Mobile TeleSystems Public Joint Stock Company

Hello. Good afternoon and good evening.

I'm really happy to welcome all our listeners and viewers on our session. For those, who do not know me, I am Polina Ugryumova, I’m Director of Investor Relations here at MTS.

And today, MTS is happy to disclose its Operational and Financial Results for Q2 2022. MTS is one of the few original companies, who keep telling about their financial results, and we are almost the only company – have decided to resume its outreach to the market after a certain break.

For me, this speaks for the fact that, rates that we maintain top-notch transparency corporate governance and openness, everything our investors long as for. Today, to remind you the management of the company may make certain forward-looking statements.

These statements reflect the management's understanding of the current status and development of the business. And in our today's materials and on our website, it is stated that actual situation may differ from the one implied such forward-looking statements, because of external influence.

Today, we have a wide audience, Russian institutional investors, international investors, today for the first time we have Russian retail investors, welcome. And also on our call, we have a journalist from leading mass media.

We'll start today's call with a brief presentation. The main language of this conference is Russia.

We have simultaneous interpretation. During the presentation, after the presentation, you're welcome to ask your questions in the chat that you can see on your screens.

Myself and my colleague, Director, who's recently joined our team. We'll be aggregating in some rising questions and transfer them to our speakers in an aggregated manner.

So we hope we'll have an open and productive dialogue today. Vyacheslav Nikolaev, our CEO; and Andrey Kamensky, our CFO.

Also on the call, we have Alexey Barsegian, VP for Corporate & Legal Affairs, who will probably join us on the Q&A session, if need be in case we require some legal support, so to speak. Now I'm happy to hand it over to Vyacheslav Nikolaev, our President of MTS.

Vyacheslav?

Hello. I'm really happy to welcome you, indeed, Q2 has been a challenge in Russia's economy and due to this fact quite a few companies stopped disclosing their results.

Polina is totally right, saying that, we believe that we must not depart from standards of corporate governance and transparency that have been established in our company for a long time. So we decided to take you through the deals of how the company is navigating through this challenging period.

We've decided to also address some technical questions in particular, related to the situation with the termination of MTS ADR program, and we'll focus on it as much as we can. Now Q2, I believe Q2 maybe called for any company, maybe called, maybe referred to as a resilience test in the period of adapting to the new market environment.

And I can tell you that MTS has accomplished this test, pretty successfully. Our Telecom is operating steadily.

I will give you some details of that. Media is also quite well-off.

The most affected to some extent are Retail and Fintech domains of our business, Fintech, including our MTS Bank. In retail, obvious, come in -- we just had supply disruptions hence price hikes.

However, running a bit ahead, I would like to say that this has not all led to a reduction of our real free cash flow. You will see it later on in our slides.

And the same is the case with Fintech. It's obvious that when the key rate hiked to 20% the lending market, new-loan origination markets virtually reduced to nil, on the one hand.

And on the other hand the rules and regulations require risk reassessment and legacy loans. So technically, this reduced net income of the bank in our group and also it affected OIBDA and net income of the group as a whole.

However, this has not had an impact on our free cash flow because this was driven by additional provision, and we are pretty optimistic about the outlook of the situation going forward. So we believe everything will be quite good going forward.

Now a few details about Telecom. What have we actually been doing over the past three months.

So telecom is capable of keeping, delivering its humanitarian function so to speak because telecom is different from quite a few processes meaning that telecom connects people, which is especially important amidst economic crisis. Now what must Telecom do?

We work seamlessly instantly and think about the future. In March, when we had an opportunity, we made massive procurement -- hardware procurement, especially and in terms of hardware, we addressed our needs for at least a year ahead, and we keep swap and equipment in the regions and our do list.

On the one hand, improving quality in the regions and on the other hand, releasing older equipment that we can redirect to other regions, which also helps us, you know, which helps us -- which makes us more optimistic about Telecom's future, Now to remind you, at the beginning of the COVID pandemic a couple of years ago, traffic skyrocketed and redistributed a lot. And in 2020 and 2021, we made a massive upgrade of our network.

So we were well-prepared for that. But now we are even better prepared thanks to that massive upgrade exercise so now this makes us even more confident of the future because now in spring 2022, traffic reduced a bit, unlike at the beginning of the pandemic.

And now traffic has started getting back to normal, but the overall activity has shown a certain decline, and this is something that can be seen in example of a few telecom metrics, I will mention a little bit later today. Now, we are not making any detailed guidance to tie on possible results of the company this year.

But in terms of CapEx, I can tell you upfront that we promised to the market that 2021 would be a peak year, and now we can see that in 2022, MTS CapEx will be lower than it was last year in 2021, so we live up to our promise. Also, let me emphasize on the additional role of rules and regulations amidst the current environment and the government and the site open as a lot, for example, the transferred for next year, our commitment on LTE coverage of federal highways, which helped us streamline our CapEx, but if you believe this year, we are working to fix some technical issues now.

I'm sure you can see at the relevant part of the presentation, let me give -- tell you my story. Now, connectivity revenue was up 4.2% and this is indeed great.

This is great news, because according to our market research, we can see that -- in the market, we can see some reductions in volume terms, I mean, in the number of customers making actual calls. So on the volume terms, there is a certain decline in the market.

And competitively, MTS has proven to be more resilient than the others. And this has certainly been supported by the indexation exercise we did earlier in the year, and also we have proven to be resilient in terms of the number of subscribes, number of customers.

Our B2B segment is growing steadily; especially new services are performing well. The MTS market as service has post an double-digit growth rate in cloud services, but also follow on showcase double-digit growth.

Telecom is showing its traditional top-notch resilience among the other business domains, especially amidst challenging environment. And this enables MTS look positive into the future in terms of our ecosystem outlook underpinned by strong telecom.

Now this is further underpinned by our successful M&As. And this reporting period, we've had a few M&As, let me tell you about a couple of them.

The first one is Gulfstream. This is a well-established company in this marketplace, the sales in private real estate securities shares, but also this has been developing and growing actively in smart home solutions.

And we believe the competencies and the assets that we've acquired may form great synergies with some established assets and competencies that MTS has already had under its belt, including IoT, video analytics and cloud solutions. So we have decided to focus our smart home developments on Gulfstream that we've recently acquired and hopefully, you'll soon see a new product in the market that the company is currently working to develop.

Also, we have acquired the company called Webinar dealing in video conferences and understand as we speak, we are actually delivering our talk on Webinars solutions. And this is a great addition to our portfolio.

And this may form quite a good replacement, quite a few services established in the market because a few solutions have started to share in suboptimal reliability. Now our ecosystem development strategy.

To what extent is it relevant today? Let me tell you that, what you currently see on the screen does prove that our ecosystem strategy is highly relevant.

First, double-digit growth rates in the number of ecosystem customers taken alone, this maybe not that impressive, unless you check out the CLV chart metric. This is a new metric in our communication with you.

CLV is an estimated cash flow to be obtained by MTS going forward from each and every specific customer. This is a pretty precise -- a metric, a pretty precisely estimated metric.

Now you can see that ecosystem customers -- the way you create value for MTS than customers using just one product. This is why, this great performance in telecom because with ecosystem customers, the churn rate is way lower than with customers using just one service.

This recent quarter, we've seen business of -- great development of our businesses beyond telecom because before telecom used to be the core, which are source of ecosystem customers, who originally -- originating from telecom and then we're adding their second and third products. This was predictable and natural, but now, we are starting getting ecosystem customers from other verticals of our business.

First of all, this is the case with our media vertical and with our banking business. Please check out the numbers, great growth rates.

Media and KION deserve standalone comments. KION is posting really great results in terms of the number of users, the hours viewed and in other metrics, the streaming service, that look great.

Apart from that, I would like to say that it's especially important that our original content is rated really well. This is top rated across the board.

Please see bottom left and also -- our presentation today is very informative. We'll tell you about CapEx and other metrics, and you will see that MTS Media still a very disciplined content generator, when we started this business of investors, we can carefully also questions -- what if we overspend on this business?

That time has proven that a great choice of the team to deal in this business vertical has been a success. Our CapEx in this business domain has been really modest that performance is just great including the rates of ecosystem customers coming from the media from KION.

Retail has already been mentioned today. There was an obvious drop in revenue.

However, this has not had an impact on OIBDA. By the way, in the first half year, we already achieved our standalone OIBDA breakeven run rate, including leases, and our initial plan was to achieve this target towards the year-end.

So we achieved it earlier -- so retail not fair is really medium healthy. So to sum it up, here we put our habitual title, steady evolution of revenue.

This is not that stable, because our habitual growth plays is set at high. But here you can see that the most negative impact on our revenue has come from retail, but this has not reduced our real free cash flow, which makes us pretty calm, looking at the numbers, and we believe pretty soon things will get to normal and will get back to metrics, which are more habitual to us.

The same can be said about OIBDA and net income, the core interim pressure on OIBDA has been exerted by FinTech, as you can see from the middle of this chart and I’ve already said that this has been driven by a non-cash item, which is additional provisioning, which we have to have due to a key rate hike, and this will make sure we get back to normal going forward. I'm done here, and now I'm happy to hand it over to our CFO, Andrey Kamensky.

Hello, colleagues. I will talk more about finance.

Slava has mentioned quite if you keep metrics of our company revenue and OIBDA, let me summarize it. We believe the reporting quarter is quite a success.

What's happening is certainly being reflected in this. This is affecting us negatively.

Slava has already mentioned that were negative factors in FinTech. This is core pressure that we see as exited and as this has been driven by additional provisions that we had to accrue in Q2.

Provisions - the provisions reflect a higher cost of risk. This peaked in Q2, as you can see on the chart, so the provisions that were accrued.

On the other hand, a result of a solid large loan portfolio accumulated with the bank and the loan portfolio itself practically did not grow in the first half year, and this is indeed another reflection of the overall situation in the country. Now, looking a bit ahead, I mean July and August, the situation is more optimistic.

We see credit demand recovering. So the evolution that we've seen in the first half year makes us optimistic about the future.

As you may know, the recent guidance by Central Bank implied greater optimism in terms of demand recovery for loans, for credit. That mix -- this is still the same practically.

I mean we still have most of our commitment denominated in rubles. This split nearly as 40% and 60% respective of the bonds and bilateral loans.

The peak of key rate that we saw in Q1 or in the first half year affected as pretty significantly, just like every company in the market. Talking about net income, this has been one of the drivers why net income reduced year-on-year.

This has been spearheaded by high interest expense, and by higher key rates. Now the situation is better.

The key rate is now lower than it used to be in the year. Even in Q2, you can see that the situation starts stabilizing.

Rates were lower than Q1, but these rates at the end of the quarter. During the quarter, they were certainly higher.

We've done really a lot in order to offset the high interest expense with the help of subsidies. Where we could, we did use this instrument.

This has not yet been recognized in our results. So we expect it to be recognized in our results during Q3.

Talking about our investments, our CapEx. Here, we've shown the trend for the recent three years.

We've spent RUB 60 billion over the recent six months. And this reiterates Slava’s idea about massive procurement of IT of equipment.

That was the case in Q1. We actually addressed our equipment needs for year ahead, so we are just come and act continuing our construction of the network.

Talking about our half CF impact. You can see that it got reduced RUB 20 billion, the key drivers of increased interest expenses, higher CapEx.

However, talking about CapEx, we already mentioned that 2021 was a peak year and for this year, we have planned smaller amounts, and we can now reiterate our expectation, our guidance that the 2022 CapEx will be lower than in 2021. Also, Slava has mentioned about M&I.

These Gulfstream and VisionLabs, also, our free cash flow has been impacted by our imports reduced, payment conditions, settlement conditions changed. We had to migrate from exposed payments to prepayments.

And this had -- this also had an impact on our working capital and cash flow. Now, dividend, in June, our shareholders have approved a dividend payout at the tune of RUB 33.85 per share.

This dividend has been paid out. In fact, the payout amount equaled RUB 48.2 billion, including quasi-treasury shares, and this was completed in mid-August.

Now, dividend policy. We expected to approve a new dividend policy.

At the beginning of the year, however, due to the current environment, we have postponed the approval of a new dividend policy. This is still in our to-do list.

A new dividend policy will be approved. This is only a matter of time.

Now, a separate talk on our ADR program. Our initial idea was to focus separately on the ADR matter, because this is a hot topic these days.

So we just wanted to share more information with you in case there are questions, we'll be happy to address them. This page shows a certain schedule process of our ADR termination program.

You know that The Delisting Law came into effect, so we relevantly applied with the governmental commission and the ADR program -- the governmental commission decided to maintain our ADR program until July. In the -- since that time, the termination of ADR program started.

This process will take some six months. The deadline is the 12th of January, which is the last time for the conversion of MTS ADRs into the underlying ordinary shares, subject to the standard Deposit Agreement.

Within this period of time, MTS received a delisting notice from NYSE. Also, in August, we notified the depository about automatic conversion of ADRs capped with Russian depositories.

I will tell you more about that commenting on the next slide. According to our estimates, the date when the automatic conversion must end is the 5th of September.

So the 11th of October is the deadline, the last day for requested submission for force conversion, there were differences between the first conversion and automatic conversion and this difference is actually commented upon on the next slide. So three branches, three cases or scenarios depending on where ADRs may be held in different scenarios, different processes.

The first case where ADRs are held with a Russian broker in Russia and the chain of custody, the chain of holders include the National Settlement Depository. In this case, automatic conversion applies, which has been already triggered by the current regulation.

And this is exactly what I've mentioned on the 16th of the August, we've notified our depository bank of automatic conversion. We, as the issuer, have initiated that.

This requires no additional actions on the part of the ADR holders. So automatic conversion has been launched already, but this is only the case where the ADRs held in Russia and a Russian broker.

The case number two, where ADRs are held internationally, abroad. In here, there are two subcases.

Subcase number one, where blocking measures apply to a willing participant of the chain of custody. This triggers force conversion, not automatic conversion difference is the following.

For automatic conversion is enough to -- but to have initiation from us is the issue whereas for forced conversion, the confirmation from the hold is needed. First, they have got to confirm that they held the ADRs is at a certain date also a notice is necessary from a depository bank, JPMorgan Bank.

So this is the Forced conversion case, which preciposes active actions on the part of the ADR holder, unlike in case 1. Now stop case number two, unless there are block on restricted measures, in this case, the standard conversion process applies.

This is now in progress. We are following that.

We're monitoring that -- and this must before the 12th of January next year within the dates commented upon during the previous slide. Now applicable and regulatory restrictions.

First, type C accounts, the nonresidents of the Russian Federation when converting the ADRs receive their shares in a type C depot account. Dividends may be transferred for such shares.

Now sales limit post conversion, shares resulting from conversion of ADRs acquired after the 27th of April 2020 are subject to a sale restrictions. So these are subject to sales restrictions.

And just in terms of payment dividends, well, here, I must say that starting July 13, until the conversion of ADRs, no dividends will be paid on the ADRs to their holders, post conversion, the shareholders will have the right to claim unpaid dividends within three years from the date of dividend payout decision. This is just in a natural rules and regulations that currently apply and that currently apply to dividend accrual and ADR disposition.

So this is basically it. We'll be happy to take your questions.

Polina, thank you. Andrey, thank you, Slava.

This ends our presentation, and we are start our Q&A session now. We have investors, analysts and journalists.

You may ask your questions in the chat. We already see quite a few questions in the chart, and we'll articulate the questions.

I mean myself and , we'll do that in Russian with simultaneous interpretation. Thank you.

Slava, the question from Interfax, Anastasia Buchavesky . Her question is why have you decided to delist from NYSE are you going into strike just on MOEX or are you looking for a new value

You know decided is the key word here. We always act under the current regulatory requirements.

So there are regulatory requirements. And so we did the delisting.

Now we always look at the widest possible spectrum of opportunities. I mean, MTS shares are one of the most exciting, most attractive shares in the Russian market, and you can see it by the share price evolution as well.

We -- by the way, have quite a few business lines, business domains. We'll be able to gain a foothold on new venues separately, independently.

Next question. Do you please update us on the goals and objectives of Serenity cybersecurity company establishment.

When you’re going to take a new product of the market? Are you going to attract professional co-investors or are you going to develop this business on your own and how much you're going to invest in this new business line?

Now quite a few questions in one. Well, let me be brief.

First, the establishment of the very company. Now a while ago, we realized that development – so many businesses with an monoliner, within one the same MTS company becomes inefficient at a point, so this is part of our strategy.

We are migrating to a holding structure so to speak, rather not a financial holding company, but a customer-centric holding company. So we are developing several our businesses in separate companies, where local management is incentivized for the performance, which have been goals and objectives of companies and then the management is incentivized for taking those companies public through auction and so on.

Cybersecurity is a very exciting fair, which is in my opinion undervalued in the Russian market, especially on the one hand. And on the other hand, this is really close to our capabilities to our competencies that have already been established with our company.

Because telecom cannot exist without top notch cybersecurity. This is pretty much like banking sector and you know, quite a few banks who also established their own cybersecurity arms.

Now, talking about investments, I will not give you a number to die, but this is a pretty serious stake. So, investments will come and we expect the investment to pay off quite soon because this is new economics, not old economics.

Another question from Interfax. Your tower business, is it still relevant?

Are you still holding negotiations? Are the prospective buyers?

Sale is relevant at a point when this is beneficial for the company. In such infrastructure moves where you saw you've got to wait for the economy and the financial markets to stabilize.

However, there is a counter trend, so to speak. We see in that requires a lot of money that people are looking to invest in exciting targets.

So, if an exciting offer comes which is beneficial to MTS, we'll continue this movement. As we speak, we are not working on a sale.

So, we are taken required corporate actions and we'll be happy to resume negotiations.

Now a couple of questions about the bank. The provisions, is it a precautionary measure or is it the real result of higher NPLs in the form, will there be a reduction in the second half year and if the latter, what's the current NPL ratio as we speak?

Well, let me answer that. As I said, this is a regulatorily driven measure.

This is a regulatory measure. This situation cannot be flat across the board, but the NPL that we've seen recently in July and August are really minor, so the additional provisions established do not reflect the minor NPL numbers that we've seen.

Andrey and I cautiously expect a zero dynamics during the year in this respect.

A follow-up question from John was on your dividend policy. Do we get a trial that we are not expecting any dividend post the first half year 2022?

Now we've been pretty clear that the dividend that we have already paid out is everything that we were planning to pay out this year. Before we used to split the dividend payout, but now amidst this uncertainty, we decided to make a one-off dividend payments -- the onetime payments.

So this year, we are not going to pay any more dividend.

Another few questions about dividends. The first one, it's clear that your dividend policy has not yet been approved, but in your future dividend policy, which parameters, which metrics of the previous dividend policy will be kept?

We have not approved the dividend policy. So we cannot disclose any parameters, but let me put it the following way.

We have a good track record with MTS. This is a company never made its shareholders unhappy with dividends payout based on the great performance of our management team.

So in the future, we -- I hope we'll not make anyone unhappy.

Now talking about total cash distribution to shareholders, these have been reduced in 2020 100 even then 2022, it's 66, and we effectively paid out a bit less. So what's the trend going forward?

What should be expected in the future?

Now the trend is pretty clear. There is a dividend policy.

Our dividend policy used to precipose a certain dividend payout, as a minimum level, a certain number of rubles per share. We used to pay more usually.

There were some extra payments. For example, in 2021, there was a payout related to the Ukraine sale.

So in absolute numbers in 2021 the actual payout was quite big. So this year, we're only talking about dividend payout.

So the stand-alone dividend is even higher than the minimum level set in the previous dividend policy.

Another question from Interfax. In Sprint, the Board of Directors has approved a new MTS strategy for 2022 and 2020.

So what's the essence of the new strategy? And is it different from the previous strategy?

Well, Interfax must have an exclusive access to . Well, that's a good question for half an hour talk, but let me cut this long story short.

In general, our overall strategy has not changed and we mentioned this in our previous occasions. But now we're making a large emphasis on the governance and management system of the company.

We keep building a strong ecosystem on the basis of a telecom backbone and we see quite a few businesses under our belt are becoming large enough that makes them eligible for indirect management and governance through the Board of Directors. And this requires a separate incentives frameworks.

And regardless of the current challenges, we believe these companies will answer within market on their own independently. And in this new strategy, we emphasized the importance of IT transformation, which is continuing in the company, and this is a facilitator of turning the solid company of MTS in a holding company united around an ecosystem or united by a customer-focused policy, which makes us optimistic about the future of our telecom backbone and of our other businesses.

Another question that's indirectly related shareholder benefits. The company has a large negative equity.

I'm not sure that it's huge, but anyway, that's negative under the IFRS. What are you going to do with that?

And what's your equity under the local GAAP under the rest?

Now, in terms of dividend, the key driver is the net income that we generate, yet and that the evolution that we have mentioned, there is a quarterly evolution, quarterly trend, and we feel pretty well in terms of net income and free cash flow. Talking about equity, this is a function of the buyback that we've been doing over the recent three to four years.

And in terms of financial statements, this does affect equity, but this is not an issue.

Let me also mention that share buyback negative impact in equity under the IFRS. But this is not the case under local -- under the Russian GAAP.

This is one of the reasons that we articulated before why we could not and would not like to redeem treasury shares because under the Russian legislation, this would restrict us in dividend payouts even regardless of the high free cash flow generated.

A couple of technical questions. Could you please tell me what's the driver of cost growth in Q1 and Q2 this year, in absolute numbers were RUB5.9 billion I mean this is the operating income.

I expect this is mostly the bank's provisions.

In OIBDA and operating income, this is mostly the reflection of the provisions established at MTS Bank, and the key growth is quarter-on-quarter. But year-on-year, there are no sharp moves.

Next question. What's the optimal size of retail network -- Retail China.

Does it make sense to keep the current number of stores given the changes in market for devices? And also has MTS started federal imports of smartphones and other devices?

If not, are you going to do this in the near future?

This is a super question. I would look at it at the angle of telecom.

It's not a secret to anyone that large retail chain all telecom operators used to have of their own or franchise anyway. The SIM-card distribution retail chains have always been large, especially with the case of Russia, a lot of SIM-cards were sold not all of them live for long, it could be referred as a washing machine and that's constantly spins that does not add great value.

So now, that the cost of SIM-cards with some operators has grown exponentially. Something has got to be done about it.

So in terms of SIM-card sales, it seems to me that the volume of sales may not be reduced, but it's time to reduce it. What's more, with MTS, we have benefits from ecosystem effects to reduce churn rates.

And so the reduction of brick-and-mortar stores, greater migration ties towards online lower SIM-card sales it will help us to reduce our own points-of-sale in telecom. I'm not saying that, one must deviate from retail.

It depends on a specific company, strategies may differ. But in terms of telecom, I think this is a very relevant question.

This is high-time and this would be the right move for the overall market. And we will go in that direction.

I hope our market peers will not lag behind, because this is indeed became increasingly expensive, costly and not that efficient.

And what about their import?

Answer. Well, I cannot give you the details off the top of my head.

Procurement is underway, vendor policies for Russia deferred. So we do not have a shortage of goods.

On the other hand, we now see increase in numbers and some ranges of smartphones especially from new brands that used to be not that popular in Russia but that I get an increase and the popular. And that I get an increase affordable amidst in the challenging economic time.

And this is high-time to update this sales mix, because people usually change brands very carefully. And this is great that we are recovering sales dynamics.

Thanks to the new brands coming in.

Now, next question is for Andrey, from Russian and International Investors. Could you please tell us, how we are going to service your Eurobond and the follow-up from a nonresident?

The recent coupon that you tied on a Eurobond was not received by some of the investors they were not able to do that. Have you addressed this issue?

In which currency have you tied out the coupon? Have you accrued the coupon payment on Type C accounts for nonresidents?

And what are you going to do to service a Eurobond going forward?

Yeah. Thanks.

The Eurobond coupon situation, we've settled our coupon payment obligations on-time, in due time as per the requirements that apply. In fact, we transferred the money to the payment agent.

The money was accrued on the payment agent’s account, but due to the current situation the money did not follow through. And we are now working to address the situation.

The situation is really challenging, and this is not just the case with us. The case is pretty similar for all the issuers of eurobonds of several programs.

So we are now working to address and settle this situation. Talking about the next payment, coupon payment that is scheduled in November.

There were a few alternative cases that we're currently considering and starting in order to make sure non-payment is affected towards all the holders. But again, let me repeat the situation with us is actually pretty much the same as with all the other Russian issuers.

Companies chose a specific way, but for now, we do not know about any 100% successful cases. There are some technical swap cases, but for now the situation is what I've said, November will come pretty soon.

So we are doing our best in order to affect payments on time. Thank you very much.

Thank you. Question from the tab .

Network upgrade plans in the regions, which regions are you going to focus, first and foremost, what can you tell about it?

Okay. Well, quite a while ago, we already established the best analytics system, not just in Russia, but also internationally, which helps us know where the next base station must be put across Russia, and the same is the case with upgrades.

So this is not a matter of specific regions, we are running our swap program where equipment from one vendor is swapped -- equipment from another vendor, because the former equipment is audited, and this is beneficial for us to install the latter equipment, and the equipment -- the older equipment released will be redirect to another region where it's needed. The swap program is nearing completion in Moscow.

Many of us live in Moscow. And I think, we have already experienced this good increases in quality archive Full HD movers can be viewed across most commercial.

Thank you. Next question, the rumor has it that MTS has developed in certain -- its own app store, what are the plans?

What are the prospects?

We are now active, making quite a few developments across a variety of IT streams. And it seems to me that an app store may be quite an exciting ed ition, quite an exciting opportunity, especially if this is merged with payment, agent capabilities.

So the plans are relevant, and these are quite quick so to speak, and the results will come soon.

Yeah. Let me ask a follow-up on equipment and the regions and CapEx as a whole.

Could you please update on eases of commitments on LTE coverage for federal highways from the side, if you postpone this portion of CapEx to 2023, which amount of CapEx will we have to invest in 2023, 2022 CapEx portion plus 20 23, CapEx portion for just 2023?

I cannot give you the details off the top of my head, but these do not sum, these do not add up. And first, this is a few billion, not tens of billions.

And the actual number does depend on collaboration of operators in terms of LTE covering of federal highways. And the government has acted as a facilitator in this process, saying to operators that guys, it's more beneficial.

It's more efficient for you to address it collectively together as soon as the program is finalized, we'll know the ultimate number, but this will not make us exceed our CapEx plan.

Thank you. A couple of questions for Andrey.

ADR dividends, have they been transferred or have they stayed with the company?

They have not been transferred. They now form our obligation, our liability.

I mentioned that we paid out RUB 48 billion. So the unpaid amount is attributable to ADR.

So this amount has not been paid. This has stayed in our books, but this is recognized as a liability.

So, when our ADRs are converted into ordinary shares, the holders will have the right to claim the unpaid dividend within three years, and we will be transferring the unpaid portion.

Another second question from a non-resident. Could you please repeat once again, how type C accounts work?

Obviously, this invest holds our ADRs through international structure.

What has got to be done to have it unpacked to have it unpacked?

You have to it unpacked you have to open up a type C account for ordinary shares to be accrued to the accounts. I'm not sure if you see this relevant slide of the presentation, but type C accounts are subject to a few restrictions.

Dividends may be accrued to type accounts. But again, this happens post conversion.

So when you have converted ADRs in ordinary shares, you start getting dividends for ordinary shares. And also type C accounts prohibit sales and purchase of shares without a relevant permission from the governmental commission.

So this is in -- this would be indeed a length of talk. I mean, in case there are specific washers, we'll be happy to address them, but currently, there is quite a big regulatory base that describes in detail how type C accounts works.

A question from Forbes, how has the current situation impacted MTS Startup Hub, will continue your venture investments, or will you invest at later stages searching for greater reliability.

We'll keep investing in that. And we now see the Startup markets revive a bit.

People are active, people work, and we will continue working in this direction. And also, I've said that recently, we've seen our IT domain activated.

and this makes or helps us deal more actively in IT and in startups. And I believe MTS will be quite attractive for – would be part as well.

Well, I just cannot see questions that we have not addressed. There are a few really technical questions related to ADR conversion, in particular, from international investors.

I suggest that those investors contact our IR at [email protected] will address your specific technical questions offline as to what you've got to do in order to have your securities unpack. By the way, some questions will be posted in a Q&A session.

Yeah, by the way we have already posted the first portion of how to instructions to have ADR unpacked. This is about the first part of Andrey’s talk.

What you did to have your ADRs unpacked, if you're a non-resident. So the first portion has been already posted in the calendars.

We will update the post to the effect of the recent regulatory changes and will post also information on automatic and forced conversion with voice, e-mailer at [email protected], and we'll take you through the difficult mechanics of the processes.