Last updated on April 20, 2014 at 13:20 EDT

Mobile TeleSystems Announces Financial Results for the Fourth Quarter and Full Year Ended December 31, 2012

March 19, 2013

MOSCOW, RUSSIAN FEDERATION, March 19, 2013 /PRNewswire/ –

Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the leading telecommunications provider
in Russia and the CIS, today announces its unaudited US GAAP financial results for the
three months and full year ended December 31, 2012.

Key Financial Highlights of Q4 2012 and FY 2012

        - Consolidated revenues up 1.1% q-o-q to $3,168 million and up 1.0% y-o-y to
          $12,436 million
        - Consolidated adjusted OIBDA[1] of $1,288 million down 6.6% q-o-q with 40.7%
          adjusted OIBDA margin and up 3.0% y-o-y to $5,300 million with 42.6% adjusted OIBDA
        - Consolidated net income[2] of $547 million in Q4 2012 and a net income of
          $1,007 million in FY 2012
        - Free cash-flow[3] growth of 25% to $1.3 billion for FY 2012

Key Corporate and Industry Highlights

        - Acquired Pilot LLC and TVKiK LLC, providing fixed broadband and pay-TV
          services in the Kursk Oblast, from private investors. The purchase price, including
          the net debt of both companies, amounts to RUB 90.7 million
        - Acquired ZhelGorTeleCom CJSC, the leading fixed broadband provided in
          Zheleznogorsk in the Kursk Oblast, from private investors. The purchase price,
          including net debt, amounts to RUB 152 million
        - Signed a non-binding indicative offer between MTS, MTS Bank and Sistema JSFC
          to purchase up to 25.095% stake in MTS Bank through a share issuance for up to RUB
          5.09 billion


Mr. Andrei Dubovskov, President and CEO of MTS, commented, “For the year 2012, Group
revenues increased by 1% to $12.4 billion. Overall, we saw strong operating dynamics in
our core Russian and Ukrainian markets, yet our Group top line performance was limited by
a significant weakening of the Russian ruble versus the US dollar and the mid-year
suspension of our operations in Uzbekistan. We continue to see growth in our markets
driven by sustained voice usage and greater adoption of data products and services. We
delivered both ARPU and usage growth in each of our core markets, a sign of Group’s
excellence throughout the organization. In 2012, total revenues in Russia increased in
ruble terms by 8% to RUB 338 billion driven by increased usage of data products; an
increase in handset sales, including sales of higher-value smartphones through our
expanding proprietary retail chain; and our ability to attract and retain higher-value


1. See Attachment A for definitions and reconciliation of adjusted OIBDA and adjusted
OIBDA margin to their most directly comparable US GAAP financial measures.

2. Here and below in the release, net income stands for net income attributable to the

3. See Attachment B for reconciliation of free cash-flow to net cash provided by
operating activity.

Mr. Alexey Kornya, MTS Vice President and Chief Financial Officer, said, “In 2012,
Group adjusted OIBDA increased by 3% to $5.3 billion. Throughout the year we showed faster
adjusted OIBDA growth relative to revenues due to rising contribution from data services
and sustained focus on reducing costs. Group adjusted OIBDA margin came in above our
guidance for 2012 at 42.6%, despite the suspension of our business in Uzbekistan, which
had historically demonstrated a higher adjusted OIBDA margin than elsewhere. For the
quarter, Group adjusted OIBDA increased by 1% year-over-year despite on-going costs in
Uzbekistan and strategic decisions made by the company to increase our retail network. In
Russia, OIBDA rose by 11% to RUB 148 billion. Sustained improvements in OIBDA throughout
the year reflected on-going efforts by the Company to manage costs, while we realized
benefits from decreased competitive activity.”

He continued, “CAPEX for the year came in line with our guidance at $2.9 billion or
roughly 23% of sales. In 2012, we continued build-out of our 3G networks, which has
reached 28,000 base stations with over 90% sites connected via IP-channels. We invested in
backbone and backhaul roll-out in the regions as well as in our GPON project in Moscow,
bringing the total length of our fiber-optic networks up to over 140,000 km.”

Mr. Dubovskov added, “With the near completion of our aggressive roll-out of 3G in
2012, we foresee a decrease in 3G-related CAPEX in 2013. However, we need to direct
sufficient funds towards LTE network build-out to ensure we are able to offer our
customers cutting edge solutions and seize commercial opportunities, which LTE provides.
Overall, we expect to spend 20% of sales on capital investments. For the period 2013 to
2015, we expect cumulative CAPEX/sales ratio in the range of 18-19%. We are confident that
in 2013 we will be able to realize our goal of 5 to 7% revenue growth in local currencies.
We believe that macroeconomic factors, the changing revenue mix within the Group and
improvement in the competitive environment will allow us to sustain our OIBDA margin in
the range of 41 to 42% for 2013.”

This press release provides a summary of some of the key financial and operating
indicators for the period ended December 31, 2012. For full disclosure materials, please
visit http://www.mtsgsm.com/resources/reports/ [http://www.mtsgsm.com/resources/reports ].

* * *

Learn more about MTS. Visit the official blog of the Investor Relations Department at
http://www.mtsgsm.com/blog and follow us on Twitter: JoshatMTS

* * *

Mobile TeleSystems OJSC (“MTS”) is the leading telecommunications group in Russia and
the CIS, offering mobile and fixed voice, broadband, pay TV as well as content and
entertainment services in one of the world’s fastest growing regions. Including its
subsidiaries, the Group services nearly 100 million mobile subscribers. The Group has been
awarded GSM licenses in Russia, Ukraine, Turkmenistan, Armenia and Belarus, a region that
boasts a total population of more than 200 million. Since June 2000, MTS’ Level 3 ADRs
have been listed on the New York Stock Exchange (ticker symbol MBT). Additional
information about the MTS Group can be found at http://www.mtsgsm.com.

* * *

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial performance of
MTS, as defined in the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. You can identify forward looking statements by terms such as “expect,”
“believe,” “anticipate,” “estimate,” “intend,” “will,” “could,” “may” or “might,” and the
negative of such terms or other similar expressions. We wish to caution you that these
statements are only predictions and that actual events or results may differ materially.
We do not undertake or intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events. We refer you to the documents MTS files from time to time with the
U.S. Securities and Exchange Commission, specifically the Company’s most recent Form 20-F.
These documents contain and identify important factors, including those contained in the
section captioned “Risk Factors” that could cause the actual results to differ materially
from those contained in our projections or forward-looking statements, including, among
others, the severity and duration of current economic and financial conditions, including
volatility in interest and exchange rates, commodity and equity prices and the value of
financial assets; the impact of Russian, U.S. and other foreign government programs to
restore liquidity and stimulate national and global economies, our ability to maintain our
current credit rating and the impact on our funding costs and competitive position if we
do not do so, strategic actions, including acquisitions and dispositions and our success
in integrating acquired businesses, potential fluctuations in quarterly results, our
competitive environment, dependence on new service development and tariff structures,
rapid technological and market change, acquisition strategy, risks associated with
telecommunications infrastructure, governmental regulation of the telecommunications
industries and other risks associated with operating in Russia and the CIS, volatility of
stock price, financial risk management and future growth subject to risks.

        For further information, please contact in Moscow:
        Joshua B. Tulgan
        Director, Corporate Finance & Investor Relations
        Mobile TeleSystems OJSC
        Tel: +7-495-223-2025
        E-mail: ir@mts.ru

SOURCE Mobile TeleSystems OJSC

Source: PR Newswire