion;      
        OIBDA margin of 34.0% compared to 34.2% in the first quarter of 2015;      
        Net profit increased by 43% to RUB 3.0 billion;      
        CAPEX5 increased by 16% year-on-year to RUB 19.0 billion         (26.2% of revenue) from RUB 16.3 billion (22.7% of revenue) in the         first quarter of 2015;      
        Consolidated Free Cash Flow (FCF) was RUB -2.4 billion compared to RUB         0.4 billion in the corresponding period of last year;      
        Net debt6 remained relatively flat since the beginning of         the year and amounted to RUB 176.5 billion, resulting in a Net         Debt/OIBDA ratio of 1.7x.      
Key figures for 1Q 2016
RUB million
                  
1Q 2016
                  
1Q 2015
                  
% change, y-o-y
Revenue
72,464
71,710
1.1%
          OIBDA        
24,670
24,492
1%
OIBDA margin %
34.0%
34.2%
Operating Income
8,502
9,269
(8%)
Operating margin %
11.7%
12.9%
Net Income
3,002
2,099
43%
% of revenue
4.1%
2.9%
Capital Expenditure
18,964
16,286
16%
% of revenue
26.2%
22.7%
Net debt
176,532
171,259
3%
Net debt/ annualised OIBDA
1.7
1.7
FCF
(2,427)
403
-
Sergei Kalugin, President of Rostelecom, commented:
We started 2016 with confidence, having achieved strong operating and       financial results within the first three months of the year. This was       made possible through the development of our digital services on the       basis of an upgraded network infrastructure, improved customer services,       and our continuing work to enhance operational efficiency. The strong       momentum that we have developed will ensure the timely implementation of       our strategic initiatives. For the remainder of 2016, a great deal of       our attention will be spent on building business in new digital       segments, in improving our organisational structure and the launch of       new network infrastructure transformation programmes. I am confident       that with the support of our customers, partners and shareholders, we       will be able to achieve our goals and evidence continued progress       towards the implementation of the Company's strategy, and ultimately at       increasing the Companys value.
Kai-Uwe Mehlhorn, Senior Vice-President and Chief Financial Officer,       added:
Rostelecom has achieved growth across all major metrics during the       first quarter having reported increases in revenue, OIBDA and net       income. This was driven by the continued increase in our pay-TV and       broadband subscriber base and reflects our efforts to actively promote       our digital services, including those related to the Smart City       project, geodata, data centres, and OTT products. We were also able to       optimize personnel costs and make savings on materials and repairs.       Based on these results we are able to confirm our forecast for 2016: we       expect this year's revenue to grow by 1-2%, OIBDA to stay at the same       level as in 2015 and capital expenditure to be less than 19% of revenues       (excluding the Bridging the Digital Divide project).
OTHER INFORMATION: CONFERENCE CALL
      Rostelecoms management will hold a conference call and webcast today at       6.00 PM (Moscow), 5.00 PM (CET), 4.00 PM (UK) and 11.00 AM (NYT). To       participate in the conference call, please dial:    
      Russia: +7 495 213 0977    
      UK/ International: +44 (0) 20 3427 1911    
      USA: +1 646 254 3360    
      Access code: 6765742    
      A webcast of the conference call will be available at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=3491.    
      A replay of the conference call will be available on the Companys       website: http://www.rostelecom.ru/en/ir/results_and_presentations/financials/IFRS/2016/1       in due course.    
      * * *    
      Rostelecom (www.rostelecom.ru)       is one of the largest national telecommunications operators in Russia       and Europe. The Company operates in all segments of the       telecommunications market and covers millions of households in Russia.    
      Rostelecom is an undisputable leader of the broadband and pay-TV markets       in Russia with over 11.9 million fixed-line broadband subscribers and       over 8.8 million pay-TV subscribers, over 3.7 million of which are       subscribed to Rostelecoms IPTV services.    
      In the first quarter of 2016 the Group generated RUB 72.5 billion of       revenues, RUB 24.7 billion of OIBDA (34% of revenue) and RUB 3 billion       of net income.    
      The Group is a market leader in providing telecommunications services to       government bodies and corporates of all levels.    
      Rostelecom is an important innovator that provides solutions in the       field of E-Government, cloud computing, healthcare, education, security       and housing & utility services.    
      The Groups stable financial position confirmed by its credit ratings.       Rostelecom was assigned BBB- and BB+ international credit ratings by       Fitch Ratings and Standard&Poors respectively.    
      * * *    
      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 Rostelecoms (the Company) future operating and         financial results as well as forecasts of the present value of future         cash flows and related factors;      
        The Companys plans to take ownership stakes in other organisations;      
        the Companys anticipated capital expenditures and plans to construct         and modernize its network;      
        the Companys 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 Companys plans with respect to improving its corporate governance         practices;      
        the Companys 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 Companys expectations as to the regulation of the Russian         telecommunications industry and assessment of impact of regulatory         initiatives on the Companys 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 Companys 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 Companys Annual Report and the Companys         other public filings.      
      Many of these factors are beyond the Companys 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 International financial reporting standards.    
2 The digital segment comprises broadband, pay-TV, VPN, VAS       and cloud services.    
3 According to data by the analytical agency Telecom Daily    
4 Here and below, please refer to Attachment 1 of this       statement for a full definition of OIBDA.    
5 Here and below, capital expenditure (CAPEX) comprises       cash spent on fixed assets and intangible assets.    
6 Here and below, Net Debt is calculated as total debt less       cash, cash equivalents and short-term investments (other financial       assets).    
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      Rostelecom OJSC