Financial performance of Megafon

• Main article: Megaphone
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2023

Revenue growth by 11.4% to 444 billion rubles

In 2023, the revenue of MegaFon, an all-Russian operator of digital opportunities, increased by 11.4% to 444 billion rubles. The growth is due to the dynamic development of the B2B segment, the consolidation of new assets into the operator's business, as well as the expansion of the subscriber base. Such information was shared with TAdviser on February 29, 2024 by representatives of MegaFon. According to them, the increase in the indicator is due to growth: service revenue (+ 10.6%), which is formed by mobile services, fixed Internet, digital services and solutions, and revenue from sales of subscriber equipment (+ 15.7%) at retail and through a wholesale channel.

An important factor in the growth of service revenue was the increase in revenues from digital business solutions: the company noted a high demand for advertising, communication and cloud services, and cybersecurity services. The increase in service revenues is also associated with the consolidation of new companies in the Group's perimeter, which were acquired at the end of 2022.

Retail and wholesale sales of subscriber equipment showed steady growth (+ 15.7%). As noted in MegaFon, this dynamics is associated with the expansion of the assortment and the launch of its own brands on the market: Fontel phones and Stellar Way premium accessories. MegaFon-owned distribution center Revo Charge made a significant contribution to the growth in consumer equipment trade, which strengthened its position in the wholesale segment of the Russian electronics market.

MegaFon's net profit increased by 43.2% to RUB 39.9 billion. In general, according to the results of 2023, the company shows a high level of financial stability. OIBDA grew by 13%, reaching 181.2 billion rubles. OIBDA margin increased by 0.59 pp to 40.82%. Both indicators are improved due to effective cost management and integration of new companies into MegaFon with the accompanying transfer to the internal circuit of a number of services and tasks previously performed by external contractors, the company explained.

CAPEX in 2023 grew by 61.3% to 101.1 billion rubles. The main impact on this indicator was for trademark acquisition transaction Yota 27 billion rubles. After the transition to "" To MegaFon trademark rights, the costs of its use were reclassified from non-current non-financial assets to capital expenditures. CAPEX 2023 also included investments in the development of assets acquired in 2022. The growth of the indicator was influenced by the active development of the operator's infrastructure. According to to data an independent study by an international company, Ookla MegaFon continues to increase its mobile network coverage in. Over the Russia year, the Coverage Score increased by 5% compared to the same values ​ ​ in 2022.

MegaFon's subscriber base in Russia in 2023 increased by 1.9% and as of December 31 amounted to 76.7 million people. According to the operator, the growth is associated with the successful use of marketing tools throughout the reporting year and the development of the company's line of telecom products. In particular, the consumer reacted positively to the expansion of MegaForce's offer - options that allow subscribers to independently configure their own tariff plan.

Sales growth of restored smartphones in the combined retail network "MegaFon" and Yota 4 times

In the period from January to November 2023, sales of the recovered quadrupled smartphones in monetary terms and by 149% in quantitative terms. The average price of such a device was 15 thousand, rubles analysts calculated. MegaFon This was provider announced on December 8, 2023. More. here

2022: RAS revenue growth to RUB 321.8 bln

MegaFon's revenue according to Russian accounting standards (RAS) in 2022 reached 321.8 billion rubles, which exceeds the one-year-old figure of 312.2 billion rubles. At the same time, the net profit of the Russian telecom operator almost halved - to 43.03 billion rubles. This was reported at the end of March 2023 by the TASS agency, referring to the accounting materials of MegaFon. At the same time, the company itself by August 22, 2023 did not publish the full financial statements under IFRS for 2022.

According to RAS, profit from MegaFon sales in 2022 amounted to 75.01 billion rubles, which is 2.7 times more than a year earlier. Profit before tax decreased 1.8 times, to 47.8 billion rubles. The cost of sales decreased to 188 billion rubles against 229.8 billion rubles in 2021.^[1]

According to MegaFon's own data, by the end of 2022 the company had 77.4 million subscribers in all countries of the operator's presence, which is 1.3% more than a year earlier. The subscriber base in Russia in comparison with the same periods increased by 1.2%, to 75.3 million people. MegaFon also reported 32.5 million users of 4G devices on its network (+ 7.2% by 2021) and 663 thousand users of pre-5G technology. As of the end of 2022, MegaFon's network consisted of about 210 thousand base stations, including 95 thousand in the LTE standard, as well as 223.7 thousand km. VOLS.

In 2022, Megafon confidently holds high positions in key parameters of satisfaction (voice quality 71%, mobile Internet quality 52%, coverage area 51%, comprehensibility of write-offs 69%, tariffs 65%), covering the constantly growing needs of its subscribers, the company said, adding that despite unfavorable external factors, MegaFon fulfilled the main goals set by shareholders and implemented the investment program.

2021: Revenue growth by 6.6% to RUB 354.19 billion

2021 MegaFon"" completed with revenue of 354.19 billion, rubles which is 6.6% more than a year earlier. The service revenue of the telecom operator during this time increased by 4.4% and reached 316.4 billion rubles. Sales of equipment and accessories increased by almost 30%, to 37.79 billion rubles. The company published its statements on March 24, 2022.

The key factor was a significant increase in customer activity in the retail network, especially at the end of the year, during the pre-holiday period, when there was a surge in sales, in particular, of high-price smartphones, the company explains, commenting on the growth in equipment sales in its network.

As for the growth of service revenue, its main drivers, according to the operator, were mobile data transmission (the number of its users increased by 5.6% over the year), content services, as well as ICT projects, M2M services and analytical services using big data. Revenue from international roaming grew throughout the year as a result of the gradual opening of borders and the easing of restrictions associated with the COVID-19 coronavirus pandemic, the company noted.

By the end of 2021, MegaFon's subscriber base in Russia amounted to 74.4 million users, an increase of 5.7% compared to the same period last year. The growth of connections is associated, in particular, with the offer of current conditions and options in the main line "# Bezpereplat," the reporting says.

MegaFon's net profit in 2021 was 66.27 billion rubles, which is 148.9% higher than the profit a year ago. A significant contribution to such a strong rise in profits was made by the sale of assets of First Tower Company JSC.

The company's capital expenditures decreased by 14.2%, to 46.95 billion rubles. By the end of 2021, MegaFon's net debt decreased to 244.6 billion rubles.^[2]

2020: Decrease in revenue by 4.8% to 332.16 billion rubles

MegaFon"" ended 2020 with revenue of 332.16 billion rubles received from this 12-month period. Compared to 2019, the indicator decreased by 4.8%.

The main turnover of the operator falls on telecommunications services - the company earned 303.03 billion rubles in 2020, which is 2.5% less than a year earlier. Sales of equipment (smartphones, routers, etc.) and accessories decreased by 23.7% to 29.13 billion rubles.

Among the negative factors that affect financial performance, MegaFon included:

• reduced revenues from international roaming;
• the outflow of labor migrants due to restrictions on movement between countries;
• a change in purchasing behavior - a decrease in activity, optimization of spending on communications and additional services during the COVID-19 coronavirus pandemic.

This was partially offset by an increase in revenue from data transmission and individual digital services, including information security services and cloud solutions, which became relevant in the context of the massive transition to remote work.

 By the end of 2020, the size of the MegaFon network amounted to about  3,700 salons, as a result of a decrease in traffic and imposed restrictions, reduced by 300 stores. 

MegaFon's net profit in 2020 increased by 157% compared to 2019 and reached 26.6 billion rubles due to an increase in operating efficiency, cost reduction due to a decrease in debt burden and optimization of the loan portfolio.

As of December 31, 2020, MegaFon's net debt amounted to 309.6 billion rubles, and its subscriber base amounted to 70.4 million customers. Capital expenditures for the year decreased by 18.7% to 54.72 billion rubles.^[3]

2019: Revenue growth 4% to RUB 348.96 billion

In 2019, MegaFon raised 348.96 billion rubles, which is 4% more than a year earlier. Most of the operator's income fell on the Russian market - 343.39 billion rubles (+ 3.9%).

Mobile services brought MegaFon 280.38 billion rubles in revenue, which is 1.6% more than a year ago. Revenues from mobile Internet increased by 6.6% and reached 107.62 billion rubles. In the segment of fixed-line services, annual turnover decreased by 1.6% to 30.43 billion rubles.

Thus, service revenue in 2019 turned out to be equal to 310.81 billion rubles, which is 1.2% more compared to 2018. Sales of equipment and accessories during this time increased by a third and reached 38.16 billion rubles due to the growth in sales of smartphones, including expensive models of Apple and Samsung, as well as Honor and Huawei, which were dedicated to special marketing campaigns. Another growth factor is associated with the opening of new generation cellular salons.

MegaFon's net profit in 2019 amounted to 10.35 billion rubles against 21.07 billion rubles in profit a year earlier. Profits were down 50.9%.

We show positive dynamics of service revenue at the end of the year. This is especially significant, because in the previous 2018 there was an increase in our income from contracts within the framework of the World Cup , - the words of MegaFon CEO Gevork Vermishyan are quoted in the message.

The number of MegaFon subscribers in Russia at the end of 2019 remained at the level of 75.2 million people. Of these, 34.9 million people use mobile Internet, which is 6.7% more than the end of 2018.

Capital expenditures of MegFon in 2019 decreased by 17.4%, to 67.3 billion rubles. The operator's net debt fell 8.5% to 320.4 billion rubles.^[4]

2018: Revenue - 335.55 billion rubles (+ 4.3%), net profit - 21.07 billion rubles (+ 2.7  %)

MegaFon ended 2018 with revenue rubles of 335.55 billion, up 4.3% from a year earlier. This growth turned out to be the smallest among the Big Three operators MTS : annual revenues rose 8.7%, VimpelCom and 5.7%.

In 2018, mobile services brought MegaFon 276.08 billion rubles, which is 4.4% more than in 2017. This amount includes 109.94 billion rubles of revenues from data transmission (an increase of 12.5%). Sales of equipment and accessories decreased by 0.6% to 28.53 billion rubles.

On fixed communication services, the operator earned 30.94 billion rubles - this is 7.6% higher than a year ago. The company associated this rise with an increase in revenue from the development of infrastructure of the World Cup, the supply of goods and services within the framework of the Digital Economy projects, including the Safe City series of projects. Revenue in the segment was also reflected in the recognition of significant revenue from a large long-term government contract and revenue from additional services provided in 2017, during the final draw of the World Cup.

In 2018, revenue from additional services, including digital products and services, increased by 9.1% as a result of the revision of price policies after conducting a multifactorial analysis of the market and the value of the product portfolio, the statement said.

According to the results of 2018, the ARPU indicator (average revenue per subscriber) in the mobile market of MegaFon increased by 9.7% compared to 2017, to 260 rubles. The volume of traffic per subscriber increased by 41.9%, to 9,256 MB. The number of smartphones supporting 4G in operator networks increased by 32%, to 28.2 million.^[5]

Net profit of MegaFon in 2018 amounted to 21.07 billion rubles, which is 2.7% more than a year earlier.

2017: Revenue 321bn (+ 1.8%), net profit RUR 20bn (-29 %)

• The consolidated revenue of the telecom segment increased by 1.8% compared to last year to 321,810 million rubles.
• Adjusted ^[6] telecom segment grew by 0.6% over the year and reached 121,850 million rubles.
• Adjusted OIBDA7 margin was 37.9% compared to 38.3% in 2016
• Adjusted net profit^[7] decreased by 29.0% compared to the previous year to RUB 20,519 million.
• CAPEX telecom segment decreased by 14.6% compared to last year to 55,985 million rubles. Nevertheless, the company plans to grow CAPEX from 56 billion rubles. in 2017 to 80 billion rubles. in 2018
• Free cash flow for shareholders of the telecom segment increased by 27.0% over the year and amounted to RUB 35,202 million.

The Board of Directors believes that the Company should not pay dividends in 2018, and accordingly, the Board of Directors does not recommend that shareholders declare dividends in 2018.

• Net debt of the telecom segment increased by 0.6% from 233,112 million rubles as of September 30, 201 to 234,517 million rubles as of December 31, 2017. The ratio of borrowed and own funds in the capital structure was 1.92x.

2016: Revenue 316 billion (+ 1%), net profit 25 billion rubles (-34 %)

• In 2016, Megafon's consolidated revenue increased by 0.9% year-on-year to RUB 316,275 million.
• Mobile data revenue increased 5.7% year-on-year to RUB 84,441 million.
• Adjusted OIBDA decreased 8.5% year-on-year to RUB 121,139 million.
• Adjusted OIBDA margin decreased to 38.3% compared to 42.2% for 2015
• Net profit decreased by 34.7% compared to last year and amounted to 25,496 million rubles.
• CAPEX decreased 6.5% to RUB 65,577 million year-on-year
• Free cash flow amounted to 46,927 million rubles, which is 12.8% lower than in 2015

• Consolidated revenue increased as revenue from mobile data, fixed-line services and revenue from equipment and accessories
  • A slight decrease in mobile revenue for the year is the result of increased competition in the market
  • Mobile data revenue growth continued, but its pace slowed due to the transition of more subscribers to package tariffs
  • Hardware revenue grew as a result of demand for more expensive premium-grade devices promoted alongside our attractive bundled offerings. The average cost of phones sold in "" salons in the MegaFon Retail fourth quarter of 2016 increased by 85% compared to last year to 4,323. rubles
  • Significant growth in equipment sales, together with good fixed business results, offset the decrease in mobile revenue and allowed us to show growth in consolidated revenue

• The uniform distribution of CAPEX during 2016 and the choice of optimal solutions allowed us to fulfill the construction plan at a lower cost
• Adjusted OIBDA and adjusted OIBDA margin remained within forecasts. The decrease in indicators was due to an increase in cost due to the redistribution of the revenue structure and an increase in the weight of low-margin segments, an increase in package tariffs, and an increase in costs for dealer commission
• The decrease in free cash flow was the result of a decrease in operating cash flow
• The increase in net debt was primarily due to the payment of dividends in December 2016
• The decrease in net income is due to:
  • Increase in cost of services
  • Increase in dealer commission costs
  • Increase in depreciation and rental expenses as a result of the continuing expansion of the network and rising inflation;
  • Higher office rental costs.

During 2016, dividends totaling 50 billion rubles or 80.63 rubles per ordinary share were approved, which corresponds to the level of payments in 2015. This confirms the stability and attractiveness of the dividend yield level for the company's shareholders.

2015: Revenue 313 billion rubles (+ 0%), profit 39 billion (+ 6  %)

On March 17, 2016, MegaFon published its consolidated audited financial results for 2015. The profit of the Russian operator increased by 6.3%.

According to the published data, in 2015 MegaFon's revenue according to international financial reporting standards amounted to 313.4 billion rubles, which is approximately the same as the previous year. The company's net profit during this time rose to 39 billion rubles from 36.7 billion rubles.

This growth, according to Gevork Vermishyan, Chief Financial Officer of MegaFon, ensured the implementation of foreign exchange risk management strategies - in particular, due to a significant decrease in negative exchange rate differences and profit from financial instruments.

In 2015, MegaFon's consolidated revenue from sales of mobile services reached RUB 270 billion, compared to RUB 269 billion a year earlier. Revenues from data transmission increased by 19% to 79.9 billion rubles.

In addition to mobile data, additional services and the corporate business segment were the main drivers of the company's revenue growth in the mobile communications market. The growth in mobile data revenues and VAS services offset the decline in revenue from voice services. The number of subscribers increased by 6.4% over the year and amounted to 76.8 million.

Fixed-line services brought the operator annual revenue of 23.4 billion rubles, which is 5.6% more than in 2014. Sales of accessories and equipment dropped by 14% - from 23.1 billion rubles in 2014 to 19.9 billion rubles a year later.

MegaFon's report also shows that OIBDA in 2015 decreased by 4.4% to RUB 132.4 billion. OIBDA margin was 42.2% versus 44% a year earlier. The operator's capital expenditures rose by almost a quarter, reaching 70.2 billion rubles.

MegaFon ended 2015 with net debt of RUB 180.8 billion compared to RUB 122.9 billion as of September 30. The operator explained the growth of its debt by dividend payments in December, the cost of buying a building on the Garden Ring and the final repayment of funds for the Yota operator. ^[8]

2014: Revenue growth to RUB 314 bn (+ 5.9 %)

• Consolidated revenue increased by 5.9% compared to 2013 to RUB 314,795 million.
• OIBDA increased by 4.5% year-on-year to RUB 138,520 million.
• OIBDA margin was 44.0% vs 44.6% for 2013
• Net profit decreased by 28.8% compared to the previous year and amounted to 36,726 million rubles, mainly due to unrealized exchange rate differences from the devaluation of the ruble in the fourth quarter of 2014
• CAPEX increased by 19.8% to RUB 56,472 mln year-on-year
• Free cash flow amounted to 70,197 million rubles.
• Net debt as of December 31, 2014 amounted to 136,175 million rubles.
• The number of subscribers of the year increased by 3.0% over the year and reached 72.2 million as of December 31, 2014

2013: Revenue of 297 billion rubles (+ 9%), profit of 51 billion (+ 16 %)

• The consolidated revenue of Megafon in 2013 increased by 9.1% compared to the same period last year and reached 297,229 million rubles.
• OIBDA grew by 13.2% year-on-year to RUB 132,592 million.
• OIBDA margin rose to 44.6% from 43.0% in 2012.
• Net profit increased by 16.3% compared to last year and amounted to 51,608 million rubles.
• CAPEX amounted to 47,144 million rubles, an increase of 4.2% compared to last year
• Free cash flow reached 82,293 million rubles, an increase of 16.3% compared to last year
• Net debt as of December 31, 2013 amounted to RUB 103,235 million.
• The number of active subscribers as of December 31, 2013 reached 70.1 million, an increase of 8.5% compared to the same period last year.

2011: Revenue 242 billion (+ 12.6 %)

• At the end of 2011, consolidated revenue increased by 12.6% compared to 2010 and reached RUB 242,608 million.
• In 2011, OIBDA grew by 3.1% to RUB 100,822 million, a record high in the Company's history.
• OIBDA's profitability in 2011 was 41.6% compared to 45.4% in 2010.
• Net profit in 2011 amounted to 43,579 million rubles, a decrease of 11.4% on an annualized basis.
• Free cash flow reached RUB 24,412 million in 2011.
• Net positive cash position as of December 31, 2011 is RUB 45,689 million.
• The number of mobile subscribers at the end of 2011 increased by 9.6% and reached 62.8 million.

2010: Revenue of RUB 215 billion (+ 18.5 %)

Consolidated revenue (US GAAP) increased by 18.5% to RUB 215.5 billion in 2010, of which mobile communications generated RUB 207.9 billion (+ 14.7%). But OIBDA profitability decreased from 48.5 to 45.4% - mainly due to the development of the retail network (expanded from 200 to more than 1000 salons) and the consolidation of the fixed business of Sinterra and Metrokom, explained Deputy General Director for Financial Affairs of Megafon Kai-Uwe Melhorn. Megafon's net profit increased by 8.6% and amounted to 49.17 billion rubles.

One of the main growth factors, Megafon CEO Sergei Soldatenkov called the popularity of mobile Internet access, on which the operator earned 19.97 billion rubles for the year. (+ 85% compared to 2009). Megafon's revenues from voice traffic in the IV quarter of 2010 "stabilized" (practically did not increase compared to the previous quarter), and from mobile data transmission - increased by 21.1%. Megafon estimates its own share in the Big Three's income from mobile data services at 40%. In 2010, Megafon's share was 38%, MTS - 34%, and VimpelCom - 28%, said Oksana Pankratova, partner of AC & M-Consulting.

Back in 2008, when the voice communication market reached saturation, Megafon began looking for new growth points and relied on mobile Internet, stressed its first deputy general director Valery Ermakov. Over the past three years, Megafon has introduced 20,000 third-generation (3G) mobile base stations, designed primarily for fast Internet access, he said. During this period, the company invested more in the development of the network than competitors - almost 170 billion rubles, Melhorn added. And in 2010, he also tripled the sale of USB modems - up to 3 million devices.

In the past five years, Megafon has spent $1.8 billion more on the construction of networks than MTS, the then MTS president Mikhail Shamolin admitted in an interview with Vedomosti in February 2011. He explained this, in particular, by the fact that, unlike other companies of the Big Three, Megafon never paid dividends to shareholders and always had a lower profitability than MTS (Soldatenkov said that the company was ready to pay dividends, but this issue is within the competence of shareholders).

2009: Revenue - 181.9, profit - 45.3 billion rubles.

At the end of 2009, US GAAP: revenue - 181.9 billion rubles, OIBDA - 88.2 billion rubles, net profit - 45.3 billion rubles.

Notes