Profile: Mobile TeleSystems OAO (MBT.N)

MBT.N on New York Stock Exchange

4 May 2015
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Mobile TeleSystems OJSC (MTS), incorporated on March 1, 2000, is a telecommunications provider in Russia and the Commonwealth of Independent States (CIS). The Company provides a range of mobile and fixed line voice and data telecommunications services, including transmission, broadband, pay-television (TV) and various value-added services, as well as selling equipment and accessories. As of December 31, 2010, MTS had a mobile subscriber base of approximately 103.35 million (approximately 71.44 million in Russia, 18.24 million in Ukraine, 8.79 million in Uzbekistan, 2.42 million in Turkmenistan and 2.46 million in Armenia). Through COMSTAR-United TeleSystems (Comstar), it is the operator in the Moscow residential broadband market. In June 2010, the Company acquired a 15.0% ownership interest in TS-Retail OJSC (TS-Retail) from Sistema, consequently its effective ownership interest in TS-Retail increased to 49.6%. It subsequently increased its effective ownership interest in TS-Retail to 50.95%, which was achieved through a voluntary tender offer to purchase Comstar's shares in September 2010. On December 27, 2010, it acquired a 100% ownership stake in Sistema Telecom, a subsidiary of Sistema, which owns the egg-shaped logos each of the telecommunications companies operating within the Sistema group uses, including the Company, and a 45% ownership stake in TS-Retail, from Sistema. As a result of this acquisition and its merger with Comstar on April 1, 2011, it owned a 100% interest in TS-Retail. In August 2010, it acquired a 95% ownership interest in Metro-Telecom, a company, which owns a fiber optic network located in the Moscow metro, from Invest-Svyaz CJSC, a wholly owned subsidiary of Sistema.

Russia is the Company’s principal market, both in terms of subscribers and revenues. During the year ended December 31, 2010, approximately 83% of its revenues came from operations in Russia; approximately 9%, of its revenues came from operations in Ukraine, and approximately 8%, of the Company’s revenues came from operations in its other countries, respectively. At December 31, 2010, approximately 69% of its mobile subscriber base was in Russia and approximately 18% was in Ukraine. At May 1, 2011, the Company had approximately 101.6 million subscribers, including approximately 71.4 million in Russia, 18.6 million in Ukraine, 9.1 million in Uzbekistan and 2.5 million in Armenia. As of December 31, 2010, the Company had mobile licenses to operate and commercial mobile operations in 82 regions of Russia. MTS Belarus had approximately 4.72 million subscribers at December 31, 2010, according to our estimates. The subscriber base of MTS Belarus was approximately 4.75 million at May 1, 2011. In Turkmenistan, its primary operating license was suspended on December 21, 2010, and it ceased providing mobile telecommunications services in that country since that date.

The Company primarily offers mobile cellular voice and data communication services to its subscribers on the basis of various tariff plans designed for different market segments. Roaming allows its customers, both subscribers and guest roamers, to receive and make international, local and long-distance calls while traveling outside of their home network. Roaming is provided through individual agreements between MTS and other global system for mobile communications (GSM) operators. As of December 31, 2010, it had bilateral roaming contracts with 673 wireless operators in 225 countries, including with regional operators in Russia. In Russia, as of December 31, 2010, in addition to its network coverage area in 82 of the 83 regions of Russia, GSM service was available to its subscribers in the Penza region of Russia where MTS operated through its roaming agreements with 12 regional operators. These services may be included in the tariff plan selected by the subscriber or subscribers may pay additional monthly charges and, in some cases, usage charges for them. Some basic value-added services that it offers are blackberry, call barring, call waiting, call divert/forwarding, short message service (SMS), multimedia messaging service (MMS), caller identification (ID) display and anti-caller ID display, mobile office, melody ring tones, conference calling, voicemail, missed call alert, wireless fidelity (WiFi), mobile banking, itemization of monthly bills, location-based service (LBS), wireless application protocol (WAP), information and directory service, general packet radio service (GPRS), MTS-Connect, international access service, Intelligent call assistant, subscriber identity module (SIM)-browser, WEB and Wireless Application Protocol (WAP) portal, APN remote access point, point-to-point transfer, real Internet protocol (IP), fixed mobile convergence, unstructured supplementary services date (USSD), automatic customer care system and customer care system via the Internet, enhanced data rates for GSM Evolution (EDGE) , High-Speed Downlink Packet Access (HSDPA), ring back tone, collect call and E-shop. It also provides a number of voice and SMS-based value-added services in co-operation with various content providers.

MTS offers GPRS services, enabling its subscribers to access the Internet, WAP and MMS in all of the countries where it operates. It also provides international GPRS roaming to its subscribers, enabling them to use various GPRS-based services while traveling abroad. EDGE is a data transfer technology capable of transmitting streamline video and TV programs onto mobile phones. As of December 31, 2011, EDGE services are available to its subscribers in Russia, Ukraine, Armenia, Uzbekistan and Belarus. The Company also offers the MTS-Connect service, which allows its subscribers to get mobile Internet access through a GPRS/EDGE/third generation (3G) connection, using a computer, personal computer (PC)-card and Universal Serial Bus-modem. This service is available to its subscribers in Russia and Ukraine and in more than 167 countries where it has GPRS roaming. The Company provides BlackBerry services to corporate users in Ukraine and to corporate users in Russia. In addition to corporate users, it also provides BlackBerry services to market subscribers in Ukraine and in Moscow and the Moscow region in Russia. In May 2009, it launched Blackberry Internet Service in Moscow and the Moscow region, and in October 2009, MTS launched commercial operations of BlackBerry Enterprise Server (BES) and BlackBerry Internet Service (BIS) in 39 regions of Russia, and expanded such services to 74 regions in 2010.

The Company has received a nationwide 3G/UMTS license in Russia. The license covers the entire territory of Russia. During 2010, MTS launched its 3G network in most of the Russian cities. In May 2009, MTS, along with Vimpelcom and MegaFon, were allocated 3G/UMTS frequencies to begin testing its 3G network in Moscow and the Moscow region. As of May 1, 2011, the Company’s 3G indoor network operated in 100 trade and business centers in Moscow and in various metro stations. It also provides 3G services to companies within Moscow. In 2010, the Company had installed 6,955 3G base stations throughout Russia. In December 2008, it launched its 3G network in Uzbekistan's two cities, Tashkent and Samarkand, followed by the launch in three additional cities: Urgench, Khiva and Bukhara in January 2009. In Armenia, its subsidiary K-Telecom is licensed to offer 3G services in the UMTS standard throughout Armenia pursuant to its wireless services license. In April 2009, it launched its 3G network in Armenia's three cities: Yerevan, the capital, Guymri and Vanadzor. In addition to cellular communication services, MTS offers corporate clients a number of telecommunications services, such as design, construction and installation of local voice and data networks capable of interconnecting with fixed line operators, installation and maintenance of cellular payphones, lease of digital communication channels, access to open computer databases and data networks, including the Internet, and provision of fixed, local and long-distance telecommunications services, as well as video conferencing.

The Company competes with Vimpel Communications, MegaFon, Tele2, Svyazinvest Telecommunications Investment Joint Stock Company, Open Joint Stock Company Long-Distance and International Telecommunications Rostelecom, Smarts, Uralsvyazinform, Astelit and Kyivstar.

Company Address

Mobile TeleSystems OAO

4 Marksistskaya Street
MOSCOW     109147
P: +7495.9116555
F: +7495.9116599

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