Mobile TeleSystems PJSC (MBT) 2020 Q4 法說會逐字稿

Dear ladies and gentlemen, welcome to the conference call of Mobile TeleSystems. At our customers' request, this conference will be recorded. (Operator Instructions)

May I now hand you over to Polina Ugryumova, Director of Investor Relations, who will lead you through this conference. Please go ahead.

Welcome, everybody, to today's event to discuss MTS's fourth quarter and full year 2020 financial and operating results. Before we start, I must remind you that, except historical information, any comments made during this call may constitute forward-looking statements. Important factors could cause our actual results to differ materially from those contained in our projections or forward-looking statements. This, in turn, imply certain risks, a more thorough discussion of which are available in our annual report and Form 20-F or the materials we have distributed today.

MTS disavows any obligation to update any previously made forward-looking statements spoken on this conference call or make any adjustments to previously made statements to reflect changes in risks.

I also want to mention that following the sale of NVision in Q4 2020, we have retrospectively restated our group profit and loss statement for comparison on a like-for-like basis. As always, you can find our press release and presentation for this call on our IR website.

Today's presenters are Alexey Kornya, President and Chief Executive Officer; Slava Nikolaev, First President for Customer Experience, Marketing and Ecosystem Development; Inessa Galaktionova, First Vice President for Telecommunications; Andrey Kamensky, Vice President for Finance; and Ilya Filatov, Vice President for Financial Services and CEO of MTS Bank, who will speak in Russian and I will translate.

So with that, let me turn it over to Alexey and get us started.

Thank you, Polina, and welcome to everyone joining us.

At a global level, 2020 was a year of unprecedented challenges. Before we begin, I would like to thank the entire MTS team for the effort, dedication and professionalism over the past year. Our sector continues to play middle role in keeping our customers and communities engaged, informed and in touch.

Against this backdrop, MTS performed admirably in 2020. We proved the agility of our team, the reliability of our network and the rationality of our long-term growth strategy. Overall, I'm happy to report that MTS closed fourth quarter in a position of strength. We forward through our full year guidance targets to our group revenue and adjusted EBITDA. Cash CapEx was also in line with guidance when including the effect from derivative instruments.

Let me walk you through the headline results. For the year, group revenue was up 5.2% year-over-year to reach nearly RUB 500 million. Core telecom services were the key driver. But we saw an additional and substantial positive impact from new areas beyond connectivity. Overall, our 3 noncore verticals contributed nearly 1/3 of group topline growth.

For the quarter, revenue growth accelerated from third quarter to 7.4% year-over-year, in part reflecting easier roaming comparables due to travel seasonality. Group adjusted OIBDA in 2020 increased 1.7% year-over-year to around RUB 215 billion. Growth was driven by core telecom services as well as the positive impact in retail, which reflected both our long-term optimization measures as well as the temporary cost savings related to COVID-19. At the same time, adjusted OIBDA growth was constrained by multiple factors, primarily the decline of relatively high-margin roaming revenue as well as other one-offs and provisions at MTS and MTS Bank. For the quarter, group adjusted to OIBDA grew 1.3% year-over-year to RUB 52.5 billion.

Turning to the earnings quarter for full year. Group net profit increased 13% year-over-year, 13% to RUB 61 billion on the back of service growth, improved cost of debt and the impact from realized derivative contracts used to mitigate ForEx exposure.

At the same time, net profit growth was constrained by high base from sale of associates in 2019, impairment of ticketing assets, change in discontinued operations and a negative impact from MTS Bank at the group level. For the quarter, group net profit amounted to RUB 13.1 billion.

Strategically, we moved forward at the pace of our digital transformation, expanding in the adjacent segments, scaling our digital ecosystem and modernizing our brand for the future.

In telecom, we saw top line growth in both wireless and wireline segments. Strategically, we continue to invest in capacity and coverage, drive fixed mobile convergence and position ourselves at the leading edge of 5G and ECM technology.

In retail, we optimized our footprint by over 400 stores and more than doubled e-commerce sales. In cloud and digital solutions, we expanded our customer base and saw double-digit revenue growth. In fintech, net interest income at MTS Bank grew by nearly 1/3 despite market volatility and challenges amid the pandemic.

In media, we added 1.5 million new OTT users, more than the total we had at the beginning of the year. And across our ecosystem, we caught some of the extra digital tailwinds in 2020 driving uptake of new products and services.

Overall, we delivered on the first full year under our CLV 2.0 growth strategy. As we head into 2021, I'm confident the company is well positioned for continued success.

With that, I will hand it over to Slava for his customer experience and ecosystem update.

Thanks, Alexey, and good afternoon and good morning to everyone joining us. Mid global digital acceleration over the past year, we moved proactively to deepen customer engagement and drive penetration of new products and services. And we saw real results. Today, more than 7 million customers are using 2 more MTS services across telecom, fintech and media.

Our MTS Cashback loyalty program now has over 9 million registered users. By the end of the year, our customer care app, MyMTS, reached nearly 24 million monthly active users, a substantial fraction of our physical user base.

This is an audience that has an established financial relationships with us and has already taken a proactive step to get closer to us. They're a prime addressable market as we seek to increase our pool of multiproduct clients.

Now a few words on media. After many years of relative stability, MTS TV reached an inflection point in 2020. Year-over-year growth in overall pay-TV users accelerated to an impressive 44%, standing at 6.6 million at year-end. And the key driver was over-the-top, which saw explosive triple-digit user growth, up 142% year-over-year in Q4.

These numbers indicate to us that our audience is now reaching critical mass. That makes it the right time to speed up execution on our content strategy.

Last year, we took the first step by drastically expanding our library of international titles. This year, we are adding the second piece of the puzzle by filling out a select slate of local original content. We have a lot in the pipeline for 2021 so stay tuned.

Turning to ecosystem subscriptions. We'll continue to refine MTS Premium to enrich the value proposition. For example, in Q4, we expanded our exclusive partnerships to include a joint tie-in with Yandex.Plus. Partnerships are a critical component for our ecosystem. And these kind of one-of-a-kind benefits are a great example of how we differentiate our value proposition.

More recently, in Q1, we launched new subscription, new tariff, which is Russia's first one-stop shop subscription that combines mobile and digital services via dynamic pricing and discount. We offer users an easy-to-use interface across a full spectrum of services from gigabytes and minutes to music and video streaming. We think this is a powerful tool to drive customer lifetime value by catering to the diverse needs of different users.

We are also continuing to revamp our mobile apps, in particular, by integrating a unified approach to client ID. Our research indicates Russian consumers prefer separate apps as opposed to a single super app so they can pick and choose the specific services they want.

At the same time, it is critical we ensure a seamless customer experience across the MTS ecosystem. We've already built our client ID module into more than a dozen apps. And we will continue to enhance cross-app functionality going forward.

Overall, we are creating a unique and fresh digital lifestyle experience to delight and wow of our customers. We made some great progress in 2020. And we think we are off to a good start in 2021.

With that, let me hand it over to Inessa for telecom and B2B update.

Thank you, Slava. As we've learned over the past year, connectivity is more essential than ever. And I'm happy to report we demonstrated solid progress in 2020 across our core telecom business.

In mobile connectivity, we saw mobile revenue service growth accelerated to 6.4% year-over-year in Q4, up from 3% in Q3. That reflected both steadily underlying dynamics as well as easy comps given 2019 roaming seasonality. In addition, we see promising indicators that our convergence and ecosystem offerings are helping boost ARPU and reduce churn, increasing overall customer lifetime value.

Turning to subscribers. We continue to see a restoration in our mobile subscriber base, which at the end of Q4 stood at 78.5 million, nearly returning to record levels. We also see health cohort dynamics. According to our tracking, our share of data users exceeds our overall market share, a promising indicator for future growth.

We also continue to see stable retention of low customers who have been with us for 12 months or longer. And fixed line revenue increased 5.3% year-over-year in Q4, reflecting both solid performance in the consumer segment as well as B2G project to bridge the digital divide.

In 2020, we had more than 350,000 net adds. And according to third-party estimates last year, MTS became the largest private broadband provider in Russia by subscribers.

In retail, we executed on our optimization plan while still delivering double-digit growth in sales of handsets and accessories. Moreover, online e-comm sales more than doubled year-over-year. In the long term, we expect it to steadily wrap up customer acquisition and service wire online channels.

Offline. We are moving forward on our plan to revamp outlets to feed up for purpose formats. Today, around 90% of our stores are a standard format and size. As we guided before, we plan to bring that down to around 60% over time, with the remainder being compressed into many formats or, in a few cases, expanded into showrooms.

A few words on network development. Given surge in data consumptions on the one hand and competitive pricing on the other, it's absolutely critical that we extract maximum value for every ruble invested in our network. To do that, we are taking an approach we call smart rollout. First, we're deploying big data analytics to better understand network health. Second, we're forecasting future demand capacity just in time before congestion becomes critical. And third, we are targeting coverage expansion by looking at where demand will be, not just the way people live. To date, we estimate smart rollout already has saved us billions of rubles versus traditional on-the-ground network planning.

Finally, a brief update on B2B. Overall, cloud and digital solutions revenue was up 25% year-over-year in Q4. We continue to see growing demand for enterprise and SME clients. And according to iKS Consulting, last year, we were #2 player in the Russian infrastructure as a service space.

In IoT, subscribers grew 30% during the year. And we expanded our network to cover over 70 Russian regions.

In private LTE, we launched Russia's first operational private 5G network, together with Gazprom Neft. And we have a number of similar projects in various stages with other leading Russian companies.

With that, let me hand it to Ilya for a fintech update.

[Interpreted] Thank you, Inessa. 2020 was a changing year for the [MTS Bank]. Following the fall in demand for (inaudible) showed recovery in [cycle] in mid-June. And by the end of cycle , positive sales ratio was up double digits versus the beginning of the year. Overall, MTS Bank was among the top 5 fastest-growing Russian banks (inaudible) overall retail loans were excluded based on the direct mortgages.

Overall, MTS Bank assets increased 20.9% in 2020 to reach RUB 217.1 billion. The overall loan portfolio ex provisions grew 24.1%. And the retail loan portfolio was up 29.7% year-over-year to RUB 117.6 billion.

On the back of loan growth, full year net interest income increased 32.5% to RUB 15.5 billion. Net fee and commission income reached RUB 6.7 billion, contributing 30% of operating income before provisioning. We are making progress in developing stable, commission-based daily banking services. For the full year, fee and commission income accounted for just under half of overall retail operating income ex provisions.

Among our many initiatives to develop our transactional retail business, I would like to highlight the upgrade of our smart banking app. We have added a feature that allows users to integrate data from third-party bank accounts. And in the near future, we plan to add additional functionality for personalized offers, savings goals and financial advice.

Despite the negative impact driven by significant provisioning, in the middle of the year, MTS Bank delivered RUB 1.1 billion in net profit for the full year.

In Q4, cost of risk to the retail loan portfolio stood at 5.4%. The share of nonperforming retail loans declined to 9.5% in Q4 versus 10.2% in Q3. Overall, the bank remains committed to a conservative approach to reserves with year-end NPL coverage standing at 128%.

We remain at a comfortable level of capitalization. As of January 1, 2021, our N1.0 capital adequacy ratio stood at 13.1%, which reflects a healthy safety margin above minimum regulatory requirements of 10.5%. At the same time, the company is actively developing its fintech vertical and the high rate of growth made in a safety state and additional capitalization. In the midterm, we do envision potential further capital injections.

We continue executing on our strategy with a focus on developing digital channels and maintaining a sober approach to risk management. We plan to expand our loan portfolio, grow retail commission income and develop digital services within the MTS ecosystem to become closer to our customers.

Now I will give the floor to Andrey for a finance update.

Thank you, Ilya. Group cash CapEx for the year came in at RUB 91.6 billion when adjusted for accelerated swap contracts. This was driven primarily by sustained network investment.

In 2020, we added 14,500 LTE base stations in Russia, with our 4G coverage reaching around 85% of the country's population. Group free cash flow in 2020 amounted to RUB 61.6 billion, when excluding the impact from MTS Bank as well as proceeds from the sale of NVision and MTS former Ukraine operations.

The year-over-year dynamic, in part, reflects a high base from 2019 that included a contribution from our former Ukrainian operations. In addition, free cash flow was impacted by higher CapEx excluding Ukraine. At the same time, this was nearly entirely offset by strong core Russian performance, reflecting the health of the underlying business as well as relatively lower tax payments and financing costs.

Turning to the balance sheet. We continue to make progress on optimizing our debt portfolio and with a favorable interest rate environment. In Q4, we took a number of notable actions, including restructuring and raising a loan with Sberbank as well as signing a preferential loan agreement with (inaudible) to finance digital projects at a state-subsidized rate.

At the end of Q4, our gross weighted average interest rate declined to 6.3%, down 136 basis points year-over-year. Overall, [turnover] remains healthy with a comfortable repayment schedule. At the end of the year, the current portion of outstanding debt stood at less than 10% of the total. And our leverage remained relatively steady at a comfortable level.

Now let me hand it back to Alexey for his closing remarks.

Thank you, Andrey. I'm encouraged by our 2020 results and the solid progress we achieved across both core connectivity as well as new growth segments.

Looking ahead, there remains significant uncertainty in '21 above all the, timing and pace of roaming recovery as international travel resumes. At the same time, we have tailwinds working in our favor, such as low roaming-based headroom for ARPU growth and sustained momentum in new segments.

Taking all factors into account, we are providing initial 2021 guidance of 4% or higher growth in both group revenue and adjusted OIBDA in 2021. This target is a reflection of our confidence we have that MTS will deliver in the year ahead.

In addition, we expect cash CapEx to come in around RUB 100 million and RUB 110 billion for the year. We recognize that this is a material increase, which reflects several factors, including foreign rates, the competitive environment and our investment plans in new segments. We see 2021, in particular as a critical year for the execution of our growth strategy as we are prepared to make smart bets for the future.

Turning to shareholder remuneration. For the year, we came in slightly above our minimum dividend policy target, on top of which, we paid out a special dividend and carried out a RUB 15 billion buyback program. All told, in 2020, MTS delivered a record high returns for shareholders.

Looking ahead, 2021 will be the last year of our current dividend policy. As you know, our policy is based around an absolute per share minimum payout. While this provides a predictable baseline, we appreciate that it can also limit market expectations on dividend upside on the back of strong operational performance. We understand decision will take into consideration when formulating our new dividend policy that will take effect in 2021.

Moreover, following our buybacks, there are fewer MTS shares outstanding, which provides additional flexibility in increasing the payout per share. In this context and given our strong results, cash position and 2021 outlook, MTS management plans to recommend an increase in our per share regular dividend payout in 2021, above the level in 2020.

2 years ago, we embarked on a journey to become more than a telecom. We are now well underway. We have mapped out the road forward. We have put a strong team in place. And we have gained momentum towards becoming Russia's premier network native ecosystem of digital products and services.

So with that, let me hand it back to Polina for Q&A.

Thank you, Alexey, and thank you to the rest of the speakers. As we take questions, please be aware that there may be a slight delay for translation.

Operator, with that, let's open the line for the questions.

(Operator Instructions) The first question we received is from Ivan Kim of Xtellus Capital.

Two questions from my side, please. First on CapEx. I was wondering, the CapEx guidance is fairly wide. So what would prompt you to spend RUB 110 billion, let's say, over RUB 100 billion? So what's -- even there is a kind of higher spending, what it will be driven by? And then also longer term, is it safe to assume that CapEx will be now above RUB 100 billion mark for the next few years? That's the first question.

And then the second question on just the trends that you were seeing in January, February on mobile service revenue growth. The exit growth was pretty good, strong, didn't decelerate in the domestic business. So are you seeing the same kind of 6% growth in January, February?

Ivan, thank you for the question. CapEx range will be defined the pace at which we'll embark our digital investment projects, ForEx dynamics. And that is basically where we see whether there will be new initiatives on investments and new projects and ideas which we'll take in next year so that they will affect the overall CapEx this year, actually, so 3 factors.

And with mobile service revenue, I'll pass it over to Inessa.

Yes. So my answer will be pretty short. So we do expect positive growth dynamics in Q1 this year. As you know, it will be some slight price increase, which was actually briefly discussed with the regulator, yes. So we do expect a positive trend in Q1 in mobile revenue growth but not on the level of Q4.

Okay. And Alexey, can I just follow up on the longer-term CapEx? So do you think the longer-term CapEx will stay above RUB 100 billion now? RUB 100 billion, I can say (inaudible) longer term.

Yes, that's true. Not necessarily. I think it will depend on a number of factors, including need for 5G investments and ForEx dynamics.

Our next question received is from Vyacheslav Degtyarev of Goldman Sachs.

Couple of questions. Firstly, can you comment on the scope of the 5G CapEx investments in 2021 and also the use cases that you're deploying that CapEx for? And also, what's the economics there? Do you recover those investments in a short period of time?

And my second one would be, if you can provide a few details on the benefits of the partnership with Yandex on the premium subscribers and whether there are any early results there?

On the CapEx, there will be no material 5G CapEx in 2021. Since there still remains uncertainty of frequencies as well as local equipment requirements for 5G network rollout, no material 5G CapEx in 2021. And for the second, I'm passing to Slava.

It's very simple. MTS -- customers of MTS Premium could get Yandex.Plus at a cheaper price and could get also a 3-month free of charge. And it works vice versa, two. So we are mutually expanding the number of customers who use services of 2 ecosystems at a discount. And we believe -- of course, we are selecting the partners in this initiative. And we think this is definitely for the benefit of MTS customers.

Current results, it's too early to speak about current results. We see a good response to that when we were delivering the message to subscriber base. But it's still at the very early stage of this curve that I think we'll show significant results. So it's not going to be 1% or 2% of MTS Premium. I expect it to be closer to -- from 10% to 20%.

The next question received is from [Mike Sander] of [Venetian Capital].

So we go on to the next question here with Anna Kurbatova from Alfa-Bank.

First question is also a follow-up on the CapEx guidance. I wonder what amount within this guidance represents maybe a rollover of projects which were not completed last year.

And the second question, if you could give some update on your media vertical? So -- because you established the entity 1 year ago, more or less. And it's interesting in terms of the progress there, in terms of your plans for the -- or in-house content development. And also, if you could provide some update, what's going on with MTS Arena? So when it will be -- go operational?

Well, on CapEx guidance, we -- historically, it is the high portion of rollover projects because this is infrastructure time-consuming investment. So it's usually about 30% of our CapEx. So higher comps as the rollover. But of course, the decisions on 2021 CapEx are usually taking late 2020, early 2021. So you have full capability to define the level of CapEx each year.

And on the -- first, on media vertical update. First of all, we see -- apart from the figures that I told you earlier which are, I think, impressive by themselves, we can also say that we see a major improvement in the product itself. We have an application that has much higher marks in all stores given by our customers, which is a great thing.

Second, we have a better retention of customers because we have better libraries in the application. And most importantly, I think, is that later this year, pretty soon, I'm not saying the date, pretty soon you're going to see a major relaunch of MTS TV with original content and a lot of new features. So as I say, stay tuned. It's going to be interesting and it's going to be soon.

On MTS Arena, we expect the launch in the middle of this year. The -- it will be technically ready before that. But the main point is an ability to create the proper lineup for offline concerts, which is not an easy task now because international travel is still restricted and there are still some concerns about how it's going to match the flow of dynamics. So it's still unclear. The exact date is still unclear. It's definitely this year. I would -- my suggestion is that it's going to be slightly closer to autumn. But it still has to be determined.

I may have a quick follow-up on CapEx. You -- well, the Russian operators were allowed to, let's say, say something in terms of Yarovaya-related project last year. So the government allowed to postpone some capacity expansion, yes, to later years, I mean, the COVID pandemic.

So could you a bit update on what's going on there? So if you, let's say, understand something last year on Yarovaya, does it mean that this year, you will need to invest for what was initially projected for the year '21 and plus what was underspent for last year? Or it will be some kind of a softer trajectory?

Yes. Thank you. Look, the limitation or ease on our Yarovaya spend does not relate to a short phase of Yarovaya infrastructure buildup. So effectively, we'll have to build what was initially planned.

So the easiness of future CapEx after the initial infrastructure was provided by those adjustments you just mentioned. However, the initial infrastructure need to be built at the initial -- kind of initial design and initial capacity. That's the commitment which we identified of RUB 50 billion over the 5-year period is still intact.

And the next question is from Maria Sukhanova from BCS.

I have 3 questions. So first one, you've mentioned price increase for your existing customers. Could you specify what was the average percentage?

Second, you also mentioned that you see a lower churn on convergent offers. Is there any number that you could share with us or just to better understand how it looks?

And thirdly, there was an article in Kommersant that you have this experiment of free access to socially important sites and there was an article saying that it might be expanded into video. Is this true with this kind of talks, discussions happening with the carriers? And if they are, how significant you think this risk is? That's it.

Yes. So I will answer the first question on the tariff adjustment. Actually, it's a very limited one. So we even don't -- it's not even material in terms of the level of increase.

On the second question, I can answer that. There are different conversion offers. And when we're talking about mobile plus 6, it is -- usually, the churn rate is less by 1.5, 1.7x. So it's already significant. When we have more products in one convergent offer like new tariff, if the client gets 3 and more services, then it's lower to up to 3x.

And on accessible Internet projects, the discussions are right now in place. So it is too early to say what will be the final constellation of this initiative from the government.

(Operator Instructions) And the next one is a follow-up of Ivan Kim.

Just 2 quick questions on buyback. So do you foresee conducting buyback this year? And then secondly on MTS Bank capital injection that you mentioned before, so what sort of range shall we expect there? About RUB 5 billion or -- if you can give us any guidance on that.

Yes. Ivan, thank you. I will take both questions. On the buyback program, actually, based on the very good results of 2020, I think that we are going to very soon announce another buyback program. It's not defined yet but, most probably, it will come.

In terms of MTS Bank capital injection, actually, it will depend on the dynamic of the bank. So far, we see that it's growing quite rapidly based on the first month of this year. So of course, it will depend on that. But it would be -- so far, the estimation is a bit less than RUB 5 billion.

The next question is from Henrik Herbst of Morgan Stanley.

I had a few questions, please. I mean the first one, just if you can help us a little bit with the cash flow for -- expectations for 2021. I mean can you help us with EBITDA and CapEx? But below that, is there anything in particular we should be aware of? Maybe you could help us please with how we should think about working capital going into 2021?

And then secondly, when you think about the investments in content, how do you think about that business? Is that a -- do you think about it as a standalone business with content investments and the TV business generating sort of standalone returns? Or is part of the returns essentially coming from lower churn, et cetera, in the mobile business? Or how do you think about the investments in that business?

So Henrik, thank you very much. In terms of the cash flow expectation for 2021, I think you have all the components. Actually, we gave guidance on EBITDA and on CapEx.

In terms of the working capital, usually, the -- it's not that material on the cash flow, although we're constantly working from one year to another to optimize it. So I think it would be more or less comparable with this year.

As far as content investment is concerned, we are not looking at the return on particular content production. Of course, we are following and doing all the analytics of what is activity with a specific content, be it our own production or partners or acquired and so on and so forth.

However, of course, we are considering it in a more complex way. We are chasing effectiveness. But as far as the return on investments, we are looking at these convergent offers, the bundling of this product into our packages and effectiveness of, overall, our media business, which includes also satellite TV, IPTV, cable TV. So it is not only online media platform, it's all the complexity where our content will be delivered.

And we have quite a scale which allows us to do those content investments because, right now, we are having more than 5 million of our customers in our media business. That includes all means of delivering content, which I just mentioned, mobile, OTT, satellite, IPTV and cable.

And the next one is from [Mike Sander] again.

So we take the next one from Sunil Rajgopal of HSBC.

Just one question. Integration revenues were quite strong in Q4. Can you give a bit of color on what were the key drivers and also some outlook for 2021?

Sunil, we apologize. Could you repeat the question? We didn't get it fully.

Yes. So yes, integration revenues were quite strong in Q4. So can you give us a bit of color on what were the key drivers and also any outlook for 2021?

You mean the revenue -- what were the drivers of revenue growth? And...

Integration revenue.

Integration revenue, okay. Honestly speaking, I'm not fully getting which line you're referring because this year, this quarter, after deconsolidation of NVision, we are showing the figures already without integration services revenue. So to what you might refer is the cloud business where we had some growth and positive strong dynamics. Also, we have quite good dynamics on sale of equipment.

We will check. I suggest to take it offline. We will check what particular -- and you connect with our IR team to specify what exactly line of our P&L you refer so that we can specify.

Okay. Sunil, I think we get it. We have Czech -- in Czech Republic, the business, the plant with some equipment production. And because of ForEx dynamics and quite a good growth even in Czech koruna, we had the positive -- strong positive impact from this -- from our Czech business. But it wasn't that material.

The next question is from Alexander Vengranovich.

Two questions from my side. So first one on your mobile retail. So we've seen that over the fourth quarter, there was some slight increase in the number of the stores, which kind of contradicts the previous trends we've seen for the whole year. So I'm just wondering, how should we look about your store count this year, whether you continue to plan the reduction of the number of the stores? And how do you see your competitors reacting in that? Is that a market trend which continues this year?

And second question is on your probably M&A strategy, maybe your B2B business. So recently, there was an article in the press that you might be looking at potentially acquisition of NTT, which is focusing on different types of the B2B products in a telephony endeavor. So I'm just wondering whether this type of the services is a focus for you for your B2B segment. Do you continue to plan to enrich your product offering for B2B clients and whether you have any aggressive plans maybe for the development of your cloud business? Because obviously, you are a #2 player on the cloud market. You also have quite strong presence in terms of the data storage capacities. So can you also please provide some more color on what are your plans with regards to the development of this business segment this year and going forward?

Okay. I will take the first question regarding retail. So first of all, we have the stable situation of the number of retail stores. So we optimized, in 2020, 600 of stores. And in Q4, we neither increased or decreased in stores.

In 2020, actually, we are not already taken into our consideration any further retail optimization, footprint optimization because we don't see the number of stores already as, how to say it, a big factor for any distribution to any kind of big influence for the distribution, yes?

So in the current phase as well, we don't see any competitive dynamics happening in the retail footprint optimization. So as well, we don't plan to do any steps in that area.

And as far as our M&A strategy concerns, yes, we do look at nonorganic opportunities expanding our business as in our existing verticals as well as beyond those verticals.

And speaking about the existing businesses, yes, where we see interesting technological opportunities, we are considering them, which -- they need to be complementary, they need to be positive business case of internal development versus nonorganic growth and also that we need to have positive perspectives for the market growth in particular segments.

If we talk about B2B segment, which is slightly different topic, yes, we believe that we have a very good and strong potential in B2B segments, especially with the development of 5G era, which I think will be even more important because it is Internet of Things. And those things will be very much delivered to customers and will be brought to the market through corporate segment.

So B2B is becoming more of our focus and importance. And in this context, we think of developing our B2B ecosystem. So that is the reason we build a separate digital B2B and cloud vertical. And that helped us already, as you rightly mentioned, to become #2 cloud provider in Russia, although yet 2, 3 years ago, we were not visible in this market. And cloud is one of the most promising segments, including potentially edge cloud, which in cloud businesses, we'll be investing. And this is one of the most interesting areas for in -- corporate segments which we see and we will have active investments.

The next question is from Anna Kurbatova of Alfa-Bank.

Basically, the first one is just clarification. You mentioned in the introductory speech that in Q4, EBITDA was impacted by provisioning. So is it possible to share with us rough estimate, rough number for the amount of provisions?

And the second question also to like double-check the timeline with the new dividend policy. So would it be correct to assume that the Board of Directors will make a decision maybe in April, yes -- April, May, and the new dividend policy will be applied from 2021? So the interim dividend, which you normally announce in October, November already will be paid that amount in line with the new policy. Am I correct? This is the question.

Anna, thank you very much. I'll take the first question. In terms of OIBDA dynamic in the fourth quarter, as we mentioned actually, besides all the positive factors that we saw in the fourth quarter, it was constrained by the number of factors, some provisions on the bank caused by the pandemic and also some provisions that we made and we booked that now judgments were prudent to make. And the biggest part of them are related to operational provision concerning specific business activities.

So this is not something specific in that. That's the kind of regular business that -- the core business that we are actually making.

And speaking about dividend policy, as I mentioned in my speech, we will not revise this year's dividend policy. So the timing for new dividend policy will be the next year, spring next year. And we will take into consideration that the current dividend policy is limiting an understanding of the upside or following the good and strong results which we are traditionally delivering.

And taking this into consideration, this year, we will recommend a higher than our fixed figure of dividend in our dividend policy. We will recommend to the Board the high figure, so demonstrating that there is an upside if there are strong results and good guidance.

And the next is a follow-up Henrik Herbst.

I realize it's getting a little bit late but a quick follow-up. In the last call, you were expressing some concern around mobile competition. I guess I just wanted to check whether anything changed. I mean, arguably, your decision to raise pricing would suggest you're not too concerned about competition but I just wanted to double check.

We see that pricing environment in Russia is pretty healthy now. Yes, I agree, we've seen some movements from different operators in the fourth quarter. But it seems that especially given that our new propositions are mostly convergent, they are -- as I said, some of them really couldn't be compared to those of our competitors. We saw no real impact on our figures by those movements. And in the first quarter, we don't see any continuation on that. So we strongly believe that pricing environment is going to be healthy in 2021.

(Operator Instructions) And the next question is a follow-up of Alexander Vengranovich.

Just one question on MTS Bank. So if you look at the number of the customers during 2020, obviously, there was no big increase in that number. And we haven't seen any visible impact on the improving number of the consistent customers on MTS Bank. So can you please share with us your plans or maybe whether this number of -- kind of a stable number of the customers is a concern for you and you want to accelerate customer acquisitions this year? So you mentioned plans to launch new products and also provide an indication that the bank might require additional utilization. So are these things connected to each other? So the main idea is actually to drive the number of the new customers to the bank.

[Interpreted] Thank you for your question. Obviously, the number of active clients at MTS Bank is one of the most critical metric for the bank development.

Looking back on 2020 performance and on 2020 environment, we can confirm that the pace of the new sales growth was below what we expected in the beginning of last year. That's why the current dynamics of the active customers at MTS Bank looks more or less different.

When we address our achievement to get to 10 million bank clients back in November 2019 at our Strategy Day, we were referencing to the overall number of clients, which are bank ones as well as fintech ones.

Looking at -- well, our expectation by the end of 2021 is that we are targeting to achieve close to 10 million clients, if accounting together of active MTS Bank clients as well as fintech clients, which are nonbank clients but still using financial services within MTS Group.

And when we talk about the potential capital injections into MTS Bank, we, first of all, are thinking about this injection as a support to maintain MTS Bank growth above the market average growth rather than thinking about being compliant with the regulation, which is not a problem.

So the main goal for the capital injections is simply to maintain the bank growth rate above market average. As an example, last year, the overall industry in the retail loan segment grew like 8% to 12%. And this is significantly below -- around 30%, which was performed by MTS Bank.

We answered your question?

Yes. I think yes. So yes, more or less, (inaudible). I think the key issue is that it's probably difficult to define this 10 million of clients in terms of the usage of the services. Obviously, the client which has a bank account and the client which just uses whatever -- one money transfer service during the month. Obviously, the value of these clients might be dramatically different to your overall ecosystem, right? And so this is just my concern obviously. So I can't add more to that. So we'll be looking at your dynamics in that business segment.

Thank you, Sasha. We are taking your source, your concerns. And we'll definitely get back to you offline from IR side.

As we received no further questions, I hand back to the speakers for closing remarks.

Ladies and gentlemen, thank you very much for listening. As usual, we will make a replay of this call available on our IR web page in the near future. If you have any further questions, please do not hesitate to reach out to MTS Investor Relations at any time. Our inboxes and phone lines are open. In the meantime, we appreciate the interest in MTS and wish everyone a pleasant day. Thank you.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]