Rostelecom financial and operating results for the 4Q and FY 2021

Print version 04.03.2022

Revenue increased by 6% in 2021; OIBDA[1] up 13%; FCF[2] up by 43%.

Moscow, Russia – March 4, 2022 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s largest integrated digital company, today announces its consolidated financial results for the fourth quarter and the full year of 2021 prepared in accordance with IFRS.

FOURTH QUARTER 2021 KEY FINANCIAL HIGHLIGHTS

• Revenue grew by 3% to RUB 168.3 billion compared to 4Q 2020:
• OIBDA up by 10% to RUB 49.1 billion;
• OIBDA margin up by 1.9 p.p. to 29.2%;
• Net profit of RUB 0.5 billion compared to net loss of RUB (1.5) billion in 4Q 2020;
• CAPEX[3] excluding state programmes increased by 18% to RUB 42.5 billion (25.3% of revenue) compared to 4Q 2020;
• FCF of RUB 15.9 billion compared RUB 19.6 billion in 4Q 2020;

FULL YEAR 2021 FINANCIAL HIGHLIGHTS

• Revenue increased by 6% to RUB 580.1 billion;
• OIBDA grew by 13% to RUB 218.8 billion;
• OIBDA margin improved by 2.2 p.p to 37.7%;
• Net profit increased by 26% to RUB 31.8 billion;
• CAPEX excluding state programs increased by 11% to RUB 118.7 billion (20.5% of revenue);
• FCF increased by 43% to RUB 32.5 billion;
• Net Debt[4] including lease liabilities increased by 8% since the beginning of the year to RUB 505.2 billion, resulting in a Net Debt/OIBDA ratio of 2.3x.

Key figures for 4Q 2021, RUB mln

RUB million	4Q 2021	4Q 2020	change, y-o-y
Revenue	168,332	163,009	3%
OIBDA	49,116	44,491	10%
OIBDA margin %	29.2%	27.3%	-
Operating Income	8,009	7,295	10%
Operating margin %	4.8%	4.5%	-
Net Income	0.450	(1,507)	-
% of revenue	0.3%	(0.9%)	-
Capital Expenditure excl. state programs	42,548	36,162	18%
% of revenue	25.3%	22.2%	-
Net debt	505,197	466,035	8%
Net debt/ annualised OIBDA	2.3	2.4	-
FCF	15,938	19,644	(3,706)

Key figures for FY 2021, RUB mln

RUB million	2021	2020	change, y-o-y
Revenue	580,092	546,889	6%
OIBDA	218,814	194,050	13%
OIBDA margin %	37.7%	35.5%	-
Operating Income	73,707	68,965	7%
Operating margin %	12.7%	12.6%	-
Net Income	31,832	25,363	26%
% of revenue	5.5%	4.6%	-
Capital Expenditure excl. state programs	118,740	107,139	11%
% of revenue	20.5%	19.6%	-
Net debt	505,197	466,035	8%
Net debt/ annualised OIBDA	2.3	2.4	-
FCF	32,499	22,659	9,840

Mikhail Oseevskiy, President of Rostelecom:

"A number of strategic and structural changes have made it possible for Rostelecom to achieve its financial and operational targets set for 2021. We have successfully expanded and improved our product line, with an increased share of innovative digital services in the range as well as grown size of the business, while strengthening its market position in key segments. As a result, we managed to post positive performance across all key financial indicators. Solid growth was also demonstrated by FCF - over 40%. Strong 2021 results provide the basis for an increase in shareholder payouts relative to the lower limit set by the dividend policy. Therefore, management considers it possible to recommend to increase dividend payments to 6 rubles per share for 2021."

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

"In 2021, Rostelecom continued to show stable business growth and a high level of cost control, which together ensured decent financial results. We also managed to meet our guidance in terms of revenue and OIBDA growth for 2021, while substantial cash flow has enabled us to implement some of the planned investment projects ahead of schedule while keeping the targeted range of CAPEX/Sales ratio. We enhanced our operations both in mature core and new growing areas coupled with increased internal efficiency as well as streamlined and downsized business model. We also aimed at decreasing our OPEX and optimizing the company’s debt structure to improve its cost and ensure resilience over the market volatility. On the financial front, these efforts have led to marginality growth, solid FCF generation as well as debt burden reduction. Operationally, they have enabled the company to further sustain and invest into growing promising areas. At the same time, the complex nature of the geopolitical context and uncertainty of the macroeconomic risks which can have a negative impact on the dynamics of the results of subsequent periods, we will take some time before discussing the potential prospects for 2022 until we see stabilisation and certainty and lower volatility in the financial markets."

KEY OPERATING HIGHLIGHTS

Fixed services business

Number of subscribers (million):	4Q 2021	4Q 2020	change, y-o-y
FIBRE-BASED SERVICES
Internet access	10.8	10.4	4%
B2C: Broadband	9.8	9.5	4%
B2B/G: Broadband	0.7	0.6	10%
B2B/G: Broadband + VPN	1.0	0.9	10%
IPTV	6.4	6.1	5%
Hosted PBX	0.218	0.160	37%
TRADITIONAL SERVICES
Local telephony services	12.5	14.0	(11%)
B2C	9.9	11.3	(12%)
B2B/G	2.6	2.7	(6%)
Broadband xDSL
B2C: Broadband xDSL	2.5	3.0	(15%)
B2B/G: Broadband xDSL	0.2	0.2	(17%)
Cable TV	4.5	4.7	(6%)

ARPU[5] (RUB):	4Q 2021	4Q 2020	change, y-o-y
FIBRE-BASED SERVICES
Internet access	380	377	1%
B2C: Broadband	2,868	2,764	4%
B2B/G: Broadband	4,066	4,298	(5%)
B2B/G: Broadband + VPN	306	307	(0,3%)
IPTV	907	1,108	(18%)
Hosted PBX
TRADITIONAL SERVICES
Local telephony services	223	227	(2%)
B2C	575	585	(2%)
B2B/G
Broadband xDSL	462	450	3%
B2C: Broadband xDSL	1,527	1,324	15%
B2B/G: Broadband xDSL	191	186	3%
Cable TV	380	377	1%

Mobile business

	4Q 2021	4Q 2020	change, y-o-y
Data Traffic, incl. MVNO,Pb	1,856	1,442	29%
Churn, %	(8.05%)	(8.09%)	0.04 p. p.
Growth of active Internet users, %	17.6%	20.0%	(2.4 p. p.)
Subscriber base, mln	47.5	46.6	2%

1. The total number of fibre optic broadband internet subscribers among households grew by 4% to 9.8 million in the fourth quarter of 2021 compared to the corresponding period of 2020; ARPU grew by 1% to RUB 380.
2. The total number of fibre optic broadband internet and VPN subscribers in B2B and B2G increased by 10% year-on-year to 0.7 million; ARPU was up by 3% to RUB 2,868.
3. The number of IPTV users grew by 5% to 6.4 million users compared to the corresponding period of last year, with average ARPU of RUB 306;
4. The number of active mobile Internet users grew in 4Q 2021 by 17.6% compared to the corresponding period of 2020. The mobile Internet data traffic growth reached 29%; at the same time, cellular customer base churn was 8.05%.The mobile subscriber base grew by 2% to 47.5 million users in 2021.

Press-release on 4q 2021 financial results