MTS reports revenue growth for 2024

By the end of 2024, MTS Group's consolidated revenue increased by 16% year-on-year to 703.7 billion rubles. This is evidenced by the financial statements of the company, distributed on Wednesday, March 5.

According to Inessa Galaktionova, CEO and Chairman of the management Board of the company, MTS has reached a new stage of transformation "with record annual revenue in the entire history of the company — over 700 billion rubles." "MTS continues to demonstrate a high double-digit revenue growth rate due to increased revenue from basic telecom services, as well as thanks to fast-growing AdTech and Fintech areas," she explained.

According to the document, OIBDA increased by 5% to 246 billion rubles in the reporting period. "The steady dynamics of OIBDA is supported by revenues from communication services and the advertising segment. The cost of developing promising areas, the ecosystem and personnel had a restraining effect on OIBDA growth," MTS explained.

Net profit for the year amounted to 49 billion rubles, a year earlier MTS' profit was 54.6 billion rubles. The decrease occurred against the background of an increase in interest expenses.

According to Inessa Galaktionova, CEO and Chairman of the management Board of the company, MTS has reached a new stage of transformation "with record annual revenue in the entire history of the company — over 700 billion rubles." "MTS continues to demonstrate a high double-digit revenue growth rate due to increased revenue from basic telecom services, as well as thanks to fast-growing AdTech and Fintech areas," she explained.

The group also increased its ecosystem base, which increased by 16% over the year, reaching 17.5 million customers. At the same time, the subscriber base in Russia grew by 1.3 million subscribers to 82.4 million

Galaktionova noted that as part of the improvement of the corporate structure, the company has formed new verticals outside the core telecom business and revised its approach to investments, freezing investments in a number of projects with low profitability.

"All these measures make it possible to keep the debt burden at a stable level even in conditions of tight monetary policy - the ratio of net debt to OIBDA remains unchanged at 1.9x for a long time," she said.

According to her, the growth of OIBDA is limited by investments in the development of new businesses, the ecosystem and personnel. Galaktionova is convinced that further improvement of the corporate structure will unlock the potential of each vertical, which in the future will provide a multiplier effect for the entire ecosystem and maintain double-digit growth rates.

The MTS CEO emphasized that import substitution and the development of its own modern technologies is one of the main future priorities of the entire telecommunications industry.

According to Gazprombank senior analyst Sergey Libin, in the future, the revenue of telecom market players "will be driven by areas such as fintech, advertising, digital and ecosystem services." At the same time, the expert continued, MTS "has shifted its focus from growth to cash flow generation, so it is quite possible that growing but not profitable areas will be optimized."

Anna Kurbatova, Senior analyst at Alfa Bank, believes that the main revenue drivers for MTS in the coming years will continue to be outside of traditional telecommunications services. "In the B2C segment, these are media and content services, information security; in B2B, advertising technologies, IT, cloud services, as well as projects related to the digitalization of the manufacturing sector," Kurbatova emphasized.

Last year, MTS put 200 domestic LTE base stations of its own production into pilot operation on its network in 37 regions of Russia. In 2025, it is planned to introduce about a thousand more base stations. MTS also began phasing out 3G networks and transferring the released frequencies to 4G/LTE. In 2025, it is planned to disable at least 50% of 3G base stations in various regions, and by the end of 2027, completely switch to the LTE standard across the country using domestic equipment.

Last year, MTS approved a dividend policy that assumes annual payments of at least 35 rubles per share in 2024-2026. The company has repeatedly confirmed that it intends to strictly follow it. Gazprombank believes that such statements, along with the Central Bank's decision to keep the key rate at 21%, influenced the growth of MTS shares.

Sergey Libin added that the group's decision on the IPO of several subsidiaries in the coming years also depends on the key rate. "In order to create comfortable conditions for bringing daughters to the IPO, it is necessary to reduce it," the expert noted.

Alfa-Bank attributes "the positive rebound in MTS shares in recent months to a general correction in the market and an improvement in investor opinion about the ability to control the debt burden and pay dividends." "By December, both MTS shares and the Moscow Exchange index were at minimum levels amid an increase in the Central Bank's key rate. Investors observed a steady increase in MTS' debt servicing costs and the pressure of this factor on net profit. Currently, the risks of further tightening of monetary policy in the market are no longer so high, and investors are more positive about MTS' potential to generate cash flow and dividends," concluded Anna Kurbatova.