Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information | |
Entity Registrant Name | MOBILE TELESYSTEMS PJSC |
Entity Central Index Key | 1,115,837 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 1,129,245,695 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
NON-CURRENT ASSETS: | ||
Property, plant and equipment | ₽ 263,063 | ₽ 272,841 |
Investment property | 407 | 336 |
Goodwill | 34,281 | 33,685 |
Other intangible assets | 79,397 | 75,128 |
Investment in associates | 9,452 | 10,551 |
Other investments | 1,953 | 36,319 |
Deferred tax assets | 5,545 | 6,150 |
Accounts receivable, related parties | 2 | 3,693 |
Other financial assets | 8,890 | 13,877 |
Other non-financial assets | 2,048 | 896 |
Total non-current assets | 405,038 | 453,476 |
CURRENT ASSETS: | ||
Inventories | 9,995 | 14,330 |
Trade and other receivables | 28,017 | 29,805 |
Accounts receivable, related parties | 11,358 | 4,401 |
Short-term investments | 50,757 | 8,657 |
Advances paid and prepaid expenses | 3,894 | 5,749 |
VAT receivable | 7,165 | 7,098 |
Income tax assets | 2,838 | 1,601 |
Assets held for sale | 1,276 | 808 |
Cash and cash equivalents | 30,586 | 18,470 |
Other assets | 146 | 75 |
Total current assets | 146,032 | 90,994 |
TOTAL ASSETS | 551,070 | 544,470 |
EQUITY: | ||
Common stock | 200 | 200 |
Treasury stock | (22,644) | (748) |
Additional paid-in capital | 381 | 191 |
Retained earnings | 151,043 | 145,622 |
Accumulated other comprehensive loss | (8,854) | (6,030) |
Equity attributable to owners of the Company | 120,126 | 139,235 |
Non-controlling interests | 4,079 | 4,713 |
Total equity | 124,205 | 143,948 |
NON-CURRENT LIABILITIES: | ||
Borrowings | 239,096 | 237,113 |
Deferred tax liabilities | 23,773 | 26,611 |
Provisions | 2,309 | 2,350 |
Other non-financial liabilities | 3,968 | 4,129 |
Other financial liabilities | 1,048 | 2,774 |
Total non-current liabilities | 270,194 | 272,977 |
CURRENT LIABILITIES: | ||
Trade and other payables | 47,314 | 41,473 |
Accounts payable, related parties | 1,102 | 1,014 |
Subscriber prepayments and other advances | 17,878 | 15,460 |
Borrowings | 64,474 | 47,207 |
Income tax liabilities | 1,150 | 962 |
Provisions | 9,852 | 8,075 |
Other non-financial liabilities | 11,865 | 10,305 |
Other financial liabilities | 3,036 | 3,049 |
Total current liabilities | 156,671 | 127,545 |
TOTAL EQUITY AND LIABILITIES | ₽ 551,070 | ₽ 544,470 |
CONSOLIDATED STATEMENTS OF PROF
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS | |||
Service revenue | ₽ 390,761 | ₽ 386,486 | ₽ 386,159 |
Sales of goods | 52,150 | 49,206 | 40,480 |
Revenue | 442,911 | 435,692 | 426,639 |
Cost of services | 123,779 | 130,158 | 126,805 |
Cost of goods | 45,623 | 45,574 | 36,555 |
Selling, general and administrative expenses | 95,186 | 94,046 | 87,340 |
Depreciation and amortization | 79,912 | 81,582 | 77,843 |
Operating share of the profit of associates | (3,210) | (3,115) | (3,456) |
Provision for investments in distressed Ukrainian banks | 1,698 | ||
Impairment of non-current assets | 3,775 | 0 | 3,516 |
Other expenses / (income) | 1,746 | (222) | 2,415 |
Operating profit | 96,100 | 87,669 | 93,923 |
Finance income | (5,548) | (5,273) | (8,368) |
Finance costs | 26,064 | 27,136 | 26,422 |
Currency exchange (gain) / loss | (1,301) | (3,241) | 6,154 |
Non-operating share of the loss of associates | 436 | 1,287 | 3,780 |
Change in fair value of financial instruments | (110) | (166) | (1,014) |
Other expenses / (income) | 992 | 317 | (54) |
Profit before tax | 75,567 | 67,609 | 67,003 |
Income tax expense | 18,977 | 15,138 | 13,931 |
Profit for the year from continuing operations | 56,590 | 52,471 | 53,072 |
Loss from discontinued operations | (4,021) | (5,668) | |
Profit for the year | 56,590 | 48,450 | 47,404 |
Profit / (loss) for the year attributable to: | |||
Owners of the Company | 56,042 | 48,474 | 49,489 |
Non-controlling interests | ₽ 548 | ₽ (24) | ₽ (2,085) |
Earnings per share (basic), Russian Rubles: | ₽ 28.68 | ₽ 24.37 | ₽ 24.88 |
Earnings per share (diluted), Russian Rubles: | ₽ 28.66 | ₽ 24.35 | ₽ 24.87 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Profit for the year | ₽ 56,590 | ₽ 48,450 | ₽ 47,404 |
Items that will not be reclassified subsequently to profit or loss: | |||
Unrecognized actuarial (loss) / gain | (40) | 50 | 86 |
Items that may be reclassified subsequently to profit or loss: | |||
Exchange differences on translating foreign operations | (2,469) | (15,104) | 2,647 |
Net fair value gain / (loss) on financial instruments | 495 | (1,200) | (3,223) |
Items that may be reclassified subsequently to profit or loss: | |||
Exchange differences on translating foreign operations in associates | (810) | (1,553) | (1,182) |
Other comprehensive (loss) / income for the year, net of income tax | (2,824) | (17,807) | (1,672) |
Total comprehensive income for the year | 53,766 | 30,643 | 45,732 |
Total comprehensive income / (loss) for the year attributable to: | |||
Owners of the Company | 53,218 | 31,268 | 47,187 |
Non-controlling interests | ₽ 548 | ₽ (625) | ₽ (1,455) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - RUB (₽) ₽ in Millions | Intellect TelecomAdditional paid-in capital | Intellect TelecomEquity attributable to equity holders | Intellect TelecomNon-controlling interests | Intellect Telecom | Rent-NedvizhimostAdditional paid-in capital | Rent-NedvizhimostEquity attributable to equity holders | Rent-NedvizhimostNon-controlling interests | Rent-Nedvizhimost | Navigation Information Systems Group (NIS)Additional paid-in capitalTeleservice | Navigation Information Systems Group (NIS)Equity attributable to equity holdersTeleservice | Navigation Information Systems Group (NIS)Non-controlling interestsTeleservice | Navigation Information Systems Group (NIS)Teleservice | NVisionAdditional paid-in capitalMTS Bank | NVisionEquity attributable to equity holdersMTS Bank | NVisionMTS Bank | StreamAdditional paid-in capital | StreamEquity attributable to equity holders | Stream | MGTS and NISAdditional paid-in capital | MGTS and NISEquity attributable to equity holders | MGTS and NISNon-controlling interests | MGTS and NIS | Common stock | Treasury stock | Additional paid-in capitalMTS Bank | Additional paid-in capital | Cash flow hedging reserve | Foreign currency translation reserveMTS BankEast-West United Bank | Foreign currency translation reserve | Remeasurements of the net defined benefit liability | Retained earnings | Equity attributable to equity holdersMTS BankEast-West United Bank | Equity attributable to equity holdersMTS Bank | Equity attributable to equity holders | Non-controlling interests | MTS BankEast-West United Bank | MTS Bank | Total |
Balance at Dec. 31, 2014 | ₽ 207 | ₽ (24,464) | ₽ 5,052 | ₽ 4,268 | ₽ 8,803 | ₽ 407 | ₽ 174,556 | ₽ 168,829 | ₽ 9,793 | ₽ 178,622 | ||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 2,066,413,562 | (77,501,432) | ||||||||||||||||||||||||||||||||||||
Profit for the year | 49,489 | 49,489 | (2,085) | ₽ (15,371) | 47,404 | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) / income for the year, net of income tax | (3,223) | 835 | 86 | (2,302) | 630 | (1,672) | ||||||||||||||||||||||||||||||||
Total comprehensive (loss) / income for the year | (3,223) | 835 | 86 | 49,489 | 47,187 | (1,455) | (14,120) | 45,732 | ||||||||||||||||||||||||||||||
Issuance of stock options | 158 | 158 | 158 | |||||||||||||||||||||||||||||||||||
Dividends declared by MTS | (50,061) | (50,061) | (50,061) | |||||||||||||||||||||||||||||||||||
Dividends to non-controlling interest | (480) | (480) | (257) | (737) | ||||||||||||||||||||||||||||||||||
Sale of own stock | ₽ 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||
Sale of own stock (in shares) | 9,935 | |||||||||||||||||||||||||||||||||||||
Purchase of own stock | ₽ (6) | (6) | (6) | |||||||||||||||||||||||||||||||||||
Purchase of own stock (in shares) | (29,666) | |||||||||||||||||||||||||||||||||||||
Disposal of subsidiary | ₽ 252 | ₽ 252 | ₽ 14 | ₽ 266 | ₽ 6,003 | ₽ 6,003 | ₽ 343 | ₽ 6,346 | ||||||||||||||||||||||||||||||
Acquisition of subsidiary | ₽ (506) | ₽ (506) | ₽ (29) | ₽ (535) | ₽ (10,371) | ₽ (10,371) | ₽ (10,371) | ₽ (997) | ₽ (997) | ₽ (997) | ||||||||||||||||||||||||||||
Changes in ownership interest with no gain/loss of control - MGTS and NIS | ₽ 105 | ₽ 105 | ₽ (153) | ₽ (48) | ||||||||||||||||||||||||||||||||||
Reclassification of retained earnings | 304 | (304) | ||||||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2015 | ₽ 207 | ₽ (24,468) | 1,045 | 9,638 | 493 | 173,200 | 160,115 | 8,256 | 168,371 | |||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2015 | 2,066,413,562 | (77,521,163) | ||||||||||||||||||||||||||||||||||||
Profit for the year | 48,474 | 48,474 | (24) | (4,495) | 48,450 | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) / income for the year, net of income tax | (1,200) | (16,056) | 50 | (17,807) | ||||||||||||||||||||||||||||||||||
Other comprehensive (loss) / income for the year, net of income tax | (1,200) | (13,970) | 50 | (15,120) | (601) | (15,721) | ||||||||||||||||||||||||||||||||
Total comprehensive (loss) / income for the year | (6,109) | 30,643 | ||||||||||||||||||||||||||||||||||||
Total comprehensive (loss) / income for the year | (1,200) | (13,970) | 50 | 48,474 | 33,354 | (625) | 32,729 | |||||||||||||||||||||||||||||||
Issuance of stock options | 131 | 131 | 11 | 142 | ||||||||||||||||||||||||||||||||||
Dividends declared by MTS | (51,738) | (51,738) | (51,738) | |||||||||||||||||||||||||||||||||||
Dividends to non-controlling interest | (1,120) | (1,120) | ||||||||||||||||||||||||||||||||||||
Unclaimed dividends | 3 | 3 | 3 | |||||||||||||||||||||||||||||||||||
Sale of own stock | ₽ 213 | 213 | 213 | |||||||||||||||||||||||||||||||||||
Sale of own stock (in shares) | 1,074,525 | |||||||||||||||||||||||||||||||||||||
Purchase of own stock | ₽ (748) | (748) | (748) | |||||||||||||||||||||||||||||||||||
Purchase of own stock (in shares) | (3,067,396) | |||||||||||||||||||||||||||||||||||||
Purchase of NCI | 5 | 5 | (22) | (17) | ||||||||||||||||||||||||||||||||||
Changes in ownership interest with no gain/loss of control - MTS Bank additional share issuance | ₽ (14) | ₽ (14) | (14) | |||||||||||||||||||||||||||||||||||
Redemption of treasury shares (Note23) | ₽ (7) | ₽ 24,255 | (24,248) | |||||||||||||||||||||||||||||||||||
Redemption of treasury shares (Note 23) (in shares) | (68,031,987) | 68,031,987 | ||||||||||||||||||||||||||||||||||||
Disposal of UMS, the Group's subsidiary in Uzbekistan (Note 27) | (2,086) | (2,086) | (1,787) | (3,873) | ||||||||||||||||||||||||||||||||||
Reclassification of retained earnings | 69 | (69) | ||||||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2016 | ₽ 200 | ₽ (748) | 191 | (155) | (6,418) | 543 | 145,622 | 139,235 | 4,713 | ₽ 143,948 | ||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2016 | 1,998,381,575 | (11,482,047) | 1,986,899,528 | |||||||||||||||||||||||||||||||||||
Profit for the year | 56,042 | 56,042 | 548 | (593) | ₽ 56,590 | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) / income for the year, net of income tax | 495 | (3,279) | (40) | (2,824) | ||||||||||||||||||||||||||||||||||
Other comprehensive (loss) / income for the year, net of income tax | 495 | (2,620) | (40) | (2,165) | (2,165) | |||||||||||||||||||||||||||||||||
Total comprehensive (loss) / income for the year | ₽ (2,593) | 53,766 | ||||||||||||||||||||||||||||||||||||
Total comprehensive (loss) / income for the year | 495 | (3,279) | (40) | 56,042 | 53,218 | 548 | 53,766 | |||||||||||||||||||||||||||||||
Issuance of stock options | 240 | 240 | 240 | |||||||||||||||||||||||||||||||||||
Issuance of stock options (in shares) | 851,275 | |||||||||||||||||||||||||||||||||||||
Dividends declared by MTS | (50,621) | (50,621) | (50,621) | |||||||||||||||||||||||||||||||||||
Dividends to non-controlling interest | (1,175) | (1,175) | ||||||||||||||||||||||||||||||||||||
Purchase of own stock | ₽ (21,896) | (21,896) | (21,896) | |||||||||||||||||||||||||||||||||||
Purchase of own stock (in shares) | (75,708,384) | |||||||||||||||||||||||||||||||||||||
Purchase of NCI | (2) | (2) | (7) | (9) | ||||||||||||||||||||||||||||||||||
Changes in ownership interest with no gain/loss of control - MTS Bank additional share issuance | (48) | (48) | (48) | |||||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2017 | ₽ 200 | ₽ (22,644) | ₽ 381 | ₽ 340 | ₽ (9,697) | ₽ 503 | ₽ 151,043 | ₽ 120,126 | ₽ 4,079 | ₽ 124,205 | ||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2017 | 1,998,381,575 | (86,339,156) | 1,912,042,419 | |||||||||||||||||||||||||||||||||||
Disposal of East-West United Bank by MTS Bank, the Group's associate (Note 7) | ₽ (659) | ₽ (659) | ₽ (659) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Profit for the year | ₽ 56,590 | ₽ 48,450 | ₽ 47,404 |
Adjustments for: | |||
Depreciation and amortization | 79,912 | 83,259 | 82,473 |
Impairment of non-current assets | 3,775 | 3,516 | |
Non-cash loss from sale of subsidiary in Uzbekistan | 2,726 | ||
Finance income | (5,548) | (5,273) | (8,368) |
Finance costs | 26,064 | 27,427 | 26,630 |
Income tax expense | 18,977 | 14,954 | 13,269 |
Currency exchange (gain) / loss | (1,301) | (3,232) | 6,213 |
Amortization of deferred connection fees | (2,876) | (2,287) | (2,362) |
Share of (profit) / loss of associates | (2,774) | (1,828) | 324 |
Change in fair value of financial instruments | (110) | (166) | (1,014) |
Inventory obsolescence provision | 2,179 | 1,548 | 384 |
Allowance for doubtful accounts | 2,923 | 2,857 | 3,221 |
Change in provisions | 14,347 | 13,161 | 7,265 |
Other non-cash items | (657) | (3,656) | (562) |
Movements in operating assets and liabilities: | |||
(Increase) / Decrease in trade and other receivables | (3,514) | (3,525) | 2,781 |
Decrease / (Increase) in inventory | 2,200 | (1,816) | (5,998) |
Decrease / (Increase) in advances paid and prepaid expenses | 1,197 | (812) | 574 |
(Increase) / Decrease in VAT receivable | (1,145) | 227 | (642) |
Decrease in trade and other payables and other current liabilities | (6,715) | (9,086) | (4,449) |
Dividends received | 3,590 | 2,801 | 3,269 |
Income tax paid | (22,427) | (11,687) | (9,643) |
Interest received | 3,319 | 3,344 | 4,760 |
Interest paid, net of interest capitalized | (23,366) | (26,821) | (24,957) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 144,640 | 130,565 | 144,088 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of subsidiaries, net of cash acquired (Note 4) | (367) | (5) | |
Purchases of property, plant and equipment (including capitalized interest in the amount of RUB 307 million, RUB 388 million and RUB 885 million, respectively) | (53,366) | (55,538) | (76,671) |
Purchases of other intangible assets | (23,065) | (28,013) | (19,440) |
Purchase of 3G and 4G licenses in Ukraine and Russia | (2,598) | (10,426) | |
Proceeds from sale of property, plant and equipment and assets held for sale | 4,343 | 4,042 | 2,988 |
Purchases of short-term and other investments | (33,717) | (9,739) | (73,485) |
Proceeds from sale of short-term and other investments | 25,385 | 39,021 | 31,678 |
Investments in associates (Note 7) | (723) | (4,094) | |
Disposal of discontinued operation, net of cash disposed | (378) | ||
NET CASH USED IN INVESTING ACTIVITIES | (81,510) | (57,302) | (145,356) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Repayment of notes | (12,042) | (20,364) | (24,018) |
Proceeds from issuance of notes | 45,000 | 10,000 | 5 |
Notes and debt issuance cost paid | (98) | (16) | (1,244) |
Finance lease obligation principal paid | (774) | (334) | (409) |
Dividends paid | (51,759) | (52,805) | (50,786) |
Cash flows from transactions with entities under common control | 3,063 | (4,821) | |
Proceeds from loans | 25,136 | 50,696 | 63,162 |
Repayment of loans | (32,239) | (69,532) | (16,132) |
Cash flows under credit guarantee agreement related to foreign-currency hedge (Note 19) | (1,766) | (2,984) | 6,706 |
Repurchase of common stock | (21,896) | (748) | (6) |
Other financial activities | (7) | (14) | (52) |
NET CASH USED IN FINANCING ACTIVITIES | (50,445) | (83,038) | (27,595) |
Effect of exchange rate changes on cash and cash equivalents | (569) | (5,219) | 761 |
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS | 12,116 | (14,994) | (28,102) |
CASH AND CASH EQUIVALENTS, beginning of the year | 18,470 | 33,464 | 61,566 |
CASH AND CASH EQUIVALENTS, end of the year | ₽ 30,586 | ₽ 18,470 | ₽ 33,464 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Interest paid, capitalized | ₽ 307 | ₽ 388 | ₽ 885 |
GENERAL INFORMATION AND DESCRIP
GENERAL INFORMATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
GENERAL INFORMATION AND DESCRIPTION OF BUSINESS | |
GENERAL INFORMATION AND DESCRIPTION OF BUSINESS | 1. GENERAL INFORMATION AND DESCRIPTION OF BUSINESS Public Joint-Stock Company Mobile TeleSystems ("MTS PJSC", or "the Company") is a company incorporated under the laws of the Russian Federation and having its registered address at 4, Marksistskaya Street, 109147, Moscow, Russian Federation. The consolidated financial statements of the Company and its subsidiaries ("the Group" or "MTS") as of December 31, 2017 and 2016, and for the years ended 31 December 2017, 2016 and 2015 were authorized for issue by MTS President on March 19, 2018. Business of the Group —MTS PJSC was incorporated on March 1, 2000, through the merger of MTS CJSC and Rosico TC CJSC, its wholly-owned subsidiary. MTS CJSC started its operations in the Moscow license area in 1994 and then began expanding through Russia and the CIS. MTS PJSC's majority shareholder is Public Joint-Stock Financial Corporation Sistema or Sistema, whose controlling shareholder is Vladimir P. Yevtushenkov. The Group provides a wide range of telecommunications services including voice and data transmission, internet access, pay TV, various value added services ("VAS") through wireless and fixed lines, integration services as well as selling equipment, accessories and software. The Group's principal operations are located in Russia, Ukraine and Armenia. MTS completed its initial public offering in 2000 and listed its shares of common stock, represented by American Depositary Shares, or ADSs, on the New York Stock Exchange under the symbol "MBT". Since 2003 common shares of MTS PJSC have been traded on the Public Joint-Stock Company "Moscow Exchange MICEX-RTS" ("Moscow Exchange"). Since 2009, the Group has been developing its own retail network, operated by Russian Telephone Company CJSC ("RTC"), a wholly owned subsidiary of MTS PJSC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS Basis of preparation —These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements are prepared on a historical cost basis, unless disclosed otherwise. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Amounts in the consolidated financial statements are stated in millions of Russian Rubles ("RUB million"), unless indicated otherwise. These consolidated financial statements have been prepared on the assumption that the Group is a going concern and will continue in operation for the foreseeable future. Basis of consolidation —The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved only where the Company has the power over the entity, is exposed and has rights to variable returns, and is able to use the power to affect its amount of variable returns. The results of the controlled entities acquired or disposed of during the reporting period are included in the consolidated financial statements from the date, the Group achieves control over the entity, or until the date on which the Company ceases to control the entity. If necessary, the accounting policies of controlled entities' are aligned with the accounting policy applied by the Group. All intra-group balances, income, expenses and cash flows are eliminated on consolidation. Those entities where the Group exercises significant influence are recognized as associates and accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. These entities are recognized at cost at the time of acquisition and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income. The carrying amount of the investment in such entities may include goodwill as the positive difference between the cost of the investment and Group's proportionate share in the fair values of the entity's identifiable assets and liabilities. The carrying amount of the investment accounted for using the equity method is tested for impairment provided there are indications of impairment. If the carrying amount of the investment exceeds its recoverable amount, an impairment loss is recognized in the amount of the difference. The recoverable amount is measured at the higher of fair value less costs of disposal and value in use. The Group presents its share in profits or losses in associates within operating profit if those interests are viewed as part of Group's core operations. As of December 31, 2017, only MTS Belarus was considered to be a part of Group's core operating activity. Shares in profits and losses of other Group's associates were presented as non-operating items. The Group has joint operations with MTS Bank, a Group's associate, relating to the development of the MTS Dengi project and Vimpelcom, relating to construction of LTE base stations. Joint operations are characterized by the fact that the operators that have joint control over the arrangement have a right to the assets, and obligations for the liabilities, relating to the arrangement. Respectively, each operator accounts for its share of the joint assets and its agreed share of any liabilities, and recognizes its share of the output, revenues and expenses incurred under the arrangement. Investments in shares of the companies over which the Group does not have control or an ability to exercise significant influence are accounted for under the cost method. The Group does not evaluate cost-method investments for impairment unless there is an indicator of impairment. Effective ownership interests in the Group's significant subsidiaries were the following: Accounting December 31, December 31, RTC Consolidated % % Vodafone Ukraine Consolidated % % MTS Turkmenistan (Note 29) Consolidated % % Sibintertelecom Consolidated % % NVision Group Consolidated % % Sitronics Telecom Solutions Consolidated % % NVision Czech Republic Consolidated % % Sputnikovoe TV Consolidated % % Stream Consolidated % % Dega Consolidated % % Stream Digital (1) Consolidated % % MTS Energo Consolidated % — Bashkortostan Cellular Communications (BCC) Consolidated % — Praliss Enterprises Limited Consolidated % — Metro-Telecom Consolidated % % MGTS Group Consolidated % % MTS Armenia Consolidated % % Navigation Information Systems Group Consolidated % % Oblachny Retail LLC Consolidated % — MTS International Funding Limited (2) ("MTS International") Consolidated SE SE MTS Belarus Equity % % Sistema Capital Equity % — MTS Bank Equity % % Zifrovoe TV Equity % % OZON Holdings Limited Equity % % (1) A wholly-owned subsidiary, through which the Group currently repurchases its own shares. (2) A company organized and existing as a private limited company under the laws of Ireland. The Group does not have any equity in MTS International. It was established for the purpose of raising capital through the issuance of debt securities on the Irish Stock Exchange followed by transferring the proceeds through a loan facility to the Group. In 2010 and 2013, MTS International issued $750 million 8.625% notes due in 2020 and $500 million 5.0% notes due in 2023, respectively (Note 15). The notes are guaranteed by MTS PJSC in the event of default. MTS International does not perform any other activities except those required for notes servicing. The Group bears all costs incurred by MTS International in connection with the notes' maintenance activities. Accordingly, the Group concluded that it exercises control over the entity. Acquisitions from entities under common control —Business combinations arising from transfers of interests in entities that are under common control with the Group are consolidated prospectively starting from the date, the control over those entities is passed to the Group. The assets and liabilities acquired are recognized at the carrying values recorded previously in the counterparty's financial statements with the resulting gain or loss recognized directly in equity. Functional currency translation methodology —As of December 31, 2017, the functional currencies of Group entities were as follows: • For entities incorporated in the Russian Federation, Dega and MTS International—the Russian Ruble ("RUB"); • For Vodafone Ukraine—the Ukrainian Hryvna; • For MTS Armenia—the Armenian Dram; • For MTS Turkmenistan—the Turkmenian Manat; • For MTS Belarus—the Belorussian Ruble; • For NVision Czech Republic—the Czech Crown. Foreign-currency transactions are translated into the functional currency at the exchange rates at the dates of the transactions. At the reporting date, monetary items denominated in foreign currencies are translated at the closing rate, whereas non-monetary items are stated at the exchange rate at the date of their recognition. Exchange rate differences are recognized in profit or loss. For entities whose records are maintained in their functional currency, which is other than the reporting currency, all year-end assets and liabilities have been translated into U.S. Dollars ("USD") at the period-end exchange rate set by local central banks. Subsequently, U.S. Dollars balances have been translated into Russian Rubles at the period-end exchange rate set by the Central Bank of Russia. Revenues and expenses have been translated at the average exchange rate for the period using cross-currency exchange rate via U.S. Dollar as described above. Translation differences resulting from the use of these rates are reported as a component of other comprehensive income. Management estimates —The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include allowance for doubtful accounts and inventory obsolescence, the valuation of assets acquired and liabilities assumed in business combinations, the recoverability of investments and the valuation of goodwill, property, plant and equipment and intangible assets, liability under put option agreement, certain provisions and financial instruments. Property, plant and equipment —Property, plant and equipment, including improvements, are stated at cost. Property, plant and equipment with a useful life of more than one year is capitalized at historical cost and depreciated on a straight-line basis over its expected useful life, as follows: Network and base station equipment: Network infrastructure 5 - 44 years Other 1.5 - 21 years Land and buildings: Buildings 20 - 150 years Leasehold improvements the term of the lease Office equipment, vehicles and other: Office equipment 3 - 21 years Vehicles 2 - 7 years Other 2 - 25 years The estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on the disposal of an item of property, plant and equipment is determined as the difference between any sale proceeds and the carrying amount of the asset and is recognised in the consolidated statement of profit or loss. Construction in progress and equipment held for installation is not depreciated until the constructed or installed asset is ready for its intended use. Maintenance and repair costs are expensed as incurred, while upgrades and improvements are capitalized. Borrowing costs —Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset during the construction phase that necessarily takes a substantial period of time are capitalized as part of property, plant and equipment until the asset is substantially ready for its intended use. The Group considers a construction period of more than six months to be substantial. Other intangible assets —Other intangible assets primarily consist of billing, telecommunication, accounting and office software as well as numbering capacity, customer base and licenses. These assets are assets with finite useful lives. They are initially recognized at cost and amortized on a straight-line basis over their estimated useful lives. Goodwill —Goodwill represents an excess of consideration transferred plus the fair value of any non-controlling interest ("NCI") in the acquiree at the acquisition date over the fair values of the identifiable net assets of the acquired entity. Goodwill is not amortized, but is tested for impairment based on the recoverable amount of the cash-generating unit ("CGU") to which the goodwill is allocated. The impairment test is carried out on a regular basis at the end of each financial year, as well as whenever there are indications that the carrying amount of the CGU unit is impaired. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGU units that are expected to benefit from the synergies of the combination. If the carrying amount of the CGU unit to which goodwill is allocated exceeds its recoverable amount, goodwill allocated to this CGU must be reduced. Impairment losses for goodwill must not be reversed. If the impairment loss recognized for the CGU exceeds the carrying amount of the allocated goodwill, the additional amount of the impairment loss is recognized through the pro-rata reduction of the carrying amounts of the assets allocated to the CGU. Impairments of intangible assets and property, plant and equipment —Impairments are identified by comparing the carrying amount with the recoverable amount. If no future cash flows generated independently of other assets can be allocated to individual assets, recoverability is assessed on the basis of the CGU to which the assets can be allocated. At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset or CGU must be determined. In addition, at the end of each period the Group assesses whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill no longer exists or may be decreased. If the impairment loss is reversed, the carrying amount of the asset (or a CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years. Assets and disposal groups held for sale —The Group classifies assets and disposal groups as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is met only when the assets (or disposal group) are available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and their sale is highly probable to occur within a year. Held for sale assets and disposal groups are measured at the lower of carrying amount or fair value less cost to sell. Inventories and spare parts —Inventories are stated at the lower of cost or net realizable value. Inventory cost is determined using the weighted average cost method. Handsets and accessories held for sale are expensed when sold. The Group regularly assesses its inventories for obsolete and slow-moving stock. Value-added tax ("VAT") —Value-added tax related to sales is payable to the tax authorities on an accrual basis based upon invoices issued to the customer. VAT incurred for purchases may be reclaimed from the state, subject to certain restrictions, against VAT related to sales. Income taxes —Income taxes of the Group's Russia-incorporated entities have been computed in accordance with Russian legislation and are based on the taxable profit for the period. The corporate income tax rate in Russia is 20%. The withholding tax rate on dividends paid within Russia is 13%. The foreign subsidiaries of the Group are paying withholding taxes in their respective jurisdictions. Deferred tax assets and liabilities are recognized for temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases of assets and liabilities that will result in future taxable or deductible amounts. The deferred tax assets and liabilities are measured using the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Financial instruments —A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets include, in particular, cash and cash equivalents, trade and other receivables, investments (mainly deposits with original maturity of more than three months, originated loans and notes, as well as debt securities) and derivative financial assets. Financial liabilities generally substantiate claims for repayment in cash or another financial asset. In particular, this includes bonds, trade and other payables, bank loans, finance lease obligations and derivative financial liabilities. Financial instruments are recognized as soon as the Group becomes a party to the contractual regulations of the financial instrument. Financial assets and financial liabilities are recognized initially at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability, except for a financial asset or liability accounted for at fair value through profit or loss, in which case transaction costs are expensed. Subsequently they are measured either at amortized cost or fair value depending on classification of those assets and liabilities based on their purpose. Financial assets can be classified as 1) financial assets at fair value through profit or loss; 2) held-to-maturity investments; 3) available for sale financial assets; 4) loans and receivables. Financial liabilities can be classified as 1) financial liabilities at fair value or 2) other financial liabilities. Cash and cash equivalents —Cash and cash equivalents represent cash on hand and in bank accounts, as well as short-term bank deposits, which have original maturities of less than three months. Such investments are measured at amortized cost. Trade and other receivables —Trade and other receivables are stated at their nominal value as reduced by appropriate allowance for doubtful accounts. Allowance for doubtful accounts —The Group provides an allowance for doubtful accounts based on management's periodic review with respect to the recoverability of trade receivables, advances given, loans and other receivables. Such allowance reflects specific cases, collection trends or estimates based on evidence of collectability. Short-term investments —Short-term investments mainly represent investments in loans, time deposits, which have original maturities in excess of three months and are repayable in less than twelve months, as well as investment in debt securities. Investment in debt securities are classified as financial assets at fair value through profit or loss, if they held for trading, otherwise they are classified as available for sale with unrealized gains and losses recorded as part of other comprehensive income. Deposits and loans are carried at amortized cost. Other investments —Other investments consist primarily of long-term deposits, which are repayable in more than a year, loans, notes and equity holdings in private companies. Deposits, loans and notes not quoted in active market are classified as loans and receivables and carried at amortized cost. The notes quoted in active market are classified based on Group's intention and ability to hold these notes to maturity either as held to maturity or available for sale. The Group reviews these investments for indicators of impairment on a regular basis. Trade payables and other non-derivative financial liabilities are measured at amortized cost. Hedging activities —The Group uses derivative instruments, including interest rate and foreign currency swaps, to manage foreign currency and interest rate risk exposures. The Group measures derivatives at fair value and recognizes them as either other current or other non-current financials assets or liabilities in the consolidated statement of financial position. Cash flows from derivatives are classified according to their nature. The Group reviews related fair value hierarchy classifications on a quarterly basis. The fair value measurement of the Group's derivative instruments is based on the observable yield curves for similar instruments. The Group designates derivatives as either fair value hedges or cash flow hedges in case the required criteria are met. Fair value hedges —Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in profit or loss immediately together with any changes in the fair value of the hedged asset or liability that are attributed to the hedged risk. Cash flow hedges —The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges are recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. Gains or losses accumulated in other comprehensive income are immediately reclassified into consolidated statement of profit or loss when related hedged transactions affects earnings. For derivatives that do not meet the conditions for hedge accounting, gains and losses from changes in the fair value are recorded immediately in profit or loss. Assets and liabilities related to multiple derivative contracts with one counterparty are not offset by the Group. Fair value of financial instruments —Fair value of financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities; • Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities; • Level 3—No observable pricing inputs in the market. Financial assets and financial liabilities are classified in the three-tier hierarchy based on the lowest level of input that is significant to the fair value measurements. The Group's assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. Liability under put option agreement —To optimize the structure of business acquisitions and to defer payment of the purchase price, the Group enters into put and call option agreements to acquire the remaining non-controlling stakes in newly acquired subsidiaries. Upon initial recognition, the commitment to purchase non-controlling interests is recognized as a financial liability for the present value of the redemption amount, which approximates its fair value. Subsequent changes in the value of the commitment are recognized in profit or loss for the reporting period. Finance leases —Leases are classified as finance whenever the terms of the lease transfer substantially all risks and rewards incidental to ownership of the leased asset to the Group. At the commencement of the lease term, the leased asset is measured at the lower of fair value or present value of the future minimum lease payments and is depreciated over the lease term. The corresponding liability is recognized in the consolidated statement of financial position within borrowings. The discount rate used in the calculating the present value of minimum lease payments is the interest rate implicit in the lease. If there is no interest rate in the lease, the Group's incremental borrowing rate is used. Share-based payment programs —Equity-settled share-based payment transactions are measured at fair value on the grant date. The fair value of the obligation is recognized as personnel costs over the vesting period and offset against capital reserves. For cash-settled share-based payment transactions, the fair value of the obligation is newly determined at each reporting date and at the settlement date, and the changes in the fair value are recognized in profit or loss, until the liability is settled. Retirement benefits —MGTS, a subsidiary of the Group, has historically offered its employees certain benefits upon and after retirement, which form a defined benefit plan. The cost of providing benefits is determined using projected unit credit method with actuarial valuation being carried out at the end of each reporting period. Provisions —Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at managements' best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. The main provisions the Group holds are in relation to employees' bonuses and other rewards, decommissioning and restoration obligation, tax provisions as well as legal claims. Provision for decommissioning and restoration —The Group calculates a provision for decommissioning and restoration when the Group has a legal or constructive obligation in connection with the retirement of tangible long-lived assets. The Group's obligations relate primarily to the cost of removing its equipment from sites. The Group records the present value of provision for decommissioning and restoration as non-current provisions in the consolidated statement of financial position. Subscriber prepayments —The Group requires the majority of its customers to pay in advance for telecommunications services. All amounts received in advance of services provided are recorded as a subscriber prepayment liability and are not recognized as revenues until the related services have been provided to the subscriber. Treasury stock —Shares of common stock repurchased by the Group are recorded at cost as treasury stock and reduce the shareholders' equity in the Group's consolidated financial statements. Revenue recognition —Revenue includes all revenues from the ordinary business activities of the Group. Revenues are measured at the fair value of the consideration received or receivable and recorded net of value-added tax. The Group recognizes revenue when the amount of revenue and related costs can be measured reliably; when it is probable that future economic benefit will flow to the Group; and when specific criteria have been met, as described below. Revenues derived from wireless, local telephone, long distance, data and video services are recognized when services are provided. This is based upon either usage (minutes of traffic processed, volume of data transmitted) or period of time (monthly subscription fees). Content revenue is presented net of related costs when the Group acts as an agent of the content providers while gross revenue and related costs are recorded when the Group acts as a primary obligor in the arrangement. Upfront fees received for connection of new subscribers, installation and activation of wireless, wireline and data transmission services ("connection fees") are deferred and recognized over the estimated average subscriber life, as follows: Mobile subscribers 7 months - 9 years Residential wireline voice phone subscribers 15 years Other fixed line subscribers 3 - 5 years The Group calculates an average life of mobile subscribers for each region in which it operates and amortizes connection fees based on the average life specific to that region. Customer incentives —Incentives provided to customers are usually offered on signing a new contract or as part of a promotional offering. Incentives, representing the reduction of the selling price of the service (free minutes and discounts) are recorded in the period to which they relate, when the respective revenue is recognized, as a reduction to both trade receivables and service revenue. The Group regularly provides special incentives to its retail customers. Generally the Group sells mobile devices of worldwide known brands with an offer of free telecommunication services for a time period from one to twelve months. Such arrangements with a customer provide for two deliverables—a mobile device delivered immediately and mobile services to be consumed in the future. The consideration received from a customer is allocated between the deliverables based on their standalone value on the market. Revenue on the devices sales is recognized at the moment of their sale, and the revenue on provision of free telecommunication services is deferred and recognized upon consumption by a subscriber. Roaming discounts —The Group enters into roaming discount agreements with a number of wireless operators. According to the terms of the agreements the Group is obliged to provide and entitled to receive a discount that is generally dependent on the volume of inter operator roaming traffic. The Group uses various estimates and assumptions, based on historical data and adjusted for known changes, to determine the amount of discount to be received or granted. Such estimates are adjusted monthly to reflect newly-available information. The Group accounts for discounts received as a reduction of roaming expenses and rebates granted as reduction of roaming revenue. The Group considers terms of the various roaming discount agreements in order to determine the appropriate presentation of the amounts receivable from and payable to its roaming partners in its consolidated statement of financial position. Sales and marketing expenses —Sales and marketing expenses consist primarily of dealers' commissions and advertising costs. Dealers' commissions are linked to revenues received during the six-month period from the date a new subscriber is activated by a dealer. The Group expenses these costs as incurred. Netting —The Group offsets its financial assets and financial liabilities only if it has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Standards, interpretations and amendments adopted on January 1, 2017 The Group has applied amendments to IAS 7 Disclosure Initiative for the first time in the current year. The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financial activities, including both cash and non-cash changes. The Group's liabilities consist of borrowings (Note 15) and certain other financial liabilities (Note 18). A reconciliation between the opening and closing balances of these items is provided in Note 16. Consistent with the transition provisions of the amendments, the Group has not disclosed comparative information for the prior period. None of the standards, interpretations and amendments adopted by the Group on January 1, 2017 had a significant effect on the Group's consolidated financial statements. Standards, interpretations and amendments in issue but not yet effective The Group has not applied the following new and revised IFRSs that have been issued but not yet effective: IFRS 9 Financial Instruments (1) Amendments to IFRS 2 Classification and measurement of Share-based Payment Transactions (1) IFRS 15 Revenue from contracts with Customers (1) Amendments to IAS 40 ) Transfers of Investment Property (1) Amendments IFRSs Annual Improvements to IFRSs 2014-2016 Cycle (1) IFRIC 22 Foreign Currency Transactions and advances Consideration (1) IFRS 16 Leases (2) Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (3) Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures (2) IFRIC 23 Uncertainty over Income Tax Treatments (2) Amendments to IFRS 9 Prepayment Features With Negative Compensation (2) Amendments IFRSs Annual Improvements to IFRSs 2015-2017 Cycle (2) (1) Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. (2) Effective for annual periods beginning on or after January 1, 2019, with earlier application permitted. (3) Effective date is not currently determined. IFRS 9, Financial Instruments. IFRS 9 regulates the classification and measurement of financial assets and liabilities and requires certain additional disclosures. The primary changes relate to the assessment of hedging arrangements and provisioning for potential future credit losses on financial assets as well as recognition of modification gain or loss for all revisions of estimated payments or receipts, including changes in cash flows arising from a modification or exchange of a financial liability, that does not result in its derecognition. Based on Group's current estimate there will be no material effect from earlier recognition of future credit losses on financial assets or for current hedge accounting. The estimated gain in relation of the Group's modified liabilibies will amount to RUB 3 bln. The Group will recognize the cumulative effect arising from the transition as an adjustment to the opening balance of equity. Prior period's comparative will not be restated. IFRS 15, Revenue from Contracts with Customers. This standard provides a single, principles-based five-step model for the determination and recognition of revenue to be applied to |
SIGNIFICANT ACCOUNTING JUDGMENT
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS | |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS | 3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS 1. Critical accounting estimates A critical accounting estimate is an estimate that is both important to the presentation of the Group's financial position and requires management's most difficult, subjective or complex judgments, often as a result of the need to determine estimates and develop assumptions about the outcome of matters that are inherently uncertain. Management evaluates such estimates on an on-going basis, based upon historical results, historical experience, trends, consultations with experts, forecasts of the future, and other methods which management considers reasonable under the circumstances. Management considers the accounting estimates discussed below to be its critical accounting estimates, and, accordingly, provides an explanation of each. 2. Depreciation and amortization of non-current assets Depreciation and amortization expenses are based on management estimates of useful life, residual value and amortization method of property and equipment and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the amortization or depreciation charges. Technological developments are difficult to predict and management views on the trends and pace of development may change over time. Some of the assets and technologies, in which the Group invested several years ago, are still in use and provide the basis for the new technologies. Critical estimates in the evaluations of useful lives for intangible assets include, but are not limited to, the estimated average customer relationship based on churn, the remaining license period and the expected developments in technology and markets. The useful lives of property and equipment and intangible assets are reviewed at least annually, taking into consideration the factors mentioned above and all other important relevant factors. The actual economic lives of intangible assets may be different from useful lives estimated by management, thereby resulting in a different carrying value of intangible assets with finite lives. The Group continues to evaluate the amortization period for intangible assets with finite lives to determine whether events or circumstances warrant revised amortization periods. A change in estimated useful lives is a change in accounting estimate, and depreciation and amortization charges are adjusted prospectively. See Notes 11 and 14 for further information. 3. Impairment of non-current assets The Group has made significant investments in property, plant and equipment, intangible assets, goodwill and other investments. Pursuant to IAS 36, goodwill and other intangible assets with indefinite useful lives and intangible assets not yet brought into use must be tested for impairment annually or more often if indicators of impairment exist. Other assets are tested for impairment when circumstances indicate that there may be a potential impairment. Estimating recoverable amounts of assets and CGUs must, in part, be based on management's evaluations, including the determination of the appropriate CGUs, the discount rate, estimates of future performance, the revenue generating capacity of the assets, timing and amount of future purchases of property and equipment, assumptions of the future market conditions and the long-term growth rate into perpetuity (terminal value). Changing the assumptions selected by management, in particular, the discount rate and growth rate assumptions used to estimate the recoverable amounts of assets, could significantly impact the Group's impairment evaluation and hence results. All of the Group's operations are in countries with emerging markets. The political and economic situation in these countries may change rapidly and potentially have a significant impact on these countries. Changing state of the world economy, and increased macroeconomic risks, impact management's assessment of cash flow forecasts and the discount rates applied. There are significant variations between different markets with respect to growth, mobile penetration, Average Revenue Per User ("ARPU"), market share and similar parameters, resulting in differences in operating margins. The future developments of operating margins are important in the Group's impairment assessments, and the long-term estimates of these margins are highly uncertain. See Notes 12 and 13 for further information about goodwill and impairment test. 4. Fair value of financial instruments Where the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using valuation techniques, including discounted cash flow models. The inputs to these models are taken from observable markets where possible, but when this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 18 for further information. 5. Provisions and contingencies The Group is subject to various legal proceedings, disputes and claims, including regulatory discussions related to the Group's business, licenses, tax positions and investments, where the outcomes are subject to significant uncertainty. In addition, significant uncertainty exists in relation of employee bonuses and other rewards, which depend on their individual performance and Group's results. Management evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss or related expense. Unanticipated events or changes in these factors may require the Group to increase or decrease the amount recorded or to be recorded for a matter that has not been previously recorded because it was not considered probable. See Note 17 and Note 30 for further information. |
BUSINESS ACQUISITIONS AND DISPO
BUSINESS ACQUISITIONS AND DISPOSALS | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
BUSINESS ACQUISITIONS AND DISPOSALS | 4. BUSINESS ACQUISITIONS AND DISPOSALS 1. Acquisitions after the reporting period Acquisition of Kulturnaya Sluzhba —In January 2018, the Group acquired a 78.2% ownership interest in Kulturnaya Sluzhba LLC ("KS"), operating under the trademark Ponominalu.ru. The purchase price comprised of cash payment, contingent consideration, payable in 12 months after the acquisition date and earn-out payments, the amounts to be paid to the sellers in 2018 if agreed upon financial targets are met by KS. Acquisition of Moskovskaia Direktciia Teatralno-Kontcertnyh i Sportivno-Zrelishchnyh Kass —In February 2018, the Group acquired a 100% ownership interest in Moskovskaia Direktciia Teatralno-Kontcertnyh i Sportivno-Zrelishchnyh Kass LLC ("MDTZK"), operating under the trademark Ticketland.ru. The purchase price comprised of cash payment and contingent consideration, payable in 12 months after the acquisition date. These acquisitions allow the Group to enter the event ticket market, while broadening the Group's suite of digital services, and integrate a key new product into existing loyalty program and mobile applications ecosystem. The following table summarizes the preliminary purchase price allocation for MDZTK and KS: MDTZK KS Cash and cash equivalents Current assets Property, plant and equipment Goodwill Other intangible assets Other non-current assets Current liabilities ) ) Liability under put option agreement over non-controlling interests — ) Non-current liabilities ) ) Consideration transferred Contingent consideration and earn-out payments Cash Consideration transferred The goodwill is mainly attributable to the expected synergies resulted from the acquisitions. The Group also entered into an option agreement with the shareholders of the KS, pursuant to which the Group has the right and obligation (in the form of a call and put option), with the put option exercisable at the request of non-controlling shareholders, to acquire their shares at a price calculated based on the future operating and financial results of KS. The Group has elected to measure the non-controlling interests in the acquiree at fair value. The fair value of the non-controlling interest has been estimated based on agreed formula in accordance with the agreement. The fair value measurements are based on significant inputs that are not observable in the market. The fair value estimate is based on: • An assumed discount rate of 10.2% • Average revenue of RUB 199 million • A net debt of RUB 83 million The receivables acquired (which principally comprised trade receivables) in these transactions with a fair value of RUB 274 million had gross contractual amounts of RUB 290 million. The best estimate at acquisition date of the contractual cash flows not expected to be collected is RUB 16 million. 2. Acquisitions in 2017 Acquisition of Bashkortostan Cellular Communication —In July 2017, the Group acquired a 100% ownership interest in Bashkortostan Cellular Communication OJSC ("BCC"). BCC operates in the Republic of Bashkortostan and holding rights to use 450 MHz and 2,100 MHz radio frequencies. The acquisition enhances the Group's spectrum resources in the Republic of Bashkortostan. The purchase price comprised of cash payment and contingent consideration, payable in 12 months after the acquisition date. The business combination was accounted for by applying the acquisition method. The following table summarizes the purchase price allocation for BCC at the date of acquisition: BCC Cash and cash equivalents Current assets Licenses Goodwill Other non-current assets Current liabilities ) Non-current liabilities ) Consideration transferred Contingent consideration Cash paid Consideration transferred The excess of the consideration over the value of net assets acquired in the amount of RUB 62 million was allocated to goodwill which is attributable to the "Russia convergent" segment. Goodwill is mainly attributable to the expected synergies. Licenses acquired are amortized over a period of their remaining useful life of 15 years in average. Acquisition of Oblachny Retail —In October 2017, the Group acquired 50.82% of ownership interest in the Russian retail software developer Oblachny Retail LLC ("Oblachny Retail"), operating under trademark LiteBox, with a call and put option arrangement existing over another 49.18% of shares. The deal allows the Group to enter the cloud-based cash register market as a fully licensed fiscal data operator ("FDO") and a provider of integrated digital cash management solutions for B2B clients. The purchase price comprised of cash payment and contingent consideration, payable in 12 months after the acquisition date. As a part of business combination the Group also made a contribution of RUB 420 million to the share capital of an acquiree to provide funds for future development. The Group has elected to measure the non-controlling interests in the acquiree at fair value. The business combination was accounted for by applying the acquisition method. The following table summarizes the purchase price allocation for Oblachny Retail at the date of acquisition: Oblachny Cash and cash equivalents Current assets Other intangible assets Goodwill Current liabilities ) Liability under put option agreement over non-controlling interests ) Other non-current liabilities ) Consideration transferred Contingent consideration Additional contribution Cash paid Consideration transferred The excess of the consideration over the value of net assets acquired in the amount of RUB 524 million was allocated to goodwill that is assigned to the "Litebox" operating segment. The goodwill is attributable to the company employees and the expected synergies. Software acquired is amortized over a period of their remaining useful life of 5 years in average. The Group also entered into an option agreement with the shareholders of the acquiree, pursuant to which the Group has the right and obligation, at the request of non-controlling shareholders, to acquire their shares at a price calculated based on the operating results of Oblachny Retail for 2019-2020. Acquisition of Praliss Enterprises —In December 2017, the Group purchased a 100% ownership interest in Praliss Enterprises ("Praliss"), thus acquiring one of the world's leading eSport clubs—Gambit Esports. The acquisition is a part of the Group's digital innovation strategy. The purchase price comprised of cash payment, contingent consideration, payable in 12 months after the acquisition date, and the earn-out amounts to be paid to the sellers in the course of two years from 2018 to 2019 if agreed upon operational targets are met by Praliss. The business combination was accounted for by applying the acquisition method. The following table summarizes the purchase price allocation for Praliss as of December 31, 2017: Praliss Other intangible assets Goodwill Non-current liabilities ) Consideration transferred Contingent consideration and earn-out payments Cash Consideration transferred The excess of the consideration over the value of net assets acquired in the amount of RUB 208 million was allocated to goodwill that is attributable to the "eSports" operating segment. The goodwill is mainly attributable to the expected synergies resulted from the acquisition. None of the goodwill recognized is expected to be deductible for income tax purposes. 3. Acquisition and disposal in 2016 Acquisition of Smarts-Yoshkar-Ola —In September 2016, the Group acquired 100% of the shares of Smarts-Yoshkar-Ola CJSC ("Smarts-Yoshkar-Ola"), operating in the Republic of Mari El and holding rights to use 1800 MHz radio frequencies. The acquisition enhances the Group's spectrum resources in the Republic of Mari El. The business combination was accounted for by applying the acquisition method. The following table summarizes the purchase price allocation for SMARTS-Yoshkar-Ola at the date of acquisition: Smarts- Cash and cash equivalents Current assets Licenses Other non-current assets Current liabilities ) Non-current liabilities ) Gain on bargain purchase (included in other operating income in the consolidated statement of profit or loss) ) Consideration transferred Contingent consideration Cash paid Consideration transferred The consideration paid was initially determined by a contract concluded between the Group and the seller (SMARTS Group) in 2014. To determine the fair value of assets acquired, the Group used comparative prices of the first radio frequencies auction held in Russia in 2015, which gave rise to the recognition of a gain from bargain purchase. The details on disposal of 50.01% share in LLC "Universal Mobile Systems" ("UMS") are disclosed in Note 27. 4. Acquisitions and disposals in 2015 Acquisition of Stream —In December 2015, the Group increased its share in Stream from 45% to 100%, after Sistema Mass Media, a subsidiary of Sistema, exchanged ownership of 55% in Stream for rights for its own debt in amount of RUB 561 million and promissory notes of LLC Stream Digital (fully-owned subsidiary of Stream) of RUB 1,089 million due on demand and bearing interest of 9% p.a. In 2016 promissory notes of LLC Stream Digital were returned to the Group as non-cash payment for 49% interest of Rent Nedvizhimost from a subsidiary of Sistema. Stream operates as content aggregator, providing VAS services mainly to the Group. The acquisition was accounted for as a transaction under common control directly in equity. Acquisition of NVision Group —In the first stage of the transaction, carried in July 2015, the Group has acquired 100% of the shares of SITRONICS Telecom Solutions CJSC, NVision program solutions, NVision Czech Republic a.s. and some smaller subsidiaries of NVision Group, from subsidiaries of Sistema. Through this transaction, the Group has obtained proprietary rights over billing system, exploited by the Group, which will allow reducing time-to-market for new products and billing and IT-related expenses. In December 2015, the Group has completed acquisition of 100% share in the holding company NVision Group JSC ("NVision Group"), from subsidiaries of Sistema. NVision Group is also one of the largest system integrators and complex IT solutions providers in Russia. Total consideration amounted to RUB 11,213 million, including RUB 73 million in notes and RUB 11,140 million in cash. As of December 31, 2017 and 2016 the Group has accounted for indemnification asset in amount of RUB 292 million and RUB 299 million respectively related to tax provisions of acquired companies. The acquisition was accounted for as a transaction under common control directly in equity. Acquisition of Navigation Information Systems —In January 2015, the Group acquired 89.5% of Navigation Information Systems ("NIS") from Sistema for RUB 44 million. NIS is the leading systems integrator for GLONASS satellite projects. The acquisition allows the Group to develop its proprietary technological platform for machine-to-machine solutions. The acquisition was accounted for as a transaction under common control directly in equity. Disposal of Rent Nedvizhimost —In February 2015, the Group sold 51% stake in its wholly-owned subsidiary Rent Nedvizhimost to a subsidiary of Sistema, for RUB 4.3 billion. The Group classified the associated assets and liabilities of the disposal group as held for sale as of December 31, 2014. After the loss of control, the Group applied for its remaining 49% interest the equity method of accounting. Further, in May 2015, the Group sold remaining 49% interest to a subsidiary of Sistema for RUB 4.2 billion. These disposals were accounted for as transactions under common control directly in equity. The following table summarizes the details of acquisitions of subsidiaries under common control in 2015: Acquired company Consideration Non cash Cash Assets Liabilities NVision NIS ) — Stream ) — * As included in consolidated cash flow statement within cash flows from transactions under common control The following table summarizes the details of disposal of subsidiaries under common control finalized in 2015 (only for part of transaction with loss of control): Disposed company Consideration Non cash Cash Asset Liabilities Rent Nedvizhimost — * As included in consolidated cash flow statement within cash flows from transactions under common control Disposal of Intellect-Telecom —In January 2015, the Group sold its 47.3% equity investment in Intellect Telecom to Sistema for RUB 344 million. The Group classified the investment as held for sale as of December 31, 2014. The disposal was accounted for as a transaction under common control directly in equity. Pro forma results of operations —The following pro forma financial data for the years ended December 31, 2017, 2016 and 2015 give effect to the business combinations as they had been completed at the beginning of the year. Pro forma: 2017 (BCC, 2016 2015 Net revenues Net income The pro forma information is based on various assumptions and estimates. The pro forma information is neither necessarily indicative of the operating results that would have occurred if the Group acquisitions had been consummated as of January 1, 2015, 2016, or 2017, nor is it necessarily indicative of future operating results. The pro forma information does not give effect to any potential revenue enhancements or cost synergies or other operating efficiencies that could result from the acquisitions. The actual results of operations of these companies are included into the consolidated financial statements of the Group only from the respective dates of acquisition. Since their respective acquisition dates, companies acquired in 2015 contributed revenue in the amount of RUB 2,133 million and net loss in the amount of RUB 447 million to consolidated statement of profit or loss for the year ended December 31, 2015. The company acquired in 2016 contributed revenue in the amount of RUB 1 million and net loss in the amount of RUB 15 million to consolidated statement of profit or loss for the year ended December 31, 2016. Companies acquired in 2017 contributed revenue in the amount of RUB 37 million and net loss in the amount of RUB 105 million to consolidated statement of profit or loss for the year ended December 31, 2017. |
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS | 12 Months Ended |
Dec. 31, 2017 | |
CASH AND CASH EQUIVALENTS | |
CASH AND CASH EQUIVALENTS | 5. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprised the following: December 31, December 31, Cash and cash equivalents at banks and on hand in: Russian Rubles Turkmenian Manat US Dollars Euro Ukraine Hryvna Other Short-term deposits with an original maturity of less than 92 days: Russian Rubles US Dollars Ukraine Hryvna Other Total cash and cash equivalents There were certain limitations on cash disposition in Ukraine as of December 31, 2017 (for details see Note 30). Cash balances in Ukraine amounted to RUB 1,330 million and RUB 3,617 million as of December 31, 2017 and 2016, respectively. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 6. SHORT-TERM INVESTMENTS The Group's short-term investments comprised the following: Category December 31, December 31, Deposits Loans and receivables Assets in Sistema-Capital trust management (Notes 18, 22) Financial asset at fair value through profit or loss Notes Loans and receivables — Loans Loans and receivables Notes Available for sale Total short-term investments The amount of loans recognized in loans and receivables generally consists of a loan issued to Mr. Pierre Fattouche and Mr. Moussa Fattouche. Notes recognized in loans and receivables category represent the balance of REPO transactions. |
INVESTMENTS IN ASSOCIATES
INVESTMENTS IN ASSOCIATES | 12 Months Ended |
Dec. 31, 2017 | |
INVESTMENTS IN ASSOCIATES | |
INVESTMENTS IN ASSOCIATES | 7. INVESTMENTS IN ASSOCIATES The Group's investments in associates (all accounted for using the equity method) comprised the following: Country of Operating activity December 31, December 31, MTS Belarus Belarus telecommunications MTS Bank Russia banking Equity investments in other unquoted companies Russia e-commerce, digital TV, asset management, etc. Total investments in associates The reconciliation of summarised financial information of MTS Belarus to the carrying amount of the Group's interest in associate is presented as follows: December 31, December 31, Assets Non-current assets Current assets Liabilities Non-current liabilities ) ) Current liabilities ) ) Total identifiable net assets The Group's share in associate % % The Group's share of identifiable net assets Carrying amount of the Group's interest The Group's share in the profit of MTS Belarus was included in operating share of the profit of associates in the accompanying consolidated statement of profit or loss. The composition of the Group's share of income of MTS Belarus is as follows: Year ended December 31, 2017 2016 2015 Revenue ) ) ) Net profit for the year ) ) ) The Group's share of the profit of the associate for the year ) ) ) Other comprehensive loss for the year (currency translation adjustment) Total comprehensive income for the year ) ) ) The Group's share of total comprehensive income of the associate for the year ) ) ) Dividends received The reconciliation of summarized financial information of MTS Bank to the carrying amount of the Group's interest in associate is presented below: December 31, December 31, Total assets Total liabilities ) ) Non-controlling interests — ) Total identifiable net assets attributable to the Group The Group's share in associate % % The Group's share of identifiable net assets Impairment of investment in associate ) ) Carrying amount of the Group's interest In February 2016, MTS Bank placed 3,588,304 additional ordinary shares. The Group acquired 946,347 shares in the placement for a total consideration of RUB 1,325 million. As the result of the transaction, the Group's share in MTS Bank decreased from 27.0% to 26.8%. In November 2016, MTS Bank placed 10,000,000 additional ordinary shares. The Group acquired 2,637,310 shares in the placement for a total consideration of RUB 2,769 million. As the result of the transaction, the Group's share in MTS Bank decreased from 26.8% to 26.6%. In May 2017 MTS Bank disposed of a 47% stake in East-West United Bank to Sistema, retaining less than 20% and losing control. Consequently, the accumulated foreign currency translation reserve in the amount of RUB 659 million was derecognized from the accumulated other comprehensive income of the Group. The Group's share in the net losses of MTS Bank was included in the non-operating share of the loss of the associates in the accompanying consolidated statement of profit or loss. The composition of the Group's share of loss of MTS Bank is as follows: Year ended December 31, 2017 2016 2015 Total interest income ) ) ) Total interest expense Net loss for the year The Group's share of the loss of the associate for the year Other comprehensive loss / (income) for the year ) Total comprehensive loss for the year The Group's share of the total comprehensive loss for the year The Group holds less than 20% of the equity interests in OZON Holdings Limited, nevertheless it determined that it has significant influence over the investee based on direct and indirect ownership of equity shares, representation on the investee's Board of Directors and certain veto rights related to matters intersecting with the Group's interests. In September, 2017 the Group acquired 5,193 additional ordinary shares of OZON Holdings Limited for a total consideration of RUB 19 million. As the result of the transaction, the Group's share in OZON Holdings Limited increased from 10.8% to 10.96%. In October, 2017 the Group acquired 7,698 additional ordinary shares for a total consideration of RUB 28 million. As the result of the transaction, the Group's share in OZON Holdings Limited increased from 10.96% to 11.19%. In September, 2017 the Group acquired 30% ownership interest in Sistema Capital, a trust management company, by making a cash contribution of RUB 356 million into its authorized share capital. The following table is the aggregate financial information of investments in the other individually insignificant associates, held by the Group: Year ended December 31, 2017 2016 2015 Net loss/(profit) for the year ) The Group's share of the loss/(profit) of the associate for the year ) Other comprehensive income for the year — — — Total comprehensive loss/(income) for the year ) The Group's share of total comprehensive loss/(income) of the associate for the year ) |
OTHER INVESTMENTS
OTHER INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
OTHER INVESTMENTS | |
OTHER INVESTMENTS | 8. OTHER INVESTMENTS As of December 31, 2017 the other investments of the Group comprised individually insignificant items. As of December 31, 2016 the other investments of the Group mainly comprised long term deposits of RUB 27,056 million, loan issued to Mr. Pierre Fattouche and Mr. Moussa Fattouche, the holders of a 20% non-controlling stake in MTS Armenia, in the amount of RUB 5,802 million and other. As of December 31, 2017 loan to Mr. Pierre Fattouche and Mr. Moussa Fattouche was reclassified to short-term investments. |
TRADE AND OTHER RECEIVABLES
TRADE AND OTHER RECEIVABLES | 12 Months Ended |
Dec. 31, 2017 | |
TRADE AND OTHER RECEIVABLES | |
TRADE AND OTHER RECEIVABLES | 9. TRADE AND OTHER RECEIVABLES Trade and other receivables comprised the following: December 31, December 31, Subscribers Roaming Dealers Interconnect Other trade receivables Other receivables Allowance for doubtful accounts ) ) Trade and other receivables The analysis of the age of trade and other accounts receivables past due but not impaired: December 31, December 31, Neither past due nor impaired Past due, but not impaired: Less than 60 days 61-150 days More than 150 days Total The following table summarizes changes in the allowance for doubtful accounts receivable: Year ended Year ended Year ended Balance, beginning of the year ) ) ) Allowance for doubtful accounts ) ) ) Accounts receivable written off Disposal of subsidiary — — Balance, end of the year ) ) ) |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
INVENTORIES | 10. INVENTORIES Inventory and spare parts comprised the following: December 31, December 31, Handsets and accessories SIM cards and prepaid phone cards Advertising and other materials TV equipment for resale Software and equipment for installation and resale Spare parts for telecommunication equipment Total inventory and spare parts Other materials mainly consist of automotive and IT components, advertising, stationery, fuel and auxiliary materials. Spare parts for telecommunication equipment included in inventory are expected to be utilized within twelve months of the year end. Expenses for inventory obsolescence provision were included in cost of goods in the consolidated statement of profit or loss. For the years ended December 31, 2017, 2016 and 2015, cost of goods comprised the following expenses: Year ended Year ended Year ended Amount of inventories recognized as an expense Inventory obsolescence provision Reversal of obsolescence provision ) ) ) Total cost of goods The reversal of the inventory obsolescence provision relates to handsets and accessories sold in the course of the Group's promotion campaigns. Inventories have been sold with positive margin. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 11. PROPERTY, PLANT AND EQUIPMENT The net book value of property, plant and equipment as of December 31, 2017, December 31, 2016 and January 1, 2016 was as follows: Network and Land and Office Construction Total Cost January 1, 2016 Additions — Put into use ) — Disposal of UMS ) ) ) ) ) Transfer to assets held for sale ) — ) — ) Disposal ) ) ) ) ) Other ) ) Foreign exchange differences ) ) ) ) ) December 31, 2016 Additions Put into use ) — Arising on business combinations — Transfer to assets held for sale ) — ) — ) Disposal ) ) ) ) ) Other ) ) ) Foreign exchange differences ) ) ) ) December 31, 2017 Accumulated amortisation and impairment January 1, 2016 ) ) ) — ) Charge for the year ) ) ) — ) Disposal of UMS — Transfer to assets held for sale — — Disposal — Other ) ) — ) Foreign exchange differences — December 31, 2016 ) ) ) — ) Charge for the year ) ) ) — ) Effect on assets impairment ) ) ) ) ) Transfer to assets held for sale — — Disposal — Other ) — ) Foreign exchange differences ) — December 31, 2017 ) ) ) ) ) Net book value January 1, 2016 December 31, 2016 December 31, 2017 Charge of amortization for 2015 year for Network and base station equipment, Land and buildings and Office equipment, vehicles and other was RUB 51,967 million, RUB 930 million and RUB 5,385 million, respectively. The amount of the compensation from third parties for items of property, plant and equipment that were accidentally damaged during construction in Moscow for the years ended December 31, 2017, 2016 and 2015 totaled RUB 1,231 million, RUB 1,350 million and RUB 1,010 million, respectively, and was included in the accompanying consolidated statements of profit or loss as component of other operating income. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL | |
GOODWILL | 12. GOODWILL The change in the net carrying amount of goodwill for the years ended December 31, 2017 and 2016 by operating segments was as follows: Russia Moscow Ukraine Other Total Balance at January 1, 2016 Gross amount of goodwill Accumulated impairment loss ) — — ) ) Currency translation adjustment — — ) ) ) Balance at December 31, 2016 Gross amount of goodwill Accumulated impairment loss ) — — ) ) Acquisitions (Note 4) — — Reclassification ) — — — Currency translation adjustment — — ) ) ) Balance at December 31, 2017 Gross amount of goodwill Accumulated impairment loss ) — — ) ) |
IMPAIRMENT REVIEW
IMPAIRMENT REVIEW | 12 Months Ended |
Dec. 31, 2017 | |
IMPAIRMENT REVIEW | |
IMPAIRMENT REVIEW | 13. IMPAIRMENT REVIEW Goodwill —Management of the Group performs impairment tests for the goodwill assigned to the cash-generating units at least annually and when there are any indications that the carrying amount of the CGU is impaired. Tangible and intangible assets excluding goodwill —At the end of each reporting period, management of the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss. When reviewing for indicators of impairment management of the Group considers the relationship between its market capitalization and book value, changes in country risk premiums and other. When the carrying amount of the CGU exceeds its recoverable amount, assets allocated to this CGU must be impaired. The recoverable amounts of the CGUs are determined based on their value in use. In assessing value in use, the estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU. Future cash flows calculations are based on a five-year operations plan, which is prepared and approved by the management of the Group. Estimation of future cash flows requires assumptions to be made in respect of uncertain factors, including management's expectations of the following: OIBDA margin, timing and amount of future capital expenditure, terminal growth rates and appropriate discount rates to reflect the risks involved. During the year ended December 31, 2017 the Group recognized impairment charges in the amount of RUB 3,775 million, including RUB 3,204 million in respect of the non-current assets of the CGU "Turkmenistan" and RUB 571 million in respect of the non-current assets of the CGU "NVision Czech Republic". Impairment charges were recorded in a separate line item as a part of operating profit in the consolidated statements of profit or loss. CGU "Turkmenistan" provided mobile services across multiple regions of Turkmenistan.The impairment in the CGU "Turkmenistan" reflects uncertainty in respect of the ability to continue operations in Turkmenistan. In September, 2017, the Group's subsidiary in Turkmenistan suspended the provision of telecommucation services to its subscribers, due to the termination by Turkmen state-owned companies and state authorities of line rental, frequency allocation, interconnect, and other agreements necessary to servicing clients. The recoverable amount of the CGU "Turkmenistan" was equal to nil as of December 31, 2017. CGU "NVision Czech Republic" tailors in-house software solutions, provides support and managed services to telecom operators, delivers electronic and mechanical manufacturing services. The impairment in the CGU "NVision Czech Republic" reflects lower operating performance. The recoverable amount of the CGU "NVision Czech Republic" was RUB 954 million as of December 31, 2017. Impairment charges are attributable to operating segments of the Group, reported as a part of the "Other" category, which does not constitute a reportable segment (Note 26). The total amount of the impairment loss for the year ended December 31, 2017 was allocated to the carrying amounts of property, plant and equipment and other intangible assets as follows: Turkmenistan NVision Czech Property, plant and equipment Other intangible assets Total During the year ended December 31, 2016 no impairment charges were recorded. As a result of impairment test as of December 31, 2015 the impairment charge of RUB 3.5 billion was recorded in a separate line item within operating profit in the consolidated statement of profit or loss in respect of the Group's investment in the CGU "Armenia". CGU "Armenia" provides mobile and fixed line services across multiple regions of Armenia. The impairment charge is attributable to the operating segment of the Group, reported as a part of the "Other" category, which does not constitute a reportable segment (Note 26). This charge relates solely to goodwill. The impairment reflects the decrease of interconnect traffic and related revenue due to dramatic growth of prices for international calling from Russia to Armenia. The recoverable amount of CGU "Armenia" was RUB 18.5 billion as of December 31, 2015. Key assumptions used for value in use calculation: OIBDA margin and capital expenditures were primarily derived from internal sources, based on past experience and extended to include management expectations. The table below presents OIBDA margin utilized for value in use calculation of related CGUs: CGU December 31, December 31, Russia convergent 38.0% - 39.1% 34.6% - 37.0% Armenia 40.2% - 41.2% 42.0% - 45.0% Moscow fixed line 41.0% - 48.5% 42.2% - 51.0% Ukraine 31.4% - 40.6% 40.6% - 46.5% NVision Czech Republic 4.2% 5.5% - 6.8% The table below presents capital expenditure as a percentage of revenue utilized for value in use calculation of related CGUs: CGU December 31, December 31, Russia convergent % % Armenia % % Moscow fixed line % % Ukraine % % NVision Czech Republic % % The terminal growth rate into perpetuity has been determined based on the nominal gross domestic product rates for the country of operation, adjusted for specific characteristic of the CGUs business. The table below presents terminal growth rate utilized for value in use calculation of related CGUs: CGU December 31, December 31, Russia convergent % % Armenia nil nil Moscow fixed line % % Ukraine % % NVision Czech Republic % % The discount rate, applied to measure free cash flow is the weighted average cost of capital according to the finance structure established for each CGU. The table below presents pre-tax rates for discounting of cash flows in functional currencies of related CGUs: CGU December 31, December 31, Russia convergent % % Armenia % % Moscow fixed line % % Ukraine % % NVision Czech Republic % % Sensitivity analysis Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of any cash-generating unit to materially exceed its recoverable amount, except for the CGU "NVision Czech Republic". After the recognition of the impairment of non-current assets the carrying value of the CGU "NVision Czech Republic" is equal to the estimated recoverable amount, any adverse change in key assumptions would, in isolation, cause a further impairment loss to be recognized. The changes in the following table to assumptions used in the impairment review of the CGU "NVision Czech Republic" would have, in isolation, led to following changes to the impairment loss recognized in the year ended December 31, 2017: Increase Decrease Pre-tax discount rate ) OIBDA margin ) Average capital expenditure as a percentage of revenue ) |
OTHER INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
OTHER INTANGIBLE ASSETS | |
OTHER INTANGIBLE ASSETS | 14. OTHER INTANGIBLE ASSETS Net book value of other intangible assets as at December 31, 2017, December 31, 2016 and January 1, 2016 was as follows: Licenses Right to Billing and Client base Numbering Other Total Useful life, years 1 to 20 1 to 15 1 to 25 4 to 31 2 to 15 1 to 10 Cost January 1, 2016 Additions — Arising on business combinations (Note 4) — — — — — Disposal of UMS — — ) — — ) ) Disposal ) ) ) ) ) ) ) Other ) ) — ) ) ) Foreign exchange differences ) — ) — ) ) ) December 31, 2016 Additions — Arising on business combinations (Note 4) — — — Disposal ) ) ) ) ) ) ) Other ) ) — — Foreign exchange differences ) — ) — ) ) ) December 31, 2017 Accumulated amortisation and impairment January 1, 2016 ) ) ) ) ) ) ) Charge for the year ) ) ) ) ) ) ) Disposal of UMS — — — — Disposal Other ) — ) ) Foreign exchange differences — — December 31, 2016 ) ) ) ) ) ) ) Charge for the year ) ) ) ) ) ) ) Effect on assets impairment — — ) — — — ) Disposal Other — ) — ) ) ) Foreign exchange differences — — December 31, 2017 ) ) ) ) ) ) ) Net book value January 1, 2016 December 31, 2016 December 31, 2017 Charge of amortization for 2015 year for Licenses, Right to use radio frequencies, Billing and other software, Client base, Numbering capacity and Other was RUB 1,447 million, RUB 1,202 million, RUB 16,933 million, RUB 692 million, RUB 147 million and RUB 3,770 million, respectively. In connection with providing telecommunication services, the Group has been issued various GSM operating licenses by the Russian Ministry of Information Technologies and Communications. In addition to the licenses received directly from the Russian Ministry of Information Technologies and Communications, the Group has been granted access to various telecommunication licenses through acquisitions. In foreign subsidiaries, the licenses are granted by the local communication authorities. Operating licenses contain a number conditions specified by legislation which generally include the required date of services provision, territorial coverage and expiration date. Management believes that the Group is in compliance with all material terms of its licenses. The Group's operating licenses do not provide for automatic renewal. All licenses covering the territories of the Russian Federation expired as of December 31, 2017 were renewed. The cost to renew the licenses was not significant. Weighted-average period until the next renewal of licenses in the Russian Federation is five years. The license for the provision of telecommunication services in Ukraine was renewed in 2013 and is valid until 2026. The license for the provision of telecommunication services in Armenia is valid until 2019. Contractual obligations to purchase intangible assets are disclosed in the Note 30. |
BORROWINGS
BORROWINGS | 12 Months Ended |
Dec. 31, 2017 | |
BORROWINGS | |
BORROWINGS | 15. BORROWINGS The Group's borrowings comprise the following: December 31, December 31, Notes Bank and other loans Finance lease obligations Total borrowings Less: current portion ) ) Total borrowings, non-current Notes —The Group's Notes consisted of the following: Currency Interest rate December 31, December 31, MTS International Notes due 2023 (Note 2) USD MTS International Notes due 2020 (Note 2) USD MTS PJSC Notes due 2022 RUB — MTS PJSC Notes due 2023 RUB MTS PJSC Notes due 2031 RUB MTS PJSC Notes due 2022 RUB — MTS PJSC Notes due 2021 RUB — MTS PJSC Notes due 2018 RUB — MTS PJSC Notes due 2020 RUB MTS PJSC Notes due 2017 RUB — Other Notes due 2018-2022 RUB 0.25% - 10% Total notes Less: current portion ) ) Total notes, non-current The Group has an unconditional obligation to repurchase certain MTS PJSC Notes at par value if claimed by the noteholders subsequent to the announcement of the sequential coupon. The dates of the announcement for each particular note issue are as follows: MTS PJSC Notes due 2023 March 2018 MTS PJSC Notes due 2031 August 2018 MTS PJSC Notes due 2020 November 2018 The Group discloses these notes as maturing in 2018 (MTS PJSC Notes due 2023; MTS PJSC Notes due 2031; MTS PJSC Notes due 2020) in the aggregated maturities schedule as the noteholders have the unilateral right to demand repurchase of the notes at par value upon announcement of new coupons. As of Desember 31, 2017 the Group had no outstanding repurchase transactions. As of December 31, 2016 the Group had the following outstanding repurchase transactions with a due date on January 09, 2017: No of Due Unrealized Total MTS PJSC Notes due 2018 — The above balances are included in the short-term portion of bank loans and other debt disclosed below. Bank and other loans —The Group's loans from banks and financial institutions consisted of the following: Maturity Interest rate (actual at December 31, December 31, USD-denominated: Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG 2018 - 2020 LIBOR + 1.15% (2.994%) Citibank 2018 - 2024 LIBOR + 0.9% (2.744%) Skandinavska Enskilda Banken AB 2017 LIBOR + 0.23% – 1.8% (2.069% – 3.644%) — EUR-denominated: Credit Agricole Corporate Bank and BNP Paribas 2017 EURIBOR + 1.65% (1.38%) — LBBW 2017 EURIBOR +1.52% (1.25%) — — RUB-denominated: Sberbank 2018 - 2021 8.45% – 9.85% VTB 2021 7.99% — Gasprombank 2018 9.6% – 10.9% — Notes in REPO 2018 Various — Citibank 2018 9.9% – 9.95% — Other 2018 - 2025 Various Other currencies: Various financial institutions 2018 - 2020 Various Total bank and other loans Less: current portion ) ) Total bank and other loans, non-current Compliance with covenants —Bank loans and notes of the Group are subject to certain covenants limiting the Group's ability to incur debt, carry on transactions with related parties, create liens on properties, dispose assets, including GSM and 3G licenses for several license areas, issue guaranties, grant loans to employees and entities, delist notes, delay coupon payments, merge or consolidate MTS PJSC with another entity or be a subject to a court decision to pay over USD 75 million (RUB 4,320 million as of the reporting date, which remains unsatisfied for more than 60 days) or be a subject to a court decision to pay over USD 250 million (RUB 14,400 million as of the reporting date, which remains unsatisfied for more than 180 days) without being appealed, discharged or waived. The Group is required to comply with certain financial ratios and maintain ownership in certain subsidiaries. The noteholders of MTS International Notes due 2020 and MTS International Notes due 2023 have the right to require the Group to redeem the notes at 101% of their principal amount and related interest, if the Group experiences a change in control. If the Group fails to meet these covenants, after certain notice and cure periods, the debtholders are entitled to accelerate the repayment of the debt. The Group was in compliance with all existing notes and bank loans covenants as of December 31, 2017. Available credit facilities —As of December 31, 2017, the Group's total available unused credit facilities amounted to RUB 36,000 million and related to the following credit lines: Currency Maturity Interest rate Available till Available Sberbank RUB To be agreed April 2021 VTB RUB 7.99% January 2021 Absolut Bank RUB CBR 1 auction rate + 1.25% – 1.8% December 2019 SPB Bank RUB To be agreed March 2020 Total (1) CBR—Central Bank of Russia In addition, the Group has a credit facility made available by Citibank at MosPrime + 1.50% interest rate with the available amount set up on request and to be repaid within 182 days. The following table presents the aggregated scheduled maturities of principal on notes and bank loans (gross of debt issuance costs) outstanding for the five years ending December 31, 2022 and thereafter: As of December 31, 2017 Notes Bank loans Payments due in the year ending December 31, 2018 2019 — 2020 2021 2022 Thereafter Total Less: unamortized debt issuance costs ) ) Total debt Early repayment of Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG (Tranche B) debt —On March 1, 2018 the Group fully repaid its outstanding loans of Tranche B in whole amount of USD 224.7 million (RUB 12,668 million), in addition to the amount of interest accrued. Finance lease obligations —The following table presents a summary of net book value of leased property, plant and equipment: December 31, December 31, Network and base station equipment Office equipment, vehicles and other Leased assets, net Additions under finance lease agreements for the years ended December 31, 2017, 2016 and 2015 amounted to RUB 3,339 million, RUB 1,117 million and RUB 1,735 million respectively. Depreciation of the assets under finance leases for the years ended December 31, 2017, 2016 and 2015 amounted to RUB 702 million, RUB 603 million and RUB 554 million, respectively, and was included in depreciation and amortization expense in the accompanying consolidated statement of profit or loss. Interest expense accrued on finance lease obligations for the year ended December 31, 2017, 2016 and 2015 amounted to RUB 954 million, RUB 855 million and RUB 756 million, respectively, and was included in finance costs in the accompanying consolidated statement of profit or loss. The following tables present future minimum lease payments under capital leases together with the present value of the net minimum lease payments as at December 31, 2017 and 2016: December 31, December 31, Minimum lease payments, including: Current portion (less than 1 year) More than 1 to 5 years Over 5 years Total minimum lease payments Less amount representing interest ) ) Present value of net minimum lease payments, including: Current portion (less than 1 year) More than 1 to 5 years Over 5 years Total present value of net minimum lease payments Less current portion of lease obligations ) ) Non-current portion of lease obligations Leased assets include transponders which are installed on a satellite and used for provision of satellite television services, network equipment and automobiles. The lease term of the transponders is twelve years. The lease term of network equipment is fifteen years. The average lease term of the automobiles is three years. The Group has an obligation to purchase these automobiles under the respective finance lease agreements at the end of the lease term. |
RECONCILIATION OF LIABILITIES A
RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2017 | |
RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES | |
RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES | 16. RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES December 31, Financing Operating Acquisitions Foreign Currency Change in Other (2) December 31, Notes (Note 15) — — ) — — Bank and other loans (Note 15) (1) — (1) ) — Finance lease obligation (Note 15) ) ) — ) — — Credit guarantee agreement related to foreign-currency hedge (Note 19) ) — — ) — — — Contingent Consideration (Note 18) — — — — — Payables related to repurchase of common stock (Note 23) — ) — — — — — — Dividends payable (Note 23) ) — — — — — Payable related to purchase of noncontrolling interests — ) — — — — — — Liability under put option agreement (Note 28) — — — ) ) — Total liabilities arising from financial activities ) ) ) ) ) (1) Including cash flows from cross-currency swaps (2) Including accrual of liabilities related to dividends declared, repurchase of common stock, additions under finance lease agreements, depreciation of debt issuance cost and others changes that are not material. |
PROVISIONS
PROVISIONS | 12 Months Ended |
Dec. 31, 2017 | |
PROVISIONS | |
PROVISIONS | 17. PROVISIONS The following table summarizes the movement in provisions for the year ended December 31, 2017, 2016 and 2015: Tax Provision for Employee Other Total At 1 January 2015 ) ) ) ) ) Arising during the year ) ) ) ) ) Utilised — Discount rate adjustment and imputed interest (change in estimates) — — Unused amounts reversed Arising due to subsidiary purchase ) — ) ) ) Translation adjustments and other ) ) — ) At 31 December 2015 ) ) ) ) ) Current 2015 ) — ) ) ) Non-current 2015 — ) ) — ) At 1 January 2016 ) ) ) ) ) Arising during the year ) ) ) ) ) Utilised Discount rate adjustment and imputed interest (change in estimates) — ) ) — ) Unused amounts reversed Disposal of a subsidiary — — Translation adjustments and other — At 31 December 2016 ) ) ) ) ) Current 2016 ) — ) ) ) Non-current 2016 — ) ) — ) At 1 January 2017 ) ) ) ) ) Arising during the year ) ) ) ) ) Utilised Discount rate adjustment and imputed interest (change in estimates) — ) — ) Unused amounts reversed Translation adjustments and other ) At 31 December 2017 ) ) ) ) ) Current 2017 ) — ) ) ) Non-current 2017 — ) ) — ) |
FAIR VALUE OF FINANCIAL ASSETS
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | |
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | 18. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES 1. Financial assets December 31, December 31, Trade and other receivables (Note 9) Accounts receivable, related parties (Note 22) Cash and Cash equivalents (Note 5) Other financial assets: Financial assets at fair value through profit or loss: Assets in Sistema-Capital trust management Total financial assets at fair value through profit or loss Financial assets at fair value through OCI: Notes Cross-currency swap designated as cash flow hedge Total financial assets at fair value through OCI Loans and receivables: Bank deposits Loans and receivables Notes Other Total loans and receivables Total other financial assets Total financial assets Total current financial assets ) ) Total non-current financial assets 2. Financial liabilities December 31, December 31, Trade and other payables Accounts payable, related parties (Note 22) Financial liabilities at amortised cost: Loans and borrowings: Notes Bank and other loans Finance lease obligations Total loans and borrowings Guarantee payment received Total financial liabilities at amortized cost Other financial liabilities at fair value: Financial liabilities at fair value through profit or loss: Deliverable currency forward not designated as hedge — Liabilities under option agreements (Note 28) Interest rate swaps designated as cash flow hedges — Total financial liabilities at fair value through profit or loss Financial liabilities at fair value through OCI: Interest rate swaps designated as cash flow hedges — Cross-currency swap designated as cash flow hedge — Total financial liabilities at fair value through OCI Total other financial liabilities at fair value Total financial liabilities Total current financial liabilities ) ) Total non-current financial liabilities Group financial liabilities are represented by trade and other payables, notes and bank loans. The main purpose of these financial liabilities is to finance the Group's operations and capital expenditures. The Group's principal financial assets include loans and investments, trade and other receivables, cash and deposits. The Group accounts for its financial assets and liabilities at amortized cost, except for derivative instruments, marketable securities, assets in Sistema-Capital trust management and liabilities under option agreements, which are accounted for at fair value. In May 2016, the Group entered into a trust agreement with the asset management company Sistema-Capital, a subsidiary of Sistema. The main purpose of the agreement is short-term profit-taking from operations with securities. The fair value measurement of the Group's derivative instruments and investments in Sistema-Capital trust management is based on the observable yield curves for similar instruments and represents the estimated amount the Group would receive or pay to terminate these agreements at the reporting date, taking into account current interest rates, foreign exchange spot and forward rates. The table below presents the fair value of financial instruments: Level of inputs December 31, December 31, Assets Sistema International Funding S.A. Bonds due in 2019 (related party) (Note 6, 22) Level 1 Derivative instruments Level 2 Cross-currency interest rate swap Assets in Sistema-Capital trust management (related party) (Note 6, 22) Level 2 Liabilities Derivative instruments Level 2 ) ) Interest rate swap ) ) Cross-currency interest rate swap ) — Deliverable currency forward — ) Liabilities under option agreements Level 3 ) ) Contingent consideration Level 3 ) ) For the year ended December 31, 2017, 2016 and 2015, net realized gains and losses of Level 3 liabilities resulting from fair value measurements amounted to RUB 120 million gain, RUB 199 million gain and RUB 1,014 million gain, respectively and were recognized as a part of change in fair value of financial instruments' in consolidated statement of profit or loss. No unrealized gains or losses of Level 3 liabilities resulted from fair value measurements were recognized during the years ended December 31, 2017, 2016 and 2015. The liability under put option agreement for redeemable NCI in MTS Armenia in amount of RUB 2,012 million is measured at fair value using a discounted cash flow technique. The most significant quantitative inputs used to measure the fair value of the liability under put option agreement for redeemable NCI in MTS Armenia are presented in the table below: Unobservable inputs December 31, December 31, Post-tax discount rate Revenue growth rate 0.0 - (0.5)% (av. –0.2%) (0.9) - (2.9)% (av. –1.8%) OIBDA margin 40.2 - 41.2% (av. 40.7%) 42.0 - 45.0% (av. 43.5%) The liability under option agreement for redeemable NCI in Oblachny Retail in amount of RUB 412 million is calculated based on agreed fixed formula, which includes future operating and financial indicators. The most significant quantitative inputs used to measure the fair value of the liability under option agreement for redeemable NCI in Oblachny Retail are presented in the table below: Unobservable inputs December 31, Discount rate % Revenue, average amount per year EBITDA margin, average rate % Net debt, average amount per year ) The carrying value of the Group's financial instruments accounted for at amortized cost approximates their fair value due to their short-term nature and market interest rates, except for borrowings, gross of debt issuance cost, as disclosed in the table below: December 31, 2017 December 31, 2016 Level of Fair value Carrying Fair value Carrying Notes (Note 15) Level 1 ) ) ) ) Bank and other loans (Note 15) Level 3 ) ) ) ) ) ) ) ) The fair value of the Group's bank and other loans is measured using a discounted cash flow technique. The discount rate used in the discounted cash flow analysis is determined on the base of the market rate for bank loans available to the Group. While management has used available market information in estimating the fair value of its financial instruments, the market information may not be fully reflective of the value that could be realized in the current circumstances. There were no transfers between levels of inputs within the hierarchy during the years ended December 31, 2017, 2016 and 2015. There were no transfers between the accounting categories of financial instruments during the years ended December 31, 2017, 2016 and 2015. |
FINANCIAL RISK MANAGEMENT
FINANCIAL RISK MANAGEMENT | 12 Months Ended |
Dec. 31, 2017 | |
FINANCIAL RISK MANAGEMENT | |
FINANCIAL RISK MANAGEMENT | 19. FINANCIAL RISK MANAGEMENT As part of its business the Group is exposed to several types of financial risks: market risks, credit (or counterparty) risks, and liquidity risks. Risks mitigating activities are mainly performed at the Group headquarters by the corporate finance personnel and are subject to the approval of the Group's supervisory bodies—Board of Directors and Budget committee. Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group is primarily exposed to the following types of market risks: interest rate risk and currency exchange rates fluctuations. Financial instruments affected by market risk include loans and borrowings, deposits, and derivative financial instruments. The sensitivity analyses in the following sections relate to the financial position as of December 31, 2017, 2016 and 2015. Interest rate risks Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. • Variable interest rate Group's bank loans denominated in US Dollars and Euros primarily bear floating interest rate. To eliminate the exposure of changes in variable interest rates related to its debt obligations, the Group enters into variable-to-fixed interest rate swap agreements, so that interest rate swap matches the exact maturity dates of the underlying debt allowing for highly-effective cash flow hedges. In aggregate, the Group entered into variable-to-fixed interest rate swap agreements designated to manage the exposure of changes in variable interest rates related to 100% and 28.6% of the Group's bank loans with variable rates outstanding as of December 31, 2017 and 2016, respectively. • Fixed interest rate risk Group's Notes and bank loans denominated in Russian Rubles bear primarily fixed interest rates. To eliminate the exposure of changes in value of debt obligations, the Group enters into fixed-to-variable interest rate swap agreements. In aggregate, the Group entered into fixed-to-variable interest rate swap agreements designated to manage the exposure of changes in value of the debt related to 7.9% and 12.9% of the Group's Notes and bank loans with fixed rates outstanding as of December 31, 2017 and 2016, respectively. The notionals related to interest rate derivative instruments amounted to RUB 49,429 million and RUB 49,451 million as of December 31, 2017 and 2016, respectively. Sensitivity analysis A reasonably possible increase of 100 basis points in short term interest rates would have resulted in RUB 44 million, RUB 704 million and RUB 933 million future increases of interest expense for the years ended December 31, 2017, 2016 and 2015, respectively. The same decrease in short term interest rates would have resulted in RUB 44 million, RUB 704 million and RUB 933 million future decreases of finance cost for the years ended December 31, 2017, 2016 and 2015, respectively. There will be no material impact on equity. The interest rate sensitivity analysis was performed based on a constant position of fixed and floating rate debt. Foreign currency risks Foreign currency risk is the risk that the fair value or future cash flows will fluctuate because of changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's financing activities. The Group manages its currency risk by hedging significant foreign currency cash outflows with derivatives and by using money market instruments. The Group has entered into several cross-currency swap agreements. The contracts designated to manage the exposure of changes in currency exchange rate. The contracts assumed periodic exchange of principal and interest payments from RUB-denominated amounts to USD-denominated amounts at a specified rate. The rate was determined by the market spot rate upon issuance. Cross-currency interest rate swap contracts mature in 2019-2024. In aggregate the Group entered into cross-currency interest rate swap agreements designated to manage the exposure of changes in currency exchange rate for 39.6% of the Group's USD-denominated Notes and bank loans outstanding as of December 31, 2017 and 29.2% of its USD-and Euro-denominated Notes and bank loans outstanding as of December 31, 2016. The notionals related to currency derivative instruments amounted to RUB 28,669 million and RUB 25,885 million as of December 31, 2017 and 2016, respectively. The Group has entered into deliverable currency forward agreements to minimize foreign currency risk exposure for operating activities. The contracts assumed the purchase or sale of the agreed amount of currency at a specified exchange rate and date. The rate was determined by the market spot rate upon issuance. As the result of deliverable currency forward agreements, unfulfilled as of December 31, 2017, 2016 and 2015, the Group recognized nil, RUB 142 mln loss and nil in the consolidated statement of profit and loss for the years ended December 31, 2017, 2016 and 2015. The notionals related to deliverable currency forward instruments, unfulfilled as of December 31, 2017 and 2016, amounted to nil and RUB 18,339 mln, respectively. The following table presents the effect of the Group's swap agreements designated as cash flow hedges in accumulated other comprehensive income for the years ended December 31, 2017, 2016 and 2015. 2017 2016 2015 Accumulated derivatives (loss) / income, beginning of the year, net of tax of (26) and 261 and 1,067, respectively ) Fair value adjustments on hedging derivatives, net of tax of (628) and (2,279) and 738, respectively ) ) Amounts reclassified to loss / (profit) for the year during the period, net of tax of 739 and 1,992 and (1,544), respectively ) Accumulated derivatives income / (loss), end of the year, net of tax of 85 and (26) and 261, respectively ) The following tables demonstrate the sensitivity to a reasonably possible change in USD and EUR exchange rates, with all other variables held constant. Change USD—effect on EUR—effect on 2017 +5 % ) –5 % ) 2016 +20 % ) –20 % ) 2015 +20 % ) –20 % ) The movement in the pre-tax effect is a result of a change in monetary assets and liabilities denominated in US dollars and Euro, where the functional currency of the entity is a currency other than US dollars and Euro. There will be no material impact on equity. The Group's exposure to foreign currency changes for all other currencies is not material. Liquidity risk Liquidity risk is the risk of a shortage of funds. The Group's policy is to borrow centrally using a mixture of long-term and short-term borrowing facilities. These borrowings, together with cash generated from operations are utilized to meet anticipated funding requirements. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Group manages liquidity risk on long-term borrowings by maintaining a varied maturity profile and a required net debt position, therefore minimizing refinancing risk. Long-term borrowings mature between one and 8 years. As at December 31, 2017, current liabilities exceeded current assets by RUB 10,639 million. Management believes the Group has sufficient existing and continuing access to liquidity through both operating cash flows and the availability of committed credit facilities of RUB 36,000 million (Note 15). Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument, leading to a financial loss. The Group is exposed to credit risk primarily from its investing activities. The Group considers its exposure to credit risk as of December 31, 2017, and 2016 to be as follows: December 31, December 31, Trade and other receivables Bank deposits Loan and notes Assets in Sistema-Capital trust management Derivative financial instruments In accordance with the Group's financial instruments management policy, the aggregate credit risk the Group may have with one counterparty is limited. The Group maintains a mixture of cash and cash equivalents, investments, derivatives and certain other financial instruments with financial institutions. These financial institutions are located in different geographical regions and the Group's policy is designed to limit exposure to any one institutions. As part of its risk management processes, the Group performs periodic evaluations of the relative credit standing of the financial institutions. On December 15, 2015 Barclays bank and the Group signed an addendum to existing cross currency swap agreements. According to the terms of the addendum parties agreed to set credit exposure limits to one another, which permits to mitigate their credit risk by requiring other party to transfer collateral payments. The balance of Barclays bank's transfer of collateral payments to the Group is RUB 1.0 billion and RUB 2.9 billion as of December 31, 2017 and 2016, respectively. Concentrations of credit risk with respect to trade receivables are limited given that the Group's customer base is large and unrelated. Therefore management believes there is no further credit risk provision required in excess of the normal provision for bad and doubtful receivables. |
INCOME TAX
INCOME TAX | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAX | |
INCOME TAX | 20. INCOME TAX Significant components of income tax expense for the year ended December 31, 2017, 2016 and 2015 was as follows: Year ended December 31, 2017 2016 2015 Current income tax charge Adjustments recognised for current tax of prior periods Total current income tax Deferred tax ) ) Income tax expense on continuing operations Income tax expense on continuing operations excludes the tax income from the discontinued operations of RUB nil, RUB 192 million and RUB 661 million for the year ended December 31, 2017, 2016 and 2015, respectively; it has been included in loss from discontinued operations (Note 27). The statutory income tax rates in jurisdictions in which the Group operates for 2017, 2016 and 2015 were as follows: Russia and Armenia—20%, Ukraine—18%, Turkmenistan—8%, Czech Republic –19%. The Russian statutory income tax rate of 20% reconciled to the Group's effective income tax rate for the year ended December 31, 2017, 2016 and 2015 as follows: Year ended 2017 2016 2015 Statutory income tax rate for the year % % % Adjustments: Expenses not deductible for tax purposes Prior periods tax effects Different tax rate of foreign subsidiaries — ) ) Earnings distribution from subsidiaries ) Change in fair value of derivative financial instruments ) Derecognition of deferred tax assets — — Other — Effective income tax rate % % % As of December 31, 2017 and 2016 the Group reported the following deferred income tax assets and liabilities in the consolidated statement of financial position: December 31, December 31, Deferred tax assets Deferred tax liabilities ) ) Net deferred tax liabilities ) ) Movements in the deferred tax assets and liabilities for the year ended December 31, 2016 were as follows: January 1, Recognised in Recognised in Effect of December 31, Assets / (liabilities) arising from tax effect of: Depreciation of property, plant and equipment ) ) ) ) ) Other intangible assets ) ) ) Potential distributions from / to Group's subsidiaries / associates ) — ) Licenses ) ) — ) Customer base ) — — ) Accrued expenses for services ) ) ) Lease obligations ) — — Loss carryforward ) ) Provision for investment in Delta Bank in Ukraine — ) — Deferred connection fees ) ) ) Hedge and other ) ) Net deferred tax liability ) ) ) ) Movements in the deferred tax assets and liabilities for the year ended December 31, 2017 were as follows: December 31, Recognised in Recognised in Effect of Effect of December 31, Assets / (liabilities) arising from tax effect of: Depreciation of property, plant and equipment ) ) — ) ) Other intangible assets ) ) ) ) ) ) Potential distributions from / to Group's subsidiaries / associates ) ) — — ) Licenses ) — — ) Customer base ) — — — ) Accrued expenses for services ) — ) Lease obligations — — — Loss carryforward — — — Provision for investment in Delta Bank in Ukraine — ) — — Deferred connection fees ) — — Hedge and other ) — ) Net deferred tax liability ) ) ) ) ) The Group recognizes deferred income tax on future dividend distributions from foreign subsidiaries and associates which are based on cumulative undistributed earnings of those foreign subsidiaries in accordance with local statutory accounting regulations. The Group recognizes deferred tax assets in respect of tax losses carried forward to the extent that realization of tax losses against future taxable profit is probable. Deferred tax assets related to tax losses of the Group's subsidiaries are recognized based on the fact that certain tax planning opportunities are available to these subsidiaries that will create taxable profit in the period in which the unused tax losses can be utilized. The amount of the deferred tax asset considered realizable, however, could be remeasured if estimates of future taxable income are changed. Federal law #401-FZ dated November 30, 2016 allowed for the indefinite carry forward of tax losses, whereas previously carry forward of tax losses was restricted to 10 years. Also the law specified that tax base for the years 2017-2020 may not be reduced by tax losses carried forward for the amount exceeding 50% of the base. Unused tax losses with indefinite expiry date, for which deferred tax assets were not recognized in the consolidated statement of financial position as of December 31, 2017 and 2016 amounted to RUB 18,003 million and RUB 8,307 million, respectively. The Group accrued following amounts for uncertain income tax positions as component of income tax payable: December 31, December 31, Uncertain income tax positions Generally, uncertain income tax positions were originated from results of tax audit. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 21. EARNINGS PER SHARE The following table sets forth the computation of earnings per share for the year ended December 31, 2017, 2016 and 2015: Year ended, Year ended, Year ended, Numerator: Profit for the year from continuing operations attributable to the owners of the company Loss for the year from discontinued operations attributable to the owners of the company — ) ) Denominator, in thousands: Weighted-average ordinary shares outstanding Employee stock options Weighted-average diluted shares outstanding Earnings per share—basic, RUB Basic EPS from continuing operations Basic EPS from discontinued operations — ) ) Earnings per share—diluted, RUB Diluted EPS from continuing operations Diluted EPS from discontinued operations — ) ) |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTIES | |
RELATED PARTIES | 22. RELATED PARTIES Related parties include entities under common ownership with the Group, affiliated companies and associated companies. Terms and conditions of transactions with related parties —Outstanding balances as of December 31, 2017 were unsecured and settlements are made on a cash basis. There have been no guarantees provided or received for any related party receivables or payables. As of December 31, 2017 and December 31, 2016 the Group had no impairment of receivables relating to significant amounts owed by related parties as well as expenses recognized during the year ended December 31, 2017 and 2016 in respect to bad or doubtful debts from related parties. Accounts receivable from and accounts payable to related parties were as follows: December 31, December 31, Accounts receivable MTS Belarus, the Group's associate Business Nedvizhimost, a subsidiary of Sistema MTS Bank, the Group's associate Zifrovoe TV, the Group's associate Sitronics, a subsidiary of Sistema — Sitronics KASU, a former subsidiary of Sistema — Other related parties Total accounts receivable, related parties Less non-current portion ) ) Accounts receivable, related parties—current Accounts payable MTS Belarus, the Group's associate MTS Bank, the Group's associate Business Nedvizhimost, a subsidiary of Sistema Sitronics, a subsidiary of Sistema — Sitronics KASU, a former subsidiary of Sistema — Maxima, a subsidiary of Sistema — Other related parties Total accounts payable, related parties The Group has neither the intent nor the ability to offset the outstanding accounts payable and accounts receivable with related parties under the terms of existing agreements. The Group provides advances to related parties which are summarized as follows: December 31, December 31, Advances for property, plant and equipment: Kapstroi Telecom, a former subsidiary of Sistema — Other related parties Total advances for property, plant and equipment Investing and financing transactions —The Group holds certain investments in related parties which are summarized as follows: December 31, December 31, Short-term investments Sistema-Capital, a subsidiary of Sistema (assets management) Promissory notes of Intellect Telecom, a subsidiary of Sistema Loan receivable from Intellect Telecom, a subsidiary of Sistema Deposits at MTS Bank, the Group's associate Sistema International Funding S.A. Bonds due in 2019, a subsidiary of Sistema Promissory notes of Sistema — Other loans receivable — Total short-term investments in related parties Other investments Promissory notes of Sistema — Loan receivable from MTS Bank, the Group's associate — Other — Total other investments to related parties Other investments in shares Sistema Venture Capital, a subsidiary of Sistema Other investments Total investments in shares of related parties Operating transactions —For the years ended December 31, 2017, 2016 and 2015, operating transactions with related parties were as follows: Year ended Year ended Year ended Revenues from related parties MTS Bank, the Group's associate (telecommunication and call center services, bank cards distribution commission) Zifrovoe TV, the Group's associate (subscriber acquisition services) Sitronics, subsidiary of Sistema (construction of a fiber optic lines) — — MTS Belarus, the Group's associate (roaming and interconnect services) Detsky Mir, subsidiary of Sistema (telecommunication services) Medsi Group, subsidiary of Sistema (telecommunication and call center services) Sistema, parent company (consulting services) Segezha Group, a subsidiary of Sistema (software supply) — Sitronics KASU, a former subsidiary of Sistema (construction of fiber optic lines, project management, software support) NVision Group, a former subsidiary of Sistema (fixed line services) — — Stream, a former Group's associate (SMS notifications) — — Other related parties Total revenues from related parties Operating expenses incurred on transactions with related parties MTS Bank, the Group's associate (commission related expenses) Business Nedvizhimost, a subsidiary of Sistema (rent and sale of property) AB Safety, a subsidiary of Sistema (security services) Jet Air Group, subsidiary of Sistema (transportation services) Maxima, a subsidiary of Sistema (advertising) MTS Belarus, the Group's associate (roaming and interconnect services) Elavius, a subsidiary of Sistema (transportation services) Inturavtoservis, subsidiary of Sistema (transport services) Rent-Nedvizhimost, a former subsidiary of Sistema (rent), merged with Business Nedvizhimost in 2016 — Stream, a former Group's associate (content services) — — NVision Group, a former subsidiary of Sistema (IT consulting) — — Other related parties Total operating expenses incurred on transactions with related parties Finance income, which arose from investment transactions with related parties for years ended December 31, 2017, 2016 and 2017 was the following: Year ended Year ended Year ended Finance income from related parties Sistema-Capital, a subsidiary of Sistema (assets management) — Business Nedvizhimost, a subsidiary of Sistema MTS Bank, the Group's associate Zifrovoe TV, the Group's associate — Sistema, parent company Other related parties Total finance income from related parties Public Joint-Stock Company "MTS Bank" ("MTS Bank") —The Group maintains certain bank accounts with MTS Bank, an associate of the Group. As of December 31, 2017 and December 31, 2016, the Group's cash position at MTS Bank amounted to RUB 13,746 million and RUB 4,902 million, respectively, including short-term deposits in the amount of RUB 633 million and RUB 532 million, respectively. As of December 31, 2016 the subordinated loan issued by the Group to MTS Bank amounted to RUB 2,100 million. The loan was repaid in January, 2017. East-West United Bank —The Group maintains certain bank accounts with East-West United Bank, a subsidiary of Sistema. As of December 31, 2017 and December 31, 2016, the Group's cash position at East-West United Bank amounted to RUB 5,969 million and RUB 736 million, respectively, including short-term deposits in the amount of RUB 5,810 million and nil, respectively. Sistema —In November 2009, the Group accepted a promissory note, issued by Sistema, as repayment of the loan principal and interest accrued to date under an agreement with Sistema-Hals. The note is interest free and repayable in 2019. As of December 31, 2017 and December 31, 2016 the amount of RUB 618 million and RUB 574 million was included in other investments and short-term investments, respectively in the accompanying consolidated statements of financial position. In October 2014 the Group acquired 2,501,350 Sistema Notes due 2016 (series 04) and 1,000 Sistema International Funding S.A. Bonds due in 2019 for RUB 519 million and RUB 32 million, respectively. The acquired bonds were classified as available for sale and accounted for at fair value to recognize changes in fair value in other comprehensive income. In March 2015 and May 2015 upon scheduled redemption, the Group received principal and coupon in the amount of RUB 409 million. In March 2016 the Group received principal and coupon of Sistema Notes due 2016 (series 04) in the amount of RUB 201 million. As of December 31, 2017 and December 31, 2016, the balance of Sistema International Funding S.A. Bonds due in 2019 amounted to RUB 57 million and RUB 65 million respectively. Business Nedvizhimost —In February 2015 and further in May 2015, the Group sold its 100% stake in Rent Nedvizhimost to Business Nedvizhimost, subsidiary of Sistema, for RUB 8,500 million in total. As of December 31, 2017 and December 31, 2016 the balance of accounts receivable amounted to RUB 4,052 million and RUB 3,693 million, respectively. The amount as of December 31, 2017 is due before December 31, 2018 and bears interest of 12% p.a. Sistema-Capital —In April 2016 the Group entered into trust agreement with the asset management company Sistema-Capital. In December 2017 the Group entered into additional trust agreement with the same terms. As of December 31, 2017 and December 31, 2016, the balance of assets under trust management amounted to RUB 9,600 million and RUB 3,721 million respectively. Zifrovoe TV —In June 2017 the Group made a cash contribution to Zifrovoe TV (ZTV) in the amount of RUB 171 million. Remuneration of key management personnel —Key management personnel of the Group are members of the Board of Directors and Management Board. During the year ended December 31, 2017, 2016 and 2015 their total remuneration amounted to RUB 739 million, RUB 760 million and RUB 835 million, respectively. These amounts comprised of RUB 490 million, RUB 470 million and RUB 514 million in base salaries and 249 RUB million, RUB 290 million and RUB 321 million in bonuses paid pursuant to a bonus plan, respectively. Management and directors are also entitled to cash-settled and equity-settled share-based payments. Related compensation accrued during the year ended December 31, 2017, 2016 and 2015 amounted to RUB 486 million, RUB 481 million and RUB 175 million, respectively. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 23. SHAREHOLDERS' EQUITY Share capital (ordinary shares) —The Group had 1,998,381,575 authorized ordinary shares with par value 0.1 RUB as of December 31, 2017 and 2016. Preferred shares have not been issued. As of December 31, 2017, the total shares in treasury stock comprised 86,339,156 and 1,912,042,419 shares were outstanding. As of December 31, 2016, the total shares in treasury stock comprised 11,482,047, and 1,986,899,528 shares were outstanding. Mobile TeleSystems' Level III American Depositary Shares (ADS) were successfully placed during the Company's initial public offering on the New York Stock Exchange on June 30, 2000. Each ADS represents 2 ordinary shares. As of December 31, 2015 the Group repurchased 33,997,667 ADSs, which were used to decrease the Group's charter capital in 2016. MTS ordinary shares have been traded on the Moscow Exchange (previously, Moscow Interbank Currency Exchange (MICEX)) since October 2003 under the ticker symbol MTSI. In 2016, the Group launched a Tender Offer, aiming to return cash of up to RUB 4,935 million to the holders of ordinary shares and ADS. During the year ended December 31, 2016 through the Tender Offer the Group has repurchased 3,060,409 ordinary shares for RUB 747 million (including 1,550,495 ordinary shares purchased from Sistema for RUB 335 million). In 2017 the Group launched a Tender Offer, aiming to repurchase its ordinary shares (including shares represented by ADSs) for up to RUB 4,647 million. Through the Tender Offer, during the year ended December 31, 2017, the Group purchased a total of 16,022,364 shares (including shares represented by ADSs) at a price per share of RUB 290, for a total cost of RUB 4,646 million. Simultaneously, the Group purchased 16,038,892 shares from Sistema Finance under the Sistema Purchase Agreement for an aggregate purchase price of RUB 4,651 million. In 2017, the Group announced that its Board of Directors has approved the repurchase of its shares and ADSs by means of a share repurchase plan in the total amount of up to RUB 20,000,000,000 (the "Repurchase Plan"), the amount includes funds used for purchasing the Company's shares from Sistema Finance until April 2019. The Repurchase Plan is carried out by the Group's wholly-owned subsidiary Stream Digital, LLC. During the year ended December 31, 2017, the Group purchased 43,647,128 shares (including shares represented by ADSs) under the Repurchase Plan at prices from RUB 257 up to RUB 305 for a total cost of RUB 12,475 million. 1. Nature and purpose of reserves Additional paid in capital reserve is used to recognize equity-settled share-based payment transactions, results of capital transactions under common control; changes in ownership interest in subsidiaries that do not result in gain/loss of control; the excess of cash received over the acquisition cost of treasury shares. Foreign currency translation reserve is used to record exchange differences arising from the translation of foreign subsidiaries financial statements from functional to presentation currency. Investments revaluation reserve is used to record the accumulated impact of derivatives designated as cash flow hedges and revaluation of investments available for sale. Remeasurements of the net defined benefit liability is used to recognize actuarial gains and losses related to the pension program set for employees of the Group's subsidiary MGTS. The following table represents roll forward of reserves balances for the years ended December 31, 2017, 2016 and 2015: Foreign Cash flow Remeasurements Balances at January 1, 2015 Other comprehensive income for the year Less: tax expense — ) — Amounts reclassified to profit for the year — ) — Less: tax benefit — — Net other comprehensive income / (loss) for the year ) Balances at December 31, 2015 Other comprehensive (loss) / income for the year ) ) Less: tax benefit — — Amounts reclassified to profit for the year ) — Less: tax expense — ) — Net other comprehensive (loss) / income for the year ) ) Balances at December 31, 2016 ) ) Other comprehensive loss for the year ) ) ) Less: tax benefit — — Amounts reclassified to profit for the year — Less: tax expense ) — Amounts reclassified to Additional paid in capital ) Less: tax expense — Net other comprehensive (loss) / income for the year ) ) Balances at December 31, 2017 ) 2. Non-controlling interest As of December 31, 2017 the only material subsidiary of the Group which had non-controlling interests was MGTS. The summarised financial information of MGTS PJSC is presented as follows: Year ended December 31, 2017 2016 2015 Non-controlling interest opening balance ) ) ) Profit for the year attributable to non-controlling interest ) ) ) Dividends to non-controlling interest Other ) ) Non-controlling interest closing balance ) ) ) December 31 2017 2016 Current assets Non-current assets Current liabilities ) ) Non- current liabilities ) ) Year ended December 31, 2017 2016 2015 Revenue, gross of intercompany ) ) ) Profit for the year, gross of intercompany ) ) ) 3. Dividends As a leading telecommunications group with a home base in developing markets, MTS' primary need is to maintain sufficient resources and flexibility to meet financial and operational requirements. At the same time, the Group continually seeks ways to create shareholder value through both its commercial and financial strategies, including organic and non organic development as well as the Group's capital management practices. MTS continues to include dividend payments as part of its commitment to maximizing shareholder value. Decisions on dividends are proposed by the Board of Directors and voted upon thereafter at a general meeting of shareholders. In determining the Company's dividend payout, the Board of Directors considers a variety of factors, including: • Macroeconomic factors and levels of competitiveness in core markets, • Cash flow from operations, • The outlook for earnings growth, • Capital expenditure requirements, • Potential acquisition opportunities, • The state of capital markets and the Group's liquidity position, and • The Group's overall debt position. In 2016, the Board of Directors approved a dividend policy for the calendar years 2016 - 2018, committing to a minimum cumulative dividend payout of RUB 20.0 per ordinary share through two semi-annual payments. In addition, the Group will aim for a target payout of RUB 25.0 - 26.0 per ordinary share in each calendar year. The Group may take decisions on dividend payout based not only on annual results but also on interim results for three, six or nine months of the fiscal year. Annual and interim dividend payments, if any, must be recommended by the Board of Directors and approved by the shareholders. In accordance with Russian laws, earnings available for dividends are limited to profits determined under Russian statutory accounting regulations, denominated in Russian Rubles, after certain deductions. The net income of MTS PJSC for the years ended December 31, 2017, 2016 and 2015 that is distributable under Russian legislation totaled RUB 125,091 million, RUB 50,659 million and RUB 6,590 million, respectively. The following table summarizes the Group's declared cash dividends for the years ended December 31, 2017, 2016 and 2015: Year ended Year ended Year ended Dividends declared (including dividends on treasury shares of 1,337, 1,950 and 1,922 respectively) Dividends, RUB per ADS Dividends, RUB per share As of December 31, 2017 and 2016 dividends payable were RUB 125.4 and 87.0 million, respectively, and included in the trade and other payables within the consolidated statement of financial position. |
SELLING, GENERAL AND ADMINISTRA
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 24. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the year ended December 31, 2017, 2016 and 2015 comprised the following: Year ended Year ended Year ended Salaries and social contributions Utilities and maintenance Advertising and marketing expenses General and administrative expenses Dealers commission Taxes other than income tax Cash collection commission Universal service fund Consulting expenses Billing and data processing Other Total |
FINANCE INCOME AND COSTS
FINANCE INCOME AND COSTS | 12 Months Ended |
Dec. 31, 2017 | |
FINANCE INCOME AND COSTS | |
FINANCE INCOME AND COSTS | 25. FINANCE INCOME AND COSTS Finance income and costs for the year ended December 31, 2017, 2016 and 2015 comprised the following: Year ended Year ended Year ended Interest expense: —Loans and notes —Amortization of debt issuance costs —Finance lease obligations —Provisions: unwinding of discount Total interest expense Loss on financial instruments Other finance costs (2) Total finance costs Less: amounts capitalized on qualifying assets (1) ) ) ) Finance costs Finance income on loans and receivables —Interest income on bank deposits —Interest income on loans —Other finance income Finance income Net finance costs (1) The annual weighted average capitalization rates of 8.2%, 8.3% and 8.3% were used to determine the amount of capitalized interest for the years ended December 31, 2017, 2016 and 2015, respectively. (2) Including repurchase of MTS International Notes |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 26. SEGMENT INFORMATION Management (chief operating decision maker) analyzes and reviews results of the Company's operating segments separately based on the nature of products and services, regulatory environments and geographic areas. MTS Group's management evaluates the segments' performance based on revenue and operating profit, excluding depreciation and amortization. Management does not analyze assets or liabilities by reportable segments. The Group identified the following reportable segments: Russia convergent: represents the results of mobile and fixed line operations, which encompasses services rendered to customers across regions of Russia, including voice and data services, transmission, broadband, pay-TV and various value-added services and retail operations. Moscow fixed line: represents the results of fixed line operations carried out in Moscow by the Group's subsidiary MGTS. MGTS is the only licensed public switched telephone network ("PSTN") operator in Moscow and is considered a natural monopoly under Russian antimonopoly regulations. Consequently, substantial part of services provided by MGTS are subject to governmental regulation. Ukraine: represents the results of mobile and fixed line operations carried out across multiple regions of Ukraine. The "Other" category does not constitute a reportable segment. It includes the results of a number of other operating segments that do not meet the quantitative thresholds for separate reporting, such as Turkmenistan, Armenia, System Integrator, Satellite TV, Navigation Information Systems, Metro-Telecom, Stream, NVision Czech Republic, Litebox, eSports and Belarus. In 2017, management has started internally assess Russia convergent and NVision Czech Republic, Stream, Navigation Information Systems and Metro-Telecom separately in order to monitor the results and make funding decisions on this basis, and thus has presented them separately. Related financial information was, retrospectively, restated. The results of operations of UMS are reported as discontinued operations in the accompanying consolidated statements of profit or loss. The segment reporting for the year ended December 31, 2015 was restated accordingly. The consolidated statement of financial position is not required to be retrospectively restated with respect to discontinued operations and therefore as of December 31, 2015 statement of financial position captions in the "Other" category of the following presentation includes UMS. The intercompany eliminations presented below primarily consist of sales transactions between segments conducted under the normal course of operations. Financial information by reportable segments is presented below: Year ended December 31, 2017: Russia Moscow Ukraine Total Other HQ and Consolidated Revenue External customers Intersegment ) — Total revenue ) Operating profit ) ) Depreciation and amortization ) Other disclosure: Capital expenditures — Year ended December 31, 2016: Russia Moscow Ukraine Total Other HQ and Consolidated Revenue External customers Intersegment ) — Total revenue ) Operating profit ) Depreciation and amortization ) Other disclosure: Capital expenditures — Year ended December 31, 2015: Russia Moscow Ukraine Total Other HQ and Consolidated Revenue External customers Intersegment ) — Total revenue ) Operating profit ) Depreciation and amortization ) Other disclosure: Capital expenditures — The consolidated operating profit is reconciled to the consolidated profit before tax on the face of the consolidated statement of profit or loss. Financial information by geographic areas is presented below: For the year ended December 31, Revenue 2017 2016 2015 Russia Other Total revenue Non-current assets (1) As of As of Russia Other Total non-current assets: (1) Comprises property, plant and equipment, goodwill and other intangible assets. Revenues from external customers and non-current assets are allocated to individual countries based on location of operations. No single customer represents 10% or more of the consolidated revenue. |
OPERATIONS IN UZBEKISTAN
OPERATIONS IN UZBEKISTAN | 12 Months Ended |
Dec. 31, 2017 | |
OPERATIONS IN UZBEKISTAN | |
OPERATIONS IN UZBEKISTAN | 27. OPERATIONS IN UZBEKISTAN On August 5, 2016, the Group sold its 50.01% stake in UMS, a subsidiary in Uzbekistan for USD 1 to UMS's sole remaining shareholder—the State Unitary Enterprise Centre of Radio Communication, Radio Broadcasting and Television of The Ministry of Development of Information Technologies and Communications of the Republic of Uzbekistan. The results of UMS operations were reported as discontinued operations in the accompanying consolidated statements of profit or loss. The consolidated statements of financial position and consolidated statements of cash flows for all periods presented were not retrospectively restated on discontinued operations. UMS's summary of financial information: Results of discontinued operation For the 2016 2015 Revenue Expenses ) ) Loss before tax ) ) Income tax gain (note 19) Loss for the period ) ) Loss on sale of discontinued operations ) — Loss from discontinued operations ) ) Loss attributable to non-controlling interests ) ) Loss to owners of the Company ) ) Basic loss per share ) ) Diluted loss per share ) ) Cash flows from (used in) discontinued operation For the 2016 2015 Net cash used in operating activities ) ) Net cash used in investing activities ) ) Net cash provided by financing activities As of August 5, 2016, the carrying amounts of UMS net assets and reconciliation of the loss on disposal were as follows: Property, plant and equipment ) Other intangible assets ) Other non-current assets ) Cash and cash equivalents ) Other current assets ) Non-current liabilities Current liabilities Non-controlling interest Accumulated other comprehensive income Consideration received — Loss on disposal of UMS ) |
LIABILITY UNDER PUT OPTION AGRE
LIABILITY UNDER PUT OPTION AGREEMENT | 12 Months Ended |
Dec. 31, 2017 | |
LIABILITY UNDER PUT OPTION AGREEMENT | |
LIABILITY UNDER PUT OPTION AGREEMENT | 28. LIABILITY UNDER PUT OPTION AGREEMENT In September 2007, the Group acquired an 80% stake in International Cell Holding Ltd ("ICH"), the 100% indirect owner of MTS Armenia, Armenia's mobile phone operator, and signed a call and put option agreement to acquire the remaining 20% stake. In 2016 ICH was liquidated and all its legal rights were assigned to Aramayo Investments Limited, a subsidiary of the Group. December 2010, the Group signed an amendment to the put and call option agreement. According to the amended option agreement, the price for the remaining 20% stake option will be determined by an independent investment bank subject to a cap of EUR 200 million. The put option can be exercised during the period from the next business day following the date of settlement of all liabilities under the loan agreement up to December 31, 2018. The call option can be exercised during the period from July 1, 2010 up to December 31, 2018. If both the call notice and the put notice are served on the same day then the put notice shall be deemed exercised in priority to the call notice. The liability under put option agreement amounted to RUB 2,012 million and RUB 2,243 million as of December 31, 2017 and December 31, 2016 respectively (Note 18). The liability under put option agreement related to Oblachny Retail is disclosed in Note 18. |
OPERATIONS IN TURKMENISTAN
OPERATIONS IN TURKMENISTAN | 12 Months Ended |
Dec. 31, 2017 | |
OPERATIONS IN TURKMENISTAN | |
OPERATIONS IN TURKMENISTAN | 29. OPERATIONS IN TURKMENISTAN In September 2017, the Group's subsidiary in Turkmenistan MTS-TM suspended the provision of telecommunication services to its subscribers, due to the termination by Turkmen state-owned companies and state authorities of line rental, frequency allocation, interconnect, and other agreements necessary to servicing MTS clients. However, the license for the provision of telecommunication services on the Turkmenistan territory is valid till the end of July 2018. According to the IAS 36 (par.12) the Group considered facts described above as an impairment indicators and consequently determined that all long-lived assets attributable to Turkmenistan subsidiary were impaired. The Group also assessed the recoverability of the current assets and recorded a provision for those that were considered to be impaired. No indicators of impairment were identified in respect of cash and cash equivalents attributable to MTS-TM. Total impairment charges recognized in the Group's consolidated statement of profit or loss for the year ended December 31, 2017 were as follows: Impairment long-lived assets Current provision for income tax Provision for doubtful accounts Other operating expenses Taxes other than income tax Deferred income tax ) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 30. COMMITMENTS AND CONTINGENCIES Capital commitments —As of December 31, 2017, the Group had executed purchase agreements of approximately RUB 33,645 million to acquire property, plant and equipment, intangible assets and costs related thereto. Agreement with Apple —In April 2017, the Group entered into an unconditional purchase agreement with Apple Rus LLC ("Purchase agreement") to buy 615 thousand iPhone handsets at list prices at the dates of respective purchases over a period ending June 30, 2019. Pursuant to the agreement the Group is also required to incur certain iPhone advertising and promotion costs. As of December 31, 2017 the Group made 44% of its total purchase installment contemplated by the agreement. Operating leases —The Group has entered into non-cancellable agreements to lease space for telecommunications equipment, offices and transmission channels, which expire in various years up to 2099. Rental expenses under the operating leases of RUB 7,705 million, RUB 7,581 million and RUB 6,093 million for the years ended December 31, 2017, 2016 and 2015, respectively, are included in selling, general and administrative expenses in the accompanying consolidated statement of profit or loss. Rental expenses under the operating leases of RUB 18,352 million, RUB 18,955 million and RUB 19,549 million for the years ended December 31, 2017, 2016 and 2015, respectively, are included in cost of services in the accompanying consolidated statement of profit or loss. Future minimum lease payments due under these leases at December 31, 2017 are as follows: Payments due in 2018 2019 2020 2021 2022 Thereafter Total Taxation —Russia and other CIS countries currently have a number of laws related to various taxes imposed by both federal and regional governmental authorities. Applicable taxes include VAT, corporate income tax (profits tax), a number of turnover-based taxes, and payroll (social) taxes. Laws related to these taxes have not been in force for significant periods, in contrast to more developed market economies; therefore, the government's implementation of these regulations is often inconsistent or non-existent. Accordingly, few precedents with regard to tax rulings have been established. Tax declarations, together with other legal compliance areas (for example, customs and currency control matters), are subject to review and investigation by a number of authorities, which are enabled by law to impose extremely severe fines, penalties and interest charges. These facts create tax risks in Russia and the CIS countries that are more significant than those typically found in countries with more developed tax systems. Generally, according to Russian and Ukrainian tax legislation, tax declarations remain open and subject to inspection for a period of three years following the tax year. As of December 31, 2017, tax declarations of MTS PJSC and other subsidiaries in Russia and Ukraine for the preceding three fiscal years were open for further review. In 2017, the Russian tax authorities completed a tax audit of MTS PJSC for the years ended December 31, 2015 and 2014. No issues that could result in additional significant charges identified. Pricing of goods and services provided within the Group is subject to transfer pricing rules. Management believes that it has adequately provided for tax liabilities in the accompanying consolidated financial statements. However, the risk remains that the relevant tax authorities could take different positions with regard to interpretive issues and the effect could be significant. The Group assessed the following contingent liabilities in respect of additional tax settlements: December 31, December 31, Contingent liabilities for additional taxes other than income tax Contingent liabilities for additional income taxes Licenses —In May 2007, the Federal Service for Supervision in the Area of Communications, Information Technologies and Mass Media awarded MTS a license to provide 3G services in Russia. The 3G license was granted subject to certain capital and other commitments. In July 2012, the Federal Service for Supervision in the Area of Communications, Information Technologies and Mass Media allocated MTS the necessary license and frequencies to provide LTE telecommunication services in Russia. Under the terms and conditions of the LTE license, the Group is obligated to fully deploy LTE networks within seven years, commencing from January 1, 2013, and deliver LTE services in each population center with over 50,000 inhabitants in Russia by 2019. Also, the Group is obligated to invest at least RUB 15 billion annually toward the LTE roll-out until the network is fully deployed. In March 2015, MTS-Ukraine acquired a nationwide license for the provision of UMTS (3G) telecommunications services through an open tender. The license cost UAH 2,715 million (RUB 6,015 million at the acquisition date) and was granted for 15 years. In accordance with the terms of the license, MTS-Ukraine was required to launch UMTS services in Ukraine by October 2016, and provide coverage throughout Ukraine by April 2020. In accordance with the terms of the license, MTS-Ukraine also concluded agreements to convert the provided frequencies for commercial use with the Ministry of Defense of Ukraine, Ministry of Internal Affairs of Ukraine and State Service of Special Communications and Information Protection of Ukraine. For the conversion of frequencies, MTS-Ukraine paid UAH 358 million (RUB 865 million as of the payment date) in 2015 and UAH 299 million (RUB 645 million as of the payment date) in 2017, and is liable to pay UAH 232 million (RUB 476 million as of December 31, 2017) adjusted for the rate of inflation in 2018. Management believes that as of December 31, 2017, the Group is in compliance with conditions of the aforementioned licenses. Litigation —In the ordinary course of business, the Group is party to various legal, tax and customs proceedings, and subject to claims, some of which relate to developing markets and evolving fiscal and regulatory environments within MTS's markets of operation. In August 2017, Federal Antimonopoly Service of the Russian Federation (FAS Russia) has charged MTS with violation of antimonopoly laws in respect to establishing and maintaining monopolistically high prices for communication services in national roaming. In Febraury 2018 FAS Russia found MTS responsible for the aforementioned violation. An administrative case is expected to be initiated, which will result in an administrative fine imposed on MTS in the amount of illegally obtained income. The amount of illegally obtained income is determined as the difference between the amount of revenue received by MTS as a result of applying monopolistically high prices and the amount of revenue that could be received as a result of applying prices which are considered by FAS Russia reasonable. As there is no information regarding the level of prices that FAS Russia considers economically justified, it is not possible to make a reliable estimation of the adverse effects of the fine that will be potencially imposed. Potential adverse effects of economic instability and sanctions in Russia —In 2014 political and economic sanctions targeting certain Russian economic sectors were introduced by the EU, US and other countries. Sanctions were subsequently extended and there is significant uncertainty regarding the extent and timing of further sanctions. Also, Russian Ruble has materially depreciated against the U.S. Dollar and Euro and ruble interest rates have increased significantly after the Central Bank of Russia raised its key rate to 17% in December, 2014. In 2018 due to Russia's ability to remain stable amid severe external shocks Russia sovereign credit ratings were increased from "stable" to "positive". The Central Bank of Russia has gradually decreased its key rate to 7.75% as of December 31, 2017 and subsequently to 7.50% as of February 12, 2018. These factors resulted in a lower cost of capital and a stable rate of inflation. However, in Russia there is an uneven growth dynamics, which could have a negative impact on the Group's business including ability to obtain financing on commercially reasonable terms. Management believes it is appropriately acting to support the sustainability of the Group's business in the current circumstances. The Group has a hedging policy in place, which partly mitigated variability of cash outflows, denominated in foreign currencies. Political and economic crisis in Ukraine —During the year ended December 31, 2014, a deterioration in the political environment of Ukraine has led to general instability, economic deterioration and armed conflict in eastern Ukraine. In 2014 The National Bank of Ukraine ("NBU") passed a decree prohibiting Ukrainian companies to pay dividends to foreign investors. The decree was extended for a few times and its edition effective as of December 31, 2017 allows payment of dividends from the profit earned in 2014-2015, subject to certain restrictions, as well as payment of the whole amount of dividends accrued from the profit earned before 2014 that was earlier prohibited Furthermore, since 2014 the Group established a provision in respect of cash balances in several Ukrainian banks, whose liquidity was affected by the economic downturn. For the year ended December 31, 2015 the provision amounted to RUB 1,698 million and was included as a component of operating expenses in the accompanying consolidated statement of profit or loss. The Group believes that these circumstances, despite the recent improvement, combined with political and economic instability in the country, could result in further negative impact on the Group's business including financial position and results of operations. As of December 31, 2017, the Group held RUB 1,330 million in current accounts and deposits in Ukrainian banks. Anti-terror law —On July 7, 2016 a series of anti-terror laws (also known as "Yarovaya-Ozerov bundle of laws") was enacted by the signature of the President of Russia. In general terms, the laws mandate that operators store and record phone conversations, text messages of subscribers, images, sounds, video and other types of communications by telecommunications operators for defined periods of time. These requirements are to become effective starting July 1, 2018. Compliance with the laws may require the construction of additional storage, processing and indexing centers and a significant increase in the Group capital expenditures. This may adversely impact Group's financial indicators, in particular free cash flow. The requirements of the anti-terror laws in respect of the data storage volume are to be determined by legal acts that have not been adopted yet. The Group will estimate the potential impact of the laws on the Group's consolidated financial statements, including additional provisions, once requirements are approved and come into force. Investigations into former operations in Uzbekistan —In March 2014, the Group received requests for the provision of information from the United States Securities and Exchange Commission ("SEC") and the United States Department of Justice ("DOJ") relating to a currently conducted investigation of the Group's former subsidiary in Uzbekistan. In 2015, activities related to the Group's former operations in Uzbekistan have been referenced in a civil forfeiture complaints ("The Complaints"), filed by DOJ in the U.S. District Court, Southern District of New York (Manhattan), directed at certain assets of an unnamed Uzbek government official. The Complaints allege among other things that MTS and certain other parties made corrupt payments to the unnamed Uzbek official to assist their entering and operating in the Uzbekistan telecommunications market. The Complaints are solely directed towards assets held by the unnamed Uzbek official, and none of MTS's assets are affected by the Complaints. The Group continues to cooperate with these investigations. The Group, the DOJ and the SEC are having discussions about a potential resolution to allegations of non-compliance with the Foreign Corrupt Practices Act (FCPA). However, at this stage, the Group is unable to predict whether or not such discussions will result in a settled resolution to the investigations, the magnitude of any settlement, or whether there will be further developments in the investigations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 31. SUBSEQUENT EVENTS 4G license secured by Vodafone Ukraine —In January and March 2018, VF Ukraine PrJSC, which serves the Ukraine market and operates as Vodafone Ukraine, secured a 4G licenses in the 2510-2520 / 2630-2640 and 1780-1785 / 1875-1880 MHz bands as the result of a national auction. The first 4G launch in Ukraine's largest cities could take place by the end of March 2018. Acquisition of MDTZK LLC and Kulturnaya Sluzhba LLC —In the first quarter of 2018, the Group acquired 100% stake in MDTZK LLC (operating under the trademark Ticketland.ru) and a 78.2% stake in Kulturnaya Sluzhba LLC (operating under the trademark Ponominalu.ru), the leading players in the Russian e-ticketing industry. The acquisitions allow MTS to enter the event ticket market (both online and offline) and establish itself as a leading ticket operator in Russia, while broadening MTS's suite of digital services and integrating a key new product into its existing loyalty program and mobile app ecosystem. See Note 4 for further information. Early repayment of credit facilities —In March 2018, MTS made partial early repayment of the 10-year credit facility from Calyon, ING Bank N.V., Nordea Bank AB and Raiffeisen Zentralbank Osterreich AG in the amount of USD 224.7 million (RUB 12,668 million). The early repayment of the loan is a part of the Company's debt portfolio optimization strategy aimed at decreasing of the overall cost of debt and increasing its overall tenor. Ruble bonds placement —In March 2018, MTS issued two series of exchange-traded bonds totaling RUB 20 billion with a semi-annual coupon rate of 7.10% and 7.25% and a maturity of 3.5 years and 7 years respectively. Investments in the development of Ozon Holdings Limited —In March 2018, MTS invested RUB 1.15 billion in the development of Ozon Holdings (OZON) through an additional share issuance. As a result, MTS's stake in the authorized capital of Ozon will increase from 11.2% to 13.7%. Acquisition of shares under Share Repurchase Plan —Since the end of the reporting period the Group acquired 27,059,204 MTS shares of Common Stock representing 1.35% of share capital issued by MTS. The Group purchased MTS shares of Common Stock under the Share Repurchase Plan announced in 2017. |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
Basis of preparation | Basis of preparation —These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements are prepared on a historical cost basis, unless disclosed otherwise. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Amounts in the consolidated financial statements are stated in millions of Russian Rubles ("RUB million"), unless indicated otherwise. These consolidated financial statements have been prepared on the assumption that the Group is a going concern and will continue in operation for the foreseeable future. |
Basis of consolidation | Basis of consolidation —The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved only where the Company has the power over the entity, is exposed and has rights to variable returns, and is able to use the power to affect its amount of variable returns. The results of the controlled entities acquired or disposed of during the reporting period are included in the consolidated financial statements from the date, the Group achieves control over the entity, or until the date on which the Company ceases to control the entity. If necessary, the accounting policies of controlled entities' are aligned with the accounting policy applied by the Group. All intra-group balances, income, expenses and cash flows are eliminated on consolidation. Those entities where the Group exercises significant influence are recognized as associates and accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. These entities are recognized at cost at the time of acquisition and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income. The carrying amount of the investment in such entities may include goodwill as the positive difference between the cost of the investment and Group's proportionate share in the fair values of the entity's identifiable assets and liabilities. The carrying amount of the investment accounted for using the equity method is tested for impairment provided there are indications of impairment. If the carrying amount of the investment exceeds its recoverable amount, an impairment loss is recognized in the amount of the difference. The recoverable amount is measured at the higher of fair value less costs of disposal and value in use. The Group presents its share in profits or losses in associates within operating profit if those interests are viewed as part of Group's core operations. As of December 31, 2017, only MTS Belarus was considered to be a part of Group's core operating activity. Shares in profits and losses of other Group's associates were presented as non-operating items. The Group has joint operations with MTS Bank, a Group's associate, relating to the development of the MTS Dengi project and Vimpelcom, relating to construction of LTE base stations. Joint operations are characterized by the fact that the operators that have joint control over the arrangement have a right to the assets, and obligations for the liabilities, relating to the arrangement. Respectively, each operator accounts for its share of the joint assets and its agreed share of any liabilities, and recognizes its share of the output, revenues and expenses incurred under the arrangement. Investments in shares of the companies over which the Group does not have control or an ability to exercise significant influence are accounted for under the cost method. The Group does not evaluate cost-method investments for impairment unless there is an indicator of impairment. Effective ownership interests in the Group's significant subsidiaries were the following: Accounting December 31, December 31, RTC Consolidated % % Vodafone Ukraine Consolidated % % MTS Turkmenistan (Note 29) Consolidated % % Sibintertelecom Consolidated % % NVision Group Consolidated % % Sitronics Telecom Solutions Consolidated % % NVision Czech Republic Consolidated % % Sputnikovoe TV Consolidated % % Stream Consolidated % % Dega Consolidated % % Stream Digital (1) Consolidated % % MTS Energo Consolidated % — Bashkortostan Cellular Communications (BCC) Consolidated % — Praliss Enterprises Limited Consolidated % — Metro-Telecom Consolidated % % MGTS Group Consolidated % % MTS Armenia Consolidated % % Navigation Information Systems Group Consolidated % % Oblachny Retail LLC Consolidated % — MTS International Funding Limited (2) ("MTS International") Consolidated SE SE MTS Belarus Equity % % Sistema Capital Equity % — MTS Bank Equity % % Zifrovoe TV Equity % % OZON Holdings Limited Equity % % (1) A wholly-owned subsidiary, through which the Group currently repurchases its own shares. (2) A company organized and existing as a private limited company under the laws of Ireland. The Group does not have any equity in MTS International. It was established for the purpose of raising capital through the issuance of debt securities on the Irish Stock Exchange followed by transferring the proceeds through a loan facility to the Group. In 2010 and 2013, MTS International issued $750 million 8.625% notes due in 2020 and $500 million 5.0% notes due in 2023, respectively (Note 15). The notes are guaranteed by MTS PJSC in the event of default. MTS International does not perform any other activities except those required for notes servicing. The Group bears all costs incurred by MTS International in connection with the notes' maintenance activities. Accordingly, the Group concluded that it exercises control over the entity. |
Acquisitions from entities under common control | Acquisitions from entities under common control —Business combinations arising from transfers of interests in entities that are under common control with the Group are consolidated prospectively starting from the date, the control over those entities is passed to the Group. The assets and liabilities acquired are recognized at the carrying values recorded previously in the counterparty's financial statements with the resulting gain or loss recognized directly in equity. |
Functional currency translation methodology | Functional currency translation methodology —As of December 31, 2017, the functional currencies of Group entities were as follows: • For entities incorporated in the Russian Federation, Dega and MTS International—the Russian Ruble ("RUB"); • For Vodafone Ukraine—the Ukrainian Hryvna; • For MTS Armenia—the Armenian Dram; • For MTS Turkmenistan—the Turkmenian Manat; • For MTS Belarus—the Belorussian Ruble; • For NVision Czech Republic—the Czech Crown. Foreign-currency transactions are translated into the functional currency at the exchange rates at the dates of the transactions. At the reporting date, monetary items denominated in foreign currencies are translated at the closing rate, whereas non-monetary items are stated at the exchange rate at the date of their recognition. Exchange rate differences are recognized in profit or loss. For entities whose records are maintained in their functional currency, which is other than the reporting currency, all year-end assets and liabilities have been translated into U.S. Dollars ("USD") at the period-end exchange rate set by local central banks. Subsequently, U.S. Dollars balances have been translated into Russian Rubles at the period-end exchange rate set by the Central Bank of Russia. Revenues and expenses have been translated at the average exchange rate for the period using cross-currency exchange rate via U.S. Dollar as described above. Translation differences resulting from the use of these rates are reported as a component of other comprehensive income. |
Management estimates | Management estimates —The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include allowance for doubtful accounts and inventory obsolescence, the valuation of assets acquired and liabilities assumed in business combinations, the recoverability of investments and the valuation of goodwill, property, plant and equipment and intangible assets, liability under put option agreement, certain provisions and financial instruments. |
Property, plant and equipment | Property, plant and equipment —Property, plant and equipment, including improvements, are stated at cost. Property, plant and equipment with a useful life of more than one year is capitalized at historical cost and depreciated on a straight-line basis over its expected useful life, as follows: Network and base station equipment: Network infrastructure 5 - 44 years Other 1.5 - 21 years Land and buildings: Buildings 20 - 150 years Leasehold improvements the term of the lease Office equipment, vehicles and other: Office equipment 3 - 21 years Vehicles 2 - 7 years Other 2 - 25 years The estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on the disposal of an item of property, plant and equipment is determined as the difference between any sale proceeds and the carrying amount of the asset and is recognised in the consolidated statement of profit or loss. Construction in progress and equipment held for installation is not depreciated until the constructed or installed asset is ready for its intended use. Maintenance and repair costs are expensed as incurred, while upgrades and improvements are capitalized. |
Borrowing costs | Borrowing costs —Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset during the construction phase that necessarily takes a substantial period of time are capitalized as part of property, plant and equipment until the asset is substantially ready for its intended use. The Group considers a construction period of more than six months to be substantial. |
Other intangible assets | Other intangible assets —Other intangible assets primarily consist of billing, telecommunication, accounting and office software as well as numbering capacity, customer base and licenses. These assets are assets with finite useful lives. They are initially recognized at cost and amortized on a straight-line basis over their estimated useful lives. |
Goodwill | Goodwill —Goodwill represents an excess of consideration transferred plus the fair value of any non-controlling interest ("NCI") in the acquiree at the acquisition date over the fair values of the identifiable net assets of the acquired entity. Goodwill is not amortized, but is tested for impairment based on the recoverable amount of the cash-generating unit ("CGU") to which the goodwill is allocated. The impairment test is carried out on a regular basis at the end of each financial year, as well as whenever there are indications that the carrying amount of the CGU unit is impaired. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGU units that are expected to benefit from the synergies of the combination. If the carrying amount of the CGU unit to which goodwill is allocated exceeds its recoverable amount, goodwill allocated to this CGU must be reduced. Impairment losses for goodwill must not be reversed. If the impairment loss recognized for the CGU exceeds the carrying amount of the allocated goodwill, the additional amount of the impairment loss is recognized through the pro-rata reduction of the carrying amounts of the assets allocated to the CGU. |
Impairments of intangible assets and property, plant and equipment | Impairments of intangible assets and property, plant and equipment —Impairments are identified by comparing the carrying amount with the recoverable amount. If no future cash flows generated independently of other assets can be allocated to individual assets, recoverability is assessed on the basis of the CGU to which the assets can be allocated. At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset or CGU must be determined. In addition, at the end of each period the Group assesses whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill no longer exists or may be decreased. If the impairment loss is reversed, the carrying amount of the asset (or a CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years. |
Assets and disposal groups held for sale | Assets and disposal groups held for sale —The Group classifies assets and disposal groups as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is met only when the assets (or disposal group) are available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and their sale is highly probable to occur within a year. Held for sale assets and disposal groups are measured at the lower of carrying amount or fair value less cost to sell. |
Inventories and spare parts | Inventories and spare parts —Inventories are stated at the lower of cost or net realizable value. Inventory cost is determined using the weighted average cost method. Handsets and accessories held for sale are expensed when sold. The Group regularly assesses its inventories for obsolete and slow-moving stock. |
Value-added tax ("VAT") | Value-added tax ("VAT") —Value-added tax related to sales is payable to the tax authorities on an accrual basis based upon invoices issued to the customer. VAT incurred for purchases may be reclaimed from the state, subject to certain restrictions, against VAT related to sales. |
Income taxes | Income taxes —Income taxes of the Group's Russia-incorporated entities have been computed in accordance with Russian legislation and are based on the taxable profit for the period. The corporate income tax rate in Russia is 20%. The withholding tax rate on dividends paid within Russia is 13%. The foreign subsidiaries of the Group are paying withholding taxes in their respective jurisdictions. Deferred tax assets and liabilities are recognized for temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases of assets and liabilities that will result in future taxable or deductible amounts. The deferred tax assets and liabilities are measured using the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. |
Financial instruments | Financial instruments —A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets include, in particular, cash and cash equivalents, trade and other receivables, investments (mainly deposits with original maturity of more than three months, originated loans and notes, as well as debt securities) and derivative financial assets. Financial liabilities generally substantiate claims for repayment in cash or another financial asset. In particular, this includes bonds, trade and other payables, bank loans, finance lease obligations and derivative financial liabilities. Financial instruments are recognized as soon as the Group becomes a party to the contractual regulations of the financial instrument. Financial assets and financial liabilities are recognized initially at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability, except for a financial asset or liability accounted for at fair value through profit or loss, in which case transaction costs are expensed. Subsequently they are measured either at amortized cost or fair value depending on classification of those assets and liabilities based on their purpose. Financial assets can be classified as 1) financial assets at fair value through profit or loss; 2) held-to-maturity investments; 3) available for sale financial assets; 4) loans and receivables. Financial liabilities can be classified as 1) financial liabilities at fair value or 2) other financial liabilities. |
Cash and cash equivalents | Cash and cash equivalents —Cash and cash equivalents represent cash on hand and in bank accounts, as well as short-term bank deposits, which have original maturities of less than three months. Such investments are measured at amortized cost. |
Trade and other receivables | Trade and other receivables —Trade and other receivables are stated at their nominal value as reduced by appropriate allowance for doubtful accounts. |
Allowance for doubtful accounts | Allowance for doubtful accounts —The Group provides an allowance for doubtful accounts based on management's periodic review with respect to the recoverability of trade receivables, advances given, loans and other receivables. Such allowance reflects specific cases, collection trends or estimates based on evidence of collectability. |
Short-term investments | Short-term investments —Short-term investments mainly represent investments in loans, time deposits, which have original maturities in excess of three months and are repayable in less than twelve months, as well as investment in debt securities. Investment in debt securities are classified as financial assets at fair value through profit or loss, if they held for trading, otherwise they are classified as available for sale with unrealized gains and losses recorded as part of other comprehensive income. Deposits and loans are carried at amortized cost. |
Other investments | Other investments —Other investments consist primarily of long-term deposits, which are repayable in more than a year, loans, notes and equity holdings in private companies. Deposits, loans and notes not quoted in active market are classified as loans and receivables and carried at amortized cost. The notes quoted in active market are classified based on Group's intention and ability to hold these notes to maturity either as held to maturity or available for sale. The Group reviews these investments for indicators of impairment on a regular basis. |
Trade payables and other non-derivative financial liabilities | Trade payables and other non-derivative financial liabilities are measured at amortized cost. |
Hedging activities | Hedging activities —The Group uses derivative instruments, including interest rate and foreign currency swaps, to manage foreign currency and interest rate risk exposures. The Group measures derivatives at fair value and recognizes them as either other current or other non-current financials assets or liabilities in the consolidated statement of financial position. Cash flows from derivatives are classified according to their nature. The Group reviews related fair value hierarchy classifications on a quarterly basis. The fair value measurement of the Group's derivative instruments is based on the observable yield curves for similar instruments. The Group designates derivatives as either fair value hedges or cash flow hedges in case the required criteria are met. Fair value hedges —Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in profit or loss immediately together with any changes in the fair value of the hedged asset or liability that are attributed to the hedged risk. Cash flow hedges —The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges are recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. Gains or losses accumulated in other comprehensive income are immediately reclassified into consolidated statement of profit or loss when related hedged transactions affects earnings. For derivatives that do not meet the conditions for hedge accounting, gains and losses from changes in the fair value are recorded immediately in profit or loss. Assets and liabilities related to multiple derivative contracts with one counterparty are not offset by the Group. |
Fair value of financial instruments | Fair value of financial instruments —Fair value of financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities; • Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities; • Level 3—No observable pricing inputs in the market. Financial assets and financial liabilities are classified in the three-tier hierarchy based on the lowest level of input that is significant to the fair value measurements. The Group's assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. |
Liability under put option agreement | Liability under put option agreement —To optimize the structure of business acquisitions and to defer payment of the purchase price, the Group enters into put and call option agreements to acquire the remaining non-controlling stakes in newly acquired subsidiaries. Upon initial recognition, the commitment to purchase non-controlling interests is recognized as a financial liability for the present value of the redemption amount, which approximates its fair value. Subsequent changes in the value of the commitment are recognized in profit or loss for the reporting period. |
Finance leases | Finance leases —Leases are classified as finance whenever the terms of the lease transfer substantially all risks and rewards incidental to ownership of the leased asset to the Group. At the commencement of the lease term, the leased asset is measured at the lower of fair value or present value of the future minimum lease payments and is depreciated over the lease term. The corresponding liability is recognized in the consolidated statement of financial position within borrowings. The discount rate used in the calculating the present value of minimum lease payments is the interest rate implicit in the lease. If there is no interest rate in the lease, the Group's incremental borrowing rate is used. |
Share-based payment programs | Share-based payment programs —Equity-settled share-based payment transactions are measured at fair value on the grant date. The fair value of the obligation is recognized as personnel costs over the vesting period and offset against capital reserves. For cash-settled share-based payment transactions, the fair value of the obligation is newly determined at each reporting date and at the settlement date, and the changes in the fair value are recognized in profit or loss, until the liability is settled. |
Retirement benefits | Retirement benefits —MGTS, a subsidiary of the Group, has historically offered its employees certain benefits upon and after retirement, which form a defined benefit plan. The cost of providing benefits is determined using projected unit credit method with actuarial valuation being carried out at the end of each reporting period. |
Provisions | Provisions —Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at managements' best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. The main provisions the Group holds are in relation to employees' bonuses and other rewards, decommissioning and restoration obligation, tax provisions as well as legal claims. |
Provision for decommissioning and restoration | Provision for decommissioning and restoration —The Group calculates a provision for decommissioning and restoration when the Group has a legal or constructive obligation in connection with the retirement of tangible long-lived assets. The Group's obligations relate primarily to the cost of removing its equipment from sites. The Group records the present value of provision for decommissioning and restoration as non-current provisions in the consolidated statement of financial position. |
Subscriber prepayments | Subscriber prepayments —The Group requires the majority of its customers to pay in advance for telecommunications services. All amounts received in advance of services provided are recorded as a subscriber prepayment liability and are not recognized as revenues until the related services have been provided to the subscriber. |
Treasury stock | Treasury stock —Shares of common stock repurchased by the Group are recorded at cost as treasury stock and reduce the shareholders' equity in the Group's consolidated financial statements. |
Revenue recognition | Revenue recognition —Revenue includes all revenues from the ordinary business activities of the Group. Revenues are measured at the fair value of the consideration received or receivable and recorded net of value-added tax. The Group recognizes revenue when the amount of revenue and related costs can be measured reliably; when it is probable that future economic benefit will flow to the Group; and when specific criteria have been met, as described below. Revenues derived from wireless, local telephone, long distance, data and video services are recognized when services are provided. This is based upon either usage (minutes of traffic processed, volume of data transmitted) or period of time (monthly subscription fees). Content revenue is presented net of related costs when the Group acts as an agent of the content providers while gross revenue and related costs are recorded when the Group acts as a primary obligor in the arrangement. Upfront fees received for connection of new subscribers, installation and activation of wireless, wireline and data transmission services ("connection fees") are deferred and recognized over the estimated average subscriber life, as follows: Mobile subscribers 7 months - 9 years Residential wireline voice phone subscribers 15 years Other fixed line subscribers 3 - 5 years The Group calculates an average life of mobile subscribers for each region in which it operates and amortizes connection fees based on the average life specific to that region. |
Customer incentives | Customer incentives —Incentives provided to customers are usually offered on signing a new contract or as part of a promotional offering. Incentives, representing the reduction of the selling price of the service (free minutes and discounts) are recorded in the period to which they relate, when the respective revenue is recognized, as a reduction to both trade receivables and service revenue. The Group regularly provides special incentives to its retail customers. Generally the Group sells mobile devices of worldwide known brands with an offer of free telecommunication services for a time period from one to twelve months. Such arrangements with a customer provide for two deliverables—a mobile device delivered immediately and mobile services to be consumed in the future. The consideration received from a customer is allocated between the deliverables based on their standalone value on the market. Revenue on the devices sales is recognized at the moment of their sale, and the revenue on provision of free telecommunication services is deferred and recognized upon consumption by a subscriber. |
Roaming discounts | Roaming discounts —The Group enters into roaming discount agreements with a number of wireless operators. According to the terms of the agreements the Group is obliged to provide and entitled to receive a discount that is generally dependent on the volume of inter operator roaming traffic. The Group uses various estimates and assumptions, based on historical data and adjusted for known changes, to determine the amount of discount to be received or granted. Such estimates are adjusted monthly to reflect newly-available information. The Group accounts for discounts received as a reduction of roaming expenses and rebates granted as reduction of roaming revenue. The Group considers terms of the various roaming discount agreements in order to determine the appropriate presentation of the amounts receivable from and payable to its roaming partners in its consolidated statement of financial position. |
Sales and marketing expenses | Sales and marketing expenses —Sales and marketing expenses consist primarily of dealers' commissions and advertising costs. Dealers' commissions are linked to revenues received during the six-month period from the date a new subscriber is activated by a dealer. The Group expenses these costs as incurred. |
Netting | Netting —The Group offsets its financial assets and financial liabilities only if it has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
Summary of ownership interests in significant subsidiaries | Accounting December 31, December 31, RTC Consolidated % % Vodafone Ukraine Consolidated % % MTS Turkmenistan (Note 29) Consolidated % % Sibintertelecom Consolidated % % NVision Group Consolidated % % Sitronics Telecom Solutions Consolidated % % NVision Czech Republic Consolidated % % Sputnikovoe TV Consolidated % % Stream Consolidated % % Dega Consolidated % % Stream Digital (1) Consolidated % % MTS Energo Consolidated % — Bashkortostan Cellular Communications (BCC) Consolidated % — Praliss Enterprises Limited Consolidated % — Metro-Telecom Consolidated % % MGTS Group Consolidated % % MTS Armenia Consolidated % % Navigation Information Systems Group Consolidated % % Oblachny Retail LLC Consolidated % — MTS International Funding Limited (2) ("MTS International") Consolidated SE SE MTS Belarus Equity % % Sistema Capital Equity % — MTS Bank Equity % % Zifrovoe TV Equity % % OZON Holdings Limited Equity % % (1) A wholly-owned subsidiary, through which the Group currently repurchases its own shares. (2) A company organized and existing as a private limited company under the laws of Ireland. The Group does not have any equity in MTS International. It was established for the purpose of raising capital through the issuance of debt securities on the Irish Stock Exchange followed by transferring the proceeds through a loan facility to the Group. In 2010 and 2013, MTS International issued $750 million 8.625% notes due in 2020 and $500 million 5.0% notes due in 2023, respectively (Note 15). The notes are guaranteed by MTS PJSC in the event of default. MTS International does not perform any other activities except those required for notes servicing. The Group bears all costs incurred by MTS International in connection with the notes' maintenance activities. Accordingly, the Group concluded that it exercises control over the entity. |
Summary of property, plant and equipment expected useful lives | Network and base station equipment: Network infrastructure 5 - 44 years Other 1.5 - 21 years Land and buildings: Buildings 20 - 150 years Leasehold improvements the term of the lease Office equipment, vehicles and other: Office equipment 3 - 21 years Vehicles 2 - 7 years Other 2 - 25 years |
Summary of estimated average subscriber lives | Mobile subscribers 7 months - 9 years Residential wireline voice phone subscribers 15 years Other fixed line subscribers 3 - 5 years |
Schedule of not applied new and revised IFRSs that have been issued but not yet effective | IFRS 9 Financial Instruments (1) Amendments to IFRS 2 Classification and measurement of Share-based Payment Transactions (1) IFRS 15 Revenue from contracts with Customers (1) Amendments to IAS 40 ) Transfers of Investment Property (1) Amendments IFRSs Annual Improvements to IFRSs 2014-2016 Cycle (1) IFRIC 22 Foreign Currency Transactions and advances Consideration (1) IFRS 16 Leases (2) Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (3) Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures (2) IFRIC 23 Uncertainty over Income Tax Treatments (2) Amendments to IFRS 9 Prepayment Features With Negative Compensation (2) Amendments IFRSs Annual Improvements to IFRSs 2015-2017 Cycle (2) (1) Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. (2) Effective for annual periods beginning on or after January 1, 2019, with earlier application permitted. (3) Effective date is not currently determined. |
BUSINESS ACQUISITIONS AND DIS41
BUSINESS ACQUISITIONS AND DISPOSALS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Schedule of details of acquisitions of subsidiaries | Acquired company Consideration Non cash Cash Assets Liabilities NVision NIS ) — Stream ) — * As included in consolidated cash flow statement within cash flows from transactions under common control |
Schedule of details of disposal of subsidiaries | Disposed company Consideration Non cash Cash Asset Liabilities Rent Nedvizhimost — * As included in consolidated cash flow statement within cash flows from transactions under common control |
Schedule of business acquisitions proforma financial data | Pro forma: 2017 (BCC, 2016 2015 Net revenues Net income |
KS and MDTZK | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Schedule of purchase price allocation | MDTZK KS Cash and cash equivalents Current assets Property, plant and equipment Goodwill Other intangible assets Other non-current assets Current liabilities ) ) Liability under put option agreement over non-controlling interests — ) Non-current liabilities ) ) Consideration transferred Contingent consideration and earn-out payments Cash Consideration transferred |
Bashkortostan Cellular Communication OJSC (BCC) | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Schedule of purchase price allocation | BCC Cash and cash equivalents Current assets Licenses Goodwill Other non-current assets Current liabilities ) Non-current liabilities ) Consideration transferred Contingent consideration Cash paid Consideration transferred |
Oblachny Retail LLC | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Schedule of purchase price allocation | Oblachny Cash and cash equivalents Current assets Other intangible assets Goodwill Current liabilities ) Liability under put option agreement over non-controlling interests ) Other non-current liabilities ) Consideration transferred Contingent consideration Additional contribution Cash paid Consideration transferred |
Praliss Enterprises Limited | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Schedule of purchase price allocation | Praliss Other intangible assets Goodwill Non-current liabilities ) Consideration transferred Contingent consideration and earn-out payments Cash Consideration transferred |
Smarts-Yoshkar-Ola | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Schedule of purchase price allocation | Smarts- Cash and cash equivalents Current assets Licenses Other non-current assets Current liabilities ) Non-current liabilities ) Gain on bargain purchase (included in other operating income in the consolidated statement of profit or loss) ) Consideration transferred Contingent consideration Cash paid Consideration transferred |
CASH AND CASH EQUIVALENTS (Tabl
CASH AND CASH EQUIVALENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CASH AND CASH EQUIVALENTS | |
Schedule of cash and cash equivalents | December 31, December 31, Cash and cash equivalents at banks and on hand in: Russian Rubles Turkmenian Manat US Dollars Euro Ukraine Hryvna Other Short-term deposits with an original maturity of less than 92 days: Russian Rubles US Dollars Ukraine Hryvna Other Total cash and cash equivalents |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SHORT-TERM INVESTMENTS | |
Schedule of short-term investments | Category December 31, December 31, Deposits Loans and receivables Assets in Sistema-Capital trust management (Notes 18, 22) Financial asset at fair value through profit or loss Notes Loans and receivables — Loans Loans and receivables Notes Available for sale Total short-term investments |
INVESTMENTS IN ASSOCIATES (Tabl
INVESTMENTS IN ASSOCIATES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments in associates | |
Schedule of investments in associates | Country of Operating activity December 31, December 31, MTS Belarus Belarus telecommunications MTS Bank Russia banking Equity investments in other unquoted companies Russia e-commerce, digital TV, asset management, etc. Total investments in associates |
MTS Belarus | |
Investments in associates | |
Schedule of reconciliation of summarized financial information to the carrying amount of the Group's interest in associate | December 31, December 31, Assets Non-current assets Current assets Liabilities Non-current liabilities ) ) Current liabilities ) ) Total identifiable net assets The Group's share in associate % % The Group's share of identifiable net assets Carrying amount of the Group's interest |
Schedule of the composition of the Group's share of loss/(income) of associate | Year ended December 31, 2017 2016 2015 Revenue ) ) ) Net profit for the year ) ) ) The Group's share of the profit of the associate for the year ) ) ) Other comprehensive loss for the year (currency translation adjustment) Total comprehensive income for the year ) ) ) The Group's share of total comprehensive income of the associate for the year ) ) ) Dividends received |
MTS Bank | |
Investments in associates | |
Schedule of reconciliation of summarized financial information to the carrying amount of the Group's interest in associate | December 31, December 31, Total assets Total liabilities ) ) Non-controlling interests — ) Total identifiable net assets attributable to the Group The Group's share in associate % % The Group's share of identifiable net assets Impairment of investment in associate ) ) Carrying amount of the Group's interest |
Schedule of the composition of the Group's share of loss/(income) of associate | Year ended December 31, 2017 2016 2015 Total interest income ) ) ) Total interest expense Net loss for the year The Group's share of the loss of the associate for the year Other comprehensive loss / (income) for the year ) Total comprehensive loss for the year The Group's share of the total comprehensive loss for the year |
Individually insignificant associates | |
Investments in associates | |
Schedule of the composition of the Group's share of loss/(income) of associate | Year ended December 31, 2017 2016 2015 Net loss/(profit) for the year ) The Group's share of the loss/(profit) of the associate for the year ) Other comprehensive income for the year — — — Total comprehensive loss/(income) for the year ) The Group's share of total comprehensive loss/(income) of the associate for the year ) |
TRADE AND OTHER RECEIVABLES (Ta
TRADE AND OTHER RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
TRADE AND OTHER RECEIVABLES | |
Schedule of trade and other receivables | December 31, December 31, Subscribers Roaming Dealers Interconnect Other trade receivables Other receivables Allowance for doubtful accounts ) ) Trade and other receivables |
Analysis of the age of trade and other accounts receivables past due but not impaired | December 31, December 31, Neither past due nor impaired Past due, but not impaired: Less than 60 days 61-150 days More than 150 days Total |
Schedule of changes in the allowance for doubtful accounts receivable | Year ended Year ended Year ended Balance, beginning of the year ) ) ) Allowance for doubtful accounts ) ) ) Accounts receivable written off Disposal of subsidiary — — Balance, end of the year ) ) ) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
Schedule of inventory and spare parts | December 31, December 31, Handsets and accessories SIM cards and prepaid phone cards Advertising and other materials TV equipment for resale Software and equipment for installation and resale Spare parts for telecommunication equipment Total inventory and spare parts |
Summary of cost of goods | Year ended Year ended Year ended Amount of inventories recognized as an expense Inventory obsolescence provision Reversal of obsolescence provision ) ) ) Total cost of goods |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of net book value of property, plant and equipment | Network and Land and Office Construction Total Cost January 1, 2016 Additions — Put into use ) — Disposal of UMS ) ) ) ) ) Transfer to assets held for sale ) — ) — ) Disposal ) ) ) ) ) Other ) ) Foreign exchange differences ) ) ) ) ) December 31, 2016 Additions Put into use ) — Arising on business combinations — Transfer to assets held for sale ) — ) — ) Disposal ) ) ) ) ) Other ) ) ) Foreign exchange differences ) ) ) ) December 31, 2017 Accumulated amortisation and impairment January 1, 2016 ) ) ) — ) Charge for the year ) ) ) — ) Disposal of UMS — Transfer to assets held for sale — — Disposal — Other ) ) — ) Foreign exchange differences — December 31, 2016 ) ) ) — ) Charge for the year ) ) ) — ) Effect on assets impairment ) ) ) ) ) Transfer to assets held for sale — — Disposal — Other ) — ) Foreign exchange differences ) — December 31, 2017 ) ) ) ) ) Net book value January 1, 2016 December 31, 2016 December 31, 2017 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL | |
Summary of change in the net carrying amount of goodwill | Russia Moscow Ukraine Other Total Balance at January 1, 2016 Gross amount of goodwill Accumulated impairment loss ) — — ) ) Currency translation adjustment — — ) ) ) Balance at December 31, 2016 Gross amount of goodwill Accumulated impairment loss ) — — ) ) Acquisitions (Note 4) — — Reclassification ) — — — Currency translation adjustment — — ) ) ) Balance at December 31, 2017 Gross amount of goodwill Accumulated impairment loss ) — — ) ) |
IMPAIRMENT REVIEW (Tables)
IMPAIRMENT REVIEW (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
IMPAIRMENT REVIEW | |
Schedule of impairment loss by CGU | Turkmenistan NVision Czech Property, plant and equipment Other intangible assets Total |
Schedule of OIBDA margin utilized for value in use calculation of related CGUs | CGU December 31, December 31, Russia convergent 38.0% - 39.1% 34.6% - 37.0% Armenia 40.2% - 41.2% 42.0% - 45.0% Moscow fixed line 41.0% - 48.5% 42.2% - 51.0% Ukraine 31.4% - 40.6% 40.6% - 46.5% NVision Czech Republic 4.2% 5.5% - 6.8% |
Schedule of capital expenditure as a percentage of revenue utilized for value in use calculation of related CGUs | CGU December 31, December 31, Russia convergent % % Armenia % % Moscow fixed line % % Ukraine % % NVision Czech Republic % % |
Schedule of pre-tax rates for discounting cash flows in functional currencies of related CGUs | CGU December 31, December 31, Russia convergent % % Armenia nil nil Moscow fixed line % % Ukraine % % NVision Czech Republic % % |
Schedule of terminal growth rate utilized for value in use calculation of related CGUs | CGU December 31, December 31, Russia convergent % % Armenia % % Moscow fixed line % % Ukraine % % NVision Czech Republic % % |
NVision Czech Republic | |
IMPAIRMENT REVIEW | |
Schedule of assumptions used in the impairment review of the CGU | Increase Decrease Pre-tax discount rate ) OIBDA margin ) Average capital expenditure as a percentage of revenue ) |
OTHER INTANGIBLE ASSETS (Tables
OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OTHER INTANGIBLE ASSETS | |
Schedule of net book value of other intangible assets | Licenses Right to Billing and Client base Numbering Other Total Useful life, years 1 to 20 1 to 15 1 to 25 4 to 31 2 to 15 1 to 10 Cost January 1, 2016 Additions — Arising on business combinations (Note 4) — — — — — Disposal of UMS — — ) — — ) ) Disposal ) ) ) ) ) ) ) Other ) ) — ) ) ) Foreign exchange differences ) — ) — ) ) ) December 31, 2016 Additions — Arising on business combinations (Note 4) — — — Disposal ) ) ) ) ) ) ) Other ) ) — — Foreign exchange differences ) — ) — ) ) ) December 31, 2017 Accumulated amortisation and impairment January 1, 2016 ) ) ) ) ) ) ) Charge for the year ) ) ) ) ) ) ) Disposal of UMS — — — — Disposal Other ) — ) ) Foreign exchange differences — — December 31, 2016 ) ) ) ) ) ) ) Charge for the year ) ) ) ) ) ) ) Effect on assets impairment — — ) — — — ) Disposal Other — ) — ) ) ) Foreign exchange differences — — December 31, 2017 ) ) ) ) ) ) ) Net book value January 1, 2016 December 31, 2016 December 31, 2017 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BORROWINGS | |
Schedule of the Group's borrowings | December 31, December 31, Notes Bank and other loans Finance lease obligations Total borrowings Less: current portion ) ) Total borrowings, non-current |
Schedule of the Group's notes | Currency Interest rate December 31, December 31, MTS International Notes due 2023 (Note 2) USD MTS International Notes due 2020 (Note 2) USD MTS PJSC Notes due 2022 RUB — MTS PJSC Notes due 2023 RUB MTS PJSC Notes due 2031 RUB MTS PJSC Notes due 2022 RUB — MTS PJSC Notes due 2021 RUB — MTS PJSC Notes due 2018 RUB — MTS PJSC Notes due 2020 RUB MTS PJSC Notes due 2017 RUB — Other Notes due 2018-2022 RUB 0.25% - 10% Total notes Less: current portion ) ) Total notes, non-current |
Schedule of dates of the announcement of the sequential coupon for note issuances | MTS PJSC Notes due 2023 March 2018 MTS PJSC Notes due 2031 August 2018 MTS PJSC Notes due 2020 November 2018 |
Summary of outstanding note repurchase transactions | No of Due Unrealized Total MTS PJSC Notes due 2018 — |
Schedule of the Group's loans from banks and financial institutions | Maturity Interest rate (actual at December 31, December 31, USD-denominated: Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG 2018 - 2020 LIBOR + 1.15% (2.994%) Citibank 2018 - 2024 LIBOR + 0.9% (2.744%) Skandinavska Enskilda Banken AB 2017 LIBOR + 0.23% – 1.8% (2.069% – 3.644%) — EUR-denominated: Credit Agricole Corporate Bank and BNP Paribas 2017 EURIBOR + 1.65% (1.38%) — LBBW 2017 EURIBOR +1.52% (1.25%) — — RUB-denominated: Sberbank 2018 - 2021 8.45% – 9.85% VTB 2021 7.99% — Gasprombank 2018 9.6% – 10.9% — Notes in REPO 2018 Various — Citibank 2018 9.9% – 9.95% — Other 2018 - 2025 Various Other currencies: Various financial institutions 2018 - 2020 Various Total bank and other loans Less: current portion ) ) Total bank and other loans, non-current |
Schedule of total available unused credit facilities | Currency Maturity Interest rate Available till Available Sberbank RUB To be agreed April 2021 VTB RUB 7.99% January 2021 Absolut Bank RUB CBR 1 auction rate + 1.25% – 1.8% December 2019 SPB Bank RUB To be agreed March 2020 Total (1) CBR—Central Bank of Russia |
Schedule of aggregated scheduled maturities of principal on notes and bank loans | As of December 31, 2017 Notes Bank loans Payments due in the year ending December 31, 2018 2019 — 2020 2021 2022 Thereafter Total Less: unamortized debt issuance costs ) ) Total debt |
Schedule of net book value of leased property, plant and equipment | December 31, December 31, Network and base station equipment Office equipment, vehicles and other Leased assets, net |
Schedule of capital leases future minimum lease payments and present value of the net minimum lease payments | December 31, December 31, Minimum lease payments, including: Current portion (less than 1 year) More than 1 to 5 years Over 5 years Total minimum lease payments Less amount representing interest ) ) Present value of net minimum lease payments, including: Current portion (less than 1 year) More than 1 to 5 years Over 5 years Total present value of net minimum lease payments Less current portion of lease obligations ) ) Non-current portion of lease obligations |
RECONCILIATION OF LIABILITIES52
RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES | |
Schedule of Reconciliation of liabilities arising from financial activities | December 31, Financing Operating Acquisitions Foreign Currency Change in Other (2) December 31, Notes (Note 15) — — ) — — Bank and other loans (Note 15) (1) — (1) ) — Finance lease obligation (Note 15) ) ) — ) — — Credit guarantee agreement related to foreign-currency hedge (Note 19) ) — — ) — — — Contingent Consideration (Note 18) — — — — — Payables related to repurchase of common stock (Note 23) — ) — — — — — — Dividends payable (Note 23) ) — — — — — Payable related to purchase of noncontrolling interests — ) — — — — — — Liability under put option agreement (Note 28) — — — ) ) — Total liabilities arising from financial activities ) ) ) ) ) (1) Including cash flows from cross-currency swaps (2) Including accrual of liabilities related to dividends declared, repurchase of common stock, additions under finance lease agreements, depreciation of debt issuance cost and others changes that are not material. |
PROVISIONS (Tables)
PROVISIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROVISIONS | |
Schedule of the movement in provisions | Tax Provision for Employee Other Total At 1 January 2015 ) ) ) ) ) Arising during the year ) ) ) ) ) Utilised — Discount rate adjustment and imputed interest (change in estimates) — — Unused amounts reversed Arising due to subsidiary purchase ) — ) ) ) Translation adjustments and other ) ) — ) At 31 December 2015 ) ) ) ) ) Current 2015 ) — ) ) ) Non-current 2015 — ) ) — ) At 1 January 2016 ) ) ) ) ) Arising during the year ) ) ) ) ) Utilised Discount rate adjustment and imputed interest (change in estimates) — ) ) — ) Unused amounts reversed Disposal of a subsidiary — — Translation adjustments and other — At 31 December 2016 ) ) ) ) ) Current 2016 ) — ) ) ) Non-current 2016 — ) ) — ) At 1 January 2017 ) ) ) ) ) Arising during the year ) ) ) ) ) Utilised Discount rate adjustment and imputed interest (change in estimates) — ) — ) Unused amounts reversed Translation adjustments and other ) At 31 December 2017 ) ) ) ) ) Current 2017 ) — ) ) ) Non-current 2017 — ) ) — ) |
FAIR VALUE OF FINANCIAL ASSET54
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | |
Schedule of financial assets | December 31, December 31, Trade and other receivables (Note 9) Accounts receivable, related parties (Note 22) Cash and Cash equivalents (Note 5) Other financial assets: Financial assets at fair value through profit or loss: Assets in Sistema-Capital trust management Total financial assets at fair value through profit or loss Financial assets at fair value through OCI: Notes Cross-currency swap designated as cash flow hedge Total financial assets at fair value through OCI Loans and receivables: Bank deposits Loans and receivables Notes Other Total loans and receivables Total other financial assets Total financial assets Total current financial assets ) ) Total non-current financial assets |
Schedule of financial liabilities | December 31, December 31, Trade and other payables Accounts payable, related parties (Note 22) Financial liabilities at amortised cost: Loans and borrowings: Notes Bank and other loans Finance lease obligations Total loans and borrowings Guarantee payment received Total financial liabilities at amortized cost Other financial liabilities at fair value: Financial liabilities at fair value through profit or loss: Deliverable currency forward not designated as hedge — Liabilities under option agreements (Note 28) Interest rate swaps designated as cash flow hedges — Total financial liabilities at fair value through profit or loss Financial liabilities at fair value through OCI: Interest rate swaps designated as cash flow hedges — Cross-currency swap designated as cash flow hedge — Total financial liabilities at fair value through OCI Total other financial liabilities at fair value Total financial liabilities Total current financial liabilities ) ) Total non-current financial liabilities |
Schedule of fair value of financial instruments | Level of inputs December 31, December 31, Assets Sistema International Funding S.A. Bonds due in 2019 (related party) (Note 6, 22) Level 1 Derivative instruments Level 2 Cross-currency interest rate swap Assets in Sistema-Capital trust management (related party) (Note 6, 22) Level 2 Liabilities Derivative instruments Level 2 ) ) Interest rate swap ) ) Cross-currency interest rate swap ) — Deliverable currency forward — ) Liabilities under option agreements Level 3 ) ) Contingent consideration Level 3 ) ) |
Schedule of significant quantitative inputs used to measure the fair value of the liability under put option agreement | Unobservable inputs December 31, December 31, Post-tax discount rate Revenue growth rate 0.0 - (0.5)% (av. –0.2%) (0.9) - (2.9)% (av. –1.8%) OIBDA margin 40.2 - 41.2% (av. 40.7%) 42.0 - 45.0% (av. 43.5%) Unobservable inputs December 31, Discount rate % Revenue, average amount per year EBITDA margin, average rate % Net debt, average amount per year ) |
Schedule of borrowings, gross of debt issuance costs, where carrying value does not approximate fair value | December 31, 2017 December 31, 2016 Level of Fair value Carrying Fair value Carrying Notes (Note 15) Level 1 ) ) ) ) Bank and other loans (Note 15) Level 3 ) ) ) ) ) ) ) ) |
FINANCIAL RISK MANAGEMENT (Tabl
FINANCIAL RISK MANAGEMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FINANCIAL RISK MANAGEMENT | |
Schedule of effect of the Group's swap agreements designated as cash flow hedges in accumulated other comprehensive income | 2017 2016 2015 Accumulated derivatives (loss) / income, beginning of the year, net of tax of (26) and 261 and 1,067, respectively ) Fair value adjustments on hedging derivatives, net of tax of (628) and (2,279) and 738, respectively ) ) Amounts reclassified to loss / (profit) for the year during the period, net of tax of 739 and 1,992 and (1,544), respectively ) Accumulated derivatives income / (loss), end of the year, net of tax of 85 and (26) and 261, respectively ) |
Schedule of sensitivity to a reasonably possible change in USD and EUR exchange rates | Change USD—effect on EUR—effect on 2017 +5 % ) –5 % ) 2016 +20 % ) –20 % ) 2015 +20 % ) –20 % ) |
Schedule of exposure to credit risk | December 31, December 31, Trade and other receivables Bank deposits Loan and notes Assets in Sistema-Capital trust management Derivative financial instruments |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAX | |
Schedule of significant components of income tax expense | Year ended December 31, 2017 2016 2015 Current income tax charge Adjustments recognised for current tax of prior periods Total current income tax Deferred tax ) ) Income tax expense on continuing operations |
Reconciliation of the effective income tax rate to the statutory income tax rate | Year ended 2017 2016 2015 Statutory income tax rate for the year % % % Adjustments: Expenses not deductible for tax purposes Prior periods tax effects Different tax rate of foreign subsidiaries — ) ) Earnings distribution from subsidiaries ) Change in fair value of derivative financial instruments ) Derecognition of deferred tax assets — — Other — Effective income tax rate % % % |
Schedule of deferred income tax assets and liabilities | December 31, December 31, Deferred tax assets Deferred tax liabilities ) ) Net deferred tax liabilities ) ) |
Schedule of movements in deferred tax assets and liabilities | January 1, Recognised in Recognised in Effect of December 31, Assets / (liabilities) arising from tax effect of: Depreciation of property, plant and equipment ) ) ) ) ) Other intangible assets ) ) ) Potential distributions from / to Group's subsidiaries / associates ) — ) Licenses ) ) — ) Customer base ) — — ) Accrued expenses for services ) ) ) Lease obligations ) — — Loss carryforward ) ) Provision for investment in Delta Bank in Ukraine — ) — Deferred connection fees ) ) ) Hedge and other ) ) Net deferred tax liability ) ) ) ) December 31, Recognised in Recognised in Effect of Effect of December 31, Assets / (liabilities) arising from tax effect of: Depreciation of property, plant and equipment ) ) — ) ) Other intangible assets ) ) ) ) ) ) Potential distributions from / to Group's subsidiaries / associates ) ) — — ) Licenses ) — — ) Customer base ) — — — ) Accrued expenses for services ) — ) Lease obligations — — — Loss carryforward — — — Provision for investment in Delta Bank in Ukraine — ) — — Deferred connection fees ) — — Hedge and other ) — ) Net deferred tax liability ) ) ) ) ) |
Schedule of amounts accrued for uncertain income tax positions | December 31, December 31, Uncertain income tax positions |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
Schedule of computation of earnings per share | Year ended, Year ended, Year ended, Numerator: Profit for the year from continuing operations attributable to the owners of the company Loss for the year from discontinued operations attributable to the owners of the company — ) ) Denominator, in thousands: Weighted-average ordinary shares outstanding Employee stock options Weighted-average diluted shares outstanding Earnings per share—basic, RUB Basic EPS from continuing operations Basic EPS from discontinued operations — ) ) Earnings per share—diluted, RUB Diluted EPS from continuing operations Diluted EPS from discontinued operations — ) ) |
RELATED PARTIES (Tables)
RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTIES | |
Schedule of accounts receivable from and accounts payable to related parties | December 31, December 31, Accounts receivable MTS Belarus, the Group's associate Business Nedvizhimost, a subsidiary of Sistema MTS Bank, the Group's associate Zifrovoe TV, the Group's associate Sitronics, a subsidiary of Sistema — Sitronics KASU, a former subsidiary of Sistema — Other related parties Total accounts receivable, related parties Less non-current portion ) ) Accounts receivable, related parties—current Accounts payable MTS Belarus, the Group's associate MTS Bank, the Group's associate Business Nedvizhimost, a subsidiary of Sistema Sitronics, a subsidiary of Sistema — Sitronics KASU, a former subsidiary of Sistema — Maxima, a subsidiary of Sistema — Other related parties Total accounts payable, related parties |
Schedule of advances provided to and certain investments held in related parties | The Group provides advances to related parties which are summarized as follows: December 31, December 31, Advances for property, plant and equipment: Kapstroi Telecom, a former subsidiary of Sistema — Other related parties Total advances for property, plant and equipment The Group holds certain investments in related parties which are summarized as follows: December 31, December 31, Short-term investments Sistema-Capital, a subsidiary of Sistema (assets management) Promissory notes of Intellect Telecom, a subsidiary of Sistema Loan receivable from Intellect Telecom, a subsidiary of Sistema Deposits at MTS Bank, the Group's associate Sistema International Funding S.A. Bonds due in 2019, a subsidiary of Sistema Promissory notes of Sistema — Other loans receivable — Total short-term investments in related parties Other investments Promissory notes of Sistema — Loan receivable from MTS Bank, the Group's associate — Other — Total other investments to related parties Other investments in shares Sistema Venture Capital, a subsidiary of Sistema Other investments Total investments in shares of related parties |
Schedule of operating transactions with related parties | Year ended Year ended Year ended Revenues from related parties MTS Bank, the Group's associate (telecommunication and call center services, bank cards distribution commission) Zifrovoe TV, the Group's associate (subscriber acquisition services) Sitronics, subsidiary of Sistema (construction of a fiber optic lines) — — MTS Belarus, the Group's associate (roaming and interconnect services) Detsky Mir, subsidiary of Sistema (telecommunication services) Medsi Group, subsidiary of Sistema (telecommunication and call center services) Sistema, parent company (consulting services) Segezha Group, a subsidiary of Sistema (software supply) — Sitronics KASU, a former subsidiary of Sistema (construction of fiber optic lines, project management, software support) NVision Group, a former subsidiary of Sistema (fixed line services) — — Stream, a former Group's associate (SMS notifications) — — Other related parties Total revenues from related parties Operating expenses incurred on transactions with related parties MTS Bank, the Group's associate (commission related expenses) Business Nedvizhimost, a subsidiary of Sistema (rent and sale of property) AB Safety, a subsidiary of Sistema (security services) Jet Air Group, subsidiary of Sistema (transportation services) Maxima, a subsidiary of Sistema (advertising) MTS Belarus, the Group's associate (roaming and interconnect services) Elavius, a subsidiary of Sistema (transportation services) Inturavtoservis, subsidiary of Sistema (transport services) Rent-Nedvizhimost, a former subsidiary of Sistema (rent), merged with Business Nedvizhimost in 2016 — Stream, a former Group's associate (content services) — — NVision Group, a former subsidiary of Sistema (IT consulting) — — Other related parties Total operating expenses incurred on transactions with related parties |
Schedule of finance income from related parties | Year ended Year ended Year ended Finance income from related parties Sistema-Capital, a subsidiary of Sistema (assets management) — Business Nedvizhimost, a subsidiary of Sistema MTS Bank, the Group's associate Zifrovoe TV, the Group's associate — Sistema, parent company Other related parties Total finance income from related parties |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SHAREHOLDERS' EQUITY | |
Schedule of roll forward of reserves balances | Foreign Cash flow Remeasurements Balances at January 1, 2015 Other comprehensive income for the year Less: tax expense — ) — Amounts reclassified to profit for the year — ) — Less: tax benefit — — Net other comprehensive income / (loss) for the year ) Balances at December 31, 2015 Other comprehensive (loss) / income for the year ) ) Less: tax benefit — — Amounts reclassified to profit for the year ) — Less: tax expense — ) — Net other comprehensive (loss) / income for the year ) ) Balances at December 31, 2016 ) ) Other comprehensive loss for the year ) ) ) Less: tax benefit — — Amounts reclassified to profit for the year — Less: tax expense ) — Amounts reclassified to Additional paid in capital ) Less: tax expense — Net other comprehensive (loss) / income for the year ) ) Balances at December 31, 2017 ) |
Schedule of declared cash dividends | Year ended Year ended Year ended Dividends declared (including dividends on treasury shares of 1,337, 1,950 and 1,922 respectively) Dividends, RUB per ADS Dividends, RUB per share |
MGTS Group | |
SHAREHOLDERS' EQUITY | |
Schedule of financial information for non controlling interest | Year ended December 31, 2017 2016 2015 Non-controlling interest opening balance ) ) ) Profit for the year attributable to non-controlling interest ) ) ) Dividends to non-controlling interest Other ) ) Non-controlling interest closing balance ) ) ) |
Schedule of financial information for non controlling interest in balance sheet | December 31 2017 2016 Current assets Non-current assets Current liabilities ) ) Non- current liabilities ) ) |
Schedule of financial information for non controlling interest in profit and loss | Year ended December 31, 2017 2016 2015 Revenue, gross of intercompany ) ) ) Profit for the year, gross of intercompany ) ) ) |
SELLING, GENERAL AND ADMINIST60
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |
Schedule of selling, general and administrative expenses | Year ended Year ended Year ended Salaries and social contributions Utilities and maintenance Advertising and marketing expenses General and administrative expenses Dealers commission Taxes other than income tax Cash collection commission Universal service fund Consulting expenses Billing and data processing Other Total |
FINANCE INCOME AND COSTS (Table
FINANCE INCOME AND COSTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FINANCE INCOME AND COSTS | |
Schedule of finance income and costs | Year ended Year ended Year ended Interest expense: —Loans and notes —Amortization of debt issuance costs —Finance lease obligations —Provisions: unwinding of discount Total interest expense Loss on financial instruments Other finance costs (2) Total finance costs Less: amounts capitalized on qualifying assets (1) ) ) ) Finance costs Finance income on loans and receivables —Interest income on bank deposits —Interest income on loans —Other finance income Finance income Net finance costs (1) The annual weighted average capitalization rates of 8.2%, 8.3% and 8.3% were used to determine the amount of capitalized interest for the years ended December 31, 2017, 2016 and 2015, respectively. (2) Including repurchase of MTS International Notes |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT INFORMATION | |
Schedule of financial information by reportable segments | Year ended December 31, 2017: Russia Moscow Ukraine Total Other HQ and Consolidated Revenue External customers Intersegment ) — Total revenue ) Operating profit ) ) Depreciation and amortization ) Other disclosure: Capital expenditures — Year ended December 31, 2016: Russia Moscow Ukraine Total Other HQ and Consolidated Revenue External customers Intersegment ) — Total revenue ) Operating profit ) Depreciation and amortization ) Other disclosure: Capital expenditures — Year ended December 31, 2015: Russia Moscow Ukraine Total Other HQ and Consolidated Revenue External customers Intersegment ) — Total revenue ) Operating profit ) Depreciation and amortization ) Other disclosure: Capital expenditures — |
Schedule of financial information by geographic areas | For the year ended December 31, Revenue 2017 2016 2015 Russia Other Total revenue Non-current assets (1) As of As of Russia Other Total non-current assets: (1) Comprises property, plant and equipment, goodwill and other intangible assets. |
OPERATIONS IN UZBEKISTAN(Tables
OPERATIONS IN UZBEKISTAN(Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OPERATIONS IN UZBEKISTAN | |
Schedule of discontinued operations accompanying in the consolidated statements of profit and loss and cash flows | Results of discontinued operation For the 2016 2015 Revenue Expenses ) ) Loss before tax ) ) Income tax gain (note 19) Loss for the period ) ) Loss on sale of discontinued operations ) — Loss from discontinued operations ) ) Loss attributable to non-controlling interests ) ) Loss to owners of the Company ) ) Basic loss per share ) ) Diluted loss per share ) ) Cash flows from (used in) discontinued operation For the 2016 2015 Net cash used in operating activities ) ) Net cash used in investing activities ) ) Net cash provided by financing activities |
Schedule of carrying amounts of UMS net assets and reconciliation of the loss on disposal | Property, plant and equipment ) Other intangible assets ) Other non-current assets ) Cash and cash equivalents ) Other current assets ) Non-current liabilities Current liabilities Non-controlling interest Accumulated other comprehensive income Consideration received — Loss on disposal of UMS ) |
OPERATIONS IN TURKMENISTAN (Tab
OPERATIONS IN TURKMENISTAN (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OPERATIONS IN TURKMENISTAN | |
Schedule of total effect of impairment charges on the Group's statement of profit or loss | Impairment long-lived assets Current provision for income tax Provision for doubtful accounts Other operating expenses Taxes other than income tax Deferred income tax ) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum lease payments under non-cancellable agreements | Payments due in 2018 2019 2020 2021 2022 Thereafter Total |
Schedule of contingent liabilities in respect of additional tax settlements | December 31, December 31, Contingent liabilities for additional taxes other than income tax Contingent liabilities for additional income taxes |
SUMMARY OF SIGNIFICANT ACCOUN66
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS - Investments In Significant Entities (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||
Feb. 28, 2018 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Nov. 30, 2016 | Oct. 31, 2016 | Feb. 29, 2016 | Jan. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2013 | Dec. 31, 2010 | |
MTS Belarus | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Proportion of ownership interest | 49.00% | 49.00% | ||||||||||
Sistema-Capital | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Proportion of ownership interest | 30.00% | 30.00% | ||||||||||
MTS Bank | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Proportion of ownership interest | 26.60% | 26.80% | 26.80% | 27.00% | 26.60% | 26.60% | ||||||
Zifrovoe TV | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Proportion of ownership interest | 20.00% | 20.00% | ||||||||||
OZON Holdings Limited | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Proportion of ownership interest | 11.20% | 11.19% | 10.96% | 10.80% | 11.20% | 10.80% | ||||||
RTC | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Vodafone Ukraine | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
MTS Turkmenistan | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Sibintertelecom | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
NVision | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Sitronics Telecom Solutions | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
NVision Czech Republic | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Sputnikovoe TV | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Stream | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Dega | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
Stream Digital | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | 100.00% | ||||||||||
MTS Energo | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | |||||||||||
Bashkortostan Cellular Communication OJSC (BCC) | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | |||||||||||
Praliss Enterprises Limited | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 100.00% | |||||||||||
Metro-Telecom | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 95.00% | 95.00% | ||||||||||
MGTS Group | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 94.70% | 94.70% | ||||||||||
MTS Amenia | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 80.00% | 80.00% | ||||||||||
Navigation Information Systems Group (NIS) | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 77.70% | 77.70% | ||||||||||
Oblachny Retail LLC | ||||||||||||
Disclosure of investments in significant entities | ||||||||||||
Ownership interest in subsidiary (as a percentage) | 50.80% | |||||||||||
MTS International Funding Limited ("MTS International") | Notes issued in 2010 | ||||||||||||
Borrowings | ||||||||||||
Notional amount | $ 750 | |||||||||||
MTS International Funding Limited ("MTS International") | Notes issued in 2013 | ||||||||||||
Borrowings | ||||||||||||
Notional amount | $ 500 | |||||||||||
USD | MTS International Funding Limited ("MTS International") | Notes issued in 2010 | ||||||||||||
Borrowings | ||||||||||||
Interest rate | 8.625% | |||||||||||
USD | MTS International Funding Limited ("MTS International") | Notes issued in 2013 | ||||||||||||
Borrowings | ||||||||||||
Interest rate | 5.00% |
SUMMARY OF SIGNIFICANT ACCOUN67
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS - Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Network infrastructure | Minimum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 5 years |
Network infrastructure | Maximum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 44 years |
Other | Minimum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 1 year 6 months |
Other | Maximum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 21 years |
Buildings | Minimum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 20 years |
Buildings | Maximum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 150 years |
Office equipment | Minimum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 3 years |
Office equipment | Maximum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 21 years |
Vehicles | Minimum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 2 years |
Vehicles | Maximum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 7 years |
Other | Minimum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 2 years |
Other | Maximum | |
Summary of property, plant and equipment expected useful lives | |
Expected useful life | 25 years |
SUMMARY OF SIGNIFICANT ACCOUN68
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS - Income Taxes (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Applicable tax rates | |||
Corporate income tax rate | 20.00% | 20.00% | 20.00% |
Withholding tax rate on dividends paid | 13.00% | 13.00% | 13.00% |
SUMMARY OF SIGNIFICANT ACCOUN69
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS - Revenue Recognition (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Revenue Recognition | |
Residential wireline voice phone subscribers | 15 years |
Minimum | |
Revenue Recognition | |
Mobile subscribers | 7 months |
Other fixed line subscribers | 3 years |
Maximum | |
Revenue Recognition | |
Mobile subscribers | 9 years |
Other fixed line subscribers | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN70
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Details) - RUB (₽) ₽ in Millions | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Standards, interpretations and amendments in issue but not yet effective | |||
Lease liability | ₽ 11,857 | ₽ 11,046 | |
Non-current assets | ₽ 405,038 | ₽ 453,476 | |
Forecast | IFRS 9 | |||
Standards, interpretations and amendments in issue but not yet effective | |||
Gain in relation of the modified liabilities | ₽ 3,000 | ||
Forecast | IFRS 15 | |||
Standards, interpretations and amendments in issue but not yet effective | |||
Additional asset stemming from the capitalization of contract costs | 5,900 | ||
Forecast | Minimum | IFRS 16 | |||
Standards, interpretations and amendments in issue but not yet effective | |||
Lease liability | 134,000 | ||
Non-current assets | ₽ 134,000 |
BUSINESS ACQUISITIONS AND DIS71
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisition of Kulturnaya Sluzhba and MDTZK (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | 3 Months Ended | ||||
Feb. 28, 2018 | Jan. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Purchase price allocation | ||||||
Goodwill | ₽ 34,281 | ₽ 33,685 | ₽ 34,468 | |||
Business combination | Kulturnaya Sluzhba LLC | ||||||
BUSINESS ACQUISITIONS AND DISPOSALS | ||||||
Ownership interest acquired | 78.20% | 78.20% | ||||
Contingent consideration payable due (in months) | 12 months | |||||
Purchase price allocation | ||||||
Cash and cash equivalents | ₽ 39 | |||||
Current assets | 153 | |||||
Property, plant and equipment | 25 | |||||
Goodwill | 669 | |||||
Other intangible assets | 75 | |||||
Other non-current assets | 20 | |||||
Current liabilities | (474) | |||||
Liability under put option agreement over non-controlling interests | (96) | |||||
Non-current liabilities | (12) | |||||
Contingent consideration and earn-out payments | 132 | |||||
Cash paid | 267 | |||||
Consideration transferred | ₽ 399 | |||||
Assumed discount rate | 10.2 | |||||
Average revenue | ₽ 199 | |||||
Net debt | 83 | |||||
Fair value of acquired receivables | 274 | |||||
Gross contractual amounts receivable for acquired receivables | 290 | |||||
Best estimate at acquisition date of contractual cash flows not expected to be collected for acquired receivables | ₽ 16 | |||||
Business combination | MDTZK LLC | ||||||
BUSINESS ACQUISITIONS AND DISPOSALS | ||||||
Ownership interest acquired | 100.00% | 100.00% | ||||
Contingent consideration payable due (in months) | 12 months | |||||
Purchase price allocation | ||||||
Cash and cash equivalents | ₽ 325 | |||||
Current assets | 159 | |||||
Property, plant and equipment | 128 | |||||
Goodwill | 3,280 | |||||
Other intangible assets | 56 | |||||
Other non-current assets | 19 | |||||
Current liabilities | (639) | |||||
Non-current liabilities | (78) | |||||
Contingent consideration and earn-out payments | 60 | |||||
Cash paid | 3,190 | |||||
Consideration transferred | ₽ 3,250 |
BUSINESS ACQUISITIONS AND DIS72
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisition of Bashkortostan Cellular Communication (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Purchase price allocation | ||||
Goodwill | ₽ 34,281 | ₽ 33,685 | ₽ 34,468 | |
Bashkortostan Cellular Communication OJSC (BCC) | ||||
BUSINESS ACQUISITIONS AND DISPOSALS | ||||
Ownership interest acquired | 100.00% | |||
Contingent consideration payable due (in months) | 12 months | |||
Purchase price allocation | ||||
Cash and cash equivalents | ₽ 13 | |||
Current assets | 5 | |||
Licenses | 260 | |||
Goodwill | 62 | |||
Other non-current assets | 21 | |||
Current liabilities | (15) | |||
Non-current liabilities | (54) | |||
Contingent consideration | 72 | |||
Cash paid | 220 | |||
Consideration transferred | ₽ 292 | |||
Average remaining useful life of licenses | 15 years | |||
Russia convergent | Bashkortostan Cellular Communication OJSC (BCC) | ||||
Purchase price allocation | ||||
Goodwill | ₽ 62 |
BUSINESS ACQUISITIONS AND DIS73
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisition of Oblachny Retail (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Purchase price allocation | ||||
Goodwill | ₽ 34,281 | ₽ 33,685 | ₽ 34,468 | |
Oblachny Retail LLC | ||||
BUSINESS ACQUISITIONS AND DISPOSALS | ||||
Ownership interest acquired | 50.82% | |||
Contingent consideration payable due (in months) | 12 months | |||
Purchase price allocation | ||||
Cash and cash equivalents | ₽ 420 | |||
Current assets | 23 | |||
Other intangible assets | 181 | |||
Goodwill | 524 | |||
Current liabilities | (123) | |||
Liability under put option agreement over non-controlling interests | (402) | |||
Other non-current liabilities | (33) | |||
Contingent consideration | 10 | |||
Additional contribution | 420 | |||
Cash paid | 160 | |||
Consideration transferred | ₽ 590 | |||
Average remaining useful life of software | 5 years | |||
Litebox segment | Oblachny Retail LLC | ||||
Purchase price allocation | ||||
Goodwill | ₽ 524 | |||
Call and put option agreement | Oblachny Retail LLC | ||||
BUSINESS ACQUISITIONS AND DISPOSALS | ||||
Remaining stake to be acquired | 49.18% |
BUSINESS ACQUISITIONS AND DIS74
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisition of Praliss Enterprises (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Purchase price allocation | |||
Goodwill | ₽ 34,281 | ₽ 33,685 | ₽ 34,468 |
Praliss Enterprises Limited | |||
BUSINESS ACQUISITIONS AND DISPOSALS | |||
Ownership interest acquired | 100.00% | ||
Contingent consideration payable due (in months) | 12 months | ||
Earn-out payment period | 2 years | ||
Purchase price allocation | |||
Other intangible assets | ₽ 132 | ||
Goodwill | 208 | ||
Non-current liabilities | (27) | ||
Contingent consideration and earn-out payments | 93 | ||
Cash paid | 220 | ||
Consideration transferred | 313 | ||
eSports | Praliss Enterprises Limited | |||
Purchase price allocation | |||
Goodwill | 208 | ||
Goodwill expected to be deductible for tax purposes | ₽ 0 |
BUSINESS ACQUISITIONS AND DIS75
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisition of Smarts-Yoshkar-Ola (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2017 | |
Smarts-Yoshkar-Ola | ||
BUSINESS ACQUISITIONS AND DISPOSALS | ||
Ownership interest acquired | 100.00% | |
Purchase price allocation for business acquired | ||
Cash and cash equivalents | ₽ 5 | |
Current assets | 5 | |
Licenses | 323 | |
Other non-current assets | 14 | |
Current liabilities | (30) | |
Non-current liabilities | (69) | |
Gain on bargain purchase (included in other operating income in the consolidated statement of profit or loss) | (235) | |
Contingent consideration | 3 | |
Cash paid | 10 | |
Consideration transferred | ₽ 13 | |
Universal Mobile Systems LLC | ||
Purchase price allocation for business acquired | ||
Percentage of voting rights disposed | 50.01% |
BUSINESS ACQUISITIONS AND DIS76
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisitions and disposals in 2015 (Details) - RUB (₽) ₽ in Millions | Nov. 30, 2015 | Dec. 31, 2015 | May 31, 2015 | Feb. 28, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jul. 31, 2015 | Jan. 31, 2015 |
Universal Mobile Systems LLC | |||||||||
BUSINESS ACQUISITIONS AND DISPOSALS | |||||||||
Percentage of voting rights disposed | 50.01% | ||||||||
Rent-Nedvizhimost | |||||||||
BUSINESS ACQUISITIONS AND DISPOSALS | |||||||||
Consideration received for disposal of company | ₽ 4,200 | ₽ 4,300 | |||||||
Percentage of voting rights disposed | 49.00% | 51.00% | |||||||
Stream | |||||||||
BUSINESS ACQUISITIONS AND DISPOSALS | |||||||||
Ownership interest in subsidiary (as a percentage) | 45.00% | 100.00% | |||||||
Ownership interest acquired | 55.00% | 55.00% | |||||||
Amount of debt acquired for consideration | ₽ 561 | ₽ 561 | |||||||
Promissory notes issued as consideration | ₽ 1,089 | ₽ 1,089 | |||||||
Interest rate on promissory notes per annum | 9.00% | 9.00% | |||||||
NVision | |||||||||
BUSINESS ACQUISITIONS AND DISPOSALS | |||||||||
Ownership interest acquired | 100.00% | 100.00% | |||||||
Amount of consideration | ₽ 11,213 | ₽ 11,213 | |||||||
Amount of consideration issued in notes | 73 | ||||||||
Amount of consideration paid in cash | ₽ 11,140 | ||||||||
Tax provision recognised as indemnification asset | ₽ 292 | ₽ 299 | |||||||
Various acquisitions in first stage of NVision Group acquisition | |||||||||
BUSINESS ACQUISITIONS AND DISPOSALS | |||||||||
Ownership interest acquired | 100.00% | ||||||||
Navigation Information Systems | |||||||||
BUSINESS ACQUISITIONS AND DISPOSALS | |||||||||
Ownership interest acquired | 89.50% | ||||||||
Amount of consideration | ₽ 44 |
BUSINESS ACQUISITIONS AND DIS77
BUSINESS ACQUISITIONS AND DISPOSALS - Acquisitions of subsidiaries under common control (Details) ₽ in Millions | 12 Months Ended |
Dec. 31, 2015RUB (₽) | |
NVision | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Consideration paid net of cash acquired | ₽ 10,181 |
Non cash consideration made | 73 |
Cash acquired | 959 |
Assets acquired other than cash | 12,861 |
Liabilities assumed | 12,977 |
Navigation Information Systems | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Consideration paid net of cash acquired | (177) |
Cash acquired | 221 |
Assets acquired other than cash | 589 |
Liabilities assumed | 1,360 |
Stream | |
BUSINESS ACQUISITIONS AND DISPOSALS | |
Consideration paid net of cash acquired | (558) |
Cash acquired | 558 |
Assets acquired other than cash | 512 |
Liabilities assumed | ₽ 2,065 |
BUSINESS ACQUISITIONS AND DIS78
BUSINESS ACQUISITIONS AND DISPOSALS - Disposal of subsidiaries under common control (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | 12 Months Ended |
Jan. 31, 2015 | Dec. 31, 2015 | |
Rent-Nedvizhimost | ||
Disposal of subsidiaries under common control | ||
Consideration received net of cash disposed | ₽ 1,193 | |
Cash disposed | 157 | |
Asset disposed other than cash | 2,013 | |
Liabilities disposed | ₽ 316 | |
Intellect Telecom | ||
Disposal of subsidiaries under common control | ||
Percentage of voting rights disposed | 47.30% | |
Consideration received for disposal of company | ₽ 344 |
BUSINESS ACQUISITIONS AND DIS79
BUSINESS ACQUISITIONS AND DISPOSALS - Pro forma results of operations (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pro forma: | |||
Net revenues | ₽ 443,178 | ₽ 435,694 | ₽ 434,757 |
Net income | 55,881 | 48,465 | 46,887 |
Companies acquired in 2015 | |||
Pro forma: | |||
Revenue of acquired entities since acquisition | 2,133 | ||
Net loss of acquired entities since acquisition | ₽ 447 | ||
Companies acquired in 2016 | |||
Pro forma: | |||
Revenue of acquired entities since acquisition | 1 | ||
Net loss of acquired entities since acquisition | ₽ 15 | ||
Companies acquired in 2017 | |||
Pro forma: | |||
Revenue of acquired entities since acquisition | 37 | ||
Net loss of acquired entities since acquisition | ₽ 105 |
CASH AND CASH EQUIVALENTS (Deta
CASH AND CASH EQUIVALENTS (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Cash and Cash Equivalents | ||||
Total cash and cash equivalents | ₽ 30,586 | ₽ 18,470 | ₽ 33,464 | ₽ 61,566 |
Restricted cash balances in Ukraine | 1,330 | 3,617 | ||
Russian Rubles | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents at banks and on hand | 16,879 | 7,657 | ||
Short-term deposits with an original maturity of less than 92 days | 6,595 | 504 | ||
Turkmenian Manat | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents at banks and on hand | 1,267 | 1,252 | ||
USD | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents at banks and on hand | 1,119 | 3,904 | ||
Short-term deposits with an original maturity of less than 92 days | 2,603 | 50 | ||
Euro | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents at banks and on hand | 983 | 1,173 | ||
Ukraine Hryvna | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents at banks and on hand | 403 | 1,538 | ||
Short-term deposits with an original maturity of less than 92 days | 352 | 1,990 | ||
Other currencies | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents at banks and on hand | 318 | 394 | ||
Short-term deposits with an original maturity of less than 92 days | ₽ 67 | ₽ 8 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term investments | ||
Total short-term investments | ₽ 50,757 | ₽ 8,657 |
Loans and receivables | ||
Short-term investments | ||
Deposits | 27,826 | 3,850 |
Loans | 5,669 | 1,021 |
Notes | 7,605 | |
Financial assets at fair value through profit or loss | ||
Short-term investments | ||
Assets in Sistema-Capital trust management (Notes 18, 22) | 9,600 | 3,721 |
Available for sale | ||
Short-term investments | ||
Notes | ₽ 57 | ₽ 65 |
INVESTMENTS IN ASSOCIATES (Deta
INVESTMENTS IN ASSOCIATES (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Investments in associates | ||
Total investments in associates | ₽ 9,452 | ₽ 10,551 |
MTS Belarus | ||
Investments in associates | ||
Total investments in associates | 3,660 | 4,303 |
MTS Bank | ||
Investments in associates | ||
Total investments in associates | 2,902 | 3,592 |
Equity investments in other unquoted companies | ||
Investments in associates | ||
Total investments in associates | ₽ 2,890 | ₽ 2,656 |
INVESTMENTS IN ASSOCIATES - MTS
INVESTMENTS IN ASSOCIATES - MTS Belarus (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | |||
Non-current assets | ₽ 405,038 | ₽ 453,476 | |
Current assets | 146,032 | 90,994 | |
Liabilities | |||
Non-current liabilities | (270,194) | (272,977) | |
Current liabilities | (156,671) | (127,545) | |
Statement of profit or loss | |||
Revenue | (442,911) | (435,692) | ₽ (426,639) |
Net loss/(profit) for the year | (56,590) | (48,450) | (47,404) |
Total comprehensive loss (income) for the year | (53,766) | (30,643) | (45,732) |
MTS Belarus | |||
Assets | |||
Non-current assets | 9,819 | 9,414 | |
Current assets | 8,117 | 6,800 | |
Liabilities | |||
Non-current liabilities | (703) | 0 | |
Current liabilities | (9,764) | (7,433) | |
Total identifiable net assets attributable to the Group | ₽ 7,469 | ₽ 8,781 | |
Percentage of ownership in associate | 49.00% | 49.00% | |
The Group's share of identifiable net assets | ₽ 3,660 | ₽ 4,303 | |
Carrying amount of the Group's interest | 3,660 | 4,303 | |
Statement of profit or loss | |||
Revenue | (23,037) | (22,256) | (20,886) |
Net loss/(profit) for the year | (6,552) | (6,356) | (7,054) |
The Group's share of the loss (profit) of the associate for the year | (3,210) | (3,115) | (3,456) |
Other comprehensive loss for the year (currency translation adjustment) | 525 | 2,292 | 3,110 |
Total comprehensive loss (income) for the year | (6,027) | (4,064) | (3,944) |
The Group's share of total comprehensive loss (income) of the associate for the year | (2,953) | (1,991) | (1,933) |
Dividends received | ₽ 3,590 | ₽ 2,795 | ₽ 3,269 |
INVESTMENTS IN ASSOCIATES - M84
INVESTMENTS IN ASSOCIATES - MTS Bank (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2017 | Nov. 30, 2016 | Oct. 31, 2016 | Feb. 29, 2016 | Jan. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2017 | |
Statement of financial position | |||||||||
Total assets | ₽ 551,070 | ₽ 544,470 | |||||||
Non-controlling interests | (4,079) | (4,713) | |||||||
Consideration for acquisition of interest in associates | 723 | 4,094 | |||||||
Statement of profit or loss | |||||||||
Total interest expense | 23,799 | 24,614 | ₽ 26,719 | ||||||
Net loss/(profit) for the year | (56,590) | (48,450) | (47,404) | ||||||
Total comprehensive loss (income) for the year | (53,766) | (30,643) | (45,732) | ||||||
MTS Bank | |||||||||
Statement of financial position | |||||||||
Number of shares placed | 10,000,000 | 3,588,304 | |||||||
MTS Bank | |||||||||
Statement of financial position | |||||||||
Total assets | 142,405 | 166,594 | |||||||
Total liabilities | (121,169) | (137,627) | |||||||
Non-controlling interests | (3,339) | ||||||||
Total identifiable net assets attributable to the Group | ₽ 21,236 | ₽ 25,628 | |||||||
Percentage of ownership in associate | 26.60% | 26.80% | 26.80% | 27.00% | 26.60% | 26.60% | |||
The Group's share of identifiable net assets | ₽ 6,127 | ₽ 6,817 | |||||||
Impairment of investment in associate | (3,225) | (3,225) | |||||||
Carrying amount of the Group's interest | 2,902 | 3,592 | |||||||
Number of shares under placement acquired by the group | 2,637,310 | 946,347 | |||||||
Consideration for acquisition of interest in associates | ₽ 2,769 | ₽ 1,325 | |||||||
Statement of profit or loss | |||||||||
Total interest income | (14,204) | (16,555) | (20,455) | ||||||
Total interest expense | 6,505 | 8,364 | 9,691 | ||||||
Net loss/(profit) for the year | 593 | 4,495 | 15,371 | ||||||
The Group's share of the loss (profit) of the associate for the year | 109 | 1,179 | 4,078 | ||||||
Other comprehensive loss / (income) for the year | 2,000 | 1,614 | (1,251) | ||||||
Total comprehensive loss (income) for the year | 2,593 | 6,109 | 14,120 | ||||||
The Group's share of total comprehensive loss (income) of the associate for the year | 690 | ₽ 1,608 | ₽ 3,737 | ||||||
East-West United Bank | MTS Bank | |||||||||
Statement of financial position | |||||||||
Percentage of voting rights disposed | 47.00% | ||||||||
East-West United Bank | MTS Bank | |||||||||
Statement of financial position | |||||||||
Accumulated foreign currency translation reserve | ₽ 659 | ||||||||
East-West United Bank | MTS Bank | Accumulated other comprehensive income | |||||||||
Statement of financial position | |||||||||
Accumulated foreign currency translation reserve | ₽ 659 | ||||||||
Maximum | East-West United Bank | MTS Bank | |||||||||
Statement of financial position | |||||||||
Percentage of ownership in associate | 20.00% |
INVESTMENTS IN ASSOCIATES - Oth
INVESTMENTS IN ASSOCIATES - Others (Details) - RUB (₽) ₽ in Millions | 1 Months Ended | 12 Months Ended | |||||
Feb. 28, 2018 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investments in associates | |||||||
Cash contribution for acquired ownership interest | ₽ 723 | ₽ 4,094 | |||||
Statement of profit or loss | |||||||
Net loss/(profit) for the year | (56,590) | (48,450) | ₽ (47,404) | ||||
Total comprehensive loss (income) for the year | ₽ (53,766) | ₽ (30,643) | (45,732) | ||||
OZON Holdings Limited | |||||||
Investments in associates | |||||||
Proportion of ownership interest | 11.20% | 11.19% | 10.96% | 10.80% | 11.20% | 10.80% | |
Number of shares acquired | 7,698 | 5,193 | |||||
Cash contribution for acquired ownership interest | ₽ 28 | ₽ 19 | |||||
Equity investments in other unquoted companies | |||||||
Statement of profit or loss | |||||||
Net loss/(profit) for the year | ₽ 1,760 | ₽ 1,172 | (1,079) | ||||
The Group's share of the loss (profit) of the associate for the year | 327 | 108 | (297) | ||||
Total comprehensive loss (income) for the year | 1,760 | 1,172 | (1,079) | ||||
The Group's share of total comprehensive loss (income) of the associate for the year | ₽ 327 | ₽ 108 | ₽ (297) | ||||
Sistema-Capital | |||||||
Investments in associates | |||||||
Proportion of ownership interest | 30.00% | 30.00% | |||||
Cash contribution for acquired ownership interest | ₽ 356 | ||||||
Maximum | OZON Holdings Limited | |||||||
Investments in associates | |||||||
Proportion of ownership interest | 20.00% |
OTHER INVESTMENTS (Details)
OTHER INVESTMENTS (Details) ₽ in Millions | 12 Months Ended |
Dec. 31, 2016RUB (₽) | |
Other investments | |
Long term deposits | ₽ 27,056 |
Mr. Pierre Fattouche and Mr. Moussa Fattouche | |
Other investments | |
Loan granted to non-controlling interest holders | ₽ 5,802 |
MTS Armenia | Mr. Pierre Fattouche and Mr. Moussa Fattouche | |
Other investments | |
Ownership interest held by non-controlling share holders | 20.00% |
TRADE AND OTHER RECEIVABLES (De
TRADE AND OTHER RECEIVABLES (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
TRADE AND OTHER RECEIVABLES | ||||
Subscribers | ₽ 11,723 | ₽ 11,360 | ||
Roaming | 7,650 | 8,083 | ||
Dealers | 3,204 | 2,723 | ||
Interconnect | 2,121 | 2,517 | ||
Other trade receivables | 4,272 | 4,805 | ||
Other receivables | 1,391 | 2,477 | ||
Allowance for doubtful accounts | (2,344) | (2,160) | ₽ (2,928) | ₽ (2,166) |
Trade and other receivables | ₽ 28,017 | ₽ 29,805 |
TRADE AND OTHER RECEIVABLES - A
TRADE AND OTHER RECEIVABLES - Age of trade and other accounts receivables (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Age of trade and other accounts receivables that are past due but not impaired | ||
Trade and other receivables | ₽ 28,017 | ₽ 29,805 |
Neither past due nor impaired | ||
Age of trade and other accounts receivables that are past due but not impaired | ||
Trade and other receivables | 22,551 | 24,100 |
Less than 60 days | Past due, but not impaired | ||
Age of trade and other accounts receivables that are past due but not impaired | ||
Trade and other receivables | 3,265 | 3,225 |
61-150 days | Past due, but not impaired | ||
Age of trade and other accounts receivables that are past due but not impaired | ||
Trade and other receivables | 872 | 1,205 |
More than 150 days | Past due, but not impaired | ||
Age of trade and other accounts receivables that are past due but not impaired | ||
Trade and other receivables | ₽ 1,329 | ₽ 1,275 |
TRADE AND OTHER RECEIVABLES - C
TRADE AND OTHER RECEIVABLES - Changes in allowance for doubtful accounts receivables (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in the allowance for doubtful accounts receivable | |||
Balance, beginning of the year | ₽ (2,160) | ₽ (2,928) | ₽ (2,166) |
Allowance for doubtful accounts | (2,880) | (2,863) | (3,269) |
Accounts receivable written off | 2,696 | 3,459 | 2,507 |
Disposal of subsidiary | 172 | ||
Balance, end of the year | ₽ (2,344) | ₽ (2,160) | ₽ (2,928) |
INVENTORIES (Details)
INVENTORIES (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
INVENTORIES | ||
Handsets and accessories | ₽ 7,836 | ₽ 11,597 |
SIM cards and prepaid phone cards | 784 | 1,165 |
Advertising and other materials | 561 | 280 |
TV equipment for resale | 350 | 320 |
Software and equipment for installation and resale | 309 | 703 |
Spare parts for telecommunication equipment | 155 | 265 |
Total inventory and spare parts | ₽ 9,995 | ₽ 14,330 |
Expected utilization after year end of spare parts for telecommunication equipment, in months | 12 months |
INVENTORIES - Cost of goods (De
INVENTORIES - Cost of goods (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INVENTORIES | |||
Amount of inventories recognized as an expense | ₽ 43,440 | ₽ 44,026 | ₽ 36,568 |
Inventory obsolescence provision | 2,692 | 2,159 | 865 |
Reversal of obsolescence provision | (509) | (611) | (878) |
Total cost of goods | ₽ 45,623 | ₽ 45,574 | ₽ 36,555 |
PROPERTY, PLANT AND EQUIPMENT92
PROPERTY, PLANT AND EQUIPMENT (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | ₽ 272,841 | ₽ 302,662 | |
Property, plant and equipment at end of period | 263,063 | 272,841 | ₽ 302,662 |
Amount of compensation from third parties | 1,231 | 1,350 | 1,010 |
Network and base station equipment | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 227,110 | 242,021 | |
Property, plant and equipment at end of period | 217,599 | 227,110 | 242,021 |
Amortization | 51,967 | ||
Land and buildings | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 17,291 | 19,866 | |
Property, plant and equipment at end of period | 15,603 | 17,291 | 19,866 |
Amortization | 930 | ||
Office equipment, vehicles and other | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 11,074 | 11,809 | |
Property, plant and equipment at end of period | 11,131 | 11,074 | 11,809 |
Amortization | 5,385 | ||
Construction in progress and equipment for installation | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 17,366 | 28,966 | |
Property, plant and equipment at end of period | 18,730 | 17,366 | 28,966 |
Carrying amount | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 640,117 | 648,509 | |
Additions | 59,581 | 48,722 | |
Disposal of UMS | (8,357) | ||
Arising on business combinations | 17 | ||
Transfer to assets held for sale | (1,430) | (1,562) | |
Disposal | (34,551) | (24,322) | |
Other | (187) | 6 | |
Foreign exchange differences | (4,841) | (22,879) | |
Property, plant and equipment at end of period | 658,706 | 640,117 | 648,509 |
Carrying amount | Network and base station equipment | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 548,058 | 542,530 | |
Additions | 2,094 | 1,350 | |
Put into use | 48,689 | 47,894 | |
Disposal of UMS | (4,152) | ||
Arising on business combinations | 10 | ||
Transfer to assets held for sale | (1,408) | (1,557) | |
Disposal | (27,092) | (20,321) | |
Other | 327 | (118) | |
Foreign exchange differences | (4,320) | (17,568) | |
Property, plant and equipment at end of period | 566,358 | 548,058 | 542,530 |
Carrying amount | Land and buildings | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 25,443 | 27,321 | |
Additions | 15 | 32 | |
Put into use | 281 | 1,550 | |
Disposal of UMS | (1,309) | ||
Arising on business combinations | 2 | ||
Disposal | (684) | (426) | |
Other | (69) | (200) | |
Foreign exchange differences | 36 | (1,525) | |
Property, plant and equipment at end of period | 25,024 | 25,443 | 27,321 |
Carrying amount | Office equipment, vehicles and other | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 49,250 | 49,692 | |
Additions | 302 | ||
Put into use | 4,522 | 5,278 | |
Disposal of UMS | (452) | ||
Arising on business combinations | 5 | ||
Transfer to assets held for sale | (22) | (5) | |
Disposal | (5,460) | (3,201) | |
Other | (452) | 269 | |
Foreign exchange differences | (315) | (2,331) | |
Property, plant and equipment at end of period | 47,830 | 49,250 | 49,692 |
Carrying amount | Construction in progress and equipment for installation | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | 17,366 | 28,966 | |
Additions | 57,170 | 47,340 | |
Put into use | (53,492) | (54,722) | |
Disposal of UMS | (2,444) | ||
Disposal | (1,315) | (374) | |
Other | 7 | 55 | |
Foreign exchange differences | (242) | (1,455) | |
Property, plant and equipment at end of period | 19,494 | 17,366 | 28,966 |
Accumulated amortisation and impairment | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | (367,276) | (345,847) | |
Charge for the year | (58,301) | (59,956) | |
Disposal of UMS | 1,397 | ||
Effect on assets impairment | (3,627) | ||
Transfer to assets held for sale | 962 | 851 | |
Disposal | 29,585 | 22,028 | |
Other | (30) | (177) | |
Foreign exchange differences | 3,044 | 14,428 | |
Property, plant and equipment at end of period | (395,643) | (367,276) | (345,847) |
Accumulated amortisation and impairment | Network and base station equipment | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | (320,948) | (300,509) | |
Charge for the year | (53,258) | (53,371) | |
Disposal of UMS | 1,121 | ||
Effect on assets impairment | (2,175) | ||
Transfer to assets held for sale | 940 | 846 | |
Disposal | 24,248 | 19,126 | |
Other | (458) | (222) | |
Foreign exchange differences | 2,892 | 12,061 | |
Property, plant and equipment at end of period | (348,759) | (320,948) | (300,509) |
Accumulated amortisation and impairment | Land and buildings | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | (8,152) | (7,455) | |
Charge for the year | (1,114) | (1,262) | |
Disposal of UMS | 62 | ||
Effect on assets impairment | (393) | ||
Disposal | 284 | 134 | |
Other | 33 | (182) | |
Foreign exchange differences | (79) | 551 | |
Property, plant and equipment at end of period | (9,421) | (8,152) | (7,455) |
Accumulated amortisation and impairment | Office equipment, vehicles and other | |||
Disclosure of detailed information about property, plant and equipment | |||
Property, plant and equipment at beginning of period | (38,176) | (37,883) | |
Charge for the year | (3,929) | (5,323) | |
Disposal of UMS | 214 | ||
Effect on assets impairment | (295) | ||
Transfer to assets held for sale | 22 | 5 | |
Disposal | 5,053 | 2,768 | |
Other | 395 | 227 | |
Foreign exchange differences | 231 | 1,816 | |
Property, plant and equipment at end of period | (36,699) | ₽ (38,176) | ₽ (37,883) |
Accumulated amortisation and impairment | Construction in progress and equipment for installation | |||
Disclosure of detailed information about property, plant and equipment | |||
Effect on assets impairment | (764) | ||
Property, plant and equipment at end of period | ₽ (764) |
GOODWILL (Details)
GOODWILL (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | ₽ 33,685 | ₽ 34,468 |
Goodwill at end of period | 34,281 | 33,685 |
Russia convergent | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 28,800 | 28,800 |
Goodwill at end of period | 28,781 | 28,800 |
Moscow fixed line | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 1,083 | 1,083 |
Goodwill at end of period | 1,164 | 1,083 |
Ukraine | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 95 | 129 |
Goodwill at end of period | 87 | 95 |
Other | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 3,707 | 4,456 |
Goodwill at end of period | 4,249 | 3,707 |
Carrying amount | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 38,667 | 39,450 |
Acquisitions (Note 4) | 794 | |
Currency translation adjustment | (198) | (783) |
Goodwill at end of period | 39,263 | 38,667 |
Carrying amount | Russia convergent | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 30,266 | 30,266 |
Acquisitions (Note 4) | 62 | |
Reclassification | (81) | |
Goodwill at end of period | 30,247 | 30,266 |
Carrying amount | Moscow fixed line | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 1,083 | 1,083 |
Reclassification | 81 | |
Goodwill at end of period | 1,164 | 1,083 |
Carrying amount | Ukraine | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 95 | 129 |
Currency translation adjustment | (8) | (34) |
Goodwill at end of period | 87 | 95 |
Carrying amount | Other | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | 7,223 | 7,972 |
Acquisitions (Note 4) | 732 | |
Currency translation adjustment | (190) | (749) |
Goodwill at end of period | 7,765 | 7,223 |
Accumulated impairment | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | (4,982) | (4,982) |
Goodwill at end of period | (4,982) | (4,982) |
Accumulated impairment | Russia convergent | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | (1,466) | (1,466) |
Goodwill at end of period | (1,466) | (1,466) |
Accumulated impairment | Other | ||
Change in the net carrying amount of goodwill | ||
Goodwill at beginning of period | (3,516) | (3,516) |
Goodwill at end of period | ₽ (3,516) | ₽ (3,516) |
IMPAIRMENT REVIEW (Details)
IMPAIRMENT REVIEW (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
IMPAIRMENT REVIEW | |||
Total impairment loss | ₽ 3,775 | ₽ 0 | ₽ 3,516 |
Russia convergent | |||
IMPAIRMENT REVIEW | |||
Capital expenditure as a percentage of revenue | 17.20% | 18.80% | |
Terminal growth rate (as a percentage) | 1.00% | 1.00% | |
Discount rate applied to cash flow projections (as a percentage) | 16.00% | 15.10% | |
Armenia | |||
IMPAIRMENT REVIEW | |||
Impairment charges on goodwill | 3,500 | ||
Recoverable amount | ₽ 18,500 | ||
Capital expenditure as a percentage of revenue | 17.80% | 11.90% | |
Terminal growth rate (as a percentage) | 0.00% | 0.00% | |
Discount rate applied to cash flow projections (as a percentage) | 15.20% | 15.50% | |
Moscow fixed line | |||
IMPAIRMENT REVIEW | |||
Capital expenditure as a percentage of revenue | 20.60% | 17.50% | |
Terminal growth rate (as a percentage) | 1.00% | 1.00% | |
Discount rate applied to cash flow projections (as a percentage) | 14.50% | 13.70% | |
Ukraine | |||
IMPAIRMENT REVIEW | |||
Capital expenditure as a percentage of revenue | 22.70% | 19.90% | |
Terminal growth rate (as a percentage) | 3.00% | 3.00% | |
Discount rate applied to cash flow projections (as a percentage) | 20.80% | 21.60% | |
Turkmenistan | |||
IMPAIRMENT REVIEW | |||
Property, plant and equipment | ₽ 3,063 | ||
Other intangible assets | 141 | ||
Total impairment loss | 3,204 | ||
Recoverable amount | 0 | ||
NVision Czech Republic | |||
IMPAIRMENT REVIEW | |||
Property, plant and equipment | 564 | ||
Other intangible assets | 7 | ||
Total impairment loss | 571 | ||
Recoverable amount | ₽ 954 | ||
Capital expenditure as a percentage of revenue | 2.50% | 2.70% | |
Terminal growth rate (as a percentage) | 2.00% | 2.00% | |
Discount rate applied to cash flow projections (as a percentage) | 8.70% | 8.70% | |
Amount of impairment loss, increase by 1 pps of pre-tax discount rate | ₽ (127) | ||
Amount of impairment loss, decrease by 1 pps of pre-tax discount rate | 172 | ||
Amount of impairment loss, increase by 1 pps of OIBDA margin | 523 | ||
Amount of impairment loss, decrease by 1 pps of OIBDA margin | (523) | ||
Amount of impairment loss, increase by 1 pps of average capital expenditure as a percentage of revenue | (523) | ||
Amount of impairment loss, decrease by 1 pps of average capital expenditure as a percentage of revenue | ₽ 523 | ||
Minimum | Russia convergent | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 38.00% | 34.60% | |
Minimum | Armenia | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 40.20% | 42.00% | |
Minimum | Moscow fixed line | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 41.00% | 42.20% | |
Minimum | Ukraine | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 31.40% | 40.60% | |
Minimum | NVision Czech Republic | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 5.50% | ||
Maximum | Russia convergent | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 39.10% | 37.00% | |
Maximum | Armenia | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 41.20% | 45.00% | |
Maximum | Moscow fixed line | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 48.50% | 51.00% | |
Maximum | Ukraine | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 40.60% | 46.50% | |
Maximum | NVision Czech Republic | |||
IMPAIRMENT REVIEW | |||
OIBDA margin (as a percentage) | 4.20% | 6.80% |
OTHER INTANGIBLE ASSETS (Detail
OTHER INTANGIBLE ASSETS (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 75,128 | ₽ 74,596 | |
Intangible assets other than goodwill at end of period | 79,397 | 75,128 | ₽ 74,596 |
Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 153,313 | 151,462 | |
Additions | 26,577 | 31,582 | |
Arising on business combinations (Note 4) | 573 | 323 | |
Disposal | (10,008) | (14,259) | |
Other | 50 | (127) | |
Foreign exchange differences | (2,219) | (10,090) | |
Intangible assets other than goodwill at end of period | 168,286 | 153,313 | 151,462 |
Carrying amount | UMS | |||
Other intangible assets | |||
Disposal | (5,578) | ||
Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (78,185) | (76,866) | |
Charge for the year | (21,733) | (23,319) | |
Effect on assets impairment | (148) | ||
Disposal | 9,910 | 13,937 | |
Other | (50) | 1 | |
Foreign exchange differences | 1,317 | 5,406 | |
Intangible assets other than goodwill at end of period | (88,889) | (78,185) | (76,866) |
Accumulated amortisation and impairment | UMS | |||
Other intangible assets | |||
Disposal | 2,656 | ||
Licenses | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 17,173 | 18,617 | |
Intangible assets other than goodwill at end of period | ₽ 16,260 | 17,173 | 18,617 |
Weighted-average period until next renewal of operating licenses | 5 years | ||
Licenses | Minimum | |||
Other intangible assets | |||
Useful life, years | 1 year | ||
Licenses | Maximum | |||
Other intangible assets | |||
Useful life, years | 20 years | ||
Licenses | Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 27,136 | 28,490 | |
Additions | 1,647 | 3,382 | |
Arising on business combinations (Note 4) | 260 | 323 | |
Disposal | (93) | (2) | |
Other | (2) | 44 | |
Foreign exchange differences | (1,207) | (5,101) | |
Intangible assets other than goodwill at end of period | 27,741 | 27,136 | 28,490 |
Licenses | Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (9,963) | (9,873) | |
Charge for the year | (2,180) | (2,092) | (1,447) |
Disposal | 92 | 2 | |
Other | (7) | ||
Foreign exchange differences | 570 | 2,007 | |
Intangible assets other than goodwill at end of period | (11,481) | (9,963) | (9,873) |
Right to use radio frequencies | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 4,120 | 5,065 | |
Intangible assets other than goodwill at end of period | ₽ 3,090 | 4,120 | 5,065 |
Right to use radio frequencies | Minimum | |||
Other intangible assets | |||
Useful life, years | 1 year | ||
Right to use radio frequencies | Maximum | |||
Other intangible assets | |||
Useful life, years | 15 years | ||
Right to use radio frequencies | Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 8,949 | 9,326 | |
Additions | 13 | 245 | |
Disposal | (1,112) | (582) | |
Other | 1 | (40) | |
Intangible assets other than goodwill at end of period | 7,851 | 8,949 | 9,326 |
Right to use radio frequencies | Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (4,829) | (4,261) | |
Charge for the year | (1,042) | (1,170) | (1,202) |
Disposal | 1,108 | 582 | |
Other | 2 | 20 | |
Intangible assets other than goodwill at end of period | (4,761) | (4,829) | (4,261) |
Billing and other software | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 49,410 | 42,577 | |
Intangible assets other than goodwill at end of period | ₽ 56,136 | 49,410 | 42,577 |
Billing and other software | Minimum | |||
Other intangible assets | |||
Useful life, years | 1 year | ||
Billing and other software | Maximum | |||
Other intangible assets | |||
Useful life, years | 25 years | ||
Billing and other software | Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 104,542 | 93,134 | |
Additions | 24,686 | 27,658 | |
Arising on business combinations (Note 4) | 163 | ||
Disposal | (8,429) | (10,509) | |
Other | (6) | (87) | |
Foreign exchange differences | (980) | (3,763) | |
Intangible assets other than goodwill at end of period | 119,976 | 104,542 | 93,134 |
Billing and other software | Carrying amount | UMS | |||
Other intangible assets | |||
Disposal | (1,891) | ||
Billing and other software | Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (55,132) | (50,557) | |
Charge for the year | (17,614) | (18,002) | (16,933) |
Effect on assets impairment | (148) | ||
Disposal | 8,345 | 10,193 | |
Other | (17) | 43 | |
Foreign exchange differences | 726 | 2,697 | |
Intangible assets other than goodwill at end of period | (63,840) | (55,132) | (50,557) |
Billing and other software | Accumulated amortisation and impairment | UMS | |||
Other intangible assets | |||
Disposal | 494 | ||
Client base | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 3,298 | 3,918 | |
Intangible assets other than goodwill at end of period | ₽ 2,682 | 3,298 | 3,918 |
Client base | Minimum | |||
Other intangible assets | |||
Useful life, years | 4 years | ||
Client base | Maximum | |||
Other intangible assets | |||
Useful life, years | 31 years | ||
Client base | Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 7,373 | 7,537 | |
Disposal | (50) | (164) | |
Intangible assets other than goodwill at end of period | 7,323 | 7,373 | 7,537 |
Client base | Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (4,075) | (3,619) | |
Charge for the year | (616) | (620) | 692 |
Disposal | 50 | 164 | |
Intangible assets other than goodwill at end of period | (4,641) | (4,075) | (3,619) |
Numbering capacity | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 209 | 212 | |
Intangible assets other than goodwill at end of period | ₽ 159 | 209 | 212 |
Numbering capacity | Minimum | |||
Other intangible assets | |||
Useful life, years | 2 years | ||
Numbering capacity | Maximum | |||
Other intangible assets | |||
Useful life, years | 15 years | ||
Numbering capacity | Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 3,070 | 3,208 | |
Additions | 12 | 65 | |
Disposal | (158) | (160) | |
Other | (4) | ||
Foreign exchange differences | (9) | (39) | |
Intangible assets other than goodwill at end of period | 2,915 | 3,070 | 3,208 |
Numbering capacity | Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (2,861) | (2,996) | |
Charge for the year | (57) | (46) | 147 |
Disposal | 158 | 160 | |
Other | (4) | (13) | |
Foreign exchange differences | 8 | 34 | |
Intangible assets other than goodwill at end of period | (2,756) | (2,861) | (2,996) |
Other intangible assets | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | 918 | 4,207 | |
Intangible assets other than goodwill at end of period | ₽ 1,070 | 918 | 4,207 |
Other intangible assets | Minimum | |||
Other intangible assets | |||
Useful life, years | 1 year | ||
Other intangible assets | Maximum | |||
Other intangible assets | |||
Useful life, years | 10 years | ||
Other intangible assets | Carrying amount | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | ₽ 2,243 | 9,767 | |
Additions | 219 | 232 | |
Arising on business combinations (Note 4) | 150 | ||
Disposal | (166) | (2,842) | |
Other | 57 | (40) | |
Foreign exchange differences | (23) | (1,187) | |
Intangible assets other than goodwill at end of period | 2,480 | 2,243 | 9,767 |
Other intangible assets | Carrying amount | UMS | |||
Other intangible assets | |||
Disposal | (3,687) | ||
Other intangible assets | Accumulated amortisation and impairment | |||
Other intangible assets | |||
Intangible assets other than goodwill at beginning of period | (1,325) | (5,560) | |
Charge for the year | (224) | (1,389) | 3,770 |
Disposal | 157 | 2,836 | |
Other | (31) | (42) | |
Foreign exchange differences | 13 | 668 | |
Intangible assets other than goodwill at end of period | ₽ (1,410) | (1,325) | ₽ (5,560) |
Other intangible assets | Accumulated amortisation and impairment | UMS | |||
Other intangible assets | |||
Disposal | ₽ 2,162 |
BORROWINGS (Details)
BORROWINGS (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
BORROWINGS | ||
Notes | ₽ 108,776 | ₽ 78,186 |
Bank and other loans | 182,937 | 195,088 |
Financial lease obligations | 11,857 | 11,046 |
Total borrowings | 303,570 | 284,320 |
Less: current portion | (64,474) | (47,207) |
Total borrowings, non-current | ₽ 239,096 | ₽ 237,113 |
BORROWINGS - Notes (Details)
BORROWINGS - Notes (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
BORROWINGS | ||
Total notes | ₽ 108,776 | ₽ 78,186 |
Less: current portion | (29,979) | (11,389) |
Total notes, non-current | ₽ 78,797 | 66,797 |
MTS International Notes due 2023 | USD | ||
BORROWINGS | ||
Interest rate | 5.00% | |
Total notes | ₽ 26,187 | 28,218 |
MTS International Notes due 2020 | USD | ||
BORROWINGS | ||
Interest rate | 8.625% | |
Total notes | ₽ 17,621 | 18,537 |
MTS PJSC Notes due 2022 (7.70%) | ||
BORROWINGS | ||
Interest rate | 7.70% | |
Total notes | ₽ 14,947 | |
MTS PJSC Notes due 2023 | ||
BORROWINGS | ||
Interest rate | 8.25% | |
Total notes | ₽ 9,997 | 9,984 |
MTS PJSC Notes due 2031 | ||
BORROWINGS | ||
Interest rate | 9.40% | |
Total notes | ₽ 9,994 | 9,986 |
MTS PJSC Notes due 2022 (9.00%) | ||
BORROWINGS | ||
Interest rate | 9.00% | |
Total notes | ₽ 9,991 | |
MTS PJSC Notes due 2021 | ||
BORROWINGS | ||
Interest rate | 8.85% | |
Total notes | ₽ 9,986 | |
MTS PJSC Notes due 2018 | ||
BORROWINGS | ||
Interest rate | 7.70% | |
Total notes | ₽ 9,986 | |
MTS PJSC Notes due 2020 | ||
BORROWINGS | ||
Interest rate | 9.25% | |
Total notes | ₽ 49 | 1,448 |
MTS PJSC Notes due 2017 | ||
BORROWINGS | ||
Interest rate | 8.70% | |
Total notes | 9,995 | |
Other Notes due 2018-2022 | ||
BORROWINGS | ||
Total notes | ₽ 18 | ₽ 18 |
Minimum | Other Notes due 2018-2022 | ||
BORROWINGS | ||
Interest rate | 0.25% | |
Maximum | Other Notes due 2018-2022 | ||
BORROWINGS | ||
Interest rate | 10.00% |
BORROWINGS - Repurchase of note
BORROWINGS - Repurchase of notes (Details) ₽ in Millions | Dec. 31, 2017RUB (₽) | Dec. 31, 2016RUB (₽)instrument |
BORROWINGS | ||
Total | ₽ 0 | ₽ 2,588 |
MTS PJSC Notes due 2018 | ||
BORROWINGS | ||
No of Notes | instrument | 2,777,440 | |
Due amount | ₽ 2,588 | |
Total | ₽ 2,588 |
BORROWINGS - Loans from banks a
BORROWINGS - Loans from banks and financial institutions (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
BORROWINGS | ||
Total bank and other loans | ₽ 182,937 | ₽ 195,088 |
Less: current portion | (33,694) | (35,188) |
Total bank and other loans, non-current | ₽ 149,243 | 159,900 |
VTB | ||
BORROWINGS | ||
Interest rate | 7.99% | |
USD | ||
BORROWINGS | ||
Total bank and other loans | ₽ 27,669 | 39,369 |
USD | Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG | ||
BORROWINGS | ||
Interest rate | 2.994% | |
Total bank and other loans | ₽ 17,077 | 25,394 |
USD | Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG | LIBOR | ||
BORROWINGS | ||
Basis spread on variable rate | 1.15% | |
USD | Citibank | ||
BORROWINGS | ||
Interest rate | 2.744% | |
Total bank and other loans | ₽ 10,592 | 12,812 |
USD | Citibank | LIBOR | ||
BORROWINGS | ||
Basis spread on variable rate | 0.90% | |
USD | Skandinavska Enskilda Banken AB | ||
BORROWINGS | ||
Total bank and other loans | 1,163 | |
USD | Skandinavska Enskilda Banken AB | Minimum | ||
BORROWINGS | ||
Interest rate | 2.069% | |
USD | Skandinavska Enskilda Banken AB | Maximum | ||
BORROWINGS | ||
Interest rate | 3.644% | |
USD | Skandinavska Enskilda Banken AB | LIBOR | Minimum | ||
BORROWINGS | ||
Basis spread on variable rate | 0.23% | |
USD | Skandinavska Enskilda Banken AB | LIBOR | Maximum | ||
BORROWINGS | ||
Basis spread on variable rate | 1.80% | |
Euro | ||
BORROWINGS | ||
Total bank and other loans | 1,172 | |
Euro | Credit Agricole Corporate Bank and BNP Paribas | ||
BORROWINGS | ||
Interest rate | 1.38% | |
Total bank and other loans | 876 | |
Euro | Credit Agricole Corporate Bank and BNP Paribas | EURIBOR | ||
BORROWINGS | ||
Basis spread on variable rate | 1.65% | |
Euro | LBBW | ||
BORROWINGS | ||
Interest rate | 1.25% | |
Total bank and other loans | 296 | |
Euro | LBBW | EURIBOR | ||
BORROWINGS | ||
Basis spread on variable rate | 1.52% | |
Russian Rubles | ||
BORROWINGS | ||
Total bank and other loans | ₽ 155,137 | 154,334 |
Russian Rubles | Citibank | ||
BORROWINGS | ||
Total bank and other loans | 2,400 | |
Russian Rubles | Citibank | Central Bank key rate | Minimum | ||
BORROWINGS | ||
Interest rate | 9.90% | |
Russian Rubles | Citibank | Central Bank key rate | Maximum | ||
BORROWINGS | ||
Interest rate | 9.95% | |
Russian Rubles | Sberbank | ||
BORROWINGS | ||
Total bank and other loans | ₽ 149,890 | 144,813 |
Russian Rubles | Sberbank | Central Bank key rate | Minimum | ||
BORROWINGS | ||
Interest rate | 8.45% | |
Russian Rubles | Sberbank | Central Bank key rate | Maximum | ||
BORROWINGS | ||
Interest rate | 9.85% | |
Russian Rubles | VTB | ||
BORROWINGS | ||
Total bank and other loans | ₽ 5,000 | |
Russian Rubles | VTB | Central Bank key rate | ||
BORROWINGS | ||
Interest rate | 7.99% | |
Russian Rubles | Gasprombank | ||
BORROWINGS | ||
Total bank and other loans | 4,000 | |
Russian Rubles | Gasprombank | Central Bank key rate | Minimum | ||
BORROWINGS | ||
Interest rate | 9.60% | |
Russian Rubles | Gasprombank | Central Bank key rate | Maximum | ||
BORROWINGS | ||
Interest rate | 10.90% | |
Russian Rubles | Notes in REPO | ||
BORROWINGS | ||
Total bank and other loans | 2,588 | |
Russian Rubles | Other | ||
BORROWINGS | ||
Total bank and other loans | ₽ 247 | 533 |
Other currencies | ||
BORROWINGS | ||
Total bank and other loans | 131 | 213 |
Other currencies | Various financial institutions | ||
BORROWINGS | ||
Total bank and other loans | ₽ 131 | ₽ 213 |
BORROWINGS - Compliance with co
BORROWINGS - Compliance with covenants and credit facilities (Details) ₽ in Millions, $ in Millions | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2017RUB (₽) | |
Available credit facilities | ||
Total available unused credit facilities | ₽ 36,000 | |
60 days | ||
Compliance with covenants | ||
Debt covenant maximum allowed amount for payment of court award | $ 75 | 4,320 |
Debt covenant maximum number of days allowed without appeal, discharge or waive | 60 days | |
180 days | ||
Compliance with covenants | ||
Debt covenant maximum allowed amount for payment of court award | $ 250 | 14,400 |
Debt covenant maximum number of days allowed without appeal, discharge or waive | 180 days | |
Sberbank | ||
Available credit facilities | ||
Total available unused credit facilities | 20,000 | |
VTB | ||
Available credit facilities | ||
Total available unused credit facilities | ₽ 10,000 | |
Interest rate | 7.99% | 7.99% |
SPB Bank | ||
Available credit facilities | ||
Total available unused credit facilities | ₽ 3,000 | |
MTS International Notes due 2020 | ||
Compliance with covenants | ||
Notes redemption price (as a percentage of principal) | 101.00% | |
MTS International Notes due 2023 | ||
Compliance with covenants | ||
Notes redemption price (as a percentage of principal) | 101.00% | |
CBR auction rate | Absolut Bank | ||
Available credit facilities | ||
Total available unused credit facilities | ₽ 3,000 | |
CBR auction rate | Absolut Bank | Minimum | ||
Available credit facilities | ||
Basis spread on variable rate | 1.25% | 1.25% |
CBR auction rate | Absolut Bank | Maximum | ||
Available credit facilities | ||
Basis spread on variable rate | 1.80% | 1.80% |
MosPrime | Citibank | ||
Available credit facilities | ||
Basis spread on variable rate | 1.50% | 1.50% |
Number of days for repayment of credit facility | 182 days |
BORROWINGS - Maturities of prin
BORROWINGS - Maturities of principal on notes and bank loans (Details) ₽ in Millions, $ in Millions | Mar. 01, 2018USD ($) | Mar. 01, 2018RUB (₽) | Mar. 31, 2018USD ($) | Mar. 31, 2018RUB (₽) | Dec. 31, 2017RUB (₽) | Dec. 31, 2016RUB (₽) | Dec. 31, 2015RUB (₽) |
Scheduled Debt Principal Repayments | |||||||
Total borrowings | ₽ 303,570 | ₽ 284,320 | |||||
Repayment of outstanding notes | 12,042 | ₽ 20,364 | ₽ 24,018 | ||||
Notes | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 109,000 | ||||||
Less: unamortized debt issuance costs | (224) | ||||||
Total borrowings | 108,776 | ||||||
Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 183,787 | ||||||
Less: unamortized debt issuance costs | (850) | ||||||
Total borrowings | 182,937 | ||||||
2018 | Notes | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 30,054 | ||||||
2018 | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 34,005 | ||||||
2019 | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 74,229 | ||||||
2020 | Notes | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 17,677 | ||||||
2020 | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 51,240 | ||||||
2021 | Notes | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 10,012 | ||||||
2021 | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 19,920 | ||||||
2022 | Notes | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 25,000 | ||||||
2022 | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 1,753 | ||||||
Thereafter | Notes | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | 26,257 | ||||||
Thereafter | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Notional amount | ₽ 2,640 | ||||||
Early repayment of Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG | Bank loans and other debt | |||||||
Scheduled Debt Principal Repayments | |||||||
Repayment of outstanding notes | $ 224.7 | ₽ 12,668 | $ 224.7 | ₽ 12,668 |
BORROWINGS - Net book value of
BORROWINGS - Net book value of leased property, plant and equipment (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of net book value of leased property, plant and equipment | |||
Leased assets, net | ₽ 8,161 | ₽ 6,972 | |
Additions to leased assets | 3,339 | 1,117 | ₽ 1,735 |
Depreciation of leased assets | 702 | 603 | 554 |
Interest expense on leased assets | 954 | 855 | ₽ 756 |
Network and base station equipment | |||
Summary of net book value of leased property, plant and equipment | |||
Leased assets, net | 8,098 | 6,906 | |
Office equipment, vehicles and other | |||
Summary of net book value of leased property, plant and equipment | |||
Leased assets, net | ₽ 63 | ₽ 66 |
BORROWINGS - Future minimum lea
BORROWINGS - Future minimum lease payments under capital leases (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating leases | ||
Total minimum lease payments | ₽ 21,445 | ₽ 18,572 |
Less amount representing interest | (9,588) | (7,526) |
Total present value of net minimum lease payments | 11,857 | 11,046 |
Less current portion of lease obligations | (801) | (630) |
Non-current portion of lease obligations | 11,056 | 10,416 |
2,018 | ||
Operating leases | ||
Total minimum lease payments | 1,763 | 1,432 |
Total present value of net minimum lease payments | 801 | 630 |
More than 1 to 5 years | ||
Operating leases | ||
Total minimum lease payments | 6,837 | 6,079 |
Total present value of net minimum lease payments | 3,138 | 3,055 |
Thereafter | ||
Operating leases | ||
Total minimum lease payments | 12,845 | 11,061 |
Total present value of net minimum lease payments | ₽ 7,918 | ₽ 7,361 |
Transponders | ||
Operating leases | ||
Lease term | 12 years | |
Network equipment | ||
Operating leases | ||
Lease term | 15 years | |
Automobiles | ||
Operating leases | ||
Lease term | 3 years |
RECONCILIATION OF LIABILITIE104
RECONCILIATION OF LIABILITIES ARISING FROM FINANCIAL ACTIVITIES (Details) ₽ in Millions | 12 Months Ended |
Dec. 31, 2017RUB (₽) | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | ₽ 289,560 |
Financing cash flows | (50,445) |
Operating cash flows | (854) |
Acquisitions | 604 |
Foreign exchange movement | (8,328) |
Currency translation adjustment | (113) |
Change in fair value | (120) |
Other changes | 76,991 |
Liabilities arising from financial activities - end of year | 307,295 |
Notes | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 78,186 |
Financing cash flows | 32,860 |
Foreign exchange movement | (2,339) |
Other changes | 69 |
Liabilities arising from financial activities - end of year | 108,776 |
Bank and other loans | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 195,088 |
Financing cash flows | (7,103) |
Acquisitions | 27 |
Foreign exchange movement | (5,478) |
Currency translation adjustment | (12) |
Other changes | 415 |
Liabilities arising from financial activities - end of year | 182,937 |
Finance lease obligations | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 11,046 |
Financing cash flows | (774) |
Operating cash flows | (854) |
Foreign exchange movement | (368) |
Other changes | 2,807 |
Liabilities arising from financial activities - end of year | 11,857 |
Credit guarantee agreement related to foreign currency hedge | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 2,907 |
Financing cash flows | (1,766) |
Foreign exchange movement | (145) |
Liabilities arising from financial activities - end of year | 996 |
Contingent consideration | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 3 |
Acquisitions | 175 |
Foreign exchange movement | 2 |
Liabilities arising from financial activities - end of year | 180 |
Payables related to repurchase of common stock | |
Reconciliation of liabilities arising from financial activities | |
Financing cash flows | (21,896) |
Other changes | 21,896 |
Dividends payable | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 87 |
Financing cash flows | (51,759) |
Other changes | 51,797 |
Liabilities arising from financial activities - end of year | 125 |
Payable related to NCI purchase | |
Reconciliation of liabilities arising from financial activities | |
Financing cash flows | (7) |
Other changes | 7 |
Liability under put option agreement | |
Reconciliation of liabilities arising from financial activities | |
Liabilities arising from financial activities - beginning of year | 2,243 |
Acquisitions | 402 |
Currency translation adjustment | (101) |
Change in fair value | (120) |
Liabilities arising from financial activities - end of year | ₽ 2,424 |
PROVISIONS (Details)
PROVISIONS (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in provisions | |||
Provision beginning of the period | ₽ (10,425) | ₽ (10,428) | ₽ (11,522) |
Arising during the year | (16,052) | (15,463) | (11,093) |
Utilised | 12,642 | 13,087 | 8,737 |
Discount rate adjustment and imputed interest (change in estimates) | (62) | (193) | 343 |
Unused amounts reversed | 1,705 | 2,302 | 3,828 |
Arising due to subsidiary purchase | (657) | ||
Disposal of a subsidiary | 91 | ||
Translation adjustments and other | 31 | 179 | (64) |
Provision end of the period | (12,161) | (10,425) | (10,428) |
Current | (9,852) | (8,075) | (7,863) |
Non-current | (2,309) | (2,350) | (2,565) |
Tax provisions other than for income tax | |||
Changes in provisions | |||
Provision beginning of the period | (457) | (525) | (2,974) |
Arising during the year | (229) | (1,058) | (481) |
Utilised | 342 | 374 | 24 |
Unused amounts reversed | 33 | 742 | 2,951 |
Arising due to subsidiary purchase | (15) | ||
Translation adjustments and other | 1 | 10 | (30) |
Provision end of the period | (310) | (457) | (525) |
Current | (310) | (457) | (525) |
Provision for decommissioning and restoration | |||
Changes in provisions | |||
Provision beginning of the period | (1,191) | (1,459) | (1,640) |
Arising during the year | (108) | (45) | (107) |
Utilised | 5 | 8 | |
Discount rate adjustment and imputed interest (change in estimates) | (103) | (142) | 256 |
Unused amounts reversed | 338 | 430 | 25 |
Translation adjustments and other | 10 | 17 | 7 |
Provision end of the period | (1,049) | (1,191) | (1,459) |
Non-current | (1,049) | (1,191) | (1,459) |
Employee bonuses and other rewards | |||
Changes in provisions | |||
Provision beginning of the period | (8,552) | (8,237) | (6,901) |
Arising during the year | (15,181) | (14,085) | (10,478) |
Utilised | 12,203 | 12,482 | 8,706 |
Discount rate adjustment and imputed interest (change in estimates) | 41 | (51) | 87 |
Unused amounts reversed | 1,233 | 1,096 | 846 |
Arising due to subsidiary purchase | (456) | ||
Disposal of a subsidiary | 91 | ||
Translation adjustments and other | 99 | 152 | (41) |
Provision end of the period | (10,157) | (8,552) | (8,237) |
Current | (8,897) | (7,393) | (7,131) |
Non-current | (1,260) | (1,159) | (1,106) |
Other provisions | |||
Changes in provisions | |||
Provision beginning of the period | (225) | (207) | (7) |
Arising during the year | (534) | (275) | (27) |
Utilised | 92 | 223 | 7 |
Unused amounts reversed | 101 | 34 | 6 |
Arising due to subsidiary purchase | (186) | ||
Translation adjustments and other | (79) | ||
Provision end of the period | (645) | (225) | (207) |
Current | ₽ (645) | ₽ (225) | ₽ (207) |
FAIR VALUE OF FINANCIAL ASSE106
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Financial instruments | ||
Total financial assets | ₽ 131,564 | ₽ 115,222 |
Total current financial assets | (120,719) | (61,333) |
Total non-current financial assets | 10,845 | 53,889 |
Total financial liabilities | 356,070 | 332,630 |
Total current financial liabilities | (115,926) | (92,743) |
Total non-current financial liabilities | 240,144 | 239,887 |
Fair value through profit or loss | ||
Financial instruments | ||
Total financial liabilities | 2,814 | 2,385 |
Fair value through other comprehensive income | ||
Financial instruments | ||
Total financial liabilities | 274 | 531 |
Trade and other payables | ||
Financial instruments | ||
Total financial liabilities | 47,314 | 41,473 |
Accounts payable, related parties | ||
Financial instruments | ||
Total financial liabilities | 1,102 | 1,014 |
Financial liabilities at amortised cost | ||
Financial instruments | ||
Total financial liabilities | 304,566 | 287,227 |
Loans and borrowings: | ||
Financial instruments | ||
Total financial liabilities | 303,570 | 284,320 |
Notes | ||
Financial instruments | ||
Total financial liabilities | 108,776 | 78,186 |
Bank and other loans | ||
Financial instruments | ||
Total financial liabilities | 182,937 | 195,088 |
Finance lease obligations | ||
Financial instruments | ||
Total financial liabilities | 11,857 | 11,046 |
Guarantee payment received | ||
Financial instruments | ||
Total financial liabilities | 996 | 2,907 |
Other financial liabilities at fair value: | ||
Financial instruments | ||
Total financial liabilities | 3,088 | 2,916 |
Deliverable currency forward not designated as hedge | Fair value through profit or loss | ||
Financial instruments | ||
Total financial liabilities | 142 | |
Liabilities under option agreement | Fair value through profit or loss | ||
Financial instruments | ||
Total financial liabilities | 2,424 | 2,243 |
Interest rate swap derivative instruments | Fair value through profit or loss | ||
Financial instruments | ||
Total financial liabilities | 390 | |
Interest rate swap derivative instruments | Fair value through other comprehensive income | ||
Financial instruments | ||
Total financial liabilities | 531 | |
Cross-currency interest rate swap | Fair value through other comprehensive income | ||
Financial instruments | ||
Total financial liabilities | 274 | |
Trade and other receivables | ||
Financial instruments | ||
Total financial assets | 28,017 | 29,805 |
Accounts receivable, related parties | ||
Financial instruments | ||
Total financial assets | 11,360 | 8,094 |
Cash and Cash equivalents | ||
Financial instruments | ||
Total financial assets | 30,586 | 18,470 |
Other financial assets: | ||
Financial instruments | ||
Total financial assets | 61,601 | 58,853 |
Loans and receivables | ||
Financial instruments | ||
Total financial assets | 43,541 | 41,435 |
Bank deposits | ||
Financial instruments | ||
Total financial assets | 27,836 | 30,906 |
Loans and receivables | ||
Financial instruments | ||
Total financial assets | 5,415 | 8,221 |
Notes | ||
Financial instruments | ||
Total financial assets | 8,480 | 804 |
Other | ||
Financial instruments | ||
Total financial assets | 1,810 | 1,504 |
Financial assets at fair value through profit or loss | ||
Financial instruments | ||
Total financial assets | 9,600 | 3,721 |
Financial assets at fair value through profit or loss | Assets in Sistema-Capital trust management | ||
Financial instruments | ||
Total financial assets | 9,600 | 3,721 |
Fair value through other comprehensive income | ||
Financial instruments | ||
Total financial assets | 8,460 | 13,697 |
Fair value through other comprehensive income | Notes | ||
Financial instruments | ||
Total financial assets | 57 | 65 |
Fair value through other comprehensive income | Cross-currency swap designated as cash flow hedge | ||
Financial instruments | ||
Total financial assets | ₽ 8,403 | ₽ 13,632 |
FAIR VALUE OF FINANCIAL ASSE107
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES - Fair value of financial instruments (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest rate swap derivative instruments | |||
Fair value measurements | |||
Liabilities | ₽ (390) | ₽ (531) | |
Cross-currency interest rate swap | |||
Fair value measurements | |||
Liabilities | (274) | ||
Deliverable currency forward agreement | |||
Fair value measurements | |||
Liabilities | (142) | ||
Liabilities under put option agreements | |||
Fair value measurements | |||
Liabilities | (2,012) | (2,243) | |
Level 1 | Sistema International Funding S.A. Bonds due in 2019 | |||
Fair value measurements | |||
Assets | 57 | 65 | |
Level 2 | Derivative financial instruments | |||
Fair value measurements | |||
Liabilities | (664) | (673) | |
Level 2 | Derivative financial instruments | |||
Fair value measurements | |||
Assets | 8,403 | 13,632 | |
Level 2 | Cross-currency interest rate swap | |||
Fair value measurements | |||
Assets | 8,403 | 13,632 | |
Level 2 | Assets in Sistema-Capital trust management | |||
Fair value measurements | |||
Assets | 9,600 | 3,721 | |
Level 3 | |||
Fair value measurements | |||
Net realized gains (loss) | 120 | 199 | ₽ 1,014 |
Unrealized gains or losses | 0 | 0 | ₽ 0 |
Level 3 | Liabilities under option agreement | |||
Fair value measurements | |||
Liabilities | (2,424) | (2,243) | |
Level 3 | Contingent consideration | |||
Fair value measurements | |||
Liabilities | ₽ (180) | ₽ (3) |
FAIR VALUE OF FINANCIAL ASSE108
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES - Put option agreement (Details) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017RUB (₽) | Dec. 31, 2016RUB (₽) | |
Liabilities under put option agreements | ||
Significant unobservable inputs | ||
Liabilities | ₽ 2,012 | ₽ 2,243 |
MTS Armenia | Liabilities under put option agreements | ||
Significant unobservable inputs | ||
Liabilities | 2,012 | |
Oblachny Retail LLC | Liabilities under option agreement | ||
Significant unobservable inputs | ||
Liabilities | ₽ 412 | |
Disclosure of significant unobservable inputs used in fair value measurement of liabilities | ||
Post-tax discount rate | 10 | |
Revenue, average amount per year | ₽ 632 | |
EBITDA margin | 13.00% | |
Net debt, average amount per year | ₽ (129) | |
Level 3 | Liabilities under option agreement | ||
Significant unobservable inputs | ||
Liabilities | ₽ 2,424 | ₽ 2,243 |
Discounted cash flow technique | Level 3 | MTS Armenia | Liabilities under put option agreements | ||
Disclosure of significant unobservable inputs used in fair value measurement of liabilities | ||
Post-tax discount rate | 0.13 | 0.13 |
Discounted cash flow technique | Minimum | Level 3 | MTS Armenia | Liabilities under put option agreements | ||
Disclosure of significant unobservable inputs used in fair value measurement of liabilities | ||
Revenue growth rate | 0 | (0.009) |
OIBDA margin | 0.402 | 0.420 |
Discounted cash flow technique | Maximum | Level 3 | MTS Armenia | Liabilities under put option agreements | ||
Disclosure of significant unobservable inputs used in fair value measurement of liabilities | ||
Revenue growth rate | (0.005) | (0.029) |
OIBDA margin | 0.412 | 0.450 |
Discounted cash flow technique | Weighted average | Level 3 | MTS Armenia | Liabilities under put option agreements | ||
Disclosure of significant unobservable inputs used in fair value measurement of liabilities | ||
Revenue growth rate | (0.002) | (0.018) |
OIBDA margin | 0.407 | 0.435 |
FAIR VALUE OF FINANCIAL ASSE109
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES - Carrying value of the groups financial instruments (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value measurements of assets | |||
Carrying value | ₽ (356,070) | ₽ (332,630) | |
Transfer of assets at fair value from level 1 to level 2 | 0 | 0 | ₽ 0 |
Transfer of assets at fair value from level 2 to level 1 | 0 | 0 | 0 |
Assets transfers into Level 3 fair value measurements | 0 | 0 | 0 |
Assets transfers out of Level 3 fair value measurements | 0 | 0 | 0 |
Transfer of liabilities at fair value from level 1 to level 2 | 0 | 0 | 0 |
Transfer of liabilities at fair value from level 2 to level 1 | 0 | 0 | 0 |
Liabilities transfers into Level 3 fair value measurements | 0 | 0 | 0 |
Liabilities transfers out of Level 3 fair value measurements | 0 | 0 | 0 |
Transfers in and out of categories of financial instruments | 0 | 0 | ₽ 0 |
Bank and other loans | |||
Fair value measurements of assets | |||
Carrying value | (182,937) | (195,088) | |
Fair value | |||
Fair value measurements of assets | |||
Fair value | (296,074) | (280,593) | |
Carrying amount | |||
Fair value measurements of assets | |||
Carrying value | (292,787) | (274,763) | |
Level 1 | Fair value | Notes | |||
Fair value measurements of assets | |||
Fair value | (112,531) | (81,462) | |
Level 1 | Carrying amount | Notes | |||
Fair value measurements of assets | |||
Carrying value | (109,000) | (78,381) | |
Level 3 | Fair value | Bank and other loans | |||
Fair value measurements of assets | |||
Fair value | (183,543) | (199,131) | |
Level 3 | Carrying amount | Bank and other loans | |||
Fair value measurements of assets | |||
Carrying value | ₽ (183,787) | ₽ (196,382) |
FINANCIAL RISK MANAGEMENT - Int
FINANCIAL RISK MANAGEMENT - Interest rate risks (Details) - Interest rate swap derivative instruments - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
FINANCIAL RISK MANAGEMENT | ||
Notional amount | ₽ 49,429 | ₽ 49,451 |
Variable interest rate risk | ||
FINANCIAL RISK MANAGEMENT | ||
Percentage of the outstanding debt that has exposure to interest rate risk | 100.00% | 28.60% |
Fixed interest rate risk | ||
FINANCIAL RISK MANAGEMENT | ||
Percentage of the outstanding debt that has exposure to interest rate risk | 7.90% | 12.90% |
FINANCIAL RISK MANAGEMENT - Sen
FINANCIAL RISK MANAGEMENT - Sensitivity analysis (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Increase in short term interest rate | |||
FINANCIAL RISK MANAGEMENT | |||
Reasonably possible increase in short term interest rates | 1.00% | ||
Increases of interest expense due to increase in risk | ₽ 44 | ₽ 704 | ₽ 933 |
Decrease in short term interest rate | |||
FINANCIAL RISK MANAGEMENT | |||
Decreases of finance cost due to decrease in risk | ₽ 44 | ₽ 704 | ₽ 933 |
FINANCIAL RISK MANAGEMENT - For
FINANCIAL RISK MANAGEMENT - Foreign currency risks (Details) - Foreign currency risks - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cross currency swap agreements | |||
FINANCIAL RISK MANAGEMENT | |||
Percentage of USD- and Euro- denominated Notes and bank loans outstanding hedged for exposure to currency rate risk | 39.60% | 29.20% | |
Notionals related to interest rate derivative instruments | ₽ 28,669 | ₽ 25,885 | |
Deliverable currency forward agreement | |||
FINANCIAL RISK MANAGEMENT | |||
Notionals related to interest rate derivative instruments | 0 | 18,339 | |
Loss recognized in consolidated statement of profit and loss | ₽ 0 | ₽ 142 | ₽ 0 |
FINANCIAL RISK MANAGEMENT - 113
FINANCIAL RISK MANAGEMENT - Foreign currency risks - effect of swap agreements on AOCI (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Effect of the Group's swap agreements designated as cash flow hedges in accumulated other comprehensive income | ||||
Accumulated derivatives (loss) / income, beginning of the year, net of tax of (26) and 261 and 1,067, respectively | ₽ (6,030) | |||
Accumulated derivatives income / (loss), end of the year, net of tax of 85 and (26) and 261, respectively | (8,854) | ₽ (6,030) | ||
Cash flow hedges | ||||
Effect of the Group's swap agreements designated as cash flow hedges in accumulated other comprehensive income | ||||
Accumulated derivatives (loss) / income, beginning of the year, net of tax of (26) and 261 and 1,067, respectively | (103) | 1,045 | ₽ 4,268 | |
Fair value adjustments on hedging derivatives, net of tax of (628) and (2,279) and 738, respectively | (2,512) | (9,116) | 2,952 | |
Amounts reclassified to loss / (profit) for the year during the period, net of tax of 739 and 1,992 and (1,544), respectively | 2,955 | 7,968 | (6,175) | |
Accumulated derivatives income / (loss), end of the year, net of tax of 85 and (26) and 261, respectively | 340 | (103) | 1,045 | ₽ 4,268 |
Tax effect relating to accumulated derivatives income | 85 | (26) | 261 | ₽ 1,067 |
Tax effect on fair value adjustments on hedging derivatives | (628) | (2,279) | 738 | |
Tax effect on amounts reclassified to loss / (profit) | ₽ 739 | ₽ 1,992 | ₽ (1,544) |
FINANCIAL RISK MANAGEMENT - 114
FINANCIAL RISK MANAGEMENT - Foreign currency risks and liquidity risk (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Foreign currency risk exposure and sensitivity analysis | |||
Amount by which current liabilities exceed current assets | ₽ 10,639 | ||
Availability of committed credit facilities | ₽ 36,000 | ||
Minimum | |||
Foreign currency risk exposure and sensitivity analysis | |||
Maturity of long term debt | 1 year | ||
Maximum | |||
Foreign currency risk exposure and sensitivity analysis | |||
Maturity of long term debt | 8 years | ||
Foreign currency risks | |||
Foreign currency risk exposure and sensitivity analysis | |||
Increase in the currency exchange rate | 5.00% | 20.00% | 20.00% |
Decrease in the currency exchange rate | (5.00%) | (20.00%) | (20.00%) |
Foreign currency risks | USD | |||
Foreign currency risk exposure and sensitivity analysis | |||
Effect on profit before tax | ₽ (447) | ₽ (6,722) | ₽ (8,986) |
Effect on profit before tax | 447 | 6,722 | 8,986 |
Foreign currency risks | Euro | |||
Foreign currency risk exposure and sensitivity analysis | |||
Effect on profit before tax | 830 | 2,274 | 5,664 |
Effect on profit before tax | ₽ (830) | ₽ (2,274) | ₽ (5,664) |
FINANCIAL RISK MANAGEMENT - Cre
FINANCIAL RISK MANAGEMENT - Credit risk (Details) - Credit risk - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Trade and other receivables | ||
Credit risk exposure | ||
Exposure to credit risk | ₽ 28,017 | ₽ 29,805 |
Bank deposits | ||
Credit risk exposure | ||
Exposure to credit risk | 27,836 | 30,905 |
Loan and notes | ||
Credit risk exposure | ||
Exposure to credit risk | 13,952 | 9,090 |
Assets in Sistema-Capital trust management | ||
Credit risk exposure | ||
Exposure to credit risk | 9,600 | 3,721 |
Derivative financial instruments | ||
Credit risk exposure | ||
Exposure to credit risk | 8,403 | 13,632 |
Cross currency swap agreements | ||
Credit risk exposure | ||
Collateral payments received | ₽ 1,000 | ₽ 2,900 |
INCOME TAX (Details)
INCOME TAX (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of income tax expense | |||
Current income tax charge | ₽ 20,712 | ₽ 15,177 | ₽ 11,865 |
Adjustments for current tax of prior periods | 673 | 98 | 284 |
Total current income tax: | 21,385 | 15,275 | 12,149 |
Deferred tax | (2,408) | (137) | 1,782 |
Income tax expense on continuing operations | 18,977 | 15,138 | 13,931 |
Income tax income on discontinued operations | ₽ 0 | ₽ 192 | ₽ 661 |
INCOME TAX - Reconciliation of
INCOME TAX - Reconciliation of groups effective income tax (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income tax disclosure | |||
Statutory income tax rate for the year (as a percentage) | 20.00% | 20.00% | 20.00% |
Adjustments: | |||
Expenses not deductible for tax purposes | 1.70% | 2.10% | 3.10% |
Prior periods tax effects | 0.80% | 0.10% | 0.50% |
Different tax rate of foreign subsidiaries | (0.50%) | (0.80%) | |
Earnings distribution from subsidiaries | 0.90% | 0.20% | (1.90%) |
Change in fair value of derivative financial instruments | 0.40% | 0.30% | (0.10%) |
Derecognition of deferred tax assets | 0.70% | ||
Other | 0.60% | 0.20% | |
Effective income tax rate | 25.10% | 22.40% | 20.80% |
Russia and Armenia | |||
Income tax disclosure | |||
Statutory income tax rate for the year (as a percentage) | 20.00% | 20.00% | 20.00% |
Ukraine | |||
Income tax disclosure | |||
Statutory income tax rate for the year (as a percentage) | 18.00% | 18.00% | 18.00% |
Turkmenistan | |||
Income tax disclosure | |||
Statutory income tax rate for the year (as a percentage) | 8.00% | 8.00% | 8.00% |
Czech Republic | |||
Income tax disclosure | |||
Statutory income tax rate for the year (as a percentage) | 19.00% | 19.00% | 19.00% |
INCOME TAX - Deferred income ta
INCOME TAX - Deferred income tax assets and liabilities (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
INCOME TAX | |||
Deferred tax assets | ₽ 5,545 | ₽ 6,150 | |
Deferred tax liabilities | (23,773) | (26,611) | |
Net deferred tax liabilities | ₽ (18,228) | ₽ (20,461) | ₽ (18,059) |
INCOME TAX - Movements in the d
INCOME TAX - Movements in the deferred tax assets and liabilities (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | ₽ (20,461) | ₽ (18,059) |
Recognised in profit / loss | 2,599 | 329 |
Recognised in other comprehensive income | (116) | (256) |
Effect of acquisitions | (59) | |
Effect of disposal | (2,475) | |
Effect of derecognition | (191) | |
Net deferred tax liability at the end of the period | (18,228) | (20,461) |
Depreciation of property, plant and equipment | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | (19,301) | (15,648) |
Recognised in profit / loss | 599 | (325) |
Recognised in other comprehensive income | (39) | (653) |
Effect of disposal | (2,675) | |
Effect of derecognition | (180) | |
Net deferred tax liability at the end of the period | (18,921) | (19,301) |
Other intangible assets | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | (7,094) | (6,454) |
Recognised in profit / loss | (290) | (1,241) |
Recognised in other comprehensive income | (8) | 29 |
Effect of acquisitions | (59) | |
Effect of disposal | 572 | |
Effect of derecognition | (3) | |
Net deferred tax liability at the end of the period | (7,454) | (7,094) |
Potential distributions from / to Group's subsidiaries / associates | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | (3,987) | (4,738) |
Recognised in profit / loss | (175) | 203 |
Recognised in other comprehensive income | 119 | 548 |
Net deferred tax liability at the end of the period | (4,043) | (3,987) |
Licenses | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | (2,099) | (1,805) |
Recognised in profit / loss | 80 | (431) |
Recognised in other comprehensive income | 25 | 137 |
Net deferred tax liability at the end of the period | (1,994) | (2,099) |
Client base | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | (660) | (782) |
Recognised in profit / loss | 124 | 122 |
Net deferred tax liability at the end of the period | (536) | (660) |
Accrued expenses for services | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | 6,382 | 7,807 |
Recognised in profit / loss | 761 | (1,280) |
Recognised in other comprehensive income | (9) | (131) |
Effect of disposal | (14) | |
Effect of derecognition | (3) | |
Net deferred tax liability at the end of the period | 7,131 | 6,382 |
Lease obligations | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | 2,199 | 2,351 |
Recognised in profit / loss | 164 | (152) |
Net deferred tax liability at the end of the period | 2,363 | 2,199 |
Loss carryforward | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | 1,917 | 1,887 |
Recognised in profit / loss | 226 | 383 |
Recognised in other comprehensive income | (49) | |
Effect of disposal | (304) | |
Net deferred tax liability at the end of the period | 2,143 | 1,917 |
Provision for investment in Delta Bank in Ukraine | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | 653 | 889 |
Recognised in other comprehensive income | (52) | (236) |
Net deferred tax liability at the end of the period | 601 | 653 |
Deferred connection fees | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | 540 | 639 |
Recognised in profit / loss | 33 | (20) |
Recognised in other comprehensive income | (11) | (32) |
Effect of disposal | (47) | |
Net deferred tax liability at the end of the period | 562 | 540 |
Hedge and other | ||
Assets / (liabilities) arising from tax effect of: | ||
Net deferred tax liability at the beginning of the period | 989 | (2,205) |
Recognised in profit / loss | 1,077 | 3,070 |
Recognised in other comprehensive income | (141) | 131 |
Effect of disposal | (7) | |
Effect of derecognition | (5) | |
Net deferred tax liability at the end of the period | ₽ 1,920 | ₽ 989 |
INCOME TAX - Recognized tax los
INCOME TAX - Recognized tax losses and uncertain income tax positions (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
INCOME TAX | ||
Unused tax losses | ₽ 18,003 | ₽ 8,307 |
Uncertain income tax positions | ₽ 906 | ₽ 756 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - RUB (₽) ₽ / shares in Units, shares in Thousands, ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | |||
Profit for the year from continuing operations attributable to the owners of the company | ₽ 56,042 | ₽ 51,841 | ₽ 52,323 |
Loss for the year from discontinued operations attributable to the owners of the company | ₽ (3,367) | ₽ (2,834) | |
Denominator, in thousands: | |||
Weighted-average ordinary shares outstanding | 1,953,779 | 1,989,282 | 1,988,728 |
Employee stock options | 1,779 | 1,412 | 1,468 |
Weighted-average diluted shares outstanding | 1,955,558 | 1,990,694 | 1,990,196 |
Earnings per share-basic, RUB | ₽ 28.68 | ₽ 24.37 | ₽ 24.88 |
Basic EPS from continuing operations | 28.68 | 26.06 | 26.31 |
Basic EPS from discontinued operations | (1.69) | (1.43) | |
Earnings per share-diluted, RUB | 28.66 | 24.35 | 24.87 |
Diluted EPS from continuing operations | ₽ 28.66 | 26.04 | 26.29 |
Diluted EPS from discontinued operations | ₽ (1.69) | ₽ (1.42) |
RELATED PARTIES - Accounts rece
RELATED PARTIES - Accounts receivable from and accounts payable to related parties (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
RELATED PARTIES | ||
Impairment recognized for bad or doubtful debts from related parties | ₽ 0 | ₽ 0 |
Expenses recognized for bad or doubtful debts from related parties | 0 | 0 |
Total accounts receivable, related parties | 11,360 | 8,094 |
Less non-current portion | (2) | (3,693) |
Accounts receivable, related parties - current | 11,358 | 4,401 |
Total accounts payable, related parties | 1,102 | 1,014 |
MTS Belarus | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 4,835 | 2,273 |
Total accounts payable, related parties | 828 | 491 |
Business Nedvizhimost | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 4,052 | 3,693 |
Total accounts payable, related parties | 60 | 32 |
MTS Bank | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 1,232 | 1,726 |
Total accounts payable, related parties | 157 | 134 |
Zifrovoe TV | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 702 | 50 |
Sitronics | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 317 | |
Total accounts payable, related parties | 9 | |
Sitronics KASU | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 51 | |
Total accounts payable, related parties | 36 | |
Other related parties | ||
RELATED PARTIES | ||
Total accounts receivable, related parties | 222 | 301 |
Total accounts payable, related parties | ₽ 48 | 137 |
Maxima | ||
RELATED PARTIES | ||
Total accounts payable, related parties | ₽ 184 |
RELATED PARTIES - Advances and
RELATED PARTIES - Advances and investments in related parties (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
RELATED PARTIES | ||
Total advances for property, plant and equipment | ₽ 1 | ₽ 187 |
Total short-term investments in related parties | 10,064 | 4,695 |
Total other investments to related parties | 618 | 2,176 |
Total investments in shares of related parties | 149 | 149 |
Other loans receivable | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 6 | |
Other investments | ||
RELATED PARTIES | ||
Total other investments to related parties | 60 | |
Other investments in shares | ||
RELATED PARTIES | ||
Total investments in shares of related parties | 32 | 32 |
Kapstroi Telecom | ||
RELATED PARTIES | ||
Total advances for property, plant and equipment | 186 | |
Other related parties | ||
RELATED PARTIES | ||
Total advances for property, plant and equipment | 1 | 1 |
Sistema-Capital | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 9,600 | 3,721 |
Intellect Telecom | Promissory notes | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 257 | 230 |
Intellect Telecom | Loans receivable | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 77 | 72 |
MTS Bank | Bank deposits | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 67 | 33 |
MTS Bank | Loans receivable | ||
RELATED PARTIES | ||
Total other investments to related parties | 2,116 | |
Sistema International Funding S.A. | Sistema International Funding S.A. Bonds due in 2019 | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 57 | 65 |
Sistema | Promissory notes | ||
RELATED PARTIES | ||
Total short-term investments in related parties | 574 | |
Sistema | Promissory notes | ||
RELATED PARTIES | ||
Total other investments to related parties | 618 | |
Sistema Venture Capital | ||
RELATED PARTIES | ||
Total investments in shares of related parties | ₽ 117 | ₽ 117 |
RELATED PARTIES - Operating tra
RELATED PARTIES - Operating transactions with related parties (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
RELATED PARTIES | |||
Total revenues from related parties | ₽ 3,349 | ₽ 2,178 | ₽ 1,484 |
Total operating expenses incurred on transactions with related parties | 4,053 | 3,114 | 6,578 |
MTS Bank | |||
RELATED PARTIES | |||
Total revenues from related parties | 1,507 | 900 | 588 |
Total operating expenses incurred on transactions with related parties | 2,259 | 347 | 61 |
Zifrovoe TV | |||
RELATED PARTIES | |||
Total revenues from related parties | 724 | 55 | 3 |
Sitronics | |||
RELATED PARTIES | |||
Total revenues from related parties | 303 | ||
Business Nedvizhimost | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 821 | 246 | 224 |
AB Safety | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 302 | 271 | 212 |
Jet Air Group | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 172 | 183 | 180 |
Maxima | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 143 | 1,018 | 1,351 |
MTS Belarus | |||
RELATED PARTIES | |||
Total revenues from related parties | 248 | 276 | 266 |
Total operating expenses incurred on transactions with related parties | 121 | 161 | 394 |
Elavius | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 11 | 159 | 328 |
Inturavtoservis | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 4 | 124 | 44 |
Rent-Nedvizhimost | |||
RELATED PARTIES | |||
Total operating expenses incurred on transactions with related parties | 308 | 776 | |
Detsky Mir | |||
RELATED PARTIES | |||
Total revenues from related parties | 188 | 129 | 64 |
Medsi Group | |||
RELATED PARTIES | |||
Total revenues from related parties | 156 | 242 | 113 |
Sistema | |||
RELATED PARTIES | |||
Total revenues from related parties | 19 | 83 | 61 |
Segezha Group | |||
RELATED PARTIES | |||
Total revenues from related parties | 10 | 149 | |
Sitronics KASU | |||
RELATED PARTIES | |||
Total revenues from related parties | 5 | 40 | 8 |
NVision | |||
RELATED PARTIES | |||
Total revenues from related parties | 119 | ||
Total operating expenses incurred on transactions with related parties | 575 | ||
Stream | |||
RELATED PARTIES | |||
Total revenues from related parties | 141 | ||
Total operating expenses incurred on transactions with related parties | 2,132 | ||
Other related parties | |||
RELATED PARTIES | |||
Total revenues from related parties | 189 | 304 | 121 |
Total operating expenses incurred on transactions with related parties | ₽ 220 | ₽ 297 | ₽ 301 |
RELATED PARTIES - Finance incom
RELATED PARTIES - Finance income from related parties (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
RELATED PARTIES | |||
Total finance income from related parties | ₽ 1,267 | ₽ 985 | ₽ 1,067 |
Sistema-Capital | |||
RELATED PARTIES | |||
Total finance income from related parties | 369 | 128 | |
Business Nedvizhimost | |||
RELATED PARTIES | |||
Total finance income from related parties | 359 | 491 | 346 |
MTS Bank | |||
RELATED PARTIES | |||
Total finance income from related parties | 345 | 285 | 447 |
Zifrovoe TV | |||
RELATED PARTIES | |||
Total finance income from related parties | 70 | 12 | |
Sistema | |||
RELATED PARTIES | |||
Total finance income from related parties | 48 | 53 | 188 |
Other related parties | |||
RELATED PARTIES | |||
Total finance income from related parties | ₽ 76 | ₽ 16 | ₽ 86 |
RELATED PARTIES - Additional in
RELATED PARTIES - Additional information of related parties (Details) - RUB (₽) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2017 | Jan. 31, 2017 | Mar. 31, 2016 | Oct. 31, 2014 | May 31, 2015 | May 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 30, 2016 | |
RELATED PARTIES | ||||||||||
Total other investments to related parties | ₽ 618,000,000 | ₽ 2,176,000,000 | ||||||||
Short-term investments in related parties | 10,064,000,000 | 4,695,000,000 | ||||||||
Key management remuneration | 739,000,000 | 760,000,000 | ₽ 835,000,000 | |||||||
Key management remuneration as base salaries | 490,000,000 | 470,000,000 | 514,000,000 | |||||||
Key management remuneration as bonus | 249,000,000 | 290,000,000 | 321,000,000 | |||||||
Cash-settled and equity-settled share-based payments | 486,000,000 | 481,000,000 | ₽ 175,000,000 | |||||||
MTS Bank | ||||||||||
RELATED PARTIES | ||||||||||
Short-term deposits with related parties | 633,000,000 | 532,000,000 | ||||||||
MTS Bank | Bank deposits | ||||||||||
RELATED PARTIES | ||||||||||
Cash position with related parties | 13,746,000,000 | 4,902,000,000 | ||||||||
Short-term investments in related parties | 67,000,000 | 33,000,000 | ||||||||
MTS Bank | Loans receivable | ||||||||||
RELATED PARTIES | ||||||||||
Total other investments to related parties | 2,116,000,000 | |||||||||
Funds received from related party for repayment of subordinated loan | ₽ 2,116,000,000 | |||||||||
East-West United Bank | ||||||||||
RELATED PARTIES | ||||||||||
Cash position with related parties | 5,969,000,000 | 736,000,000 | ||||||||
Short-term deposits with related parties | 5,810,000,000 | 0 | ||||||||
Sistema | Promissory notes | ||||||||||
RELATED PARTIES | ||||||||||
Amount receivable | 618,000,000 | |||||||||
Short-term investments in related parties | 574,000,000 | |||||||||
Sistema | Sistema Notes due in 2016 (series 04) | ||||||||||
RELATED PARTIES | ||||||||||
Investment related party notes | ₽ 2,501,350 | |||||||||
Acquired bonds classified as available for sale and accounted for at fair value with changes recognized in other comprehensive income | 519,000,000 | |||||||||
Proceeds received on redemption as principal and coupons | ₽ 201,000,000 | |||||||||
Sistema | Promissory notes | ||||||||||
RELATED PARTIES | ||||||||||
Total other investments to related parties | 618,000,000 | |||||||||
Amount receivable | 574,000,000 | |||||||||
Sistema International Funding S.A. | Sistema International Funding S.A. Bonds due in 2019 | ||||||||||
RELATED PARTIES | ||||||||||
Investment related party bonds | 1,000 | |||||||||
Acquired bonds classified as available for sale and accounted for at fair value with changes recognized in other comprehensive income | ₽ 32,000,000 | |||||||||
Proceeds received on redemption as principal and coupons | ₽ 409,000,000 | |||||||||
Short-term investments in related parties | 57,000,000 | 65,000,000 | ||||||||
Business Nedvizhimost | ||||||||||
RELATED PARTIES | ||||||||||
Amount receivable | ₽ 4,052,000,000 | 3,693,000,000 | ||||||||
Interest rate | 12.00% | |||||||||
Rent-Nedvizhimost | Business Nedvizhimost | ||||||||||
RELATED PARTIES | ||||||||||
Ownership interest sold (as a percent) | 100.00% | |||||||||
Proceeds from sale of ownership interest | ₽ 8,500,000,000 | |||||||||
Sistema-Capital | ||||||||||
RELATED PARTIES | ||||||||||
Short-term investments in related parties | ₽ 9,600,000,000 | ₽ 3,721,000,000 | ||||||||
Balance of assets under trust management | ₽ 9,600,000,000 | ₽ 3,721,000,000 | ||||||||
Zifrovoe TV | ||||||||||
RELATED PARTIES | ||||||||||
Cash contribution made to related party | ₽ 171,000,000 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | 12 Months Ended | |||
Dec. 31, 2017RUB (₽)₽ / sharesshares | Dec. 31, 2016RUB (₽)₽ / sharesshares | Dec. 31, 2015RUB (₽)shares | Dec. 31, 2014shares | |
Shareholders' equity | ||||
Number of shares outstanding | 1,912,042,419 | 1,986,899,528 | ||
Purchase of treasury shares | ₽ | ₽ 21,896,000,000 | ₽ 748,000,000 | ₽ 6,000,000 | |
Common stock | ||||
Shareholders' equity | ||||
Ordinary shares authorized | 1,998,381,575 | 1,998,381,575 | ||
Par value (in RUB per share) | ₽ / shares | ₽ 0.1 | ₽ 0.1 | ||
Number of shares outstanding | 1,998,381,575 | 1,998,381,575 | 2,066,413,562 | 2,066,413,562 |
Treasury stock | ||||
Shareholders' equity | ||||
Number of shares outstanding | (86,339,156) | (11,482,047) | (77,521,163) | (77,501,432) |
Purchase of treasury shares | ₽ | ₽ 21,896,000,000 | ₽ 748,000,000 | ₽ 6,000,000 | |
ADS | ||||
Shareholders' equity | ||||
Ratio of ordinary shares per each ADS | 2 | |||
Number of ADSs repurchased (in shares) | 33,997,667 | |||
Common stock and ADSs included in Tender Offer | ||||
Shareholders' equity | ||||
Maximum stock repurchase amount | ₽ | ₽ 4,647,000,000 | ₽ 4,935,000,000 | ||
Number of shares repurchased | 16,022,364 | 3,060,409 | ||
Price per share | ₽ / shares | ₽ 290 | |||
Purchase of treasury shares | ₽ | ₽ 4,646,000,000 | ₽ 747,000,000 | ||
Common stock and ADSs included in Tender Offer | Sistema | ||||
Shareholders' equity | ||||
Number of shares repurchased | 1,550,495 | |||
Purchase of treasury shares | ₽ | ₽ 335,000,000 | |||
Common stock and ADSs included in Tender Offer | Sistema Finance | ||||
Shareholders' equity | ||||
Number of shares repurchased | 16,038,892 | |||
Purchase of treasury shares | ₽ | ₽ 4,651,000,000 | |||
Common stock and ADSs included in the Repurchase Plan | ||||
Shareholders' equity | ||||
Maximum stock repurchase amount | ₽ | ₽ 20,000,000,000 | |||
Number of shares repurchased | 43,647,128 | |||
Purchase of treasury shares | ₽ | ₽ 12,475,000,000 | |||
Common stock and ADSs included in the Repurchase Plan | Minimum | ||||
Shareholders' equity | ||||
Price per share | ₽ / shares | ₽ 257 | |||
Common stock and ADSs included in the Repurchase Plan | Maximum | ||||
Shareholders' equity | ||||
Price per share | ₽ / shares | ₽ 305 |
SHAREHOLDERS' EQUITY - Nature a
SHAREHOLDERS' EQUITY - Nature and purpose of reserves (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reserves balances | |||
Balance | ₽ 143,948 | ₽ 168,371 | ₽ 178,622 |
Other comprehensive (loss) / income for the year, net of income tax | (2,824) | (17,807) | (1,672) |
Balance | 124,205 | 143,948 | 168,371 |
Foreign currency translation reserve | |||
Reserves balances | |||
Balance | (6,418) | 9,638 | 8,803 |
Other comprehensive income / (loss) for the year | (2,620) | (13,970) | 835 |
Amounts reclassified to profit for the year | (2,086) | ||
Amounts reclassified to Additional paid in capital | (659) | ||
Other comprehensive (loss) / income for the year, net of income tax | (3,279) | (16,056) | 835 |
Balance | (9,697) | (6,418) | 9,638 |
Cash flow hedging reserve | |||
Reserves balances | |||
Balance | (155) | 1,045 | 4,268 |
Other comprehensive income / (loss) for the year | (3,140) | (11,324) | 3,253 |
Less: tax (expense) benefit | 628 | 2,219 | (542) |
Amounts reclassified to profit for the year | 3,748 | 9,897 | (7,121) |
Less: tax (expense) benefit | (741) | (1,992) | 1,187 |
Other comprehensive (loss) / income for the year, net of income tax | 495 | (1,200) | (3,223) |
Balance | 340 | (155) | 1,045 |
Remeasurements of the net defined benefit liability | |||
Reserves balances | |||
Balance | 543 | 493 | 407 |
Other comprehensive income / (loss) for the year | (40) | 50 | 86 |
Other comprehensive (loss) / income for the year, net of income tax | (40) | 50 | 86 |
Balance | ₽ 503 | ₽ 543 | ₽ 493 |
SHAREHOLDERS' EQUITY - Non-cont
SHAREHOLDERS' EQUITY - Non-controlling interest (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Non-controlling interest | |||
Non-controlling interest opening balance | ₽ (4,713) | ||
Dividends to non-controlling interest | 1,175 | ₽ 1,120 | ₽ 737 |
Non-controlling interest closing balance | (4,079) | (4,713) | |
Statement of financial position | |||
Current assets | 146,032 | 90,994 | |
Non-current assets | 405,038 | 453,476 | |
Current liabilities | (156,671) | (127,545) | |
Non-current liabilities | (270,194) | (272,977) | |
Income statement | |||
Revenue, gross of intercompany | (442,911) | (435,692) | (426,639) |
Profit for the year, gross of intercompany | (56,590) | (48,450) | (47,404) |
Non-controlling interests | |||
Non-controlling interest | |||
Dividends to non-controlling interest | 1,175 | 1,120 | 257 |
Income statement | |||
Profit for the year, gross of intercompany | (548) | 24 | 2,085 |
MGTS Group | |||
Non-controlling interest | |||
Non-controlling interest opening balance | (4,787) | (5,191) | (4,399) |
Profit for the year attributable to non-controlling interest | (554) | (727) | (782) |
Dividends to non-controlling interest | 1,175 | 1,120 | 257 |
Other | (14) | 11 | (267) |
Non-controlling interest closing balance | (4,180) | (4,787) | (5,191) |
MGTS Group | Non-controlling interests | |||
Statement of financial position | |||
Current assets | 22,595 | 25,301 | |
Non-current assets | 42,204 | 50,130 | |
Current liabilities | (8,959) | (7,653) | |
Non-current liabilities | (7,250) | (7,965) | |
Income statement | |||
Revenue, gross of intercompany | (39,565) | (40,210) | (41,144) |
Profit for the year, gross of intercompany | ₽ (9,719) | ₽ (12,167) | ₽ (13,322) |
SHAREHOLDERS' EQUITY - Dividend
SHAREHOLDERS' EQUITY - Dividends (Details) ₽ / shares in Units, ₽ in Millions | 12 Months Ended | |||
Dec. 31, 2018payment₽ / shares | Dec. 31, 2017RUB (₽)payment₽ / shares | Dec. 31, 2016RUB (₽)payment₽ / shares | Dec. 31, 2015RUB (₽)₽ / shares | |
Dividends | ||||
Minimum cumulative dividend payout for ordinary share | ₽ 20 | ₽ 20 | ₽ 20 | |
Number of semi-annual payments | payment | 2 | 2 | 2 | |
Net income available for distribution as calculated under Russian statutory accounting regulations | ₽ | ₽ 125,091 | ₽ 50,659 | ₽ 6,590 | |
Declared cash dividends | ||||
Dividends declared (including dividends on treasury shares of 1,337, 1,950 and 1,922 respectively) | ₽ | 51,958 | 51,958 | 52,011 | |
Dividends declared on treasury shares | ₽ | ₽ 1,337 | ₽ 1,950 | ₽ 1,922 | |
Dividends, RUB per ADS | ₽ 52 | ₽ 52 | ₽ 50.34 | |
Dividends, RUB per share | ₽ 26 | ₽ 26 | ₽ 25.17 | |
Dividends payable | ₽ | ₽ 125.4 | ₽ 87 | ||
Minimum | ||||
Dividends | ||||
Target annual payout per ordinary share | ₽ 25 | ₽ 25 | ₽ 25 | |
Maximum | ||||
Dividends | ||||
Target annual payout per ordinary share | ₽ 26 | ₽ 26 | ₽ 26 |
SELLING, GENERAL AND ADMINIS131
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |||
Salaries and social contributions | ₽ 44,605 | ₽ 44,347 | ₽ 40,026 |
Utilities and maintenance | 9,361 | 9,092 | 6,817 |
Advertising and marketing expenses | 9,185 | 10,480 | 9,543 |
General and administrative expenses | 8,321 | 7,007 | 6,762 |
Dealers commission | 6,718 | 6,740 | 8,960 |
Taxes other than income tax | 3,896 | 3,806 | 1,970 |
Cash collection commission | 3,689 | 3,311 | 2,906 |
Universal service fund | 3,462 | 3,412 | 3,441 |
Consulting expenses | 1,975 | 1,618 | 2,392 |
Billing and data processing | 1,292 | 1,485 | 1,829 |
Other | 2,682 | 2,748 | 2,694 |
Total | ₽ 95,186 | ₽ 94,046 | ₽ 87,340 |
FINANCE INCOME AND COSTS (Detai
FINANCE INCOME AND COSTS (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest expense: | |||
Loans and notes | ₽ 22,131 | ₽ 22,982 | ₽ 25,154 |
Amortization of debt issuance costs | 623 | 683 | 732 |
Finance lease obligations | 954 | 855 | 756 |
Provisions: unwinding of discount | 91 | 94 | 77 |
Total interest expense | 23,799 | 24,614 | 26,719 |
Loss on financial instruments | 2,486 | 25 | 210 |
Other finance costs(2) | 86 | 2,885 | 378 |
Total finance costs | 26,371 | 27,524 | 27,307 |
Less: amounts capitalized on qualifying assets (1) | (307) | (388) | (885) |
Finance costs | 26,064 | 27,136 | 26,422 |
Finance income on loans and receivables | |||
Interest income on bank deposits | 4,818 | 4,277 | 7,187 |
Interest income on loans | 330 | 510 | 728 |
Other finance income | 400 | 486 | 453 |
Finance income | 5,548 | 5,273 | 8,368 |
Net finance costs | ₽ 20,516 | ₽ 21,863 | ₽ 18,054 |
Annual weighted average capitalization rates | 8.20% | 8.30% | 8.30% |
SEGMENT INFORMATION - Financial
SEGMENT INFORMATION - Financial information by reportable segments (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue | |||
Revenue | ₽ 442,911 | ₽ 435,692 | ₽ 426,639 |
Operating profit | 96,100 | 87,669 | 93,923 |
Depreciation and amortization | 79,912 | 81,582 | 77,843 |
Other disclosure: | |||
Capital expenditures | 86,158 | 80,185 | 98,721 |
Total | |||
Revenue | |||
Revenue | 425,188 | 416,878 | 411,766 |
Operating profit | 107,880 | 95,933 | 101,240 |
Depreciation and amortization | 76,690 | 77,291 | 74,116 |
Other disclosure: | |||
Capital expenditures | 83,766 | 76,190 | 93,452 |
Russia convergent | |||
Revenue | |||
Revenue | 365,846 | 355,056 | 351,406 |
Operating profit | 93,821 | 81,484 | 82,788 |
Depreciation and amortization | 59,942 | 60,087 | 61,202 |
Other disclosure: | |||
Capital expenditures | 65,790 | 61,208 | 64,194 |
Moscow fixed line | |||
Revenue | |||
Revenue | 34,350 | 34,796 | 34,770 |
Operating profit | 8,801 | 10,850 | 13,737 |
Depreciation and amortization | 10,642 | 10,900 | 7,715 |
Other disclosure: | |||
Capital expenditures | 7,403 | 7,316 | 9,303 |
Ukraine | |||
Revenue | |||
Revenue | 24,992 | 27,026 | 25,590 |
Operating profit | 5,258 | 3,599 | 4,715 |
Depreciation and amortization | 6,106 | 6,304 | 5,199 |
Other disclosure: | |||
Capital expenditures | 10,573 | 7,666 | 19,955 |
Other | |||
Revenue | |||
Revenue | 17,618 | 18,689 | 14,718 |
Operating profit | (871) | 3,523 | 2,180 |
Depreciation and amortization | 3,481 | 4,395 | 3,800 |
Other disclosure: | |||
Capital expenditures | 2,392 | 3,995 | 5,269 |
HQ and elimination | |||
Revenue | |||
Revenue | 105 | 125 | 155 |
Operating profit | (10,909) | (11,787) | (9,497) |
Depreciation and amortization | (259) | (104) | (73) |
Intersegment elimination | Total | |||
Revenue | |||
Revenue | 10,930 | 11,881 | 11,810 |
Intersegment elimination | Russia convergent | |||
Revenue | |||
Revenue | 5,136 | 4,849 | 4,370 |
Intersegment elimination | Moscow fixed line | |||
Revenue | |||
Revenue | 4,683 | 4,871 | 4,836 |
Intersegment elimination | Ukraine | |||
Revenue | |||
Revenue | 1,111 | 2,161 | 2,604 |
Intersegment elimination | Other | |||
Revenue | |||
Revenue | 12,785 | 14,423 | 4,456 |
Intersegment elimination | HQ and elimination | |||
Revenue | |||
Revenue | (23,715) | (26,304) | (16,266) |
Operating segments | |||
Revenue | |||
Revenue | 442,911 | 435,692 | 426,639 |
Operating segments | Total | |||
Revenue | |||
Revenue | 436,118 | 428,759 | 423,576 |
Operating segments | Russia convergent | |||
Revenue | |||
Revenue | 370,982 | 359,905 | 355,776 |
Operating segments | Moscow fixed line | |||
Revenue | |||
Revenue | 39,033 | 39,667 | 39,606 |
Operating segments | Ukraine | |||
Revenue | |||
Revenue | 26,103 | 29,187 | 28,194 |
Operating segments | Other | |||
Revenue | |||
Revenue | 30,403 | 33,112 | 19,174 |
Operating segments | HQ and elimination | |||
Revenue | |||
Revenue | ₽ (23,610) | ₽ (26,179) | ₽ (16,111) |
SEGMENT INFORMATION - Financ134
SEGMENT INFORMATION - Financial information by geographic areas (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue | |||
Revenue | ₽ 442,911 | ₽ 435,692 | ₽ 426,639 |
Non-current assets | |||
Non-current assets: | 376,741 | 381,654 | |
Russia | |||
Revenue | |||
Revenue | 405,365 | 392,764 | 387,456 |
Non-current assets | |||
Non-current assets: | 339,693 | 340,944 | |
Other | |||
Revenue | |||
Revenue | 37,546 | 42,928 | ₽ 39,183 |
Non-current assets | |||
Non-current assets: | ₽ 37,048 | ₽ 40,710 |
OPERATIONS IN UZBEKISTAN - Disp
OPERATIONS IN UZBEKISTAN - Disposal of UMS (Details) ₽ / shares in Units, ₽ in Millions | Aug. 05, 2016USD ($) | Dec. 31, 2017RUB (₽) | Dec. 31, 2016RUB (₽)₽ / shares | Dec. 31, 2015RUB (₽)₽ / shares |
Results of discontinued operation | ||||
Income tax gain (note 19) | ₽ 0 | ₽ 192 | ₽ 661 | |
Loss from discontinued operations | ₽ (4,021) | ₽ (5,668) | ||
Basic loss per share | ₽ / shares | ₽ (1.69) | ₽ (1.43) | ||
Diluted loss per share | ₽ / shares | ₽ (1.69) | ₽ (1.42) | ||
UMS | ||||
Disposal of UMS | ||||
Sale of ownership in discontinued operation (as a percentage) | 50.01% | |||
Consideration received for disposal of company | $ | $ 1 | |||
Results of discontinued operation | ||||
Revenue | ₽ 5,115 | ₽ 4,610 | ||
Expenses | (6,602) | (10,939) | ||
Loss before tax | (1,487) | (6,329) | ||
Income tax gain (note 19) | 192 | 661 | ||
Loss for the period | (1,295) | (5,668) | ||
Loss on sale of discontinued operations | (2,726) | |||
Loss from discontinued operations | (4,021) | (5,668) | ||
Loss attributable to non-controlling interests | (654) | (2,834) | ||
Loss to owners of the Company | ₽ (3,367) | ₽ (2,834) | ||
Basic loss per share | ₽ / shares | ₽ (1.69) | ₽ (1.43) | ||
Diluted loss per share | ₽ / shares | ₽ (1.69) | ₽ (1.42) | ||
Cash flows from (used in) discontinued operation | ||||
Net cash used in operating activities | ₽ (543) | ₽ (1,121) | ||
Net cash used in investing activities | (1,253) | (2,195) | ||
Net cash provided by financing activities | ₽ 1,234 | ₽ 3,492 |
OPERATIONS IN UZBEKISTAN - Carr
OPERATIONS IN UZBEKISTAN - Carrying amounts of UMS net assets and reconciliation of the loss on disposal (Details) - RUB (₽) ₽ in Millions | Aug. 05, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Carrying amounts of UMS net assets and reconciliation of the loss on disposal | |||||
Property, plant and equipment | ₽ (263,063) | ₽ (272,841) | ₽ (302,662) | ||
Cash and cash equivalents | (30,586) | (18,470) | ₽ (33,464) | ₽ (61,566) | |
Other current assets | (146) | (75) | |||
Non-current liabilities | 270,194 | 272,977 | |||
Current liabilities | 156,671 | 127,545 | |||
Non-controlling interest | 4,079 | 4,713 | |||
Accumulated other comprehensive loss | ₽ (8,854) | ₽ (6,030) | |||
UMS | |||||
Carrying amounts of UMS net assets and reconciliation of the loss on disposal | |||||
Property, plant and equipment | ₽ (6,960) | ||||
Other intangible assets | (2,922) | ||||
Other non-current assets | (2,577) | ||||
Cash and cash equivalents | (378) | ||||
Other current assets | (1,359) | ||||
Non-current liabilities | 5,113 | ||||
Current liabilities | 2,484 | ||||
Non-controlling interest | 1,787 | ||||
Accumulated other comprehensive loss | 2,086 | ||||
Loss on disposal of UMS | ₽ (2,726) |
LIABILITY UNDER PUT OPTION A137
LIABILITY UNDER PUT OPTION AGREEMENT (Details) ₽ in Millions, € in Millions | 1 Months Ended | |||
Sep. 30, 2007 | Dec. 31, 2017RUB (₽) | Dec. 31, 2016RUB (₽) | Dec. 31, 2010EUR (€) | |
ICH | ||||
Liability under put option agreement | ||||
Stake acquired | 80.00% | |||
Liabilities under put option agreements | ||||
Liability under put option agreement | ||||
Liabilities | ₽ | ₽ 2,012 | ₽ 2,243 | ||
Call and put option agreement | ICH | ||||
Liability under put option agreement | ||||
Remaining stake to be acquired | 20.00% | |||
Price cap on option to purchase remaining stake | € | € 200 | |||
MTS Armenia | ICH | ||||
Liability under put option agreement | ||||
Stake acquired | 100.00% |
OPERATIONS IN TURKMENISTAN (Det
OPERATIONS IN TURKMENISTAN (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effect of impairment charges on the Statement of profit or loss | |||
Current provision for income tax | ₽ 20,712 | ₽ 15,177 | ₽ 11,865 |
Provision for doubtful accounts | 2,923 | 2,857 | 3,221 |
Other operating expenses | 1,746 | (222) | 2,415 |
Deferred income tax | (2,408) | (137) | 1,782 |
Total impairment loss | 3,775 | ₽ 0 | ₽ 3,516 |
Turkmenistan | |||
Effect of impairment charges on the Statement of profit or loss | |||
Impairment long-lived assets | 3,204 | ||
Current provision for income tax | 100 | ||
Provision for doubtful accounts | 74 | ||
Other operating expenses | 37 | ||
Taxes other than income tax | 20 | ||
Deferred income tax | (69) | ||
Total impairment loss | ₽ 3,366 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Capital commitments (Details) item in Thousands, ₽ in Millions | 1 Months Ended | |
Apr. 30, 2017item | Dec. 31, 2017RUB (₽) | |
Capital commitments | ||
Capital commitment to acquire property, plant and equipment, intangible assets and related costs | ₽ | ₽ 33,645 | |
Apple Rus LLC [Member] | ||
Capital commitments | ||
Number of iPhone handsets included in the purchase agreement | item | 615 | |
Percentage of total purchase installment made | 44.00% |
COMMITMENTS AND CONTINGENCIE140
COMMITMENTS AND CONTINGENCIES - Operating leases (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating leases | |||
Rental expense under operating leases, reported in selling, general and administrative expenses | ₽ 7,705 | ₽ 7,581 | ₽ 6,093 |
Rental expense under operating leases, reported in cost of services | 18,352 | ₽ 18,955 | ₽ 19,549 |
Future minimum lease payments | 15,135 | ||
2,018 | |||
Operating leases | |||
Future minimum lease payments | 10,000 | ||
2,019 | |||
Operating leases | |||
Future minimum lease payments | 827 | ||
2,020 | |||
Operating leases | |||
Future minimum lease payments | 441 | ||
2,021 | |||
Operating leases | |||
Future minimum lease payments | 238 | ||
2,022 | |||
Operating leases | |||
Future minimum lease payments | 201 | ||
Thereafter | |||
Operating leases | |||
Future minimum lease payments | ₽ 3,428 |
COMMITMENTS AND CONTINGENCIE141
COMMITMENTS AND CONTINGENCIES - Taxation (Details) - RUB (₽) ₽ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Additional taxes other than income tax contingent liability | ||
Taxation | ||
Estimated financial effect of contingent liabilities | ₽ 732 | ₽ 354 |
Additional income tax contingent liability | ||
Taxation | ||
Estimated financial effect of contingent liabilities | ₽ 2,591 | ₽ 2,588 |
COMMITMENTS AND CONTINGENCIE142
COMMITMENTS AND CONTINGENCIES - Licenses (Details) ₽ in Millions, ₴ in Millions | Jan. 01, 2013 | Jul. 12, 2012RUB (₽)item | Mar. 31, 2015UAH (₴) | Mar. 31, 2015RUB (₽) | Dec. 31, 2017UAH (₴) | Dec. 31, 2017RUB (₽) | Dec. 31, 2015UAH (₴) | Dec. 31, 2015RUB (₽) | Dec. 31, 2017RUB (₽) |
LTE license | |||||||||
Commitments and Contingencies related to Licenses | |||||||||
Number of years to deploy service | 7 years | ||||||||
Minimum number of inhabitants for providing LTE services | item | 50,000 | ||||||||
Minimum annual investment | ₽ | ₽ 15,000 | ||||||||
UMTS Licenses | MTS Ukraine | |||||||||
Commitments and Contingencies related to Licenses | |||||||||
License cost | ₴ 2,715 | ₽ 6,015 | |||||||
Grant period (in years) | 15 years | 15 years | |||||||
Amount paid for conversion of frequencies | ₴ 299 | ₽ 645 | ₴ 358 | ₽ 865 | |||||
Amount payable for conversion of frequencies | ₴ 232 | ₽ 476 |
COMMITMENTS AND CONTINGENCIE143
COMMITMENTS AND CONTINGENCIES - Others (Details) - RUB (₽) ₽ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Feb. 12, 2018 | Dec. 31, 2017 | Dec. 31, 2014 | |
Central Bank of Russia | ||||
Potential adverse effects of economic instability and sanctions | ||||
Key rate | 7.50% | 7.75% | 17.00% | |
Ukranian Bank | ||||
Potential adverse effects of economic instability and sanctions | ||||
Provision in respect of cash balances in banks, whose liquidity was affected by the economic downturn | ₽ 1,698 | |||
Current accounts and deposits | ₽ 1,330 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) ₽ in Millions, $ in Millions | Mar. 01, 2018USD ($) | Mar. 01, 2018RUB (₽) | Mar. 31, 2018USD ($)series | Mar. 31, 2018RUB (₽)series | Feb. 28, 2018 | Oct. 31, 2017RUB (₽) | Sep. 30, 2017RUB (₽) | Aug. 31, 2017 | Mar. 31, 2018RUB (₽)shares | Dec. 31, 2017RUB (₽) | Dec. 31, 2016RUB (₽) | Dec. 31, 2015RUB (₽) | Jan. 31, 2018 |
Subsequent events | |||||||||||||
Repayment of outstanding notes | ₽ 12,042 | ₽ 20,364 | ₽ 24,018 | ||||||||||
Consideration for acquisition of interest in associates | ₽ 723 | ₽ 4,094 | |||||||||||
Acquisition of shares under Share Repurchase Plan | Common stock | |||||||||||||
Subsequent events | |||||||||||||
Number of shares repurchased | shares | 27,059,204 | ||||||||||||
Acquisition of shares under Share Repurchase Plan (as percent) | 1.35% | ||||||||||||
Bank loans and other debt | Early repayment of Calyon, ING Bank N.V, Nordea Bank AB, Raiffeisen Zentralbank Osterreich AG | |||||||||||||
Subsequent events | |||||||||||||
Term of loan | 10 years | 10 years | |||||||||||
Repayment of outstanding notes | $ 224.7 | ₽ 12,668 | $ 224.7 | ₽ 12,668 | |||||||||
Exchange-traded bonds | Ruble bonds placement | |||||||||||||
Subsequent events | |||||||||||||
Number of series of exchange-traded bonds issued | series | 2 | 2 | |||||||||||
Bonds issued | ₽ 20,000 | ₽ 20,000 | |||||||||||
7.10% semi-annual coupon rate bonds | Ruble bonds placement | |||||||||||||
Subsequent events | |||||||||||||
Semi-annual coupon rate | 7.10% | 7.10% | |||||||||||
Maturity of bonds | 3 years 6 months | 3 years 6 months | |||||||||||
7.25% semi-annual coupon rate bonds | Ruble bonds placement | |||||||||||||
Subsequent events | |||||||||||||
Semi-annual coupon rate | 7.25% | 7.25% | |||||||||||
Maturity of bonds | 7 years | 7 years | |||||||||||
MDTZK LLC | Business combination | |||||||||||||
Subsequent events | |||||||||||||
Ownership interest acquired | 100.00% | 100.00% | 100.00% | ||||||||||
Kulturnaya Sluzhba LLC | Business combination | |||||||||||||
Subsequent events | |||||||||||||
Ownership interest acquired | 78.20% | 78.20% | 78.20% | ||||||||||
OZON Holdings Limited | |||||||||||||
Subsequent events | |||||||||||||
Consideration for acquisition of interest in associates | ₽ 28 | ₽ 19 | |||||||||||
Proportion of ownership interest | 11.20% | 11.19% | 10.96% | 10.80% | 11.20% | 10.80% | |||||||
OZON Holdings Limited | Investments in the development of Ozon Holdings Limited | |||||||||||||
Subsequent events | |||||||||||||
Consideration for acquisition of interest in associates | ₽ 1,150 | ||||||||||||
Proportion of ownership interest | 13.70% | 13.70% |