Rostelecom financial and operating results for the third quarter and nine months of 2021

Print version 09.11.2021

Third quarter revenue increased by 5%, with OIBDA^[1] up 9%

Moscow, Russia – November 9, 2021 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest digital service provider in Russia, today announces its consolidated financial results for the third quarter and nine months of 2021 prepared in accordance with IFRS.

Third quarter 2021 financial highlights

• Revenue increased by 5% to RUB 141.2 billion compared to 3Q 2020;
• OIBDA up 9% to RUB 58.3 billion;
• OIBDA margin up 1.5 p.p. to 41.3%;
• Net profit of RUB 8.4 billion, compared to RUB 11.8 billion reported in 3Q 2020;
• CAPEX^[2] excluding state programs increased by 1% year-on-year to RUB 24.6 billion (17.4% of revenue);
• FCF^[3] of RUB 13.3 billion, compared to RUB 18.9 billion for the same period of 2020;
• Net Debt^[4] (including lease liabilities) increased by 8% YTD, amounting to RUB 502.5 billion, resulting in a Net Debt (including lease liabilities)/OIBDA ratio of 2.3x.

Key financial highlights for nine months of 2021

• Revenue increased by 7% to RUB 411.8 billion compared to the nine months of 2020;
• OIBDA increased by 13% year-on-year to RUB 169.7 billion compared to the nine months of 2020;
• OIBDA margin increased by 2.3 p.p. to 41.2% compared to the nine months of 2020;
• Net profit increased by 17% to RUB 31.4 billion compared to the nine months of 2020;
• CAPEX excluding state programs increased by 7% year-on-year to RUB 76.2 billion (18.5% of revenue);
• FCF improved by RUB 13.5 billion, to amount to RUB 16.6 billion.

Key figures for 3Q 2021, RUB mln

RUB million	3Q 2021	3Q 2020	change, y-o-y
Revenue	141,213	134,988	5%
OIBDA	58,323	53,678	9%
OIBDA margin %	41.3%	39.8%	-
Operating Income	21,228	23,423	(9%)
Operating margin %	15.0%	17.4%	-
Net Income	8,398	11,768	(29%)
% of revenue	5.9%	8.7%	-
Capital Expenditure excl. state programs	24,638	24,326	1%
% of revenue	17.4%	18.0%	-
Net debt (incl. lease liabilities)	502,487	501,593	0.2%
Net debt (incl. lease liabilities)/ OIBDA	2.3	2.6	-
FCF	13,339	18,939	(5,600)

Key figures for 9M 2021, RUB mln

RUB million	9M 2021	9M 2020	change, y-o-y
Revenue	411,760	383,880	7%
OIBDA	169,698	149,559	13%
OIBDA margin %	41.2%	39.0%	-
Operating Income	65,698	61,670	7%
Operating margin %	16.0%	16.1%	-
Net Income	31,382	26,870	17%
% of revenue	7.6%	7.0%	-
Capital Expenditure excluding state programmes	76,192	70,977	7%
% of revenue	18.5%	18.5%	-
Net debt (incl. lease liabilities)	502,487	501,593	0.2%
Net debt (incl. lease liabilities)/ OIBDA	2.3	2.6	-
FCF	16,561	3,015	13,546

Mikhail Oseevskiy, President of Rostelecom:

“In the third quarter of 2021, Rostelecom continued to grow steadily, having achieved its key financial and operational targets. Revenue grew by 5%, OIBDA increased by 9%, and the company continues to increase its free cash flow, which reached almost RUB 17 billion during the 9 months of 2021, which will support our plans to increase dividend payments for the current year (of RUB 6 per share) and beyond.

A key strategic initiative for the period was the recent acquisition by Rostelecom of BFT, a leading public services digitisation provider. Our focus on identifying promising and fast-growing digital business segments is a significant part of our transformation.”

Vladimir Kirienko, First Vice-President of Rostelecom:

“The development of our brand-new services and solutions helps us generate additional value through our segment & cluster management model.. Our main goal is to strengthen our digital leadership by providing innovative products that are rising in demand as well as to ensure stable growth and efficiency in our core business. This has enabled us to perform well across our key financial metrics in absolute terms as well as to post OIBDA margin increase by solid 1.5 p.p."

Sergey Anokhin, Senior Vice-President and Chief Financial Officer:

“The Company continued to demonstrate stable business growth and a high level of cost control during the third quarter, which ensured that we remain within our budget for 2021. The successful fulfilment of our plans during the 9 months of 2021, and the moderate macroeconomic risk outlook enables us to look more optimistically at our anticipated results for the whole Full Year. As a result of this, we are improving our previously published forecast for OIBDA growth in 2021 to 10-12% y-o-y. In terms of revenue, the Company continues to plan for growth of at least 5% and we expect CAPEX in the range of 110-115 billion rubles (excluding the implementation of state programs)."

Key operating highlights

Fixed business

Number of subscribers (million):	3Q 2021	3Q 2020	change, y-o-y
Internet access	13.5	13.4	0.4%
B2C: Broadband	12.4	12.3	0.05%
B2B: Broadband + VPN	1.1	1.1	4%
Pay TV	10.9	10.7	2%
Incl. IPTV	6.3	5.9	7%
Hosted PBX	0.198	0.147	35%
Local telephony services	12,9	14,5	(11%)

ARPU[5] (RUB):	3Q 2021	3Q 2020	change, y-o-y
Internet access
B2C: Broadband	393	390	1%
B2B: Broadband + VPN	3,584	3,566	1%
Pay TV (B2C)	252	245	3%
Incl. IPTV	299	298	1%
Hosted PBX	945	1,119	(16%)
Blended ARPU[6]	551	537	3%

Mobile business

	3Q 2021	3Q 2020	change, y-o-y
Data Traffic, incl. MVNO,Pb	1,750	1,351	30%
Churn, %	(8.0%)	(7.3%)	0.6 p.p)
Growth of active mobile Internet users, %	18.5%	25.5%	(7.0 p.p.)

1. The total number of Internet subscribers among households grew to 12.4 million in the third quarter of 2021 compared to the corresponding period of last year. ARPU increased by 1% year-on-year to RUB 393;
2. The total number of Internet and VPN subscribers in B2B increased by 4% year-on-year to 1.1 million; ARPU increased by 1% year-on-year to RUB 3,584;
3. The number of pay-TV subscribers grew by 2% to 10.9 million users compared to the corresponding period of last year, with average ARPU of RUB 252 in B2C;
   • the number of IPTV subscribers increased by 7% to 6.3 million, and ARPU was RUB 299 in B2C;
4. The number of active mobile Internet users increased by 18.5% year-on-year during 3Q 2021. Year-on-year growth in mobile Internet data traffic reached 30% during the third quarter of 2021; while cellular customer base churn amounted to 8.0%/

Press-release on 3q 2021 financial results