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Pdf Annual Report 2014 Pdf 7.2 MB MegaFon Annual Report 2014 Meeting the challenge Annual Report 2014 Contents Strategic report Governance Financial statements Meeting the challenge 02 Our approach to Governance 74 Independent auditors’ report 93 At a glance 12 Board of Directors 76 Consolidated statement Geographic presence 14 Management Board 78 of comprehensive income 94 Highlights 16 Leadership 80 Consolidated statement Chairman’s statement 18 Accountability and effectiveness 85 of financial position 96 Our business model 20 Other corporate governance issues 86 Consolidated statement Our strategy 22 Shareholders’ equity 88 of changes in equity 97 Chief Executive’s review 24 Directors’ responsibility statement 91 Consolidated statement Market overview 27 of cash flows 98 Review of operations 34 Notes to the consolidated financial Financial review 51 statements 99 Sustainability 54 Risk and risk management 62 Additional information Glossary 144 Contacts 145 Disclaimer statements 146 We are committed to meeting the challenges we face in everything we do. While we operate in a dynamic market characterised by opportunity, we recognise that it contains a range of challenges – Meeting maintaining growth and leadership, sustaining the challenge innovation, delivering value – that require world- class performance across our business. We are inspired by the Olympic ideals and confident in our ability to compete effectively. Approved by Annual General Shareholders Our development as one of Russia’s leading Meeting of MegaFon PJSC on 30 June 2015 telecommunications businesses is reflected in Preliminarily approved by the Board our achievements. Our strong business model of Directors of MegaFon OJSC1 on 28 April 2015 and clear strategy have resulted in a highly Chief Executive Officer I.V. Tavrin competitive positioning and consistent value generation for stakeholders. Chief Accountant L.N. Strelkina 1 On 30 April 2015 the Company’s name was changed to MegaFon PJSC in accordance with the resolution of 20 April 2015. Strategic report Strategic 72.2m +5.9% Total number of our Total year-on-year revenue mobile subscribers growth for FY 2014 as of 31 December 20141 Governance Go online 8,087 ir.megafon.com 4G stores Financial statements Financial We are a leading 4G/LTE Our extensive retail network operator, providing 4G services includes more than 8,000 to 51%2 of the population, owned-and-operated, third- in 72 Russian regions party MegaFon mono-brand and Euroset stores In focus information Additional Leadership in innovation Resilient and efficient growth Read more on pages 02-03 Read more on pages 04-05 Disciplined investment in business development Dynamic culture and strong team spirit Read more on pages 06-07 Read more on pages 08-09 Figures in this report may vary from similar figures quoted in previous material due to updated calculations. 1 Data includes subscribers of the Company in Russia and subscribers of its subsidiaries: ‘TT mobile’ CJSC in the Republic of Tajikistan, ‘AQUAFON-GSM’ CJSC in the Republic of Abkhazia and ‘OSTELEKOM’ CJSC in the Republic of South Ossetia. 2 Russian population as of the latest census in October 2010. MegaFon Annual Report 2014 01 Meeting the challenge… …through leadership in innovation Maintaining our leadership position depends on our ability to effectively predict market trends, develop technology and embrace the current and future needs of our customers. Innovation is therefore at the heart of our business, and our track record of successful innovation reflects our ability to meet the challenges of our dynamic and rapidly developing market. 02 MegaFon Annual Report 2014 Strategic report Strategic LTE- Advanced 1st in the world to commercially launch LTE-Advanced Governance The leading 4G provider in Russia Financial statements Financial 5.8m 4G-enabled devices registered on MegaFon network as of 31 December 2014 72 Russian regions with access to information Additional MegaFon 4G/LTE services >270 4G base stations were set up in Sochi to provide quality network operations MegaFon Annual Report 2014 03 Meeting the challenge… …through resilient and efficient growth We are clearly focused on delivering profitable growth, and we have a strong record of consistent competitive achievement. We aim to continue growing our market share through investment in products and services, thereby delivering superior value and returns to all our stakeholders. 04 MegaFon Annual Report 2014 Strategic report Strategic c.300,000 subscribers from more than 70 countries used Governance roaming services provided by MegaFon during the Sochi Olympics Financial statements Financial +5.9% revenue growth year-on-year Additional information Additional Strong financial performance 44% 26.1% OIBDA-CAPEX/revenue OIBDA margin for FY 2014 indicator for FY 2014 – the highest among ‘Big three’ companies MegaFon Annual Report 2014 05 Meeting the challenge… …through disciplined investment in business development Investment is at the core of our growth strategy. We have a robust investment programme focused around best-in-class network development, technological innovation and customer support which drives our commitment to sustainable value generation for customers, partners, investors and employees alike. 06 MegaFon Annual Report 2014 Continuous report Strategic +84% Number of 4G network stations increased by 84% to 18,636 units in 2014 roll-out and modernisation to Governance provide the best service quality Financial statements Financial 166,453 km RUB 56.5bn extensive fibre-optic total CAPEX spent in 2014 communication network in Russia Additional information Additional RUB 10bn invested by MegaFon into preparation for the Sochi Olympic and Paralympic Games MegaFon Annual Report 2014 07 Meeting the challenge… …through a dynamic culture and strong team spirit We have a dynamic workforce that is characterised by a strong team spirit and connected by common values and principles. We have an ethical culture of transparency, honesty and openness which has enabled us to build a leading business whose achievements we all share in, and which enables us to celebrate success wherever it happens. 08 MegaFon Annual Report 2014 Strategic report Strategic 25,000 volunteers were communicating with each Governance other free of charge during the Sochi Olympics using a special tariff plan from MegaFon Financial statements Financial 30,8541 employees MegaFon is one of the largest and most attractive employers in Russia information Additional Our people are at the core of our business 20,000 employees HR-Brand award have taken part in the annual ‘Point of Destination The MegaFon corporate – Our Client’ programme portal MegaNet received over the last eight years the HR-Brand award 1 According to the new methodology, the number of employees includes full-time and temporary employees, excluding those on maternity leave and outsourced employees, and represents the annual time average. MegaFon Annual Report 2014 09 Meeting the challenge Delivering world-class support for a major international event… MegaFon was the Mobile Communications Partner for the XXII Winter Olympic and XI Paralympic Games in Sochi, creating a bespoke mobile network infrastructure and providing high-quality communication services for the most connected Winter Olympics ever. LTE-Advanced >950 Data transmission speed of up to Base stations were built by 300 Mbit/s on the LTE-Advanced MegaFon for the Sochi Olympics network was demonstrated during the Sochi Olympics 660 terabytes Data traffic used by the 20 Mbps participants and guests Average speed of 4G mobile of the Sochi Olympic and internet at the Sochi Olympics Paralympic Games >220 km Smotri+ Length of FOCL built for the The application was among the Sochi Olympics top free applications on the App Store and Google Play with 600,000 users during the Olympics 10 MegaFon Annual Report 2014 HSPA+ report Strategic 1st operator to launch HSPA+ internet service and deploy …based on a track- HD Voice record of long-term achievement 3G Governance 1st operator to launch a nationwide We are proud of the achievements we 3G network have made in developing MegaFon as in Russia one of the leading operators in our market, with a reputation for innovation, creativity and ambition. Financial statements Financial We intend to continue breaking new ground and leading our market through innovative and creative thinking, enhancing the experience of our customers and delivering value to our stakeholders. 4G 1st operator to launch a The 2014 Additional information Additional 4G network Olympics in Sochi in Russia had 4G technology provided by MegaFon MMS 1st operator in Europe to launch ‘MMS’ Mobile-TV 1st operator in Russia 5G to introduce ‘Mobile-TV’ We signed a memorandum of LTE-Advanced understanding with 1st operator in the world to commercially Huawei on the joint launch the fastest mobile data network, development of 5G and 1st operator in the world to launch technology in Russia sales of routers supporting super-fast LTE-Advanced speeds MegaFon Annual Report 2014 11 At a glance A year of innovation MegaFon is one of Russia’s largest mobile operators in terms of revenue and subscribers. We provide services in all market segments, including voice, data and other mobile and fixed-line telecommunications services, digital TV and IP telephony. We also have subsidiaries in Tajikistan, Abkhazia and South Ossetia. Our extensive Our broad service Our respected networks portfolio brand Our advanced infrastructure enables us to Our high-quality services, all targeting real MegaFon is one of Russia’s most deliver a wide range of high-quality mobile customer needs, extend far beyond voice, prominent brands, built on a heritage of services throughout Russia. MegaFon invests mobile and fixed-line data transfer. We also innovation, market-leadership and targeted continuously in improving service quality, and provide a range of value-added services to sponsorship. In 2014, we had the highest in 2014 we reached all our infrastructure retail customers, business and government score in ‘Power of Brand’ among the top development targets. We expanded our clients and other telecommunication four Russian telecom operators. Our key network into new regions and increased service providers.
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