Mobile TeleSystems Announces Financial Results for the Fourth Quarter and Full Year Ended December 31, 2012

Mobile TeleSystems Announces Financial Results for the Fourth Quarter and Full
                         Year Ended December 31, 2012

PR Newswire


MOSCOW, RUSSIAN FEDERATION, March 19, 2013 /PRNewswire/ --

Mobile TeleSystems OJSC ("MTS" - NYSE: MBT), the leading telecommunications
provider in Russia and the CIS, today announces its unaudited US GAAP
financial results for the three months and full year ended December 31, 2012.

Key Financial Highlights of Q4 2012 and FY 2012

  oConsolidated revenues up 1.1% q-o-q to $3,168 million and up 1.0% y-o-y to
    $12,436 million
  oConsolidated adjusted OIBDA^[1] of $1,288 million down 6.6% q-o-q with
    40.7% adjusted OIBDA margin and up 3.0% y-o-y to $5,300 million with 42.6%
    adjusted OIBDA margin
  oConsolidated net income^[2] of $547 million in Q4 2012 and a net income of
    $1,007 million in FY 2012
  oFree cash-flow^[3] growth of 25% to $1.3 billion for FY 2012

Key Corporate and Industry Highlights

  oAcquired Pilot LLC and TVKiK LLC, providing fixed broadband and pay-TV
    services in the Kursk Oblast, from private investors. The purchase price,
    including the net debt of both companies, amounts to RUB 90.7 million
  oAcquired ZhelGorTeleCom CJSC, the leading fixed broadband provided in
    Zheleznogorsk in the Kursk Oblast, from private investors. The purchase
    price, including net debt, amounts to RUB 152 million
  oSigned a non-binding indicative offer between MTS, MTS Bank and Sistema
    JSFC to purchase up to 25.095% stake in MTS Bank through a share issuance
    for up to RUB 5.09 billion


Mr. Andrei Dubovskov, President and CEO of MTS, commented, "For the year 2012,
Group revenues increased by 1% to $12.4 billion. Overall, we saw strong
operating dynamics in our core Russian and Ukrainian markets, yet our Group
top line performance was limited by a significant weakening of the Russian
ruble versus the US dollar and the mid-year suspension of our operations in
Uzbekistan. We continue to see growth in our markets driven by sustained voice
usage and greater adoption of data products and services. We delivered both
ARPU and usage growth in each of our core markets, a sign of Group's
excellence throughout the organization. In 2012, total revenues in Russia
increased in ruble terms by 8% to RUB 338 billion driven by increased usage of
data products; an increase in handset sales, including sales of higher-value
smartphones through our expanding proprietary retail chain; and our ability to
attract and retain higher-value subscribers."


1. See Attachment A for definitions and reconciliation of adjusted OIBDA and
adjusted OIBDA margin to their most directly comparable US GAAP financial

2. Here and below in the release, net income stands for net income
attributable to the Group.

3. See Attachment B for reconciliation of free cash-flow to net cash provided
by operating activity.

Mr. Alexey Kornya, MTS Vice President and Chief Financial Officer, said, "In
2012, Group adjusted OIBDA increased by 3% to $5.3 billion. Throughout the
year we showed faster adjusted OIBDA growth relative to revenues due to rising
contribution from data services and sustained focus on reducing costs. Group
adjusted OIBDA margin came in above our guidance for 2012 at 42.6%, despite
the suspension of our business in Uzbekistan, which had historically
demonstrated a higher adjusted OIBDA margin than elsewhere. For the quarter,
Group adjusted OIBDA increased by 1% year-over-year despite on-going costs in
Uzbekistan and strategic decisions made by the company to increase our retail
network. In Russia, OIBDA rose by 11% to RUB 148 billion. Sustained
improvements in OIBDA throughout the year reflected on-going efforts by the
Company to manage costs, while we realized benefits from decreased competitive

He continued, "CAPEX for the year came in line with our guidance at $2.9
billion or roughly 23% of sales. In 2012, we continued build-out of our 3G
networks, which has reached 28,000 base stations with over 90% sites connected
via IP-channels. We invested in backbone and backhaul roll-out in the regions
as well as in our GPON project in Moscow, bringing the total length of our
fiber-optic networks up to over 140,000 km."

Mr. Dubovskov added, "With the near completion of our aggressive roll-out of
3G in 2012, we foresee a decrease in 3G-related CAPEX in 2013. However, we
need to direct sufficient funds towards LTE network build-out to ensure we are
able to offer our customers cutting edge solutions and seize commercial
opportunities, which LTE provides. Overall, we expect to spend 20% of sales on
capital investments. For the period 2013 to 2015, we expect cumulative
CAPEX/sales ratio in the range of 18-19%. We are confident that in 2013 we
will be able to realize our goal of 5 to 7% revenue growth in local
currencies. We believe that macroeconomic factors, the changing revenue mix
within the Group and improvement in the competitive environment will allow us
to sustain our OIBDA margin in the range of 41 to 42% for 2013."

This press release provides a summary of some of the key financial and
operating indicators for the period ended December 31, 2012. For full
disclosure materials, please visit

* * *

Learn more about MTS. Visit the official blog of the Investor Relations
Department at and follow us on Twitter: JoshatMTS

* * *

Mobile TeleSystems OJSC ("MTS") is the leading telecommunications group in
Russia and the CIS, offering mobile and fixed voice, broadband, pay TV as well
as content and entertainment services in one of the world's fastest growing
regions. Including its subsidiaries, the Group services nearly 100 million
mobile subscribers. The Group has been awarded GSM licenses in Russia,
Ukraine, Turkmenistan, Armenia and Belarus, a region that boasts a total
population of more than 200 million. Since June 2000, MTS' Level 3 ADRs have
been listed on the New York Stock Exchange (ticker symbol MBT). Additional
information about the MTS Group can be found at

* * *

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of MTS, as defined in the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. You can identify forward
looking statements by terms such as "expect," "believe," "anticipate,"
"estimate," "intend," "will," "could," "may" or "might," and the negative of
such terms or other similar expressions. We wish to caution you that these
statements are only predictions and that actual events or results may differ
materially. We do not undertake or intend to update these statements to
reflect events and circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. We refer you to the documents MTS
files from time to time with the U.S. Securities and Exchange Commission,
specifically the Company's most recent Form 20-F. These documents contain and
identify important factors, including those contained in the section captioned
"Risk Factors" that could cause the actual results to differ materially from
those contained in our projections or forward-looking statements, including,
among others, the severity and duration of current economic and financial
conditions, including volatility in interest and exchange rates, commodity and
equity prices and the value of financial assets; the impact of Russian, U.S.
and other foreign government programs to restore liquidity and stimulate
national and global economies, our ability to maintain our current credit
rating and the impact on our funding costs and competitive position if we do
not do so, strategic actions, including acquisitions and dispositions and our
success in integrating acquired businesses, potential fluctuations in
quarterly results, our competitive environment, dependence on new service
development and tariff structures, rapid technological and market change,
acquisition strategy, risks associated with telecommunications infrastructure,
governmental regulation of the telecommunications industries and other risks
associated with operating in Russia and the CIS, volatility of stock price,
financial risk management and future growth subject to risks.

For further information, please contact in Moscow:
Joshua B. Tulgan
Director, Corporate Finance & Investor Relations
Mobile TeleSystems OJSC
Tel: +7-495-223-2025

SOURCE Mobile TeleSystems OJSC
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