Mobile TeleSystems Public Joint Stock Company
Q3 2021 Earnings Call Transcript

Published: 17 Nov 2021

[Polina Ugryumova:]

Good afternoon or good evening, to everyone who is watching us or listening to us today. I am happy to open our today's event with MTS disclosing its financial and operating results for quarter three. My name is Polina Ugryumova, and I'm the Director for Investor Relations at MTS. Today, we have got a great management team of the company, and they will tell you about the most recent developments in our life. Before I start, I should say that within our today's presentation, we may make some forward-looking statements, forecasts or estimates or expectations, and it should be borne in mind that this forward-looking statements reflect the way the management understands the development of our business today in the current conditions. In our today's materials, which have been circulated to you and at our website and in Form 20-F, we say that these estimates may change in line with changes in the external environment going forward. And before I officially start our event, I would like to make a couple of additional comments. As you can see, not only have we changed the format of the dialogue to make it more active or rather interactive transparent. And we sincerely hope for an open dialogue with our audience. We've also expanded the team of speakers with two more top managers joining us today. I will introduce them a bit later. And let me also say that regrettably, who is in charge of our Fintech team is unable to join us today, but he has sent his colleague who shows the Fintech developments will not be left out today. So our today's speakers, President and Chairman of the Management Board of MTS, Vyacheslav Nikolaev; Inessa Galaktionova, First Vice President for Telecommunications; Olga Ziborova, Vice President for Ecosystem Development and Marketing; Andrey Kamensky, Vice President for Finance; Farid Kamalov, our new speaker, Vice President for Retail Development; Igor Mishin, also a new speaker, Vice President for Media; and we also have Sergey Ulyev, Vice President for Strategy at MTS Bank. Now I'm happy to give the floor to the President of our company, Vyacheslav Nikolaev. Thank you very much.

[Vyacheslav Nikolaev:]

Hello, dear colleagues. I'm really happy to see you, and I hope that I will see some of you live in the Zoom Q&A session. We did update the format indeed and I think it is important. Some things that we are already accustomed to should be changed from time-to-time because together with some visual changes, we also have changes in the essence and you will better understand the way MTS works when you see real people who stand behind the company who change the company all the time. And I would be really grateful for your feedback. Please tell us what you like about the company and about the presentation, what you miss in our quarterly meetings, what else you would like to see because we would like to become even more interesting and open for you. So let me start the very presentation. I would like to tell you a lot and quite a lot of figures. We've got things to boast of that I will leave this to my colleagues. I will tell you some few figures though, group wide revenue growth plus 8.4%. You can see it on the screen, it is visually less than in the previous quarter. I am sure you can remember it that I should say that first of all, the pandemic effect is still there, they haven’t been used up and if you see the third quarter last year, you would understand that this additional incremental growth is worthy, of course. And even more important, more than 60% of the growth that we are showing is attributable not to telecom figures, but to non-telecom. I told you several times that even telecom figures are growing underpinned by the less churn driven by – which is driven by our ecosystem impacts. Customers that have several products are less likely to go elsewhere than those who have one product only. And directly, when we calculate the plane, we can see that more than 60% is attributable to non-telecom operations. In this chart, you can see that this trend is consistent. As you know, we have announced our diversification strategy quite a while ago. Two years ago, we announced our ecosystem development strategy and we can see that the strategy works. We grow faster than the market and in many cases in telecom, and we also grow faster than the market as a group that we understand that we shouldn't stop our development. A lot of products and services were developed based on our telecom operations, but we can see that these products are quite big in size these days. The procedures and principles that were good for telecom are now somewhat outdated and they are a kind of an obstacle to our younger and more active businesses. That's why we have changed a lot, and you have seen our changes. I'm sure, in quarter three, we approved MTS services as standalone business, this is where we concentrated our technical block, what we used to call it, our cloud business, our data centers and infrastructure. I have already told you that we are creating a player that is supposed to become number one in the Russian market in cloud services. And so a lot of it has been done in quarter three and we are really active and getting even more active in this area. Besides, we've got Fintech with MTS Bank, you have seen a lot of developments here as well. And our MTS Media was also a dedicated business. And now we are changing the processes to make sure this company is as much independent from MTS from our parent company as possible. And the same is true about retail business. You will learn a lot about it today. Farid, we will tell you about the ways we are changing the business and why you will be able to find a lot of reasons for a certain upside in this business stream. And there is yet quite a number of businesses that will soon be able to become separable or noticeable part of MTS business overall. We will be able to tell you about each of them separately, and you will be able to see the figures by workstream. We are doing quite a lot in MTS Entertainment. It is obvious that now during the pandemic, it is not the most high margin or profitable business stream that we are sure that this preparation will result in a good market share, which will keep growing once the restrictions are lifted. We have some very interesting changes in MTS Auto, in MTS marketologist as well. And some of these changes will be reported on by my colleagues in our today's presentation. In addition, the very process of making teams separate, results in sharper focus of the management on the business they are in charge of, and this is what unlocks some value inherent in these businesses. Usually, they are traded at different multiples and for us, it is obviously good. We understand we would like to show it, but apart from that, there are other changes that need to be made accordingly. First, we put clear rules of the interaction between the core and those businesses because we wouldn't like to sacrifice our customer interaction. For the customers, we should be not exactly one of the same company, but we must be able to understand who exactly our customers are. Like a one-stop shop, we need to understand who they are without asking additional questions and this is what we are able to do. Thanks to Big Data and Artificial Intelligence, one of the best developed in the market. We are fine tuning our interaction with the customers, which results in a higher NPS and higher number of references that customers make regarding our services. In addition, we have to change quite a lot of support functions, not only support I should say because when we speak about IT, IT is not a support or back-office function for us. No way. A lot of people would think that IT support. At least over the recent 15 years, it was the case. But now IT is at the heart of development of almost all the companies. And I wouldn't say that we have to, but we are at the time when IT requires comprehensive transformation. The services that were part of telecom are now IT-based, and in telecom, MTS is known as a very reliable provider, one of the most reliable ones, and we need to strengthen protection, reliability and cybersecurity. At that, we also need to change the infrastructure to able to faster connect new services for us to be better at interacting with our partners for any experiments to take hours, but not weeks. You know a lot about digital transformation and we have done a lot that there is still more room for perfection. We have invited our Vice President, Pavel Voronin, who is now in-charge of this business stream. And we are now looking into new IT strategy. This is really very interesting, and I will share something with you. In addition, we are taking a new look at our product portfolio and we are reviewing the very products on offer. We have started offering quite a number of new products in the previous 2.5 years. We can see that some of them are not quite successful and we will have to close them down because the hypothesis have not been confirmed. This is not bad for the teams who developed those products. It is just that the process was unusual for us. In telecom, we are used to rolling out products with quite a long time to market and some other specific features. In our today's world, we should be able to offer products more frequently. We have rebalanced quite an extensive part of our portfolio. It was a bit painful that anyway we succeeded. We introduced a new incentive and motivation system. I will tell you more about it. And for product developers, their long-term duration has been changed a lot. The incentive is now in stock option plans and the team is better linked with our business targets. They can see it as their own dream and as their own business, it really incentivizes the team to achieve some very good results. In addition, we have to change our actual support functions. To give you a good example, it is procurement. In procurement, actually – the procurement was built for our telecom needs that when we started to have more businesses than that, we have reinvented the process. We invited the person who wasn't too much into procurement, he was closer to startups and business development. And he will set a task to develop procurement as a service. It has been a couple of months since, and they are doing some good job or they are making progress appreciated by the company and telecom that is used to some outdated processes now understands that we are now living in new life in a new era, and it actually supports the teams spirit and more else. It is truly about the number of other process like HR and Recruitment. We have to look for talent, IT, developers, product managers, product team member. It requires new incentive and motivation arrangements. It has been changed not only for product teams, but also for top management. We are all together in the same boat so to say and our objectives, I mean, everybody has their own targets, including Vice Presidents, but our overall overarching target in long-term incentivization is linked to the company's value and valuation, it helps us to coordinate our efforts across the Board. We changed our approach to talent acquisition and I can say that we can see quite a good inflow of people despite the fact that there is deficit in the market. MTS offers some good opportunities in cloud development and other areas that inspire people and we can see a lot of new talent coming in. Right now, I'm happy to give the floor to Vice President of Ecosystem Development and Marketing, Olga Ziborova, who will tell you a lot of things I would like to personally share with you. But anyway, I'm giving the floor to her. Thank you.

[Olga Ziborova:]

Thank you, Vyacheslav. Good afternoon, good evening, dear colleagues. I would like to start with the key indicators of this evolution and dynamics of our ecosystem clients. This is the basis of our transformation into a digital ecosystem. Ecosystem clients are clients who use two or more products and use them knowingly. We mean by that these products are paid for from the same account or there is one and the same ID used for seamless transition from one digital window to another or premium subscription that gives access to several digital services of the ecosystem, which I will tell you more about later. If we look at the figures, it is good to see that our ecosystem clients are growing steadily. The growth is consistent in first quarter. In third quarter of 2021, we reached 7.8 million and the incremental growth is 400,000 subscribers. We understand the reasons behind it. We see growth in the clients of our premium subscription and there is also growth in our digital services. We keep monitoring the number of products per client or per customer and we can also speak about sustained growth and figures. Now it is 1.4 product as at the end of quarter three 2021. I am especially happy to say that the fastest growth is among the clients with three and more products and this is goodness because we understand people do come to us and buy a second service, which they like, and then they also buy their full third and fourth products. Vyacheslav has already said that our modal is stable and robust. He says that the development of ecosystem clients and penetration of digital products into our telecom base enables us to show faster growth in our core business and other businesses of the company across the Board. First of all, it is due to lower churn of ecosystem clients, we can see that. And you have seen the figures too, they are really robust and we can see that if a client uses two or more services, the churn of such clients gets lower by 3x or more. If clients start using premium or cashback, the lower churn is still there, that is 11x less. And we can see engagement with the brand maximizing. If a client starts using ecosystem services, their NPS grows more than by 1.5x. If an ecosystem client uses cashback points that they receive is part of the program then their NPS grows more than 3x. A couple of words on our ecosystem subscriptions that is premium and cashback. Our premium subscription has been updated this year. To be more exact in February, we launched a fee-based version and expanded its content. Now the subscription includes several services that represent our key business verticals, limitless – unlimited mobile Internet, KION, MTS music and premium card of our bank. And we can see, I'm really happy to say that the market's perception of the changes is positive. Over the last three quarters, the number of customers of ecosystem premium subscription has almost doubled. The subscription enables us to engage telecom base in other business verticals of the company. 83% of new MTS music users and 27% of KION viewers come to us through the premium program. As for our cashback program, we can see some significant success as well. The number of registered users is growing. Over the last three quarters it grew by 67%. There is an increase in the number who pay for new digital products using cashback. Their number grew by 88% here to date. In September, we introduced new drivers to stimulate using cashback points and we are really happy to see the results. 40% of new cashback users became repeated MTS retail channel customers. Of course, we will keep developing the program going forward and our targets are to increase the number of the program clients, and to increase the turnover as well. And no doubt, of course, we can only engage our customers when we develop digital customer journeys. Here MyMTS application is of great help to us. The number of active users keeps growing by the end of quarter three towards a 25.2 million people. We have updated the app a lot. We changed the visualization, improved navigation and introduced new widgets. Functional widgets that enable us to be in a closer contact with our client, we can tell them about cashback or the need to top-up and so on, and we also have content widgets that tell the customers about new products and new content cases. With that, over to Inessa, who will tell you about the development of our telecom business.

[Inessa Galaktionova:]

Thank you, Olga. Good afternoon or good evening, dear colleagues. Let me share the results of telecom with you. The results of telecom is, of course, based on our quality strategy and really good results of our ecosystem operations. You can see that in quarter three 2021, we are at historic maximum in our subscriber base. When customers come to us, they stay with us for a long time. It’s really important for us to have a quality base. When we analyze the customer or subscriber base, we make a special focus on the subscribers who have been with us more than for 12 months. So we have grown not only as compared to the pre-pandemic level that also enhances the number of these clients more than by 2%. And it is really important because it shows how the instruments and tools in the ecosystem work. Customers come to us, they stay with us and they start using more products and services that Olga has been talking about. Next, I would like to say that our total V&D base got back to the pre-pandemic level. You Know, that our churn is getting lower. You know, that a key objective in the telecom industry is to reduce the churn. And we are proud by the fact that the churn has been reduced by more than 1.5 percentage points. What is important to say about our mobile business, MTS has network number one in terms of quality. And of course, we can see an increase in the traffic consumption, record high growth rates where seen in 2020 and say, we are carried over to 2021. There is a higher load, and we need to be focused on increasing the quality and the capacity of our network. We have already told you about our smart rollout project that enables us to make quality investment in the network. It helps us optimize costs for further development and maintaining the capacity going forward. So there is now less investment with the same result. I would like to additionally tell you that in the year 2021, we have started swapping equipment in Moscow really actively. We told you about that at our previous disclosure conferences. As a kind of summary for this year, I should say that this stage has been really quick. We did not see any major issues with our B2C or B2B clients’, which confirms that we are really concentrated on first complex objective and we did a good job. Our clients in Moscow have already felt it. There is a higher speed and for our growing base in Moscow, this is just the right time for this kind of operations. I would like to tell you more about our fixed-line subscribers. The growth is really good. Our base now is 4,120,000 subscribers. And it's really important to say that, well, as you may know, this year, we have made two acquisitions Zelenaya Tochka, fixed-line operator and also MTT company, which has enabled us to grow in the revenue and in the number of clients. As for non-organic growth, you saw it in our statements, we grew by 24%. As for organic growth in the B2C segment without fixed-line, we grew by about 9%. We keep developing in this area. First, it is about upgrading the network. We only had 19% of our network ready for one gigabyte, but now it is about 40% of the network rated to provide such a speed in the regions. There are about 56 regions ready to provide such a high speed. It is also important to say that we keep expanding the coverage of fixed-line. And we have grown by about 5% by now to reach 15,600,000 households across the country. Apart from that, why we are doing all that? Of course, there is demand for fixed-line, but we also make a bet so to say on convergence. It is a confirmed fact that it enables us to reduce churn and show growth in financials. In convergence, focus was made on it several years ago and by our data, now we have the fastest growth in the industry in convergence services and the growth of subscriber base. In quarter three, we grew more than 30% year-on-year in convergent-based growth. It is a powerful tool and we keep developing it. There are activities in our sales channels and product portfolio. There are a lot of opportunities and of course, we will not stop with these results. Now over to B2B, B2G initiatives. We have already mentioned that it is one of the powerful growth drivers for the entire company. We invest a lot of intellectual resources and other resources in this business stream because it truly gives us some really good growth indeed. What we are proud of and what I would like to share with you. We are now active promoting our business digitalization projects. By now, we have implemented more than 15 projects, pilot and commercial ones with largest Russian companies in oil and gas, and metals and mining, for example. Besides in quarter three, we launched a dedicated commercial 5G network with Polymetal. I should say that we made this project turnkey. We started with research and studies, and then we did design and planning and actual construction of the network. It is our first turnkey project and the very successful one that we understand that this business stream is really promising. And in October, we made an announcement, we signed an agreement with Ericsson, saying that we will be exclusively developing dedicated 5G networks with them for various sectors of our business. Hopefully, we will tell you more about interesting projects in these areas that we have implemented. The acquisition of MTT enabled us to grow in the fixed-line business. And besides, the very objective behind the acquisition was about the services associated with virtual telephone offices and also various services and telecom apps. In June, we integrated the company in MTS and started providing various services in the summer. We can see some really good response from our clients and we will highlight a breakthrough cases here going forward. We are now working on them and we are planning to launch them in 2022. Last but not least in my part of the presentation, I would like to remind you that in 2019, we entered an important project for MTS and Russia, that is social projects, social important facilities. About two months ago, we completed the project. We built more than 5,000 social important facilities across the country, partially it was financed through our Debut Social Bonds, as you may know. We completed the initiative on time as per the schedule. And of course, unique figures, 1,500 schools, 1,600 healthcare facilities. In this case, we were a really strong partner to the government in implementation of its social objectives. So this is yet another success of ours. With that, let me complete my part of the presentation dedicated to telecom. I could speak about it for hours, but there are my colleagues to tell you about our other businesses. Over to Sergey to speak about financial services. Sergey?

[Sergey Ulyev:]

Hello, Inessa, thank you very much. Hello, dear colleagues. My name is Sergey Ulyev, and I will tell you more about our Fintech and MTS Bank operations. 2021 is upon the whole a very positive year for the development of the banking business. And our bank in particular, one of the key indicators, the number of retail assets, our gross retail loan portfolio. You can see it here. This year, it grew by about 70% year-on-year and it is about 3x as much as the market average. Now our retail assets exceed RUB108 billion, and this growth was quite diversified. It covered all our key products, three products, I mean, POS loans, where we are the leader in the market; then cash loans, which are still a driver of the retail business, and also credit cards, where we are increasing our rankings. Growing faster in the market means that in all the three products we have increased our market share, and we are now ahead of a number of our peers. As for our business and financial performance, this growth in the core business of course, made a positive impact here. And in quarter three, we hit a number of records in the history of MTS Bank. For example, operating income that characterizes the profitability of our business organically grew by 50% year-on-year, which is record high for us, I think, and to one of the leading indicators across the banking business upon on the whole. Net profit is a result of our work is record high for MTS Bank, RUB5.1 billion. A year ago, this figure was completely different, about RUB200 million that it was due to the pandemic impact to an extent. Now the return on equity is quite different from the previous year. It is about 16%. It is important to say that this growth is primarily attributed to the growth in our digital channels. During the pandemic, people really appreciate digital channels without having to actually go to a bank office, so now digital channels are dominating channels for us. Online and mobile bank, doubled profit, so to say it is much more convenient for customers to use this channel, and we are now mobile-centric, digital-first and even mobile-first because now when we design a new product or a change in interfaces, what we think, first of all its impact on the mobile bank and then for our customers and convenience for them there. I should say that the penetration of our mobile bank has grown a lot as well, and it is now 70% of our active customer base, but we expect that it will grow further till the end of the year and more than 2 million people by the end of this year and our customers will be regularly using mobile bank. And according to the data of an investment bank and their ranking of downloads and mobile banks, MTS Bank is among top six that shows high demand from our customers. To support it, we keep investing in the development of our product teams. Today, more than 70% digital teams are working on the development of our products. We keep increasing this number and we are requiring more and more digital talents to make sure our products are comfortable and convenient for our customers. What's next? It's important that this growth is not a compromise. It is not due to sacrificing the quality of our portfolio. We keep a close eye on the quality and the credit quality and the quality of risk, and there are some good results in third quarter 2021. There is yet another record value maybe the best NPL in our retail loan portfolio, 6.4%, which is the lowest over the recent history of the bank. And it is in line with the leading players of the Russian financial market. What's important? NPLs that the bank has are provisioned accordingly and the coverage is 150%. You can see this ratio growing during the year, and it means that the bank will not incur any losses associated with those NPLs coverage ratio is in line with the best practices of the best Russian players. And to conclude my presentation, I would like to mention an important event in the corporate governance. In September, we had shareholder meetings that elected a new Board of Directors. And positive news is, is that now out of nine directors, four are independent, that is plus two independent directors on our Board. And these new people bring in international Fintech expertise that will really help us in implementing our strategy to continue our growth. We will keep striving for that, and we will keep meeting the best practices of corporate governance in financial services. Thank you very much. And now over to Igor, who will tell you more about our media business.

[Igor Mishin:]

Thank you, Sergey. Good afternoon or good evening. MTS Media, it is well understood that the key event, intermediate business of MTS this year is offering a new brand to the market, new online cinema KION. It is just six months old. And right now we have 21 original titles or projects for our audience. KION Originals are what makes a difference. What differentiates us from other players and supports interest to the platform and subscription. The overall number of subscribers in cable, OTT, satellite keeps growing. We can see by the results, that's a major additional growth in percentage wise, not in absolute terms so far is attributable to OTT services. But our traditional cable, IPTV and satellite TVs, three areas where MTS has always been among the leaders despite the overall stagnation of the traditional pay TV market. In MTS Media, this three areas give us stable growth, not so big, but stable in each quarter. We can see there is a new culture of engagement without resources and the figures that you can see on the screen are to show you that it is the truth as the hours per viewer per week, it is almost four hours. It is a high growth for the platforms that has only been there for several months. This indicator is really good. And besides the share of content is also growing the share of content viewed that is the rate is highest in viewing TV channels. As for the quality of our channels and content, of course, your originals are a differentiator. That's why you would focus on the quality of the products. You can see the ratings by the independent aggregator in the market. They are somewhat lower than the ratings by our audience. Our viewers who vote after watching a film or a TV series that effectively the ratings are still high around seven. And we know from that that the communication is adequate. Our audience is not disappointed and they love our content. There is yet another indicator, it’s a number of titles a viewer watches. After watching one TV series, for example, people stay with the platform and watch other titles. Those who view two titles are more are now at about 50%, which is good dynamics. As for investment in originals, on the one hand, the number of originals in our overall library that now has more than 8,000 titles. That is movies, TV programs, documentaries, TV series. We can see that the share of KION Originals is small that it is investment intensive. It is the key differentiator in the development of our communication with the audience. So in nine months, you can see that the investment in content is quite comfortable. It's based on the company's operating profit – operating income. And we also have learned how to raise additional investments in developing the content with large media companies. We have achieved good results. We have good experience with Channel 1 TV and premier platform despite the fact that they may see in our competitor. Now, over to Farid.

[Farid Kamalov:]

Thank you, Igor. Good afternoon or good evening, dear colleagues. Let me introduce myself. My name is Farid Kamalov. I joined MTS in the middle of 2021, and I'm in charge of the company's retail business. I would like to tell you what we have managed to achieve over these months and what our transformation plans for the future for 2022 are. Let me start with giving you an overview of MTS retail business. We are number one largest telecom retailer in Russia, and our share is about 50%. We have almost 5,000 stores across the country in each inhabited localities, around new visitors. That is 120 million footfall per year. We've got a unique brand. Our traffic is incredible, which adds to the company's revenue. But there are some headwinds as well. For example, low margin products in telephony. We are going to mitigate this program through increasing the product mix in the complimentary categories, such as smart home and gaming. Talking about our website, right now, it is not fully adequate to the market requirements. But this year, we are going to close the first-loop, so to say of our omni-channel approach. So this is click and collect logistics specifics. As for operating costs, this time – thanks to the new management team and it has been replaced. It is now almost 100% new. So we are improving the business, reducing the costs, and next year we will go on with that. Now, as for our strategic development vectors, omni-channel approach, seamless customer experience that will enable our customers to buy more without actually seeing a difference between offline and online, we will be able to develop additional product groups. This is also broader product assortment, which will enable us to mitigate the risks associated with margins and it will also enable us to increase revenue. Our pickup points will be there not only for our own products, but also for third-party Internet stores. On the one hand, it will generate us additional income. On the other hand, it will enable us to manage the traffic. Fintech, a super complimentary category in electronics and we are growing double-digit this year. We will stick to the same rate next year. We are a kind of a shop window for MTS products, and it is an important focus in our work. As for costs, we will be keeping them down in 2021 and in 2022 too. Our key target is positive operational efficiency in 2022. Thank you. Now, over to Andrey.

[Andrey Kamensky:]

Farid, thank you very much. Over to financial results and performance of the company. What can be nicer than speaking about good results. You can see OIBDA in the quarter, we show the growth of 4.2% year-on-year. Speaking about this indicator, it is important to bear in mind two factors. First is quite high base of 2020. In the third quarter of 2020, the lockdown was canceled and borders were partially opened, which drove the business in quarter three, 2020. So as I say, the base is quite high. And the second factor, which is also important, is roaming. You can see that year-on-year, there is some positive effect. It could have been higher though. Now roaming is still far from the pre-COVID levels. And this is – here is yet some room for us for further achievements. You can also see the figures for our retail here. There is a slight negative impact, which is also explained by what Farid has already spoken about. First, as for the margins of the business year-on-year, there are lower margins from sales of telephone products. And in the second quarter last year, there were some economists that were left in the last year. As for net profit of the group, here you can see the key drivers. The key drivers is our core businesses and Fintech. The contribution of those businesses is positive. And besides there are some objective factors that make negative impact on net profit. First of all, it is depreciation and amortization, launch of intangible assets, our own product development software for our base stations. This investments increased year-on-year and so amortization goes up as well. Now, higher interest expense. Now, there are higher interest rate because the key rate has been increased. Let me remind you the increase was 1.25%, and of course, it couldn't, but impact our interest expenses besides and absolute growth of our debt also made an impact on those figures. Now, over to our CapEx or investment program. This is in line with our plan and previously announced figures. So over the year, our estimate is RUB110 billion. As for the drivers, you can see that the key driver is telecom, our core business and core income. What Inessa has been speaking about as an example, swap in Moscow was a driver behind increased expenses this year. And what's different from the previous years, for example, there is a higher investment pool that we allocated to our business areas, including telecom. You can see considerable growth of investment in digital products as well, and it is our strategic debt, so to say. Now over to our debt portfolio management, higher CapEx. And I would say that as for quarterly evolution, this year, we spent amounts that are more evened out. But this year in nine months, we spent more and within the same period last year, we also have investments in acquisition of Zelenaya Tochka and MTT and also Fintech. And we also bought a data center this year. So there's quite a lot of M&A activity on our part this year. Of course, it made an impact on our debt. It has gone up, but as for the breakdown, it is about the same, almost all of it is denominated in rubles. And you can see the split between bonds and credit facilities as for rates 62% of fixed trade and 38% floating rate. And of course, we feel the impact of the changes in the key rate. You can see it in the chart on the right hand side, weighted average interest rate. You can see it somewhat growing quarter-to-quarter, but it is at a comfortable level for us about 7%. Now, over to Vyacheslav. Thank you.

[Vyacheslav Nikolaev:]

Thank you, Andrey. Let me be really brief. Let me remind you all that we have been really happy to share the results of our operations and we have always paid good dividend. You can see it in this chat, our dividend policy is now being updated. It will be announced soon. Of course, it will depend on what shareholders decide, but we would like to recommend more frequent payment of dividends. And second, I'm sure that everybody will support us in that, the amount or the size of dividends should be higher than in the previous dividend policy. With this good news, I would like to add that we confirm our outlook for 2021 growth and revenue guidance. We upgrade our guidance on our OIBDA. There are only two months left till the end of the year. We can see what's happening and it will be higher than 6% growth year-on-year. We can also update our CapEx guidance. It will be within our initial guidance, but maybe closer to the upper threshold, about RUB110 billion this year. And indeed there are two months or even a month and a half left before the end of the year. We understand that the year was really challenging. It was really loaded with ideas and changes and the things we have been working on that would bring about really good results and make us optimistic about the year 2022. Now over to Polina, with your concluding comments, and I'm really hopeful for an open dialogue with you a bit later today.

[Polina Ugryumova:]

Thank you, Vyacheslav. Vyacheslav, thank you very much, again. Soon we will open the floor for questions to the management. Today, we have a wider audience than usual. We have analysts, investors and journalist on the line. For us to be able to take all your questions, I'm now inviting my colleague to assist me. Alexey Merkutov, spokesperson for MTS, best friend of journalists. Of course, you can ask all your questions in the dedicated channel in the PR or IR. The details have been circulated to you. If you would like to ask your question live, please get connected via the Zoom channel. If you are not there yet in Zoom in the chat, please introduce yourself by the name, so that we could identify you and show you on the screen for our speakers. We will start our dialog really soon. Please stay with us, and we will resume in a minute.

[A - Polina Ugryumova:]

Alexey, over to you.

[Alexey Merkutov:]

Happy to take the floor. Dear colleagues, let us start with a general question asked by almost all the journalists. It's about our subscriber base quarter three year-on-year growth. Incremental is about 1.5 million subscribers. Why so many?

[Inessa Galaktionova:]

First of all – the first question about telecom shows that we are really working well in this area. There are several reasons behind the growth. First, we can see the impact of the ecosystem operations and a sharper focus on lowering the churn. Yet another factor with a number of subscribers, they were dormant, but now they're active again. There was a decline associated with the pandemic, which we told you about in 2020, and in the first half of 2021. And we can now see this dormant clients becoming active again. There are some short-term effects as well. As I told you, we can analyze the base. We do analyze it, and we can see how our core customers feel. I am sure there will be further growth driven by the reasons I've just told you about. Polina?

[Polina Ugryumova:]

Thank you very much, Inessa. As I understand, the next question will be asked via our Zoom channel. It's a question by our analyst, Anna Kupriyanova, Gazprombank. Hello, Anna.

[Anna Kupriyanova:]

Yes. Good evening. Thank you very much for this opportunity to take part in an online conference. I'm really happy to see all the managers here together. And my first question will be about the ecosystem. Can you tell us more about the developments? What kind of synergies do you envisage from those new business streams and how do they impact the lifetime value of the customer? Where can you see the largest return on investment going forward? What new business streams are you now thinking about in this regard? And if I may, I will ask my second question later. Thank you.

[Olga Ziborova:]

I have already spoken about the synergies and the first impact that we can see is of course, lower churn among our ecosystem clients. Two and more products per client drive it down 3x. And of course, the average ticket grows, and we keep monitoring the contribution of various business verticals and various products. And the growth of CLV churn, KION and digital products give us quite a promising performance, very attractive.

[Vyacheslav Nikolaev:]

Yes. And I would like to add some meat – some flesh so to say. When we look at CLV of some products that do not give us an immediate financial return. If you offer a free of charge product, our CLV would grow by 30% and more. We can really see it. And of course, we assess all our new products with this indicator in mind. I cannot say that there is some special performance by any particular product, but the question is what products we are thinking about in terms of synergies. These are products associated with high frequency. This is what we currently lack in my opinion for full fledged promotion of other services of the ecosystem. So now we are paying a lot of efforts to develop our smart home and auto products that will result in higher frequency next year. Anna?

[Anna Kupriyanova:]

Yes. Thank you very much for your answers. My second question, if I may, it's about MTS Bank. We can see that there is some decline in the margins in quarter three. Can you elaborate on what stands behind it and what evolution we should expect? Could you give us guidance on the bank on OIBDA, for example? And where there is potential for investment income due to higher rates, for example?

[Sergey Ulyev:]

Let me try to answer the question. In fact, the margins in the market with the tougher competition is slightly reducing for most of the players, but in the second half of the year, the margins always show lower results in P&L than in the first one, not all the P&L from the loans we issue, they're on the balance sheet reflected already. There is some to be reflected going forward. There is a kind of a delay effect. And as for the margins, the key rate is increased. Funding is more expensive and loans are issued at new rates, but we lag behind temporarily. But as usual, the high is the key rate, the high is the interest margin of the bank is, so it all offsets in the midterm. We do not expect any further significant pressure in this regard on us. And we have quite an ambitious growth plan as for commission income. I would like to say that lending income is about 23% for us from other – in our total income, it is quite high and it is driven by the growth of payments that we used to have in offline format in MTS offices and outlets. But this year, we can see some active growth in a number of payment services launched in the digital channel. We hope this growth will sustain.

[Alexey Merkutov:]

Thank you. Let us go one with questions by journalists, Anastasia Gavrilyuk from Kommersant, is asking the retail chain, why we increase the number of outlets during the pandemic?

[Vyacheslav Nikolaev:]

Let me take this question. We are based on the size of the retail network, which is in turn based on the situation in the market. We'll look at it by geography, by some particular regions. Now the network is more than 5,000 outlets and we think it is adequate at present. So there was growth and there was decline. Is it a trend or is it a regular fluctuation? So actually there is no trend for an increase in the number of outlets. And we still say that we look to globally reducing the number of outlets of brick-and-mortar stores, and we hope this is where the market will be moving to.

[Alexey Merkutov:]

And if we may, another question from Anastasia to Andrey Kamensky. Please comment on the Russian business, OIBDA margin and net profit?

[Andrey Kamensky:]

When we speak about our results, of course, we mainly speak about the Russian business that is more than 90% in the indicators. More than 90% of our revenue is driven by the Russian business. Well, the Russian business is not consolidated. So our financials are the financials in Russia.

[Polina Ugryumova:]

Okay. And another question from the investment community, Anna Kurbatova, Alfa-Bank. Hello, Anna. Your questions. Please go ahead.

[Anna Kurbatova:]

Yes. Thank you very much. Good afternoon, good evening, everyone. I would like to ask my first question about your CapEx program. First, you are slightly more aggressive than before approach or rather forecast or guidance for the CapEx this year. Can we assume that it is more like a technical review result, for example, something associated with the FX rates in your contracts with vendors? Or have you managed to confirm or to complete some of your projects earlier than planned? This is the first question or the first part. And the second part on CapEx is how should we look at your CapEx program for the year 2022 and beyond? Will you have higher CapEx as compared to 2021 or will it be rather flat? And as for market environment, I listened to Rostelecom yesterday. Mikhail Oseevskiy said that they do not expect any large scale 5G networks in Russia in the coming three years. What is your view on your CapEx in terms of breakdown and the share of sales in the coming couple of years?

[Andrey Kamensky:]

Let me start, and my colleagues will take over. So I may repeat some things, I have already told you about CapEx, this year is a kind of peak year in terms of investment for us, mainly in the telecom. You saw it in the presentation with the telecom share, obviously going up. It is driven by a number of factors, including some projects that we mentioned today, such as swap. As for the year 2022, we can say that in terms of CapEx to sales, this indicator or ratio will not be higher than in 2021. As for the breakdown, it will be about the same. So there was a kind of a peak this year for telecom. So it will be going down next year, but still the share of telecom will be quite high. You are saying that we have increased the guidance, but we have not. We have always given you a range. And now we are just saying that we will be closer to the ceiling of the range. This year, we had to somehow offset some negative factors driven by FX rate, the impact by the vendors, and so one that we have succeeded and we are within the initial guidance.

[Vyacheslav Nikolaev:]

Yes. This is what I said. It wasn't an increase. We just clarified the figure, narrowed down the guidance because we now better understand what kind of a figure it will be. We hope that next year, our CapEx to sales will be lower in 2022, I'm uncertain.

[Inessa Galaktionova:]

And I would also add based on my past as an analyst, a company is now undergoing transformation. We have talked to the market quite a number of times, and it doesn't make much sense to look at the margins because the product mix is changing. CapEx to sales, well, I think we can use the same logics here. I would say this approach is not always adequate. We are developing new businesses whose CapEx is not always comparable with the classical business of telecom.

[Alexey Merkutov:]

Yes. Can we add something? Yes. I was granted this right by the President today. Vyacheslav, a question, you are saying you are reviewing your product mix, some of the products will be closed down. What is the principle behind closing down the products?

[Vyacheslav Nikolaev:]

That is a good question. Let me tell you upfront. I do hope that we will not have to close down any of the products, but the approach is really transparent. We get a product sometime to create an MVP. We enter the market and we verify or double check our hypothesis. So this is not usually an MTS brand, but a brandless product. So we just look at the hypothesis. We give a product a number of attempts, and this is really a reasonable approach. First of all, we have a product research team that takes into account quite a number of aspects, such as product practices, market areas, where they are with IT, what their product targets are, what they have achieved and what they have not, and how well the team understands that they will be able to reach some good results over a certain time span, not a very long one. So if we understand it, well, I mean, this is not a personal decision by someone. We've got the product committee in the company, and the IQ of the team is quite high. They meet on a regular basis and we do look into each and every product we see if there are chances or not. And if we can see the product has no chances, there is a whole dashboard we use, we close down the product and we thank the team because even if they do not launch the product, they gain the experience.

[Polina Ugryumova:]

Thank you, Vyacheslav. Our next question comes from the line of Ivan Kim, Xtellus Capital Partners analyst. Hello, Ivan.

[Ivan Kim:]

Yes. Hello. I hope you can hear me well, and I only have one question about your dividend policy. I understand that at this stage, you will not be able to shed much more light, but I would like to understand the logics. Will it be dividend per share or will there be a connection to free cash flow? And what's your idea about future buybacks maybe? We accumulated quite a lot of shares on your balance shift, should we expect any more buybacks in the coming years? Thank you very much.

[Andrey Kamensky:]

Let me start, and Vyacheslav may take over. There is some prior history to that. We communicate quite a lot to investors and get the feedback regarding the existing dividend policy period was for three years. This year, this period is over and we will approve a new dividend policy for another period. The company is changing a lot in terms of our investment, in terms of the evolution of our key metrics, what Polina has been talking about. As for the margins, it wouldn't be quite right to look at the company the same way you used to look at it before. Various work streams, various requirements to margins various requirements in funding. At this stage, we cannot give you a clear answer. What we are planning to do is a proposal to the Board of Directors. The Board of Directors will review it and approve something. We are looking into several options, the current dividend policy and dividend policies of other companies for example. We are now elaborating our proposal options to the Board for them to approve a new dividend policy. That's where we are. But this is a very good question. Indeed we are looking into various scenarios of further dividend calculation. And we will be happy to discuss it with analysts, I mean, different options from their potential market perception.

[Alexey Merkutov:]

Thank you very much. And now over to consolidation of Q1. There are two questions, mainly. You promised 30 originals this year. Will you leave up to this promise? Are they successful? And what number of originals are you planning to launch and shoot next year?

[Igor Mishin:]

Look, any figure that we mention in a media presentation, any resource, especially digital resource is not something binding. It is not a specific plan. It is a kind of a variable target. We are flexible in deciding what to release and what not. We need a certain time intervals in launching new product. We need to retain our current audience. We understand that at the beginning of the year, we spoke about 30 originals. We have offered 21 by now. In absolute terms, it won't be 30, I'm sure. We see a stable increase in the audience with each and every release, so we manage our content very confidently. It costs money. This is content investment, and we do not do it just for pleasure. There must be some idea behind it, and this is the way we are planning to work. We keep a close eye on it. And I think next year, a competitive figure for – a competitive number for any online cinema that once leadership and coverage will be somewhere between 30 to 40 titles a year. Not only for us with our peers too, there will be competition. And the thing is not the number that the quality actually a kind of a balance of emotions that the spectator has and feels they do not come to us for news. They come to us for some experiences and senses, and this is what we are driven by. I would make a kind of forecast on films that only are released, that are released on the digital without going to actual live cinemas and like TV series, for example. My focus is there will be – I think it is unlikely that there will be any major events. They are now winning out the quality of the offer. We are a young platform. We will be looking into the market and we are somewhere in between. We should be somewhat proactive in terms of the audience expectations. And like what number of films and TV series we will need for that about 30 to 40 a year, I think.

[Alexey Merkutov:]

What are your most successful and unsuccessful project this year? No, just in general.

[Igor Mishin:]

Currently, in top 20 titles at KION, top five is starting – we started in May and there was top five, and this top five in top 20 is our original project. Of course, there is some flexibility because some projects keep gaining more audience, such projects as Crystalline, Clinic of Happiness. There is no advertisement, but their audience is still increasing. And we understand that they are good releases. Our last release from the 1st of November is or lady government official. On the 7th of November, we saw great number of views. There was a maximum in terms of daily views that we saw, but there are no particular bets. This is how it works flexibly.

[Polina Ugryumova:]

Now, let me take the floor. Ivan Kim has one question unanswered. That is buybacks of the company in the coming couple of years.

[Andrey Kamensky:]

Buyback is not a part of our dividend policy. It is a case-by-case decision made based on the market environment. There is still this option. We cannot say that we have a kind of a preference for buybacks as a company. We do not have any specific plans in mind. That's for sure. Thank you.

[Polina Ugryumova:]

Our next question is from the investment community, again. Here is Henrik Herbst, analyst of Morgan Stanley. Hi, Henrik.

[Henrik Herbst:]

Hello. Hi. Thanks very much. I have a couple of questions. Firstly, just in terms of your cash flow and how you should think about it next year. You mentioned that 2021 was a peak year, at least for CapEx. Can you just clarify, when you said that, is that on CapEx to sales or is it in absolute terms as well? And then secondly, when we think about your cash flow going into next year, are there any other sort of one-offs or any events like that or things like that we should bear in mind that should improve going into next year? That was the first one.

[Polina Ugryumova:]

Now there is a translation for our Russian speaking audience.

[Andrey Kamensky:]

As for one-offs it would be difficult for me to speak about. Nobody knows what will happen. That's why they are one-offs. And thus for evolution or dynamics, let me reiterate, this year we see a significant impact on cash flow of greater investment in CapEx that we mentioned about and investment in non-organic growth or M&As. Those transactions we spoke about gave quite a considerable impact. If we do not take them into account, our free cash flow is even higher than in 2020, but this is excluding the bank. The bank has its own evolution. So it wouldn't be right to consolidate it here. So there is more acquisitions and more CapEx this year. Talking about comparison, we compare it in absolute figures. You saw it on the chart, the total is 110 billion in CapEx as I mentioned. In 2022, we expect it to be lower. As for M&A, this is always about an opportunity. I'm opportunistic about it. If there is a good asset to buy, then there is a transaction.

[Vyacheslav Nikolaev:]

Now there are no major transactions that we would forecast for the next year. And now back to the question, CapEx to sales going down or absolute CapEx going down, we believe that we will be showing lower CapEx in absolute terms next year, not only CapEx to sales and we do not have any one-offs that would make an impact on that in the year 2022.

[Polina Ugryumova:]

And let me add one particular factor that makes an impact on the comparison of cash flow indicators on a quarterly basis and year-to-date that is for nine months. As compared to the same period last year and additional negative impact this year is nominal or so to say, optical, different allocation of CapEx quarter-to-quarter. Before the end of the previous year, the classical telecom CapEx was shifted to quarter four considerably that this year, the picture has evened out. In the first half of the year, the nominal CapEx is kind of against us that the closer we are to the end of the year, the more it evens out. Have we answered your question? And I understand you have a follow-up?

[Henrik Herbst:]

Yes. I just wondered, I mean, if you could talk a little bit about the ecosystem is obviously very interesting and it seemed to be some very clear benefits. What I wanted to ask is how you think about, I guess the synergies between the services because you've – we're going into an ecosystem world, but you've at the same time started to report much more granular split between the businesses. So how do you – where do you allocate sort of revenues and synergies and costs? When it's practically, I guess, moving towards one service? And how do you think about – I guess, I think you've talked about potentially monetizing some of these parts. How do you think about that? I guess that could also complicate things because who gets both of the synergies. Thanks.

[Polina Ugryumova:]

It is mainly about finance. Allocation of revenue among work streams that are reflected in our current format of reporting. The question is not only about revenue, but also about costs. And a question that is connected with it, potential dedicated businesses, and they're going to capital markets, for example. Going to capital markets also raises certain flags of questions as to the interaction of this business and the ecosystem upon the whole.

[Vyacheslav Nikolaev:]

That's just a great question. I would give the price to this question today. The thing is we do expect that the most standalone our businesses are the more relevant this issue will be. And right now, we have a kind of more commercialized negotiations within the company. There is of course, this concept of a bundle, when you just sell a bundle, it is easier because we can measure CLV and impact on CLV. By the various parts of the bundle, we can allocate very clearly the revenue from the bundle to various businesses. There are models that have been accepted and that have been good. And as for costs, they are incurred by each business separately. But what we now have is a more challenging situation like ecosystem products, premium or cashback programs, for example. That now the way out would be to think about premium products as able to negotiate with each and every business. I mean, the same thing happens in Yandex and other ecosystems. An intermediary product is a standalone product as well, and it can also be commercial. We do not actually set a target to earn, it is somewhere around zero, but the allocation of revenue is via commercial negotiations. And when – not if, but when these businesses are made standalone and potentially find partners through an IPO or another option, we will be ready for that. A unified brand and the unified customer-centric approach across the Board will be part of this standalone businesses as well because the essential part of this value is about the omnichannel approach and about customers being within the ecosystem. We have taken this path of two years and a half already. We have been trying to balance it all out and I think we have succeeded.

[Henrik Herbst:]

Let me ask a follow-up question. Right now, talking about commercial negotiations between our departments and structural units, do I get it right that they are built mainly on the basis of consumption patterns within a bundle?

[Vyacheslav Nikolaev:]

Yes. This is what I'm talking about. The premium program will not benefit from having a product in the bundle that will not have demand that will have advertisement. Well, it is of course, about consumption and of course, we need to review the internal IT system and CRM to be able to calculate all that.

[Polina Ugryumova:]

Henrik, have we answered your question?

[Henrik Herbst:]

Yes. I think so. I realize it was quite complicated one, but that was great. Thank you very much.

[Alexey Merkutov:]

Thank you. A follow-up on IT strategy to Vyacheslav. Vyacheslav, you said that you invited for that. Could you shed more light and will this strategy be the same as the dividend strategy that is to be approved by the Board of Directors? Or is it an internal strategy of the company and it doesn't need approval?

[Vyacheslav Nikolaev:]

Well, why it will be submitted to the Board of Directors for approval, it is one of the core parts of the overall MTS strategy. And let me emphasize once again, that it is getting more and more important to shed more light. First of all, it is about architectural changes and MTS approach that is interaction between the businesses internally, including APIs that will be made for outreach to the external world to speed up our time to market a lot. Our time to market is not bad. We are quite in line with the market, but we believe that it can be further improved and accelerated. And tomorrow, we will need to be able to experiment within hours not weeks, and we should be ready to invest in it. Yes, it is an obvious growth area and upside area indeed.

[Polina Ugryumova:]

The next question is via my channel, again, we have an analyst from HSBC, . I worked with Mandeep for a number of years in Morgan Stanley. He's my colleague. Hi, Mandeep, really happy to see you. Please go ahead and ask your question.

[Unidentified Analyst:]

Hello, Polina. Very good. Thanks. Thanks for taking my question as well. My question is in three areas. Firstly, I want to understand, if you could discuss about the competitive behavior in the country both in Moscow as well as in the regions, especially on the data side? That's the first question. Secondly, if you could talk about your network capacity utilization right now, both again in Moscow, as well as in the regions? What percentage of free capacity you do have on the network currently? And then third question is on the 5G strategy of MTS. Given you're talking about CapEx, the way the CapEx is going. I just want to understand, do you see an uptick because of 5G at some point of time? Or would you rather contain the CapEx with your current levels and rather kind of fit your 5G strategy within your current CapEx strategy rather than fitting your CapEx strategy into a more aggressive 5G strategy?

[Inessa Galaktionova:]

Russia is no doubt a highly competitive market because there are four operators present in the market. And of course, they are all at various stages of their successes or failures all the time. So of course, the market sees some developments from time-to-time where you need to be active. You need to somehow respond to price aggression or some searches in sales. It is a standard situation for us. We have been long present in this market led by four operators, and the year 2021 is not that much different from the previous ones. The year 2020 was a kind of a quieter year because the pandemic made an impact on certain activities. Everybody's working on transformation and making their operations more efficient. Nobody knew how soon it would end and what kind of an impact it would have on operating performance. We can see that international roaming was frozen and the number of businesses experienced issues. We started 2021 quite calmly, some regions required a more active position, of course, but basically we are in the market of four operators. And in our performance, you can see that we are quite efficient. Last year, there were no quarters with negative dynamics in telecom, and this year you can also see that the performance is really good, especially in the third quarter, and we have things to be proud of. Going to the network capacity question. Yes, of course, there is higher consumption of traffic and it requires more capacity that what is important is not linear investments in capacity. We must be reasonable and efficient. There are big data teams and technical teams working on it and my team as well. We keep looking for and finding new efficiency tools. The projects I have been speaking about, smart rollout is aimed at increasing efficiency, while planning investments in the network. Moscow is one of the regions where we see, and we understand there is demand for high speeds and capacities. So we prepare for it upfront. We planned the activity, approved it in 2020, and we started developing it in 2021. Swap project, the project primarily taking part in Moscow. Now the objective was to complete it really fast. And we did most of the work in 2021. We can see an increase in the speed and capacity in Moscow. As the effect is really good, we are really good with our subscriber base in Moscow, and we see that the capacity associated activities will support our further growth in such a competitive region as Moscow. In other regions of , there is room with our capacity. Our planning of the network is really high quality and there are no dedicated work streams. I do not think we need them. Everything is quite well balanced and efficient.

[Vyacheslav Nikolaev:]

And there is some cushion in each and every region. As for investments, we do not contain our investment in 5G. We do not expect as well as with the previous standards. We do not expect that 5G will be somehow on top of our investment. I think it will replace investment in 4G and make our investment more efficient overall. So if it will have an impact, it will be a positive one. And I think there are more questions. So let us give the floor to those who ask them.

[Polina Ugryumova:]

Do you have any follow up questions?

[Unidentified Analyst:]

No. Great. Thank you very much. Thanks.

[Alexey Merkutov:]

There are two questions to Inessa and Vyacheslav. I think the first one has resumed integration between Belarus and Russia. And what about the cost of roaming? Will it be going down into next December? What number of customers so called corporate customers, great customers? So to say, we will have to disconnect. Over to Inessa with roaming.

[Inessa Galaktionova:]

And I will be able to speak about customers too. As for Belarus, you know that the tariffs have been reduced and they were reduced actually a year ago, if my memory doesn't fail me in November, 2020. And right now those rates are almost the same as in Russia. We do not expect any further decline. Everything that we had to do has already been done and looks like everybody is happy.

[Vyacheslav Nikolaev:]

Yes. Everybody would like to ask questions about customers, but let me use my position to answer this one. I hope we will not have to disconnect anyone in December, but there is a good word in English, encourage. I believe that we encourage everyone to take it seriously. This is a law and we see some good dynamics in legalization of those SIM cards. Personal data are filled in. We help our clients with it. We have informed everyone about it. If you have SIM cards that does not have personal data, we help everyone. Please do come to our mobile outlets. We help you work with the government services platform. So we do hope that we will not have to disconnect anyone. We are taking some preventive measures.

[Inessa Galaktionova:]

Yes. Vyacheslav, you are absolutely right. We are doing our best to make sure that all the clients are comfortable with this transition on the 1st of December and all those text messages, communications in the media and so on. That should really been taken seriously. Do not leave it until the last day as we are used, please identify yourself proactively, and you will not actually notice the 2nd of December coming.

[Polina Ugryumova:]

Thank you very much, Inessa. If I get it right, there are no more questions from the external audience. But actually our Q&A has lasted for almost 40 minutes. Thank you very much, dear audience, dear colleagues. We will be happy to take your feedback on the new format. As usual, if you have more questions, please contact our IR or PR functions at MTS. We are always ready to help you and to engage in an ongoing dialogue. Our speakers, thank you very much and have a very good evening. Thank you. Goodbye.