Mobile TeleSystems: Statement Regarding the Impact on MTS of Recent Events
MOSCOW, Russia – Mobile TeleSystems Public Joint Stock Company (“MTS” or “the Company”) (NYSE: MBT; MOEX: MTSS), Russia’s largest mobile operator and one of the leading providers of media and digital services, provides an update regarding the current situation and the potential impact on the Company of recent geopolitical events.
- MTS believes that its business is resilient to external shocks. The Company is focused on navigating the current environment, which it continues to monitor.
Operationally, MTS’ businesses and verticals continue to serve customers in the Company’s operating markets and strive to remain trusted partners for counterparties. The Company has a diverse base of vendors and suppliers and maintains regular communications with stakeholders.
MTS has a solid financial position and comfortable leverage, as well as a portfolio of gross debt denominated at 98% in local currency, including currency hedging at the end of the last reporting period ( Q3 2021).
MTS is not currently aware of any designation of MTS, its subsidiaries or members of its management team under the sanctions recently imposed by the EU, US, UK and certain other countries.
At the same time, MTS cannot exclude the possibility of impacts on its operations and financial results due to actual and potential external factors beyond its control, including changes in the broader macroeconomic environment, restrictions on commercial and commercial relations and the possibility of a further extension of sanctions. Therefore, the management team remains focused on ensuring operational continuity and providing uninterrupted connectivity and other services to customers. For more information, see the section titled “Updated Risk Factors” below.
MTS will release its financial results for the fourth quarter and full year 2021 as scheduled on March 3 at 3:00 p.m. Moscow time (7:00 a.m. New York time). Given the rapidly changing external environment, no conference calls will be held to discuss the financial results. Shareholders or other market participants wishing to discuss these or other matters are encouraged to contact the MTS Investor Relations Department at:
Investor Relations Department
Mobile TeleSystems Public Joint Stock Company
Tel: +7 495 223 2025
Email: [email protected]
Update of risk factors
In February 2022, following an escalation of the conflict between Russia and Ukraine, the EU, US, UK and some other countries imposed significant new sanctions and export controls to Russian and Belarusian persons and entities.
On February 28, trading on the Moscow Stock Exchange of all equity securities was suspended (including the Company’s ordinary shares), with the suspension subsequently extended until at least March 2. Certificates of Deposit (“ADR”) and those of certain other Russian companies.
Developments related to these matters are highly unpredictable, occur quickly and often without notice, and are mostly beyond the control of the MTS Group, and the risk that any member of the MTS Group, or persons in positions within the MTS Group MTS and its counterparties that may be affected by future sanctions designations cannot be excluded. Current and future risks to MTS Group include, among others, the risk of reduced or blocked access to capital markets and its ability to obtain financing on commercially reasonable terms (or at all), the risk of restrictions on the import of certain equipment and software, as well as the risk of further depreciation of the Russian ruble against other currencies (which has already happened to a large extent), which could have a negative impact on the Company’s investment process, as a significant portion of its capital expenditures are denominated or linked to foreign currencies. currencies. In addition, rate hikes by the Central Bank of Russia, which raised its key rate to 20%, will increase and may continue to increase the Company’s funding costs due to the impact on interest rate credit facilities. variable.
In addition, the CBR prohibited Russian securities market professionals from carrying out depositary and record keeping activities and from carrying out sales of securities of Russian companies by non-residents of Russia (with a very limited number exceptions), with the effect that, among other things, no ADRs can be converted into ordinary shares for such non-Russian residents. In addition, the CBR has prohibited Russian companies from making payments, including dividends, on securities of Russian companies to non-Russian residents, so any non-Russian resident holder of our ADRs on the record date relevant for the payment of dividends would not be eligible to receive such dividends. These developments could have a material adverse effect on the liquidity and value of our ADRs.
The operations of MTS Bank, a subsidiary of MTS Group, are sensitive to risks affecting the ability of MTS Group borrowers to repay amounts due to MTS Group, which may be affected by the overall macroeconomic environment and business climate. Adverse changes in economic conditions may cause the value of collateral held on loans and other obligations to deteriorate.
The aforementioned geopolitical events, and any continued tensions, have had and may continue to have a negative impact on the volatility and price of the Group’s shares and ADRs.