Mobile TeleSystems Announces Financial Results for the Second Quarter Ended June 30, 2013

 Mobile TeleSystems Announces Financial Results for the Second Quarter Ended
                                June 30, 2013

PR Newswire

MOSCOW, August 20, 2013

MOSCOW, August 20, 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 ended June 30, 2013.

Key Financial Highlights of Q2 2013

  oConsolidated revenues up 5% y-o-y to RUB 97 billion
  oIncrease in mobile service revenue in Russia of 6% y-o-y to RUB 66 billion
  oData revenue growth of 40% y-o-y to RUB 11 billion
  oConsolidated OIBDA up 10% y-o-y to RUB 44 billion
  oGroup OIBDA margin improved 1.9 pp y-o-y to 45.5%
  oConsolidated net income^[1] of RUB 29 billion
  oFree cash-flow reached RUB 45 billion for the six months ended June 30,

Key Corporate and Industry Highlights

  oApproved a new dividend policy aimed at a payout of a minimum dividend
    distribution amount of at least 75% of Free Cash Flow for the relevant
    financial period or, if greater, RUB 40.0 billion per year
  oApproved annual dividends of RUB 14.6 per ordinary MTS share
    (approximately RUB 29.2 per ADR) for the 2012 fiscal year, amounting to a
    total of RUB 30.2 billion
  oAcquisition of 25.095% stake in MTS Bank through a share issuance for RUB
    5.09 bln
  oReached an agreement with Altimo, Nomihold and other associated parties to
    settle all disputes related to investment in Bitel LLC, a mobile telephony
    services provider in the Kyrgyz Republic
  oIssued USD-denominated Loan Participation Notes in the amount of $500
    million with an annual interest rate of 5.00% and maturity in June 2023
  oPlaced exchange-traded ruble bond of RUB 10.0 billion with a maturity of
    10years and a five-year put option
  oAppointed Mr. Mikhail Arkhipov to the position of Vice President, Human
  oMTS's brand was ranked in the BRANDZ™ Top 100 Most Powerful Brands, a
    ranking published by the Financial Times and Millward Brown Optimor, with
    a brand value of $10.63 billion
  oSigned an agreement with Ericsson to jointly develop telecommunications
    infrastructure for an LTE network rollout in Russia's Volga, Siberian,
    Ural and Southern Federal Districts
  oSemi-annual dividend recommendation by the MTS Board of Directors of RUB
    5.22 per ordinary MTS share (RUB 10.44 per ADR) on the basis of H1 2013
    financial and operating results for a total payout of RUB 10.8 billion
  oPartnership with Nokia Siemens Networks to jointly develop
    telecommunications infrastructure and build 4G networks in the Moscow
    region and Russia's Central Federal District

^[1]Attributable to the Group.


Andrei Dubovskov, President and CEO of MTS, commented, "During the quarter
group revenue increased 5% year-over-year. In Russia, revenues grew 4%
year-on-year to 86.5 billion rubles. Mobile service revenues increased by 6%
year-on-year to 66.2 billion rubles driven by data adoption and further
monetization of data traffic. and messaging revenues. We continue to see
market-leading growth in data traffic revenue, which grew 40% year-on-year.
Our fixed-line operations showed strong performance in spite of sustained
competitive pressures, having increased by 4% year-over-year to 14.4 billion

Alexey Kornya, MTS Vice President and Chief Financial Officer, said, "In Q2
2013, Group OIBDA increased by 10% year-on-year up to 44.4 billion rubles with
a margin of 45.5%. Strong OIBDA growth rate is attributable to both organic
and inorganic factors. In Russia, OIBDA rose by 6% ear-over-year to 39.2
billion rubles. For the quarter we delivered strong OIBDA margin of 45.4%
compared to 44.6% margin in Q2 2012. Margin improvement was driven by one-off
factors as well as the rising share of data traffic revenues in total revenues
and reduced handset sales. Our topline performance, rising data consumption
and continuous cost control initiatives continue to offset inflationary
pressures, such as rising personnel costs, higher rent and network maintenance
costs. Net income rose to 29.0 bln rubles. We realized a positive gain due to
our settlement over Bitel through a reversal of the provision for the
acquisition of the 49.0% stake in Tarino Limited, in 2005 the owner of Bitel
LLC, and accrued interest in the amount of 223 million US dollars, as well the
125 million US dollars in compensation paid in cash. At the same time, we
witnessed a non-cash FOREX loss in the amount of 3.1 bln rubles due to the
weakening of the ruble versus the US dollar and Euro and its impact on our
debt valuation."

Mr. Kornya continued, "Free cash flow for the first half of the year came
improved to 45.2 billion rubles, a 34% increase over the first half 2012. Our
net debt/ LTM adjusted OIBDA ratio came fell to 1.0x due to improvement in
operating performance and our success in managing debt portfolio through the
early redemption of loans, repurchase of ruble-denominated bonds and the
timely and advantageous placement of debt securities. During the quarter we
confirmed our commitment to increasing shareholders return. In early August
MTS Board of Directors set the date for the Company's extraordinary general
meeting of shareholders for September 30, 2013. The Board also recommended
that the EGM approve semi-annual dividends of RUB 5.22 per ordinary MTS share
(10.44 rubles per ADR) amounting to the total of RUB 10.8 billion on the basis
of the Company's H1 2013 financial and operating results. If the
recommendation is approved at the EGM, MTS will pay out around 41.0 billion
rubles in 2013 calendar year. This is in line with our new dividend policy
that calls for distribution in the form of dividends of an amount equal to at
least 75% of Free Cash Flow for the relevant financial period or, if greater,
40.0 billion per year."

Mr. Dubovskov concluded, "We reiterate our revenue guidance of 5-7%.for 2013
-2015. Growth continues to be driven by the increased adoption of data
services, as well as sustained sales of smartphone and stable subscriber
dynamics. For OIBDA, we are pleased to raise our OIBDA margin guidance to over
43% for the year considering our strong organic performance in the first-half
of the year, various one-off factors and continuation of the current stable
competitive environments in our markets of operation. For the period 2013-2015
we see our OIBDA margin at about 42%."

This press release provides a summary of some of the key financial and
operating indicators for the period ended June 30, 2013. 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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