2018 MTS GROUP SUSTAINABLE DEVELOPMENT REPORT

FULL VERSION Member of the Social Content Charter of Russian Business Message from the President of MTS PJSC ...... 4

About the Company ...... 6

CSR Strategy ...... 8 MTS for Clients ...... 12 KEY SERVICES ...... 14

DEVELOPING TELECOMMUNICATION INFRASTRUCTURE...... 27

DEVELOPING INNOVATIVE SERVICES ...... 32

SERVICE QUALITY AND CONSUMER SAFETY ...... 69

MTS for Society ...... 80 SOCIAL RESPONSIBILITY ...... 82

ENVIRONMENTAL RESPONSIBILITY ...... 110

COMPLIANCE AND CULTURE OF GOOD FAITH BEHAVIOR ...... 124

MTS for Employees ...... 128 HR POLICY ...... 130

PERSONNEL STRUCTURE ...... 134

CORPORATE CULTURE ...... 137

HUMAN RIGHTS AT THE WORKPLACE ...... 143

TRAINING AND DEVELOPMENT ...... 145

RECRUITMENT AND ADAPTATION ...... 151

MOTIVATION AND SOCIAL GUARANTEES ...... 159

OCCUPATIONAL HEALTH & SAFETY ...... 163 Full trade name of the Company in Russian: Публичное акционерное общество «Мобильные ТелеСистемы» MTS for Shareholders ...... 168

Short trade name of the Company in Russian: FINANCIAL RESULTS ...... 170 ПАО «МТС» CORPORATE GOVERNANCE...... 171

Full trade name of the Company in English: SUPPLY CHAIN ...... 175 Mobile TeleSystems Public Joint Stock Company Glossary ...... 184 Short trade name of the Company in English: MTS PJSC About the Report ...... 189 Appendices ...... 196 102-1 In this report, the terms “MTS”, the “Company”, and “MTS Group” shall refer to the group of companies comprising MTS PJSC and its subsidiaries; the term “MTS PJSC” shall mean Mobile TeleSystems KEY MTS AWARDS 2018 ...... 196 Public Joint Stock Company. GRI CONTENT INDEX ...... 199

The indicators in this Report are as of December 31, 2018, unless other periods or dates are expressly CONTACTS ...... 212 indicated.

EVERY

MTSFOR BOD Y MTS revenues. Over the past year we have income. Our technologies help create Message from deployed LTE networks in all the markets of a comfortable environment for life and presence and put in place the first federal favorable conditions for self-development. the President NB-IoT network in Russia for the Internet of Our flagship social project “Generation M”, Things. by means of digital technologies, opens up 102-14 of MTS PJSC equal opportunities for the development of Internally, we embarked on the path of children across the country. optimization and improved efficiency of We are all becoming witnesses to how processes via their automation – we can and The MTS leadership is unique as, traditionally, digital technologies deeply penetrate every should become faster and more flexible. we have been the first in the country area of our life and erase the boundaries in all key business indicators- revenue, that seemed to be impassable just a The development of the social sphere is capitalization, subscriber base. But largely, few years ago. MTS is undergoing now a gaining priority in the MTS Group activities. we are number one because MTS is a dream transformation into a business ecosystem. Matters relative to the development of company staffed with highly involved, Our task is to come to be a key player in society and business are interlinked and conscious and responsible people. The basis spheres that are new to the company. We by developing business we always take of MTS successful development is not the face serious challenges in such areas as into account the needs of the society technologies but rather the people who financial technologies, cloud computing, big including those that have no direct touch create them. This was the case when MTS data, artificial intelligence, digital education, on our current business objectives. Why had under 100 employees and it remains so eSports and telemedicine. should we do this? Because we realize that now that we are over 65 thousand. We are today telecom and IT services are the key united by a focus on results and MTS is a During the year, we have successfully technologies to change and develop the company where ambitious goals are quite worked on the implementation of a digital society, and it is our work and initiative that a common thing, where every employee strategy and expanded our activities the life of each of us will depend on in the can get an opportunity of self-fulfillment into new directions. In 2018 we obtained future. and help to find such opportunities for our controlling interest in MTS Bank which partners, customers and the society. It is allows us a faster launch of converged The whole strategy of MTS is focused on also our rule not to rest on our oars: that is fintech products. One of the key events solving urgent social issues. We develop why we have been working every day to make has been a service deployed to allow new advanced solutions that improve the quality the wildest dreams come true. customers signing a contract with the of people’s lives: we introduce innovations in operator and the Bank at the same time. the field of healthcare, education and urban infrastructure. In September MTS entered We also strengthened our positions in the the online education market and launched fast-growing market of cloud services by the platform Smart University, in the first Yours faithfully, expanding our network of data centers, place, for preparations for the Unified state ALEXEY KORNYA, both through greenfield and acquisitions exams in English and math. In tandem President of MTS PJSC “Our technologies help in this segment. In April MTS launched a with MEDSI we launched the telemedicine create a comfortable cloud service of personal data storage and service SmartMed that provides online processing for enterprises. consultations with medical practitioners. environment for life and favorable conditions We kept fostering our leadership in the Our services make the society more open telecom segment – the core part of our and modern and people – better informed, for self-development.” business still generating the main share of whatever their place of residence and

5 2018 MTS Group Sustainable Development Report

ABOUT THE COMPANY > 105 >65 mln subscribers thousand employees in host countries MTS is a leading company in Russia and CIS countries by mobile and fixed-line communication services, Internet access, cable and satellite TV broadcasting, digital services and mobile applications, financial and e-commerce services, as well as convergent IT solutions in the area >7 of system integration, the Internet of Things, data processing and cloud computing. RUB 480.3 thousand volunteers Providing innovative services and solutions, MTS makes a significant contribution to the bln consolidated development of the regions of operation and improvement of the life quality of dozens of revenue millions of people. 102-13 MTS actively cooperates with the GSM (GSMA) Association, an international organization which 102-2, 102-4, 102-6 In 2018, MTS Group includes more than 800 telecom performed its activities in Russia, operators worldwide via industry on the territory of Ukraine, the Republic programs, working groups and of Armenia and the Republic of Belarus, information initiatives. MOBILE TELESYSTEMS where it has the required licenses JLLC for the provision of communication services. This year GSMA held the Mobile 360 The total population in the area covered Series international forum in Russia for the first time, thus confirming MTS by MTS Group’s licensed services exceeds the importance of post-Soviet markets 200 million people. for the development of industry 9.5 49% innovations worldwide and the formation of the global digital economic space. 126 MTS was a general partner of the event.

63 46%

5.5 Republic of Belarus Russia Brand MTS ARMENIA CJSC Ukraine Population, mln VivaCell-MTS Mobile penetration, % 3.0 PRJSC VF UKRAINE 80% MTS PJSC Share of population 125 that has access Vodafone to 4G, % MTS 2.1 42.2 Subscriber base 100% 57% 146.8 100% by the end of 2018, mln 127 179 Share of ownership, % 45 37% 68 31% Market share, % 19.7 Republic of 78 Armenia

6 7 CSR STRATEGY SOCIAL AREA • Improving the quality of life for subscribers In December 2016, the MTS Functional Corporate Social Responsibility (CSR) Strategy was approved until 2020. • Taking care of employees and their development • Corporate volunteering 102-12 • Charity MTS CSR activities cover the social, economic and environmental areas and involve the implementation of projects in support mln MTS Group total expenses of 13 UN Sustainable Development Goals. for charitable and social 781.6 projects in 2018 For more information on the connection between the UN goals and MTS’ projects, see the 2017 MTS Group Sustainable Development Report, section “Development Strategy”.

STRATEGIC GOALS OF MTS IN THE FIELD OF SOCIAL RESPONSIBILITY: ENVIRONMENTAL AREA • Development of services improving the Improving the quality of life and safety of people and society, environmental sustainability including through the development of innovations and the provision 1 • Environmental protection activities of a wide range of modern services;

Creating conditions for sustainable 2 business development.

ISO 26000 self-assessment BUSINESS AREA In 2018, MTS conducted a self-assessment on compliance with the • Digital inequality recommendations of the international standard ISO 26000:2010 Guidance on elimination Social Responsibility. • Expanding the range of The ISO 26000 standard establishes the norms of civilized relations between the the services by increasing organization and society and regulates a wide range of aspects, from human rights the share of socially to environmental impact. oriented products and According to the results, MTS PJSC adheres to the recommendations of ISO services 26000:2010 in all areas of analysis. The Company effectively runs necessary • Synergy of CSR practices and creation of common business processes and has relevant local regulations in place. Moreover, the Company has a mature system and all necessary resources to move from the values classic CSR model towards the model with the sustainable development being • Development of regions, territories of operation and integrated in the Company’s business strategy and activities of key divisions. local communities • Responsible business conduct 8 9 CSR Strategy | 2018 MTS Group Sustainable Development Report

CSR activities of MTS are based on principles In 2018, the development of key performance In addition, employees can take three for All Ages together with employment centers of socially responsible business conduct indicators in the field of sustainable development additional paid days off to participate in provide an opportunity to develop both aimed at ensuring sustainable development and CSR began, including the formation of social programs. Corporate volunteering at businesses and the regions of presence. and growth of the Company’s prosperity, their list and methods for their quantitative and MTS (JUST Give Good and Mobile Fairytale developing a competitive economy, improving qualitative measurement. Puppet Theater projects, volunteer center the life quality and well-being of the society. of Sistema Charity Fund and other) allows For more information, see sections These principles were developed with Society each employee to socialize themselves. MTS “MTS for Clients” and “MTS for Society”. support and consideration of expectations charity projects help children with serious of all stakeholders and were set forth in the In the social sphere, illnesses (Generation M, Give Good!) and Corporate Social Responsibility Policy of MTS strives to improve support the development of education, MTS regulating the implementation of CSR the quality of life of its health care and social infrastructure. More projects. customers, takes care than seven thousand volunteers among the of employees and their total number of MTS employees take part 102-18, 102-20 The main CSR governing development, cultivates in environmental, educational, adaptation, Environment bodies are the Board of Directors and corporate volunteering and is engaged in charity. charity and donor campaigns. . the Management Board of MTS. Their The Company’s projects aimed at improving the MTS develops services that competencies include approval of the CSR quality of customer life are primarily related to increase environmental Strategy and social programs, supervising our core business. We provide accessibility and For more information, see section sustainability and conducts their implementation and efficiency evaluation expand the range of digital services by offering “Social Responsibility”. activities to protect of social projects. The Vice President for online education, the My MTS self-service the environment and Human Resources and the Director of the system, telemedicine projects, social, as well environmental education. Corporate Social Responsibility Department as charitable and educational programs for Every year we conduct a survey, which Our projects such as Data of MTS PJSC HR Unit are responsible schoolchildren, students and adults. helps us to monitor the growth dynamics of Telemetering, MTS Books, and Forest Patrol are for planning, direct implementation and those who care and want to be useful. We aimed to improve the environmental situation. consolidation of CSR activities. Planning also search for new relevant areas of social Eco packaging for SIM-cards, eco cleanups, and implementation of the Company’s social For more information, see section activity thus enabling our employees to wastepaper and battery collection projects help initiatives across regions are carried out “MTS for Society”. embody their potential. to protect the environment and maintenance by employees of the HR, Marketing and PR sustainable resource consumption. The Company Department. has introduced energy saving and energy efficiency programs; energy saving equipment is 102-32 CSR Committee – a consultative body used in the construction of cell sites. under the Management Board Member - Vice President for Human Resources of MTS PJSC Economy – serves to address the following key tasks: Employees For more information, see section The economic sphere “Environmental Responsibility”. • involvement in partner programs; We care for our employees is the key activity and their improvement of MTS. We provide • integration of the Company’s CSR Policy by providing support communication into external and internal environment; programs and new services, contribute approaches to training, to the prosperity of the regions and • creation of a CSR environment in and improving communication territories of operation, give an opportunity outside the Company; channels and working conditions and promoting to fully develop all forms of business and a healthy lifestyle. The Company has a unique responsibly conduct our own business. • consolidation and efficient use of the offer for the labor market – additional days off Our Company teaches new professions, Company’s resources in integrated CSR for adoptive parents. contributes to the professional growth projects; and development of all spheres of society. MTS cooperates actively with federal and • preparation of the Sustainable For more information, see section regional authorities. Projects such as mobile Development Report. “MTS for Employees”. libraries, mobile guides, MTS—a Company

10 11 KEY SERVICES ...... 14

Mobile Communications ...... 14

Broadband Internet Access ...... 15

Fixed-Line Communication Services ...... 15

Financial Services ...... 17

Nonadjacent digital businesses ...... 22

Business Services ...... 23

DEVELOPING TELECOMMUNICATION INFRASTRUCTURE ...... 27

Mobile Communication Infrastructure...... 27

Data Centers ...... 31

DEVELOPING INNOVATIVE SERVICES ...... 32

Innovative Network Development ...... 34

Smart City ...... 41

System Integration ...... 47

Big Data ...... 53

Perspective Business Development Areas ...... 54

Internal Digital Transformation ...... 66

SERVICE QUALITY AND CONSUMER SAFETY ...... 69 Alexander Samuilov, Director of MTS PJSC branch in YNAO Service Quality ...... 69 “It is important for us that every Consumer Security ...... 76 resident irrespective of his/her place of residence has access

MTS FOR CLIENTS MTS FOR CLIENTS to high-quality communication.”

13 MTS FOR CLIENTS | Key Services 2018 MTS Group Sustainable Development Report

Broadband Internet Access GROWTH IN THE NUMBER OF BROADBAND INTERNET MTS FOR CLIENTS ACCESS SUBSCRIBERS IN RUSSIA, % The growth rate of the Russian broadband Internet access market (BBA) is declining; in 4.4 4.1 2018, the number of subscribers increased by KEY SERVICES 102-2, 102-6 2.3%. The service is developed mainly due to the growth in the number of private users, however, with penetration close to 60% at the end of 2018, 2.3 the market is saturated not only in large, but also Mobile Communications in most medium-sized cities. The ARPU index for 2018 was RUB 346, which is 2% more than in 0.6 On the results of 2018, mobile penetration in 78 2017. This was due to the revision of operators’ Russia reached 179%, placing the country among mln subscribers tariff lines: the abandonment of low-speed tariffs the most developed telecommunication markets in Russia and the “recovery” (prices were held back on the 2016 2017 2018 2019 in the world. The number of regular users of data broadband Internet access market for quite a (forecast) transmission services in Russia is growing. As at Up to 700 long time, while costs of equipment and services the end of 2018, their share was 58.8% of the total Mbit/s 4G increased). number of subscribers. The volume of data traffic Internet speed consumption increased by 1.5 times compared As of the end of 2018, penetration in cities 1.95 to 2017, and the penetration of smartphones into with a population of over 50 thousand people the MTS network reached 70.1%. LTE penetration MOBILE TRAFFIC IN THE MTS NETWORK, PB exceeded 69%. At the same time, competition mln users of GPON among mobile Internet users was 1.3 times higher in these cities is rather acute: the service is networks against 2017. provided by at least three operators, both federal and local. In settlements with a 38% 2 016 In 2018, mobile communication services in population of less than 50 thousand people, MTS share in the Russia were rendered by four federal operators: penetration is still low at the level of 35%. The o broadband Internet MTS PJSC, MegaFon PJSC, VimpelCom PJSC 959 pportunities for the operators’ organic growth access market and RT-Mobile CJSC (T2RTC Holding, a joint have already been exhausted. Still, MTS showed in Moscow enterprise of Rostelecom PJSC and Tele2), as well 315 an increase in the subscriber base by 6% and TOP-3 as regional telecommunication companies and 136 1 269 1 364 revenue by 9% in the B2C segment by the end Russian broadband 883 virtual network operators occupying about 1% of 650 of 2018. access operators the market. 16 12 18 17 2015 2016 2017 2018 Under the conditions of market saturation, the main strategy in the market of fixed broadband SHARE OF THE RUSSIAN MARKET’S MOBILE access is attracting and retaining subscribers OPERATORS BY THE NUMBER OF SUBSCRIBERS LTE 3G 2G by means of developed package offers, higher Fixed-Line Communication Services IN 2018, %1 access speed, and implementation of convergent 1 services. In 2018, the leading providers MTS continues to systematically pursue the 17 continued switching to convergence of fixed strategy of improving the quality of its fixed- 31 SHARE OF REGULAR USERS OF DATA TRANSMISSION and mobile services. As of the end of 2018, line products by upgrading our networks, SERVICES, % mobile communication services (including those launching digital and interactive TV services, of the MVNO format) are offered by all TOP-5 and expanding the throughput performance of broadband access operators in Russia. backbone channels to increase speeds for the subscribers. 58.8 53.2 MTS launched a converged offer across all 47.2 49.0 regions of operation of a fixed business. The MTS was the first among ground fee-based average consumption rate of broadband TV operators to launch an UltraHD channel access subscribers grew by more than 17% and in its DVB-C cable network and on a satellite 29 amounted to 64 Mbit/s. With such technical platform. UltraHD broadcasting is considered 2015 2016 2017 2018 22 capability we increased the speed of Internet by MTS as one of the drivers for growth of the access to all subscribers of low-speed tariff plans fee-based TV market in the near future. UltraHD to at least 50 Mbit/s. Broadband access tariffs super high definition broadcasting has always MTS MegaFon Other were also launched in 2018 in a number of regions been the prerogative of the satellite TV market, Tele2 VimpelCom 1 According to AC&M agency. with Internet access speeds of up to 330 Mbit/s. and its launch in the MTS cable segment will

14 15 MTS FOR CLIENTS | Key Services 2018 MTS Group Sustainable Development Report

be the boost for the development of the new MTS together with Huawei is Furthermore, MTS has the most favorable prices generation television market in Russia, stimulate working on a platform to introduce for subscriber equipment: from RUB 3,590 to the demand and open up new opportunities and innovation in television products 3,900 in 2018. markets for owners of high-quality content. Within the framework of the St. Satellite TV The main feature of MTS TV is a great coverage in MTS DTV Basic Package contains more than 130 Petersburg International Economic terms of the geography of service provision and channels, including over 20 HD channels. It is the Forum 2018, MTS and Huawei signed a The satellite TV market is a logical addition the diversity of TV services connection options and biggest regional-market basic package which was memorandum on the creation of a single to the services already rendered by MTS. It usage. also part of all package proposals incorporating multimedia platform for the development bridges the gap that cannot be covered via other BBA and telephony. of all MTS television products, including technologies due to such objective reasons as mobile, cable, satellite television and IPTV. remoteness of territories, terrain complexity, and etc. 40 The main feature of MTS TV is The changeover to a new platform will HD/UHD channels a great coverage in terms of open up the possibility to introduce We offer subscribers two hundred channels, with 200 innovative solutions into MTS television 192 of them included in the basic package. the geography of service pro- services and integrate MTS TV services channels vision and the diversity of TV with other products of the Company and its partners. In particular, it will allow to services connection options implement content recommendation and usage. services of third-party applications based on Big Data and connect customers The MTS satellite TV network includes a number of channels broadcasting to cross-discount programs for MTS in national languages of the peoples of Russia and neighboring countries. In 2018, MTS continued to develop a new services. The development within a single These channels help out to preserve and develop the national languages TV platform which expands the capabilities of platform will also give an opportunity to and cultures, unite people and serve as the means of establishing the dialog traditional TV with interactive components. double the number of TV HD and UltraHD between the Company and national diasporas both at the level of joint We actively promoted Interactive TV, channels for a period of five years and events and communication with regional administrations. a service with the help of which a subscriber triple the number of films and TV shows gets access to a large number of channels, available to users of television services. including in HD quality, premium packages The full transfer of all MTS TV services and modern interactive services. Such to the new platform is planned to be applications as Yandex.Disk, Wiki TV, completed by the end of 2019. Financial Services MTS Bank managed to lay the foundation for Megogo, Amediateka, and Easy Payment future growth and successful digital business were integrated in MTS Interactive TV in In 2018, the MTS PJSC and MTS-Bank PJSC transformation in order to provide customers 2017. In 2018, MTS integrated the Tvigle (MTS Bank, Bank) integration was further with products and services of the highest quality. Karaoke application, provided subscribers developed. The main guidelines are the with access to the START online cinema of digitalization of financial products, improvement Due to the active use of the big data capabilities movie premieres and TV series along with of user interface usability and launch of new of MTS Group, MTS Bank was able to develop the largest online cinema Ivi. More than 43% services that meet customer needs. and offer attractive financial services to its 6,500 content items are available in the MTS share in the fee-based customers, which contributed to a sharp Video on Demand catalog of the Interactive TV market in Moscow increase in sales of personal loans in the second TV service. MTS PJSC bought a 28.63% half of 2018. stake in MTS-Bank PJSC from In 2018, the Bank integrated the most popular Sistema JSFK in 2018. As a consumer products, including requests for result of the transaction, the credit cards and personal loans, into the My TOP-5 MTS application, which will enable the Company 90% share of MTS in the capital of to radically expand its customer base. The Russian fee-based of DTV penetration MTS Bank was up to 55.24%. In implementation of a unified scoring strategy will TV operators allow the Bank to provide a potential client with a February 2019, MTS increased combined set of banking products, as well as to its share in the capital of MTS raise the customer satisfaction, avoiding credit 175 risks. 4K ultra high channels Bank to 95%. 102-10 resolution HD channels 4 channels >40 16 17 MTS FOR CLIENTS | Key Services

MTS Bank >1 thous. ATMs 3 50 and self-service terminals mln customers cities

MTS Credit Online Virtual Card Fintech services by PrJSC VF Ukraine

TA2 In November 2018, MTS and MTS Bank were the first in Russia to launch TA2 In 2018, PrJSC VF Ukraine a virtual credit card for secure purchases launched an insurance service on the Internet and in retail outlets using SmartTravel for those who travel abroad, smartphones. An MTS subscriber can apply as well as a service for payment in public for a virtual card on the MTS website with transportation with SMS. Currently, just several clicks or in the mobile app, SMS payment is available in Lviv and without visiting MTS’ shop or bank branch. Ivano-Frankovsk. Residents of Vinnytsia, Zhitomir and Kharkov will enjoy this The MTS Credit Online virtual credit card service in 2019. is available to MTS’ subscribers if they have expressed their consent to receive remote services of MTS Bank upon signing the subscriber contract with MTS and got MTS Money Wallet Service a personal offer with a pre-approved credit limit. TA2 In 2018, MTS Money Wallet launched a num- ber of innovative services for its customers: The credit card may be used in online stores and added to Apple Pay or Samsung Pay to • connected the entire line of payment services make purchases in sales outlets equipped such as Apple Pay, Google Pay and Samsung with contactless payment terminals. Pay, so the payment can be made on the website and in the MTS applications; It is issued with the innovative Mastercard tokenization technology. When used, the • launched a service allowing to pay for MTS Credit Online virtual card’s number kindergarten, clubs, sections and additional is not stored either on a mobile device or educational fee-based services in Moscow in in trade and service companies. A unique MTS Money and My MTS applications; token is created instead. This token is a 16-digit combination tied up to a particular • embodied money transfers to clients of any smartphone which is used for payment. bank, including people who still do not have Every transaction made with the Mastercard a bank card or if its number is unknown; token is well-protected and offers the same guarantees and benefits for buyers and • in cooperation with Megafon, MTS promoted retail outlets as any Mastercard transaction. transfers without commission between MTS and MegaFon subscribers, thus increasing the turnover between operators three times;

• due to the interaction with the MTS Cashback program, the MTS Money Wallet clients began to receive cashback when making customary payments in the application and on the MTS Money website.

18 MTS FOR CLIENTS | Key Services 2018 MTS Group Sustainable Development Report

MTS Money Application Payment of Bills To use the service, just go to the Payment Accounts section, specify one or more In 2018, the application became available 1.6 The My MTS application has launched a documents (parent’s passport, SNILS not only for MTS subscribers, but also for mln installations convenient service that allows you to pay or the child’s birth certificate) and save subscribers of other Russian operators. Now, MAU (monthly active for kindergarten, sections and additional the template. The service will check the any user can install the application on their users): educational fee-based services in Moscow. availability of accounts in Moscow database smartphones, attach one or more bank cards Now accounts are automatically pulled into the and show them in the application. and get an e-wallet. application, without filling in long details.

One can pay bills, fines, mobile 0.5 communication, home Internet and TV, mln housing services, games, social networks, DAU (daily active transport, repay loans and make hundreds of other necessary purchases in the application. users): Financial Services in Armenia Transfer fees are low if any. The list of MobiDram’s services is constantly expanding, and today it is Here you can make all sorts of transactions: % a modern payment system that meets all safety requirements between personal accounts and mobile +45 numbers and bank cards of other clients.

It is not only convenient to use the MTS Money NSAT (net user TA2 In 2012, MobiDram, a subsidiary of payments and transactions directly application, but also safe, even according to satisfaction): VivaCell-MTS, started providing finan- through their phone via USSD commands. the most stringent modern requirements. At cial services via mobile phone for the first You do not need a smartphone, a special the same time, there is a free fraud insurance, time in Armenia. The MobiDram technical program or Internet access. The advantage so the client’s may be refunded up to RUB platform was fully developed in Armenia by of MobiDram is that the simplest mobile 10,000. +50% the local company Volo, with which VivaCell- phone becomes a convenient tool for using MTS has been cooperating for many years. electronic financial services. Remote Banking Service of MTS Bank in the MTS Money Application You can make local and international money In November 2018, VivaCell-MTS teamed transactions, housing and tax payments, up with MobiDram and Globbing and rating In 2018, MTS Bank customers received 4.2 pay for mobile, fixed and Internet services, launched an innovative initiative aimed access to remote banking service options and repay loans in the branch offices, at improving the accessibility and in the MTS Money application. After linking terminals and MobiDram mobile application. convenience of online services for users. the bank account, bank cards, their balance Since 2018, it has been possible to make Globbing is an international trading and transaction history are automatically MTPL payments through MobiDram platform for making purchases in foreign displayed in the application. Thus, MTS Bank Contactless Payment Services terminals, which is not only convenient, but stores and receiving them in Armenia. customers have a unique opportunity to also allows customers to save 5% of the Such cooperation will enable users to combine the most popular mobile banking In 2018, the possibility to pay by card of any insurance payment. Using the MobiDram replenish their Globbing accounts via functionality with the payment functionality in issuing banks added to Apple pay/Google pay/ e-wallet, you can pay for goods in online MobiDram without a commission. They the phone account, loading cards to Apple Pay Samsung Pay was provided to enable MTS stores and link a bank card to your account can also pay with MobiDram mobile wallet and Samsung Pay services, linking cards of customers to get an innovative payment method to make offline purchases with your phone. on the Globbing website and get their any banks and other options of the MTS Money in MTS Money, My MTS and MGTS applications on parcels in two service and sales centers of application. the websites mts.ru and payment.mts.ru. It also A key feature of MobiDram is the ability of VivaCell-MTS. became possible to load the MTS Bank cards to VivaCell-MTS subscribers to make various Apple Pay and Samsung Pay payment services directly from MTS Money and My MTS.

Turnover on contactless payment services for MTS Money cards December 2018 and January 2019 amounted to issued RUB 165 mln. For the second month of the Apple Pay launch in MTS Money, more than 20% of payments are made using this payment method. 5.4 mln 20 21 MTS FOR CLIENTS | Key Services 2018 MTS Group Sustainable Development Report

Second memory Business Services

MTS Cashback Cloud capacity 25% MTS Cash Desk of the electronic theater According to the updated law on the and concert tickets market MTS Cashback is a loyalty program for MTS use of cash registers, most of individual subscribers. To join the program, you should entrepreneurs in the field of trade were register on the MTS website or download From 5 In addition to the consolidation of new business obliged to switch to online cash desks before the MTS Cashback application. When buying and opportunities to increase ticket sales July 1, 2018. MTS has launched a boxed goods or services from the program partners among subscribers through the integration of solution to facilitate this transition. Everyone via the Internet, part of the money spent to 1,000 GB the Company’s services and Big Data expertise, who buys the “MTS Kassa” (MTS “Cash is returned to the client as cashback. It is MTS also received additional tools for marketing Desk”) device receives an “Easy Start” set accumulated in a virtual moneybox in the activities and interaction with customers and for the businesses to transfer to brand new user’s personal account. partners. cash desks without paying for connection, registration, use of the cash management TA2 The MTS Second Memory software and services of the fiscal data Up to cashback application is a cloud storage YouDo.com operator. where you can download backup copies of contacts, photos, music +25% and other important files from In September 2018, MTS became the co-owner your smartphone. The service of YouDo.com, one of the biggest online Free services and solutions provides the user with access platforms for searching contractors to solve of “Easy Start”: > 240 to all content from any device. domestic and business tasks. This is mutually popular online The application is available to all beneficial cooperation: MTS entered the market stores subscribers with a free storage of such online services for the first time, and • device activation and registration and services capacity of 5 GB. A larger cloud YouDo.com gained access to a wide audience of in the Federal Tax Service; capacity is available for a monthly the operator and extensive service expertise. subscription fee. In 2018, the loyalty program became even The partners are going to create new service • equipment setup; more attractive. The accumulated cashback The application makes it possible categories and automate them together, as can be spent not only on communication or to sort the bright moments by well as expand their business geography. In • training of employees to work with goods in the MTS outlets, but also on the MTS time and geotags, as well as share particular, they plan to start working in 20 more the cash register; mobile connection for family and friends. the content and entire albums regions across Russia: MTS’ database and with friends and family. In the analytics will help to find the platform users in • use of cloud software and services We plan to give cashback for purchases summer of 2018, users could print new regions. of the fiscal data operator (FDO) made in retail stores and payment for MTS the best pictures in their gallery in for one year from the activation services, as well as the possibility to pay for just a couple of minutes, and soon MTS and YouDo.com intend to conduct an date; entertainment services and applications, get their order at home, work, or experiment in 2019 and create joint banking home Internet and TV by cashback. a convenient issue point. products for self-employed people. YouDo. • more than 2,500 service engineers com database contains 850,000 registered all over the country are ready to go contractors, some of them are self-employed to the customer’s place to setup citizens and potential users of the MTS Bank the equipment in retail outlets on a products, to whom the Company will be able to turnkey basis. offer the new product for participation in the state experiment with a special tax regime. Nonadjacent digital businesses diversification will allow MTS to take a leading position in the promising market of ticket sales Social projects will be another important area of Ticketland.ru and Ponominalu.ru. for theaters, concerts, musicals and festivals, cooperation. In 2019, YouDo.com aims to launch and also offer subscribers to buy electronic a category of volunteer tasks where socially 102-10 In February 2018, MTS acquired two tickets with its integration into the MTS mobile unprotected citizens will be the customers. ticket operators: Ticketland.ru and Ponominalu. application ecosystem. Contractors won’t take any money, but would ru. Transactions that target business receive positive feedback on the site, which will improve their rating and increase the numbers of orders.

22 23 2018 MTS Group Sustainable Development Report

The line of kits called “MTS Kassa” includes a medium-sized businesses it is not that easy cash terminal with or without fiscal storage, to collect sufficient information for analysis cloud software, services of the fiscal data and processing. In fact, there is now almost operator and a telematic SIM card. All devices 6 million such enterprises in Russia. transfer data via mobile network or Wi-Fi, and information is stored on a secure cloud. The In 2018 MTS presented a new product for “MTS Kassa” kit also includes round-the-clock small and medium-sized businesses — MTS technical support of IT specialists. To register Marketing innovative digital platform. Now, the “MTS Kassa” device, a valid qualified companies of all sizes will be able to access electronic digital signature will be required, products based on Big Data thanks to MTS which MTS can issue if necessary”. Marketing.

Using MTS Marketing, anyone who has access The boxed solution supports to the Internet and wants to tell about small and medium business, their business can independently set up an advertising campaign. Service users gain as it helps to optimize costs access to targeted newsletters and banner and contributes to the advertisement, which will help them attract new customers. Moreover, companies and digitalization of companies entrepreneurs can form mailings on their in the transition period for own database of contacts and draw attention of those who have not visited them for a long Russian trade. time. In this case, all downloaded data will be placed in a secure cloud storage, where it will be under reliable protection. “Easy Start” and “MTS Kassa” make the life of entrepreneurs easier in terms of the Using constantly updated data, MTS installation of new cash register equipment. In Marketing users can select potential addition, the online cash desk allows customers customers by more than 120 parameters. for improving their corporate business Machine learning algorithms gather the processes, as the cloud software supplied as most relevant audience for each request. part of the package, which is accessible from For example, entrepreneurs can set gender, any place, includes the goods accounting age, income and other parameters of system and the loyalty program. potential customers, or show advertising to those who often pass near their outlet. Selecting filters in the personal account, the user will be able to adjust advertising so that it reaches exactly those people, who can be truly interested in their business.

With this approach, promotional offers MTS Marketing are not sent massively, but only to people who can really be interested in a particular Big Data technology, which has been recently product or service. And this is a plus for used actively in various business areas both subscribers as well, because they will in Russia and abroad, provides for selection have less unnecessary messages in their of those, who will most probably wish to buy phones. People would receive the most a given product. At the same time, while useful information, and a system of strict major market players have all resources automated moderation of messages will in hand to operate big data, for small and combat junk messages.

25 MTS FOR CLIENTS | Key Services 2018 MTS Group Sustainable Development Report

A wide range of advertising It is based on a platform that enables to Developing Telecommunication channels will help companies determine the employee’s location with the help of mobile phone signal at the nearest cell Infrastructure 103-2, 103-3 attract new customers, sites: the accuracy is several meters. revive sales during a low season, distribute evenly the The Mobile Employees service tracks Nowadays, many aspects of our life depend on the Internet movements on the map. You can also plan and load on outlets and solve monitor the task performance, coordinate access: We make an entry to educational institutions, fill in other urgent problems. actions and receive reports. school journals, and receive state and municipal services

Furthermore, the service tracks vehicles via the Internet. Cellular communication is included in the Another function of the service is the ability to and controls fuel consumption. The car set of vital services, and our Company finds the provision of provide customers with cashback for making owner receives SMS notifications of purchases. Companies can independently violations and other reports on the vehicle residents of even the most remote and hard-to-reach areas select purchases for which the customers fleet operation and work of drivers. Thanks with high-quality communication services the key social would receive remuneration to be spent on free to the transport monitoring, it is possible communication or used to get a discount on to analyze drivers’ behavior and the vehicle objective. a smartphone. operation quality. This information may be available to insurance and leasing Mobile Employees companies in order to calculate the cost of Mobile Communication expand its trunk fiber optic lines. Penetration of CASCO tariff and improve service quality. Infrastructure FTTB and GPON networks reached 93.2% at the Mobile Employees is an MTS platform for end of 2018. organizing and coordinating the remote work of MTS continues to build cell sites to develop employees. This service is available worldwide the mobile communication infrastructure. New MTS cell sites operate at 1800 MHz making the solution scalable and efficient. We strive to maximize the area of mobile frequency, which contributes to the spread communication coverage in MTS’ host of high-quality signal over a large area and countries and regions to meet our customers’ increases its penetrating capacity. The signal needs and apply an integrated approach to the penetrates better into closed premises, THE SERVICE THREE WAYS OF DELIVERING ON BUSINESS TASKS, development of data networks: We actively thereby improving the quality of 4G coverage in DEPENDING ON THE CLIENT’S NEEDS: develop 4G networks, and working ahead of residential buildings, educational institutions, the curve prepare our network to the transition shopping centers and other buildings. from the fourth generation to the fifth generation technology. For more information on 5G infrastructure development, see section Capital expenditures of MTS Group in 2018 “Innovative Network Development”. totaled RUB 86.5 bln, excluding the cost of licenses acquired in Ukraine, with an 18% ratio of capital costs to the revenue. The Company In Ukraine, MTS Group continued to focus on Employees Transport Coordinator boosted the amount of investment in the the network construction and service quality. development of networks in Russia, focusing on In January and March 2018, the Company Сontrol Monitor Manage travelling ensuring better LTE coverage. In the reporting obtained licenses to provide LTE services and employees’ transport employees: period, MTS built more than 21.5 thousand cell launched 4G network in Ukraine. At the end of displacements GPS/GLONASS tasks, marks, status sites in 83 regions of Russia. More than a half 2018, 3G coverage in Ukraine reached 85% of the of them are of the LTE standard. PA4 At the population, and 4G coverage accounted for 45% end of 2018, 4G coverage reached 68% of the of the population. The number of smartphone Russian population. MTS also continued to users and data services consumers grew by 7.9% and 9.9%, respectively.

In Belarus, 3G coverage is available for 99.79% of the population, and 63.14% have 4G. The share >61 of subscribers using data services was 60.4% thousand cell sites in Russia in 2018.

26 27 MTS FOR CLIENTS | Developing Telecommunication Infrastructure 2018 MTS Group Sustainable Development Report

CAPITAL EXPENDITURES OF MTS GROUP

2016 2017 2018 4G in Moscow Metro Russia,1 RUB bln 73.8 65.2 75.1 Moscow residents spend in % of revenue 18.4 15.8 16.8 Since February 2019, MTS network is about 40 minutes a day Ukraine,2 RUB bln 7.5 10.3 9.3 available at all 226 Moscow metro stations in all existing standards: 2G, 3G and 4G. underground and are not in % of revenue 25.6 39.4 31.4 MTS subscribers can also make voice ready to refuse from voice calls and use the mobile Internet in metro services and the access Armenia, RUB bln 1.0 0.9 2.0 trains in tunnels using second and third to familiar applications, in % of revenue 11.8 12.5 26.4 generation networks, and 4G in a number messengers, e-mail and of sections of Kalininsko-Solntsevskaya online games for this time. Turkmenistan, RUB bln 0.4 0.1 - and Sokolnicheskaya lines. MTS plans A joint project with Moscow to provide all metro tunnels with 4G in % of revenue 9.0 3.9 n/a Metro to equip all stations standard by the end of 2019. with the most up-to-date MTS Group,3 RUB bln 83.6 76.4 86.5 communication standard in % of revenue 19.2 17.3 18.0 will allow our subscribers to comfortably use any digital 1 Excluding expenses for acquisition of 4G licenses. services, including those 2 Excluding expenses for acquisition of 3G licenses. sensitive to the speed of the 3 Including capital expenditures in Uzbekistan and Turkmenistan reflected in cash flow from discontinued 360 mobile Internet. operations. TB of mobile Igor Egorov, Internet use MTS Director 2 Moscow Metro in the Moscow Region mln subscribers passengers per use MTS network month in Moscow Metro every day

Internet on Elbrus

MTS NETWORK DEVELOPMENT IN MOSCOW METRO

2017 2018 2019

In December 2018, MTS base station (3G and Emergency Situations will be provided with 2G) was put into operation in the Kabardino- a significant benefit as communication will Balkarian Republic on Elbrus at an altitude help them in rescue operations. MTS is the only MTS launched LTE of 3,888 m above sea level. It is the most All 226 stations are operator to ensure on the stations highland cellular communication facility in This is another MTS project to develop the covered by MTS voice communication on Kalininsko- Russia and Eastern Europe. For the first time tourist potential of the Russian regions. network, which and mobile Internet in Solntsevskaya and in history, mobile Internet became available Similar equipment was previously installed supports 2G, 3G and all subway tunnels. Sokolnicheskaya on Elbrus at an altitude up to 5,100 m and on the Azau Meadow (the highest inhabited 4G standards. voice communication — to the top of the point of the Elbrus Region with an altitude lines. mountain (5,642 m). Mountain skiers and of 2,300 m above sea level) and at altitudes climbers and employees of the Ministry of of 3,200 and 3,500 m.

28 29 MTS FOR CLIENTS | Developing Telecommunication Infrastructure 2018 MTS Group Sustainable Development Report

Data Centers In 2018, MTS Group acquired one of the largest data processing centers in Russia called Eliminating Digital Gap in the Arctic Today, enterprises increasingly abandon their Avantage Data Center. It became the tenth own corporate servers and choose cloud data center of the Company and the fourth providers, who offer attractive conditions for data center in Moscow (Moscow accounts for PA2 103-2, 103-3 Since 2016, a strategic As part of its campaign, MTS upgraded data processing and storage and a high level of 75% of Russian cloud technology market). The agreement has been effective between MTS the stations to meet LTE standard in large security along with the fault tolerance. Therefore, fault tolerance of the data center’s solutions is and the Government of the Yamalo-Ne- cities of Yamal: Novy Urengoy, Salekhard, MTS actively develops its own infrastructure in confirmed by Uptime Institute - Tier III Design Noyabrsk, Nadym and Tarko-Sale. Yamal is nets Autonomous Okrug (YNAO), under this area. Certificate. which MTS continues to develop the mobile a region with a complicated infrastructure network of the second, third and fourth and large distances: Northern residents generations. and visitors of the region spend much MTS Group has the following data processing The acquisition of Avantage significantly time on the road. When analyzing this centers: four data centers in Moscow, two improves the MTS computing power and expands The large-scale network development special feature of the Autonomous Okrug, data centers in Nizhny Novgorod, and one the technological base for service provision program in Yamal targets improving the we decided to focus on accessibility of each in Samara, Novosibirsk, Vladivostok and to business. MTS benefits from resources of accessibility of innovative services for the high-speed Internet at the key transport Krasnodar. The reliability level of MTS’ data Avantage in the #CloudMTS project, in which the hubs of YNAO. In 2018, the airport of Novy population and active development of the centers is determined by the Tier-III marking. operator provides cloud services to business, as telecommunications infrastructure in the Urengoy and the Urengoy River Port being MTS data centers in Moscow, St. Petersburg well as colocation services. region in general. Coverage and quality of the oldest and one of the most Northern communication will be significantly improved ports in Russia were connected to the and Novosibirsk are equipped with modern data both in the cities of YNAO and remote high-speed Internet using LTE technology. storage systems and servers of world producers For more information about rotational camps and fields, including beyond Motorists driving on the Surgut–Novy promising uninterrupted operation and high #CloudMTS, see section “Perspective the Arctic Circle, in permafrost conditions, in Urengoy highway got access to high-speed quality of services. Business Development Areas. areas where there was no mobile connection mobile Internet: in case of any difficult and high-speed Internet. situations they will always stay on track. Tier standards is the data center performance language. The HIGH-TECH PLATFORM AVANTAGE: Uptime Institute Certification The era of high speed and technolo- Launching networks in remote gies came to the Arctic meaning not villages of Yamal District is a socially for compliance with the Tier III 16 rooms only development, but application of important task. It is important standard guarantees stringent 20 MW the most innovative products. Qual- for us that every resident of the capacity ity development of the communica- region irrespective of their place of requirements for reliable data for 2,240 tion infrastructure and liquidation residence have access to high-quality center infrastructure. 6,400 m2 racks of the digital gap remains one of the communication. After all, this makes area crucial tasks. It is only possible to the life of Northern residents much solve it in a competitive environment. easier, as using the mobile Internet Every year MTS has been expanding they can quickly solve a whole range its presence in the Arctic Region and of everyday issues, from public The development of digital services Modular Data Center upgrading the networks. The invest- services to tax payments. and organic growth of Internet traffic ments resulted in improved quality In 2018, the Company built the first modular Aleksandr Samuilov, is driving us to build an infrastructure of communication and Internet data center. Opening a new data center in Director of MTS branch in YNAO of higher reliability that would satisfy services in the majority of the dis- Nizhny Novgorod will enable MTS to increase trict settlements, including remote and even anticipate customer needs. the volume of services for corporate clients rotational camps of major oil and gas System integration and automation in areas such as system integration, data deposits being important for us. As of the end of 2018, MTS mobile projects with the use of cloud storage and processing, backup, transfer of technologies require a trouble-free and Dmitry Kobylkin, communication was available to more IT systems to secure cloud #CloudMTS, as than 90% of the settled population of the secure system these days. Governor of YNAO well as services for processing large amounts region. Mobile network of MTS in YNAO of data using the MTS BDaaS infrastructure works on fully updated modern equipment, Andrey Ushatsky, (Big-Data-as-a-Service). The capabilities of which supports high quality voice service Management Board Member, Vice- the Nizhny Novgorod data center will also be parameters and 3G mobile Internet President for Engineering and IT of subscribers. Connecting Yamal cities to 4G used in MTS projects for development of the MTS PJSC communication remains one of the focus Internet of Things solutions. areas for MTS. Introduction of LTE standard will continue in 2019.

30 31 MTS FOR CLIENTS | Developing Innovative Services 2018 MTS Group Sustainable Development Report

Construction of the engineering infrastructure was carried out by NVision Research and Development Center In order to accelerate the start of the Group, the subsidiary system integrator. We data center operations, we applied the used the so-called prefabricated solutions, In 2018, on the basis of the existing MTS infrastructure in Innopolis Technopark, MTS PJSC and modular construction principle. The when all the parts of the machine room were Ericsson opened a joint Research and Development Center in Kazan. The main activity of the Center is the creation and introduction of innovative products and solutions based on 5G and IoT produced at the plant, brought to the facility first data center module, a 900-kW technologies to the Russian and global markets. First of all, the Center will focus on developing and assembled tthere. As a result, the output machine room and infrastructure, is the smart city solutions to satisfy the needs of the Russian cities. installed at the site arranged after the is a full-fledged data center. In the future, end of the general construction cycle. other modules can be added to the first The process is similar to children’s one without wasting time on construction preparation. blocks construction. laboratory, an accelerator of R&D activities and a MTS and the Russian Academy Aleksander Tishkin, The next modular data centers of MTS will be link between various product teams. of Sciences responsible for102-2 the Engineering built in St. Petersburg, Novosibirsk and one of Infrastructure’s Architecture the cities of the Southern Federal District. MTS Innovation Center is in charge of the In 2018, MTS and the Department of of the Data Center promising business development areas, Nanotechnologies and Information implementing a brand new approach to the Technologies of the Russian Academy of research. Innovation Center is comprised of six Sciences signed a cooperation agreement directions: clouds, health, education, artificial for information and communication intelligence, e-sports and MTS StartUp Hub to technologies development. Developing Innovative Services 102-2, 103-2, 103-3 work with startups. The agreement provides for cooperation in conducting research in fundamental In 2018, MTS PJSC established the and applied sciences, sharing of expertise Today, the leaders are those who focus on information M2M/IoT Department, which includes the in scientific and technical programs and M2M/IoT Products Center and the M2M/IoT projects for practical implementation of technologies. Such conditions are dictated to the busi- Infrastructure Solutions and Services Center. innovations to the benefit of MTS and the ness by the rapid development of technologies. In Russia, The M2M/IoT Department, established in the Russian ICT industry, events aiming at the Sales Unit, will coordinate the issues of vertical exchange of information and experience, innovation and competence centers of the National Technological IoT solutions in the agriculture, transport, smart as well as popularization of modern Initiative are opened, while the companies are going through a new city, smart homes, industry, housing and energy technologies and scientific knowledge. fields throughout the MTS Group. automation era. And all this happens at the intersection of science and business. In addition, given the importance of developing and implementing innovative digital products, at the top management level we have established All over the world, IT and telecom MTS keeps up with the trends of digitalization, into the future in order to use effectively high the position of Management Board Member, Vice companies are the leading actors in which literally captured the world. We have set technologies for the development. President for Digital Business Solutions of MTS economic modernization processes. MTS ourselves the global business goal to achieve PJSC, and assigned Valery Shorzhin. carries out digital transformation to bring digital transformation and to become not just Many different departments are involved in new products and services to the market. a telecommunication leader, but to step far R&D activities at MTS. One of them is the R&D In order to identify the functionality, which is Using the enormous scientific potential expected to be in demand in new products, we of the Russian Academy of Sciences and collect ideas from three sources: MTS StartUp the skills of hundreds of IT specialists Hub startups, Russian and foreign venture and engineers of our Company, we ANO Digital Economy companies (MTS works in partnership with Oracle, have set the goal to accelerate the Microsoft, Google, etc.), as well as the applied implementation of scientific innovations science (universities, large R&D centers, etc.). MTS PJSC is among the founders of the Autonomous Non-Profit Organization (ANO) in existing successful projects and Digital Economy, which ensures cooperation between business, experts and the state in the create the groundwork for new high- development of the digital economy in the country. tech products, thus contributing to the For more information about MTS innovative development of Russia. The project is aimed at large-scale development of information and telecommunication cooperation with universities, see technologies and their massive introduction in all areas of life. ANO Digital Economy also section “Recruitment and Adaptation”. Vladimir Khrenkov, supports socially significant projects and initiatives in this field. Director of MTS Group’s Innovation Center

32 33 MTS FOR CLIENTS | Developing Innovative Services 2018 MTS Group Sustainable Development Report

Innovative Network Development RUSSIAN INDUSTRIAL AUTOMATION MARKET, • housing and municipal services (city lighting • massive expansion of IT services, applications, RUB BLN control system, energy efficiency control sys- analytics and integration, including through Internet of Things 270 tem, smart resource accounting, optimization information security devices and Big Data of consumption, maintenance and calcula- services; CAGR = 43% In addition to traditional services, MTS offers tions, smart elevator, smart waste bins, etc.); 189 a set of technological solutions and opportu- • the prevailing consumer segment will be B2B, • nities to improve the performance, automate 133 electricity (resource accounting, industrial while the smallest will be B2C. the business processes and interaction with Internet); the contractors, expand the customer base and 93 IoT Solutions Platform increase the sales volumes. • agriculture (networks, cattle breeding, crop production, storage solutions); At the end of 2018, MTS launched the IoT solu- One of the main development directions is the tions platform, which is a SaaS platform for promotion of optimal solutions for the deploy- • ecology (monitoring of environmental parame- IoT devices control and implementation of the 2017 2018 2019 2020 ment of the Internet of Things (IoT). (forecast) (forecast) ters), etc. integrated industry solutions according to the business requirements. The Russian market is going through a revolution Source: TAdviser Analytical Center together with Key trends in the Internet of Things market in in the field of IoT: the number of wireless modules Rostec State Corporation 2019 will be: The advanced configuration for specific com- in the networks of mobile operators exceeded plex business tasks, traditionally being industrial 17.5 million by the end of 2018. We expect the DIGITALIZATION IN HOUSING AND UTILITIES, • reduction of the share of equipment in the IoT companies can be noted among the distinctive average annual growth of the Russian IoT market RUB BLN revenue structure; characteristics of the solution. The platform also to be about 18–25% in 2019–2022. allows providing support for more than 10,000 8 • diminution of the share of connectivity costs device models. CAGR = 15–21% 7 The fastest growth in the demand for the Inter- in income and rapid reduction of the ARPU net of things is noted in the fields of transport, 6 from one IoT device; real estate, housing and utilities, as well as 5 energy, industry and agriculture. Smart city solutions are becoming more and more com- mon. Both the development of the Low-power Wide-area Network (LPWAN) and active state MAIN CONSUMERS OF THE IOT PLATFORM support of IoT, in particular, the state Digi- tal Economy program, as well as federal and regional state projects related to digitalization, are the growth drivers. 2017 2018 2019 2020 (forecast) (forecast)

MTS already has existing digital products and Source: IoT Perspectives vertical solutions (platforms and applications) in 1 place in such sectors of the economy as: DIGITALIZATION IN THE PUBLIC SECTOR, RUB BLN Companies with the need M2M/IoT device • transport and logistics (smart parking, smart 172 to implement IoT projects manufacturers car insurance, etc.); CAGR = 26% 123 • security (safe city, smart video surveillance, IoT Platform 108 access control + acoustic security monitoring system, fire alarm system); % 42 2019 2020 2021 share of MTS on the Russian Internet (forecast) (forecast) (forecast) Front end applications of Things market in terms of the Source: TAdviser Analytical Center together with Integrators developers number of telematic SIM cards Rostec State Corporation

1 Includes budget injections in all areas covered by the Digital Economy program.

34 35 MTS FOR CLIENTS | Developing Innovative Services 2018 MTS Group Sustainable Development Report

GENERAL FEATURES OF THE IOT PLATFORM

MTS and Kirovsky Zavod Over 10,000 device models Supports any kind of connection are integrated with the platform of IT solutions on the market — an industrial GSM / NBIoT / Wi-Fi / Ethernet communication platform that will expand the capabilities of industrial enterprises in IoT the field of digitalization.

The first stage of cooperation between The platform’s capacity is estimated Interactions between devices and Kirovsky Zavod and MTS Group will be to over 1 mln devices with the last the platform occur following one the creation of an industrial platform horizontal upgrade of the following protocols: for remote monitoring and control of • MQTT v.3.1.1 production equipment. It is based on artificial intelligence technologies for • LWM2M collecting and analyzing data on the • Other protocol adapters operation of the machine fleet, capable of Customer cases can be implemented through processing information from an unlimited various ways: number of equipment units. This platform • through NVision can be used to improve the efficiency of internal and external logistics, as well as the • through the Customer operation of automated metering units and • through side integrators other production processes. The platform will be integrated, launched and tested at one of the enterprises of Kirovsky Zavod.

At the second stage of cooperation, the platform solutions are planned to be scaled MTS Smart Farming Helps Modern Farmers Enter the At the St. Petersburg International up to other production sites: enterprises of Digital World and Increase Profits Innovation Forum, MTS Group and Kirovsky agricultural, industrial, power engineering Zavod signed a cooperation agreement. It and metallurgical production and the Smart Farming is a vertically integrated (vaccination, disease treatment, breeding will result in the emergence of a new class energy complex. solution for the agricultural industry. Its and reproduction) and track their main components are a specialized IoT movements on the open terrain or inside platform and the infrastructure of specially the barn; designed wearable sensors installed on the livestock and transmitting information • module for calculating individual feeding about their condition. rations for each animal;

Smart Farming modules: • analysis module based on machine learning, which analyzes all collected SIM cards for IoT • electronic animal certificate, where data and, in particular, identifies of all collected information is stored and livestock health deterioration at the MTS has started production of SIM cards for the Internet of Things (IoT), which will enable displayed, such as: weight dynamics, earliest stage. The notification and task various enterprises to reduce costs when introducing IoT to their production process. physical activity and appetite, body setting system helps employees take temperature and pulse, amount and action on time. MTS will provide three types of SIM cards: a conventional NB-IoT SIM card, a thermo-SIM quality of milk yields, etc.; card that ensures stable operation of the smart device in extreme climatic conditions, and a As a result of the implementation of our SIM chip for miniature devices. • application for tablet, in which farmers solution, the company significantly reduces register all operations performed costs, increases yields and, therefore, Devices with NB-IoT SIM cards can work seamlessly under difficult signal conditions and with the livestock and their indicators boosts own profit. operate for up to ten years without additional battery recharging.

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NB-IoT Technology The launch of the NB-IoT network gives IoT pilot MTS was the first among Russian operators to M2M Manager build the necessary infrastructure for services projects the status of and devices of the Internet of Things as defined industrial products being in the LTE standard and based on NB-IoT (Narrow M2M Manager is a convenient universal The Traffic Control feature allows defining Band IoT) technology. The NB-IoT standard is in high demand in various tool for managing SIM cards in remote a list of allowed/disabled numbers for optimal for data collection, analysis and manage- industries. technological equipment, namely M2M voice, CSD and SMS traffic. ment, and remote control of devices. devices. The solution enables to obtain NB-IoT solutions will serve as a powerful objective and complete status, statistical In 2018, a new platform (version 2.0/2.1) MTS NB-IoT network has already been launched impulse for the Russian IoT market thanks to and other information about the operation was commercialized, integration with in dozens of Russian cities, including Moscow, St. their energy efficiency, high security and other of remote devices. the NB-IoT network was carried out, the Petersburg and cities with more than one million benefits of the new communication standard. Technological Messages functionality and inhabitants. In 2019, MTS plans to actively expand The federal and regional support of the digita- The platform is interconnected with the the IoT network tariff plan were launched. the coverage area of the NB-IoT network and to lization process will remain the driver for the main nodes of the MTS network providing create the possibility of implementing the cover- development of the new standard. for monitoring and online operations: Main changes in the release of M2M 2.0: age upon the customer request. control of targeted use and expenses, full information about the status of the SIM • updated internal architecture; KEY BENEFITS OF NB-IOT card, diagnostics, notifications, flexible configuration of user authorizations, • geographic redundancy; • rapid deployment and scaling In 2018, MTS NB-IoT networks were reports, API. • optimized workflows; • energy efficiency launched in 50 regions of Russia for The platform has an additional functionality • high communication range the Internet of Things projects. that extends its field of application. For • improved and redesigned web interface • secure channel example, M2M Manager enables you to of the service; • possibility to connect up to 50,000 devices comfortably manage SIM cards connected together on one base station (a standard under different contracts in different • billing and management functions of leads by the number of station is able to connect up to 1,000 devices) MTS regions. This is the free Single Sign In the Internet traffic and its packages modules in operation option. What it offers: have been fully transferred to the M2M Manager platform; • all SIM cards can be managed as a single array, regardless of the region in which • expanded API functions; the contract for mobile services has been IoT Explorium of MTS concluded; • modular configuration of functionality provision: the customer may or may not In the center of Moscow, in one of MTS offices, • it is possible to split up competences be authorized to use different features. there is a place where you can see how the most One of the main tasks of between users who manage the entire interesting achievements in the field of Internet of the laboratory is testing array of SIM cards and local contracts. Things work. And this is not just a demonstration B2B solutions. The doors of capabilities; almost all solutions are ready to be are open for everybody: launched in a pilot or commercial mode. customers who want to get the services and MTS’ laboratory became the 27th laboratory in the world, opened under the auspices of the GSMA suppliers wishing to test International Association. Here customers, partners their solutions. and suppliers can study the commercial IoT Igor Egorov, 30% services, and test and create promising solutions income growth in the field of Internet of Things. Stands of the MTS Director in the MTS laboratory contain parts of IoT networks with Moscow Region various sensors and equipment used to transmit 30% 32% parameters and data for their processing on cloud growth in the share of growth in the number platforms and control through tablets and laptops active devices of customers with visualization of information about the state of systems on large screens.

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and offer an adaptive solution based on the IoT and system integration for each particular city Data Telemetering together with its administration.

In 2018, MTS PJSC signed 13 agreements with TA2 The service solves a number of com- The Data Telemetering solution offers a Smart City the administrations of cities and regions of plex tasks faced by the companies, such as: convenient and modern platform with the the Russian Federation. The development of possibility to introduce virtual sensors and innovative technologies and services related to • monitoring of the status of important calculate formulas. MTS is actively developing as the digitalization of the economy, industry and parameters in an industrial, production an operator of digital services, social area of regions, as well as the develop- or other facility; Solution technologies can be widely ment of the communications infrastructure in used in food retail, food production and and already today we have their territories will be the cooperation priori- • collection of readings from various warehouses, water treatment and heat considerable resources and ties. metering devices (electricity, water, supply facilities, gas distribution stations heat, etc.); and other complex urban infrastructure. experience in implementing In June 2018 MTS PJSC and Skolkovo Tech- smart solutions both for nopark signed a cooperation agreement for the • remote control over advanced development of the smart city technologies. technological equipment. everyday life of people and for Commissioning of the Internet of Things pilot enterprises and urban spaces. zone based on NB-IoT networks became the first step in fulfillment of the agreement. The test zone with the NB-IoT standard coverage TA2 Smart City is a natural urban development operates throughout the technopark and is ADVANTAGES OF THE SOLUTION process aimed at solving modern problems and open to startups and companies developing tasks that no one even thought about some the smart city products and solutions. The pilot time ago (increased number of residents, road zone commissioning and the possibility to per- traffic, economic activity, cultural exchange). form testing in the “live network” will expand the number of professionals and companies The Smart City creation begins with the devel- involved in the development of digital solutions Agrocompanies, Regional energy and opment of a concept or roadmap, which can be and reduce the time for the market launch of Service companies, productions, warehouses, sales companies, water comprised of and include several or even many commercial products of the Internet of Things. operating companies, IT business centers, food utilities companies, products. Experts identify a range of problems departments stores managing companies

Ensurance of the steady functioning of Automation of meter Reduction of operating equipment and systems, reading, cheap solution, costs, new service quality St. Petersburg Novosibirsk Region Republic of Rostov Region Primorye Territory minimization of losses reliability, information for customers Administration Administration Ingushetia Administration Administration Administration due to malfunctions

Monitoring Accounting of Remote maintenance of infrastructure energy resources service Orenburg Niznhy Novgorod Voronezh Region Republic of Republic Administration Administration Administration Tatarstan of Karachaevo-Cherkessia Administration Administration

Polyarnye Zori Kostroma Skolkovo Administration Administration

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Kostroma Region St. Petersburg The priority area of cooperation in launched the first pilot zone of the Internet The key field of cooperation in the quality of life and work of residents of the St. Petersburg will be the development of of Things in St. Petersburg based on NB-IoT Kostroma Region will be the development region and develop the economic potential technologies related to the digitalization networks within the framework of the of innovative technologies and services of the Kostroma Region. of urban infrastructure. In April, MTS Smart City of St. Petersburg project. related to the digitalization of the regional economy and its social area, as well as infrastructures in human settlements in order to improve the safety of the urban The digitalization of the economy can environment and the usage efficiency of serve as an economic breakthrough the regional economic resources. for the region, improve its Pilot Project in Tatarstan Implementation of the agreement will productivity and access to education In 2018, MTS launched Russia’s first The pilot project was implemented by means include regional testing of innovative and medicine, as well as all the basic comprehensive pilot solution for smart city of a video surveillance system, remote digital services and solutions of MTS in the directions that determine the quality in the field of housing and utilities on the meter readings, monitoring of parking lots, following areas: Smart City, the Internet of life in the modern world. The 4.0 NB-IoT network. A residential complex with the environmental situation and household of Things, mobile applications, including industrial revolution discussed today this solution was built in Arsk, the Republic waste removal. Everything in the complex telemedicine and education services; is not possible without the creation of Tatarstan. In Tatarstan, a special attention provides for improvement of the living cybersecurity, Big Data, cloud services and of the infrastructures based on is paid to information technologies. This environment quality and cost reduction due electronic commerce. telecommunications. development was part of Tatarstan’s to automation of processes. Strategy 2030 and Russia’s Digital Economy Using MTS digital solutions, regional socio- Vasily Golub, Development Strategy until 2024. cultural and infrastructural projects are Director of MTS conducted with the view to improve the Kostroma Branch SMART CITY: A PILOT IN ARSK Network- IoT

Eco-monitoring: ensures a continuous and automated monitoring of the environmental and meteorological situation СO, NO, NO2, SO2, O3, H2S volatile organic substances, PM2.5, PM10. Noise, Ukraine direction and speed of wind, temperature and humidity, air pressure, rain, ?, UV Based on Kharkov example, PrJSC VF A smart transport system, smart traffic Ukraine launched a complex partnership lights and parking lots, electronic project, which will turn an ordinary medical appointment booking and video metropolitan city with all its typical issues surveillance systems became the key Face Recognition System: into a comfortable and smart city. Modern project priorities. allows to control who Meter Reading: technologies and solutions will enable WEB interface enters the house Water / Electricity restructuring the work of all municipal In 2018, Kharkov residents gained access for all users services and systems, converting many to the city online services for registration services to digital and online ones, making of various certificates, statements and them more efficient, and saving money and applications by means of identification time of the city and its residents. via Mobile ID. In 2019, the list of online Smart Waste services will be expanded. Sorting: automatically Smart Parking: determines how TA2 In 2018, the Mobile ID technology was launched, which allows to check if a parking spot full the bins are allowed Vodafone Ukraine customers to use the service of is free electronic personal identification, as well as the electronic digital signature representing a legal alternative to the owner’s manual signature. Occupied Free Full Empty

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The introduction of the Inter- As part of the effective agree- speed reached 979 Mbps by the end of 2018. In 2018, MTS LTE2100 networks were net of Things in all areas ments, in 2018 we moved from MTS has drove the LTE network to gigabit launched in 19 regions of Russia: in the Bel- testing the pre-5G technology speeds by combining all available frequency gorod, Kostroma, Nizhny Novgorod, Novosi- will take place, first of all, to launch of the first commercial bands and applying technologies that will be birsk, Rostov, and Samara regions; the Altai, on the basis of 5G mobile products of the pre-5G network involved in networks of the fifth generation: Krasnodar, Krasnoyarsk, Perm, and Primorsky using LTE EVO opportunities: multiantenna modes (MIMO 4x4) and high-or- territories; the republics of Bashkortos- technologies. der modulation (256 QAM). tan, Buryatia, Dagestan, Mari El, Sakha, and • we built high-capacity zones with Tatarstan; Khanty-Mansi and Yamal-Nenets On the Way to 5G Massive MIMO for the World Cup; In 2018, a large-scale program was launched autonomous okrugs. to build LTE2100 mobile communication net- • we increased the spectrum The fifth generation of mobile communication works on the frequencies of the previous 3G MTS uses new technologies for LTE2100: efficiency by launching new LTE (5G) will give operators the opportunity to cre- generation in small and remote settlements multiantenna mode (MIMO 4x4) and higher bands (LTE 900 and LTE 2100); ate many new services. of Russia. We were the first among Russian modulation (256 QAM versus 64 QAM in 3G), • we introduced Gigabite LTE telecom operators to refarm (reassign) the which multiplies almost by five the down- According to forecasts made by Ericsson commercial zones (LAA, Carrier 2100 MHz band, originally intended for UMTS link speed to reach up to 100 Mbps at 5 MHz Mobility analysts, 5G communication technol- Aggregation, 256QAM) onto the (3G) networks, to faster and more capacious bandwidth compared to 21 Mbps in the most ogy standards will be approved by 2020, and by network. 4G (LTE) networks. advanced 3G standard HSPA+. The 2100 MHz 2022 more than 500 million subscribers will be registered in 5G networks, excluding IoT devices. Broadband 5G mobile Internet will be first launched in large cities and continue to grow at Communication at the 2018 FIFA World Cup LTE’s pace: it is expected that their penetration nership with key suppliers, by means of testing rate will reach 15% by 2022. By 2023, according new solutions. When preparing for the 2018 FIFA World In order to provide the fans with to Ericsson’s forecast, 5G networks will have 1 Cup, multi-operator mobile communica- communication services during their billion connections, and 5G services will be avail- Unlicensed spectrum technologies, such tion systems were designed and run in 12 trips between the cities hosting the able to 20% of the world’s population. as LAA (License Assisted Access), will be unique stadiums in the following 11 Rus- World Cup, indoor solutions were used in 5G networks to ensure wavelength- sian cities in less than a year: Moscow, implemented in Sapsan high-speed trains Pursuant to the state program - Digital Econ- division multiplexing, expand their bandwidth St. Petersburg, Kazan, Nizhny Novgorod, on the route St. Petersburg — Moscow — omy of the Russian Federation - in 2020, 5G net- and capacity. In this solution, the LTE base Rostov, Kaliningrad, Samara, Saransk, Vol- Nizhny Novgorod and Allegro high-speed works shall be launched in eight cities of Russia, station and subscriber devices operate both gograd, Sochi, and Yekaterinburg. trains from St. Petersburg to Helsinki. and by 2025 in all cities with a population of over in the standard licensed frequency spectrum 1 million people. owned by the telecommunications operator Communication services were provided The quality of communication provided and in the unlicensed 5 GHz band. To avoid in all licensed ranges and technologies by MTS during the World Cup was highly interference with other devices running DCS-1800/UMTS-2100/LTE1800/LTE2600. appreciated by the Ministry of Digital Data transmission services were provided Development of Russia and the sport on the Wi-Fi network, the base station in at record speed rates given the conditions event’s organizers. this band follows the Listen-Before-Talk of mass congestion of subscribers: 3G — 3 principle. Mbps, and LTE — 7 Mbps.

The LAA technology is an important On its way to the large-scale milestone on the road to 5G, since it will be used in next-generation networks to and commercial develop- download instantly heavy files, watch ment of 5G technologies, ultra-high definition video, use virtual and 12 7 MTS operates in partnership augmented reality services, play cloud stadiums mln fans in gaming. In addition, LAA allows you to quickly fan zones with big actors of the global and cost-effectively build gigabit networks information and communica- in places of active traffic consumption, 25 tion industry: Ericsson, Nokia, where operators do not always have enough 3 thous. hours available frequencies in the licensed mln spectators of voice Samsung and Huawei. spectrum. at 64 matches traffic MTS is preparing its network for the introduc- The first commercial high-speed LAA network tion of 5G technologies. To that end, research is of Russia and Eastern Europe was launched conducted both by our specialists and in part- in 2018 in Ufa, where the peak downlink

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band covers a larger radius than LTE2600, and Kazan, Rostov-on-Don, Nizhny Novgorod, Cooperation with Ericsson the aggregation with the lower range LTE1800 Yekaterinburg and Samara. Using Massive offers a larger coverage than UMTS2100. MIMO, we increased the network capacity in In February 2019, MTS and Ericsson signed another agreement to launch the first fragments places crowded with fans and active traffic of the fifth generation MTS mobile networks in Russia in 2019 and further develop 5G tech- nological solutions in the current infrastructure of MTS. Also in 2018, we launched a 900 MHz LTE consumption: around stadiums, in railway network in St. Petersburg and the Leningrad stations, airports, parks, fan zones, along The 2019–2022 5G work plan agreement provides for the development and deployment Region. pedestrian areas and near tourist attractions. of the first fragments of 5G networks in pilot zones and commercial clusters in 2019, To ensure continuous coverage, cell sites the upgrade of existing 5G LTE networks into high-speed LTE Advanced Pro networks, The wide application of the principle of techno- equipped with Massive MIMO have been as well as the further development and implementation of commercial solutions and logical neutrality in accessible bands will allow installed in more than 40 areas. products based on fifth-generation communication technologies. MTS to overcome the frequency deficit, accel- erate the deployment of LTE networks in the After the World Cup, we continued to country, accelerate data transfer, expand the use Massive MIMO cell sites in the most zone of steady 4G coverage and bring nearer frequented commercial areas requiring high the 5G era. capacity, and we began to launch them in System Integration Group’s integration solutions are presented more regions. with the support and on the basis of the For more information on MTS continues to launch services for subsidiary system integrator NVision Group infrastructure development, As part of a Formula 1 tournament on two pro- automation of various activities using and the company Navigation Information see section Developing fessional VR gaming systems, interacting with software and hardware platforms. MTS Systems. “Telecommunication Infrastructure”. each other through a cell site and the Ericsson 5G 28 GHz mobile terminal, a ping of 4 mc was reached in the 5G network in GUM on the Red The Future is Already Now Square, which makes it the most comfortable SYSTEM INTEGRATION SOLUTIONS technology for eSport. In summer 2018, MTS launched the Massive MIMO technology on the existing network, In St. Petersburg, we introduced the first which will be widely used in the fifth- prototype of a real Samsung 5G tablet in the generation communication networks. The Museum of Communications and demon- commercial launch of this technology was set strated its work in real conditions on the 5G on the occasion of the World Cup and took network: the speed at the physical layer of the place in seven cities: Moscow, St. Petersburg, device reached 2 Gbps. Development and Voice and Equipment Service and Information installation of multimedia installation outsourcing systems software communication

MTS and KAMAZ

In April 2018, MTS PJSC and Given the leading role of KAMAZ in the KAMAZ PJSC, the largest development of unmanned vehicles in manufacturer of heavy trucks the country, it is obvious that its partners in Russia, signed a cooperation are companies that are successful in that Business VR simulators, Data transfer Staff positioning automation agreement in the fields of segment and offer technologies and solutions Machine vision AR visual voice networks system and development assistant 5G communication networks that can help KAMAZ implement its ambitious of devices for unmanned vehicles, as plans. MTS is precisely one of such leading well as development and companies and can offer KAMAZ its own implementation of the promising world-class developments. industrial Internet of Things МТС and automation of production Firdaus Kabirov, processes at KAMAZ. Deputy Director for Development of Innovative Products Physical security Information Dispatchering and engineering MTS Cloud BIG DATA and economic system systems safety

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The solutions developed were implemented in the companies Henkel Rus, Volzhsky Pipe Private LTE 7.4 Plant, Guildov Krasnoyarsk Non-Ferrous Metals Plant, PK Novocherkassk Electric RUB bln (+33%) of MTS’ The Private LTE solution consists in constructing an isolated network infrastructure for the client, Locomotive Plant, Russian Platinum, revenue came from system allowing to cover communication zones in hard-to-reach areas. Priargunsky Industrial Mining and Chemical integration in 2018 Association and others.

The Company’s system integration services NVision Group’s product line is growing allow to unify information flows, create rapidly, introducing platforms and systems Components of the solution Advantages a single workspace for users, and make that automate and optimize a significant Operator network business processes transparent and flexible. part of customers’ business processes. The • Сore of the network (EPC), • Own isolated network company expands its competence not only to which all cell sites are con- • Transition to modern digital nected NVision Group offers its customers in the field of classical system integration, technologies on a single platform • LTE cell sites • Automation of technological technologies that are widely used in but also in industrial automation relevant • Frequency spectrum assigned systems and use of low latency production and help companies to achieve on the market and highly promising projects • Subscriber’s equipment applications (Internet of Things) business goals more effectively. for the public sector. • Radiocommunication server • Possibility to cover the communication network in hard- to-reach and unserved areas, wide range Private LTE network • Video surveillance able to work over LTE • Live tracking of high-value assets with an accuracy of within one Industrial IoT centimeter

The Industrial IoT solution relies on to a server, where it is processed, and connecting machines, conveyors, presses receive information from the server, BTS.N BTS.2 BTS.1 to an aggregate platform using sensors allowing to monitor the workload and GSM/FOD/TOD GSM/FOD/TOD GSM/FOD/TOD that collect and send information downtimes.

Indoor/Outdoor Personnel Positioning System

The personnel positioning system is a and sending an alert in case of being in a MONITORING OPTIMIZATION MANAGEMENT DIGITALIZATION device used by the worker (or integrated dangerous zone. OF PRODUCTION OF PRODUCTION OF DOWNTIMES OF PRODUCTION into his clothing), which allows tracking his location with high accuracy, warning This solution has been applied in the person- • Automation of • Optimization of • Reduction of • Electronic him about violation of access restrictions nel positioning system of PAO Severstal. real-time control equipment and downtimes’ dispatching of of the production staff working duration due the production • Control of the schedule to the absence information to use and workload • Digital Tracking of details, workplaces of equipment of failures in equipment • Integration of breakdowns, etc. • Estimation of order to analyze production infor- production and fix the pro- • Optimal mation systems losses, includ- cesses maintenance ing working time planning, losses depending on the operating Localize people, mobile equipment and time and actual other physical objects with an accuracy condition of within a dozen centimeters within closed or opened spaces

Up to 30% less 40% less 100% control working time downtimes 100% integration

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Access Control System based on Biometrics Object Video Analytics

TA2 This solution involves customer It is used to strengthen the access regime Object Video Analytics allows recognizing cameras are installed in the enterprise. control of access to sites through in enterprises or to increase control over defective products, monitoring the They are connected to processing biometrics (including video analytics it (for example, in order to track the time presence of people in the workplace, platforms based on reference models recognition), smart cards and RFID-tags. or site visits accurately). counting people/products, identifying and able to recognize such necessary and measuring objects, compressing images as human faces or product daily shooting to important events. Video characteristics.

2D and 3D face Multifactorality, integration with recognition smart and RFID cards Video analytics Machine vision at production site

New-generation People/products Location ACS meter Zonal positioning Reporting • Presence (on the basis of time) on the metering • Quantity of visitors going • Location (X,Y)m (X,Y,Z) in and out • Modules for the industry

Inspection Presence control Presence Anti-fraud control protection • Product quality • Range of solutions on the basis of face • Form recognition • Presence or absence of objects on the control zone Sensors and Devices Development

Measurement The solution involves prototyping, design sensors for the agricultural industry being • Length, width, height and assembly of devices for data reading tags installed in ears of cows, which allow Creation and its subsequent processing to detect monitoring their health status, life cycles, • Area, volume, size of an intellectual anomalies or trends. An example is well-being, needs, etc. and indexed video • Amount of objects

• Quick display, events only • Successful compression: 2 minutes in 20 seconds • One working day in 40 Identification minutes • Text and numbers • Bar codes and 2D codes Creation Prototypes Support of various Use of hardware of technologies types of connectivity: encryption and software NB, IoT, 3G, 4G according devices to GOST

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Mobile Office thousand vehicles Vodafone Big Data Lab are under control >60 VF Ukraine PrJSC has provided a huge TA2 The Mobile Office solution is based opportunity to deal with all corporate on three key technologies: remote access, systems (ERP, CRM, SED) remotely. Modern amount of data for creation of the data- communication and security. Having unified communications solutions allow In 2018, the company Navigation- analytics ecosystem as a basis for business implemented this solution, the customer you to stay in touch and quickly solve Information Systems carried out a number and society transformation. The project is able to work unhindered from anywhere any issues due to easy access, contacts of projects for the implementation of also demonstrated the possibilities of Big in the world. and calls management. Above all, Mobile integrated solutions for motor transport Data solutions in various areas of life and Office solution is safe for the customer’s monitoring and management. More than helped young people get oriented in the Corporate e-mail and address book in business: information security systems 2,500 vehicles were equipped with navigation professions of the future, relevant in the your smartphone are not enough for high protect mobile devices, communication systems with over 500 of them having been following five years. quality work. Mobile Office provides the channels, and servers. equipped with video recording systems. Big Data Lab members have been working In addition, the company Navigation- with data for three months. The best ideas Information Systems has concluded the were finalized in cooperation with Vodafone agreements for integration services with data analysts and presented to potential a number of major Russian companies: customers and investors. Rostelecom PJSC, SIBUR Holding PJSC, SUE Mosgortrans, Rus-Oil JSC. Vodafone Ukraine united in the project all related parties: business, universities, Multimedia Software Servers and storage Big Data developers, investors, municipal and state systems institutions. In Kiev and Lviv Vodafone big Video- and Provision of Microsoft Design and construction Big Data is one of the key development data have already been used to optimize audioconference licenses, development of computing systems priorities within the framework of MTS the transport systems in the cities. The systems. Solutions of web systems and and complexes. digital strategy and has significant mobile application Ride Now, one of the in the field of audiovisual services on Java and C++, Data storage systems potential for further application finalists, is about to be launched soon. information display. integration of programs. and networks. both in the core business and for the Data centers. Development development of new directions. of mobile applications (IOS, Android).

Subscribers Geoanalytics Services

Taking into account the fact that people The new MTS product will enable busi- always have a mobile phone with them, nesses to find a shorter way to con- the operator can detect the location sumers of goods and services. Apart of their subscribers with certain toler- from advertising, anonymous data on ance. The service, which MTS offers today, subscribers’ movements, their demo- includes not only information about geo- graphic composition and income level Maintenance location, but also a huge amount of large can be used for rental of shop premises, and technical support anonymous data — gender, age of sub- choosing land plots for construction, Information scribers and even their estimated planning transport routes in any ter- security Outsourcing of the monthly income. ritory where mobile communication is operation and support available. Management of the of information and Geoanalysts will tell you for example, authorization and telecommunication what streets 35-45-year-old women The first buyer of the new product accounting data, protection systems and complexes. traveling abroad twice a year walk down was Amedia Communication Network, of personal information, Comprehensive support control of confidential and when they do it. Geoanalysts will the advertising network providing ser- of data centers. Guarantee tell you where it is more likely to meet vices for planning and outdoor advertis- information leaks, of individual SLA. young people aged 18-25, using more ing in Russia. Security Operation Outsourcing of user support. Centre (SOC), etc. than 20 GB of mobile Internet traffic per month on high price gadgets.

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Products based on Big Data technologies The exact picture of the TA2 #CloudМТS works in this very segment. services increased more than threefold, the are already successfully used in many suburban migration in Lviv It turned from a startup into a large stored and processed data volume increased areas in the Company: in marketing, cloud provider with its own data centers sevenfold over the same period. sales, personnel management, In 2018, a large-scale study of connected with MTS trunk channels. In 2018, infrastructure planning and others. the circular migration of the Lviv this segment witnessed an active growth: For more information on the new Region residents was carried new popular services were launched, the cloud services, see the 2018 MTS In 2018, the schedule management out based on the analysis of the cloud platform functions were developed. PJSC Annual Report, section “MTS system of retail outlets based on operator’s big data on the movements At the end of the year, revenue from cloud Innovation Center”. Big Data (Workforce Management of Vodafone Ukraine customers. project) was successfully scaled up to cover the entire MTS retail network. The study results determined the Implementation of the system has led following: to significant optimization of the retail • the exact number of people personnel costs, while maintaining the entering Lviv every day; x 7 sales level. increase in the • which settlements the most amount of stored A number of products based on Big inhabitants come from; Data was launched for ultra-targeted x 3 and processed communications with subscribers, in • the most popular entry points revenue increase of data 25-30% particular, a recommendation system for to the city; #CloudМТS business operation personal offers of smartphone models to expenses optimization • their everyday traffic. MTS subscribers. The study results will be used by the Over a year, Big Data external Lviv City Council for implementation commercial projects developed of the electronic ticketing system, MAIN USERS OF MTS CLOUD SERVICES successfully: digital advertising, development of the new transport geoanalytics for retail networks and routes, the repair of roads, and the outdoor advertising development, urban improvement. analytics for transport and infrastructure planning of cities. For more information, see section “Business Services”. 18% of #CloudМТS portfolio INDUSTRY In 2018, one of the Big Data priorities in MTS was the development of Data Perspective Business • Use clouds for ERP systems, Lake (data storage), in which data Development Areas internal corporate resources was accumulated and showcases for (hr portals, databases and mail services). product development were formed. Cloud Technologies FINANCES • Use subscription based Over a year, the Big Data infrastructure software. and the volume of accumulated data Cloud services have become an integral part Transfer to clouds: 20% of were significantly expanded, and the of the society and business life. The transi- • test environments data storage depth and the speed of tion to cloud technologies is an important for the development #CloudМТS data transmission to Data Lake were trend and part of the economy digital trans- of new services; portfolio • sites; significantly increased, thus forming formation. Clouds allow storing and shar- • CRM systems. a foundation for further effective ing documents, photos, music and videos, development of Big Data products in the without overloading the memory of phones Company. or computers. They are even more import- RETAIL NETWORKS ant for corporate users who have to deal with much larger volumes of information and calculations: this market in Russia is growing Transfer to clouds: • online shops; by an average of 30% per year in line with the • customer online portals, global trends. 23% of #CloudМТS • databases; portfolio • internal register systems.

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As the #CloudМТS MTS has entered the market of experience shows, cloud personal data protection businesses can optimize 17.5 Russian business requirements for hours of audio operating costs by 25-30% Education information security are constantly records with native with the help of clouds. growing determining the demand for speakers from services with the increased security Although the Russian market of online Cloud services are mostly the United States, level. Uberization and digitalization are technologies in the field of education Canada and the popular in retail, finance changing traditional solutions in this is at its emerging stage, modern trends 8.5 sector and manufacturing area. On this market MTS has presented demonstrate the demand for distance United Kingdom mln printed companies. a solution that reliably protects against learning based on the individual approach. In characters is the threats and saves customers from their the next three years MTS expects the online volume of a unique own IT equipment costs. education market to more than double in interactive Russia, and its volume to exceed RUB 50 bln. textbook The dedicated protected segment of the cloud #CloudMTS forms the basis 2.2 for the service. This fault-tolerant MTS started its development In 2018, we expanded the thousand exercises in infrastructure is based on a VMware capabilities of the #CloudМТS in the area of online grammar, vocabulary, cloud platform and launched virtual platform. The service makes it possible to upload the information education with the launch listening, reading, writing the new services for business: and speaking mail cloud services, a service systems involved in personal data of the interactive educational collection and processing, such as for storage and exchange HR management systems, corporate platform Smart University. of corporate information, a content, interaction with customers specially for the MTS resource by native dedicated segment for working and others, to the cloud. The solution It is an important part of MTS Group’s speakers from different countries of the with personal data. Last is relevant for companies working strategy for the development of new world. The program includes intermediate year, investments into cloud with personal data: banks, insurance digital services in emerging markets tests to be passed throughout the course development, taking into account companies, medical organizations, that are not directly connected with the and the possibility to monitor the study M&A transactions related to logistics companies, retailers with telecommunications business. progress using the built-in statistics system. purchases of the Avantage data loyalty programs and many others – Progress tracking is available for parents as center and the cloud provider from small to large businesses. TA2 The first area of focus for Smart well. IT-Grad, exceeded RUB 12.4 bln. University was preparation for the Unified We have ensured a significant The protected segment of the cloud National Exam in English. The platform The new educational resource increase in computing capacities #CloudМТС is certified in accordance offers a personal program that is prepared with the requirements of the Federal and expanded the technological individually for each student (one-to-one) of MTS does not involve esti- Law No.152-FZ “On Personal Data” and using a special algorithm that takes into base to provide corporate clients mates and templates, but is by-laws. Its security level is confirmed account the level of knowledge, available with new profitable services. by the certificate of the Federal Service classroom hours and the score that the customized for each user. for Technical and Export Control. student plans to get at the Unified National Students can communicate Oleg Motovilov, Exam. The program materials have been Director of the Cloud developed by the leading experts in the with their professors in video Provider #CloudМТS Unified National Exam and meet the real chats accessible from any exam tasks and requirements of the Federal Today, clouds are becoming Institute of Pedagogical Measurements, place throughout the country the center of corporate digital while the educational platform was and the whole world via the MTS actively uses cloud technologies to designed by MTS Group’s employees. develop other innovative business areas. ecosystems, serving as the Internet and with the use of In 2018, SmartMed telemedicine platform technological foundation for The lesson is conducted with a professional headphones. was launched on the basis of the certified innovations. Cloud technologies teacher by means of video communication #CloudMTS cloud segment for storage through the application or service site. of electronic medical patient cards in drive implementation of the The student performs tasks in a specially The Smart University online service also has accordance with the legal requirements. Internet of Things, big data and created interactive textbook. The personal its own mobile application MTS English, which For more information on SmartMed, see artificial intelligence services. account has all the necessary materials, gives the possibility to study the language at section “Telemedicine”. as well as useful audio messages recorded any time and even if there is no computer.

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In December 2018, MTS launched its second Starting from January 1, 2018 amendments educational course as part of the Smart were introduced to Federal Law No. 323-FZ of University project, namely preparation the Russian Federation dated November 21, for the Unified National Exam in Maths. 2011 on Public Health Protection Principles Studies under the new program are more in the Russian Federation, providing for interesting and comfortable than traditional the possibility of remote medical care. offline courses, while the high educational Not only changes in the Russian law, but quality is guaranteed by a personal program also the willingness of people to use the customized by professors for every student. new healthcare technologies are the pre-requisites for active telemedicine The program includes all units of Math development. For example, 82% of Russian studied at the 10th–11th school years, and population would be ready to consult a for those who target to get 80–100 points doctor remotely in certain life situations in for the profile Unified National Exam, 2018 according to the Future Health Index all types of parametric equations and study by Philips (Future Health Index). inequalities, as well as the theory of numbers can be studied. The main task of the digital healthcare field being of strategic importance for MTS is The cost of study depends on the number the development of preventive medicine, of selected classes. Taxpayers can also health medicine. MTS is already studying receive a social tax deduction for their the possibilities of implementing solutions studies in Smart University. Payment for in early diagnosis, online health status studies is made through the personal monitoring and development of automatic student account at smart-university.ru or data analysis and personal recommendations in the application. to the patient.

In its effort to make the educational platform as multiple-purpose as possible, MTS plans to scale it up both in terms of the set of training programs and affordable We support Russian developments functionality. In 2019, the Smart University in the field of medicine, including team plans to expand its product range active cooperation with by launching Russian, General English and universities and technological Business English courses for adult audiences startups: MTS has launched a and the corporate segment, implementation Master’s program in telemedicine of the online group classes format and at the Moscow Polytechnic distribution of the service in Belarus and Ukraine. University, a digital medicine direction in the MTS Startup Hub accelerator and jointly with the Higher School of Economics initiated the research of public readiness for the introduction of telemedicine. The results of the research confirm our optimistic Telemedicine forecasts for the development of digital medicine in Russia in the Telemedicine is another important new upcoming years. industry with a huge potential in our country. Digital health technologies provide access Aleksey Kornya, to quality medical care for a wide range of President of MTS PJSC patients, including in regions, small towns and settlements.

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TA2 In 2018, MTS together with MEDSI run beginning of 2018 MTS acquired Gambit Esports, MTS StartUp Hub Accelerator the SmartMed telemedicine platform, which an organization that brings together four is planned to form the basis for development the application teams (16 players) in the most popular game In March 2018, MTS introduced a new tool of a range of digital healthcare products and 100 was included into disciplines — Counter Strike: Global Offensive, for working with young technological projects — VMI of services. thous. League of Legends, Dota 2 and FIFA. the corporate accelerator MTS StartUp Hub. The accelerator targets the companies that users downloaded The SmartMed application has become already have their own product and first the application the first product of this collaboration. MTS Strategy on the eSports customers. This unique product in the digital health 23 market will combine both segment combines MEDSI’s and MTS’ medical insurance marketing activities and MTS StartUp Hub is not expertise. SmartMed allows for consulting companies a MEDSI doctor via video communication the development of products a classic accelerator: or chat, anywhere in the world, calling a doctor at home, including emergency care, At the moment, only Moscow clinics of for gamers. our goal is the complete making an appointment to the MEDSI clinics, MEDSI are involved in the project. In course introduction of breakthrough storing medical data in your smartphone of time, it is planned to significantly expand MTS has previously supported the gaming thus remaining confident in their security the geography through the development of community of Russia by offering products and technologies into the and having access to it at any time and on partnership systems. In addition, in the near technical solutions for eSports enthusiasts Company’s ecosystem. any device. The application contains up-to- future SmartMed will have its chat bot, which and professionals in a variety of disciplines. date information about MEDSI’s clinics will recommend a doctor to consult. In particular, MTS Group established direct The most mature projects, which prove and doctors, history of online and offline connection channels with servers of the largest the demand for their products in the consultations, all documents stored by eSports gaming companies, thus providing an advantage correspondence tour, get the opportunity the patient or sent by the doctor, including for subscribers when playing both on mobile to immediately proceed to the development prescriptions and test results. In the last few years, the interest in eSports gadgets and stationary gaming computers and not only in our country, but also throughout consoles. In September 2016, MTS also became The SmartMed application is available for all the world has significantly increased, but most a technical partner of the GamerStadium subscribers of Russian operators, and for importantly, eSports started to turn into an project, under which the largest eSports club MTS subscribers all Internet traffic consumed exciting mixture of sports and business with was opened in Moscow. In addition, a special when communicating with doctors via the a focus on the show part from a rather mass tariff was offered for the fixed Internet for 2 application is free of charge. activity which was still a hobby. And all three gamers, which high speed is ensured by direct sets components find their own audience, both connection to game servers along with the high- user and professional one. Even more than quality GPON channel and allows for achieving 13 With the adoption of the that, eSports is closely associated with high minimum server response time and fast in-game countries law on telemedicine, high technologies, and as for the Internet, mobile response. communications and equipment (computers, professional competencies, smartphones, accessories) eSports matches Within its own Innovation Center, MTS opened > 1 are almost a benchmark and a kind of quality an eSports division headed by Irina Semenova, advanced medical thous. control. an expert with 17 years of experience in the applications experience and variety of gaming industry, one of the founders of Virtus. specializations of MEDSI It is no more an activity, which interaction pro. Konstantin “groove” Pikiner, CEO of > 40 with the economic system was limited Gambit Esports, will also join the new division MTS experts doctors will become even to sponsorship and rare participation of in the position of the Director of MTS Sports. closer to patients. celebrities. The world’s largest business Konstantin Pikiner has been in the professional players, popular sports clubs and associations eSports since 2002 and has an extensive have recently joined this activity, while in some experience in managing and creating successful At the end of 2018, about 100 MEDSI places it even involves state participation. At projects. He has been actively involved in the specialists were connected to the online visit this very early stage for the industry, MTS was development of eSports clubs, such as Virtus. 20 program: not only therapists and pediatricians, among the first who came to eSports with a pro, k23, Moscow Five and Gambit Esports. > but also doctors of other most popular serious investment approach. market 36 specialties: allergists, otolaryngologists, For more information, see the 2018 experts project teams gastroenterologists, endocrinologists, 102-10 Entering the eSports market is in MTS PJSC Annual Report, section involved in a pilot cardiologists and others. The number line with MTS Strategy for the development “MTS Innovation Center”. project of MTS of dedicated specialists giving online of digital directions and products beyond the consultations will continue to grow. scope of traditional telecommunication. In the

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of a pilot project in partnership with startups and export Russian projects to MTS, skipping the face-to-face part of international markets. the program. The face-to-face part is a The strategic goal of the MTS 5 two-month acceleration program, as part StartUp Hub program is to Telecom Idea thous. of which the invited projects carry out jointly test product hypotheses participants of case Project experts became winners of the individual work with business customers, and solve problems with the championships pass practical master classes and receive sixth MTS Volunteer Awards Ceremony in help of new technologies, as the Intellectual Volunteering category. 3 feedback from industry market experts on this will allow for achieving thous. their products and solutions. . maximum synergy with startups participants MTS held the annual international competition through the introduction of IT schools The selected projects gain the opportunity Telecom Idea for the eighth time in 2018. It is to develop a pilot project and access to of a working product into aimed at finding and supporting talented the corporate customer base, sales chan- our customer base, which innovators in the field of information and potentially creates additional >250 nels and infrastructure of the Company. communication technologies, as well as in Thanks to a test run in conditions as close cost for a particular area of social and environmental sectors. project teams 7 as possible to real ones, they can assess MTS business. countries the prospects of their projects and their In addition to exciting projects developed viability. In the future, MTS can become Dmitry Kurin, by students, Telecom Idea has been actively a customer of a startup, buy a stake in it Head of MTS StartUp Hub looking for new promising personnel for the or become its owner. It is also possible to second year in a row. transfer projects abroad. 70 For more information on attracting cities across Russia The annual budget for the MTS StartUp Hub young professionals, see section program, taking into account all stages of “Recruitment and Adaptation”. > 100 working with startups, totals RUB 50 mln. effect from the introduction of startups in experts This amount may increase depending on the the short term will amount to hundreds of needs of the program. In 2018, MTS allo- millions of rubles. One of the forms of Telecom Idea regional cated about RUB 30 mln for the develop- stages is the championships on solving business and Novosibirsk, and the national final was held ment of startups. According to the forecast In 2019, MTS StartUp Hub plans foreign cases held by the Changellenge agency. in Moscow. The most successful casers were by MTS StartUp Hub, the potential economic expansion into the markets of Israel, Regional cups of the case championship took invited to undertake an internship or to work in Singapore and Europe. MTS together place in St. Petersburg, Kazan, Yekaterinburg the Company. with foreign partners plans to scout local

CATEGORY SHARE IN THE NUMBER STAGES OF APPLICATIONS SUBMITTED STAGES OF WORKING WITH STARTUPS OF APPLICATIONS IN 2018, % IN 2018, % 4 123 17 24 29 32

ACCELERATION PILOT PROJECT SCALING UP

17 • distant montlhy free course in • product viability testing • cooperation with MTS on real time commercial terms • access to the MTS infrastructure 20 • a two-month face-to-face stage • a grant of RUB 500,000 • hypothesis testing • a grant of RUB 200,000 19 39

CSR Tech E-Health Artificial Intelligence start-up pre-seed seed FinTech EduTech IoT

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The second option of regional stages of Telecom Hackathon - Telecom Idea Junior Idea 2018 was IT Schools organized in coopera- tion with the Agency for Innovative Development. In November 2018, MTS together During three days the participants attended with the Agency for Innovation a series of training events and communicated Development held a two-day with representatives of the innovative business Hackathon - Telecom Idea Junior on the basis of major universities and with the 2018 for schoolchildren aged 11-14. assistance of city administrations in Krasnodar, Hackathon held in Moscow school No. Ulyanovsk, Yaroslavl, Tyumen, and Kaluga. The 2030 included educational sessions cities for IT schools were chosen on purpose: on creation of effective presentation, these are the locations where MTS branches have team building and generation the highest demand for qualified employees. of successful business ideas. Participants also got acquainted with Along with the regional stages, applications in the Internet of Things and tried to six categories were collected at telecomideas. use it in their projects to increase com from February 15 through May 14, and then their investment attractiveness. the project expertise was carried out within a week and semi-finalists were determined. The The main prize was a trip to the best students of the regional stages reached the all-Russian specialized session semifinal without selection. on information technologies and technical sports in the city of Anapa The teams of 41 projects which reached the in the VDC “Smena”, where the final second stage of the competition received the of the all-Russian contest “Telecom support of mentors on the basis of the Higher Idea Junior” was held. School of Economics for ten days. The mentors helped the participants to “grow” their high-tech product at an accelerated pace.

FROM TELECOM IDEA TO SOCIAL IDEA

2018 2019

STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5

Ideas Training People Business MTS

• Searching for ideas • Training employees • Organizing online • Searching for the • Offline contest for the to solve social and mentors, programs for social best projects with projects, training and issues, including building a dialogue entrepreneurship the use of Telecom selecting winners (5 with the help of with new audience skills Create Your Idea site. Website projects) technologies, Business with MTS rebranding • Social networks services, and services provided • Employment by MTS centers • CISS (Centers of Innovation of the Social Sphere)

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The Expert Council selected five finalist All-Russian specialized session Robot aid projects, which authors presented their on information technologies developments at the final pitch session. The and technical sports MTS became one of the first is an instance interacting with main award for the competition winners Russian companies to implement other programs via the user interface. was the invitation to a foreign innovative RPA (Robotic Process Automation) educational tour. The All-Russian specialized session technology for automation of its Robots can perform operations on information technologies and internal business processes. with large amounts of table data, In early October, the winners technical sports was completed in copy/input data to different systems, Anapa on December 9, 2018. It was RPA is a technology that simulates check information for completeness of Telecom Idea 2018 visited held with the support of MTS and the human actions when working and correctness and generate reports, Ireland within the framework Presidential Grants Fund for the first with information systems. A robot form and send e-mails and so on. time. 108 children aged 11–17 from of the educational tour. 15 Russian regions participated in the They met the successful profile shift. entrepreneurs from Russia The key tasks of the shift were career Which processes can be What are the benefits of and Ireland, visited the guidance of children in the field of robotized? a robot? information technologies and support Guinness Enterprise Centre of the most promising participants • running with high frequency on a regular basis • work round the clock of IT-projects through the system of (GEC), a place of innovative • having clear rules with minimum exceptions • double-digit reduction of process errors mentorship, internships and other • critical in terms of the period of performance • preservation of current IT landscape startups and one of the educational tools. • custom configuration largest venture funds in • reduction in costs of data input up to 70% Ireland, as well as the office Change of tariff of Google. chose a system approach and launched a comprehensive cross-functional digitalization. Most calls related to the change of a tariff plan are made In 2019, the competition will bear the name of online without visiting the retail store or MTS Client Service. Thereby, part of requests is sent to the Back Office as they Social Idea, being a more precise definition of its In order to perform a diagnostic of the have to be handled manually by employees. To date, tariff key task: a search for projects aimed at solving current business processes, a large-scale plans are changed by a robot after the robotization process, important social problems with the use of digital study was conducted, which resulted in and employees do not take part in it. technologies. the development and presentation of over Analysis of requirements of the tax service 300 specific automation initiatives forming the basis for the internal business process A requirement is a document of the Federal Tax Service Internal Digital Transformation digitalization program. demanding to provide documentation and information about a company MTS have previously interacted with. What the robot have been taught about? Currently, the robot MTS had started to develop and implement This is how the iDA (Internal Digital Automation) understands what documents are needed by the Federal Tax new technologies even before it became a program was created. This program is intended Service, for which period and organizations. mainstream. Today we bring this work to a to increase the digitalization level of internal The robot finds the history of cooperation with the organization, downloads it and submits in a convenient format the information fundamentally new level: instead of continuing business processes in order to reduce their obtained for employees of the Shared Service Center. The team to automate business processes in parts, we labor intensity and improve their efficiency. continues to improve the robot and teach it new functions, for example to send letters to the Federal Tax Service. . Elaboration of accidents on accelerated Diagnostics of current business processes: amortization

After the robotization project implementation, all accidents are processed with the robot’s assistance. Employees create a request to Remedy on the use of the accelerated asset amortization. Then the robot helps to transfer the data from > 500 Remedy to OEBS for the verification whether it is possible 22 to apply the acceleration; if results are positive, the term thous. face-to-face interviews of beneficial use in OEBS will be adjusted and the accident closed. employees 17 thous. detailed questionnaires

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The iDA program, developed Ngenie platform for creating project office, and the concept of virtual a unique tool to build modular and horizontal for the following five new services teams has been proposed for each functional scalable solutions based on microservices, area. allows you to quickly test business ideas years, will provide reliable Ngenie is one of the dozens of and conduct pilot projects. The platform control and minimize platforms within the FORIS Business The majority of the initiatives taken under provides quick changes and automation Framework ecosystem, on which all the iDA program is related to the refinement of typical tasks and processes. And the bureaucratic obstacles to the of our IT products are created. It is of current IT systems. The new systems will Fingate platform gives us the opportunity implementation of the most a huge set of ready-made tools for be implemented to replace those current to process 90,000 requests per second and developers. The platform provides systems that fail to provide all necessary provide information on account expenses ambitious digital initiatives. tools for all occasions: some tools functions. to the subscriber in the My MTS Application provide for fast publication of almost immediately. The emerging Cognitive services, other tools are responsible Another important tool proposed to be used Framework machine learning platform for information security of users, in the iDA program implementation is routine ecosystem will be used to launch technical some tools ensure notification of work robotic automation. MTS robots are innovation differentiators in business users via various channels, from SMS flexible algorithms able to perform human products. For example, on Bot Platform, I was lucky to be a member of to e-mails. actions in transactional, repetitive processes. which is a part of Cognitive Framework, we the project team from the very have created a chat-bot with high accurate beginning. Even one year ago it Ngenie is intended to improve the The main success criterion of the MTS recognition of subscriber’s intentions became clear that iDA was not efficiency of IT services development internal digitalization program is the reaching 95% and are already using it only a path to new opportunities, and accelerate their commercial product launch speed. We are changing actively. but also a profound internal start-up. For this purpose, the the IT structure from functional to product change in ourselves necessary platform ensures automation of one and increasing investments into R&D for the project implementation. many stages of the process, and projects. most importantly – provides a wide During the year, we not only For more information, see section range of tools to solve typical tasks We are creating a new stack of technology discussed the hypothetic “Service Quality”. related to development and use of platforms. For example, the Ngenie platform, improvements, but also took the IT products. In addition, the active part in trainings and platform helps to improve the quality studied new (agile) approaches to of IT products — security, reliability, reorganization of our processes. scalability, flexibility, and availability. After all, in the process of Service Quality implementing the automation All Ngenie tools target fast idea, we will cooperate with development and deployment of web and Consumer Safety internal and external IT teams. applications and services, and are Therefore, we should be ready to based on open solutions and free speak the same language. software, so that development of new applications not only becomes faster, Service Quality customers, creating the most convenient Shamil Khayretdinov, but also significantly cheaper. and simple tools to control write-offs is Director of Logistics 103-2, 103-3 Maintaining a high level of a separate task. Under this task we develop The entire product team benefits Department of MTS PJSC customer loyalty to our brand and constant and improve our self-care application from using these tools. The product improvement of the services quality My MTS. owner reduces costs for development, represent the most important tasks for MTS. implementation and use of the Providing the best customer experience is In addition, it is important to introduce product, as well as accelerates the basic platform for all work elements of new tools to assess and improve customer In June 2018, a virtual project office was its launch to the market. The the Company’s divisions. interaction processes, such as the launched to help the initiators of digital development team does not have to development of the Customer Journey changes develop ideas, allocate IT resources to solve typical tasks thus saving own MTS uses a whole set of tools and programs Mapping program (analysis and client implement and evaluate the automation cost, energy and gets the opportunity to to improve customer experience. We pay experience design). We develop and as well as evaluate the effectiveness of the focus on creating business value. much attention to the toxicity control of the implement new maps of client paths in line proposed changes and build a business case. It becomes easier for operators services used by our customers. First of all, with the modern trends: simple, intuitive, The robotic process automation team (RPA to deploy and monitor the service it is about quality control of partner services. minimum time consuming, digital, and Center) has already been created for internal through active implementation of Since transparency of mutual settlements is customized. Developed maps undergo business processes as part of the virtual automation. a very sensitive point of interaction for our mandatory testing in UX laboratories with

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the participation of real customers who can for proactive identification of current NUMBER OF MTS RETAIL OUTLETS MTS retail chain became a share their opinion about the new product customer needs and allow offering them laureate in the area of customer 6,194 long before its launch. Product teams the best solutions. Our customers can 5,878 service 5,696 implement only changes approved by real be confident that at any point of contact customers. they have the opportunity to inform us MTS retail chain became the winner of that their problem has not been solved, the international CX Awards 2018 in the Communication with the and this message will not be ignored. To category Best Practice of Customer solve such problems, the Company has Analytics and Feedback. Customer customer is maximally implemented the Closed Circuit program, service experts forming part of the jury automated and translated when our specialists receive information of CX Awards 2018 highly appreciated about the customer, who indicated during the work carried out to change the NPS into digital environment, the survey that his problem was “not dynamics in the retail operator. solved” and promptly contact him to work however, we try to maintain 2016 2017 2018 thoroughly on his problem. The figures Analyzing the factors that affected real-life communication prove effectiveness of this program: level the perception of customers, MTS with those for whom it is of customer loyalty after getting into Having your own sales channel allows you retail chain managed to reduce the the Closed Circuit program grew several managing the number and quality of connections waiting time in its offices, improve important. times and reached + 70%. more efficiently, as well as maintaining a high the quality of service and customer level of service. MTS retail chain remains the satisfaction with acquisition of gadgets, To measure customer loyalty, we use We try to create the interactive cooperation main channel for attracting MTS subscribers telecommunications services, financial the NPS index, which has shown a stable system to make our clients feel involved with its outlets accounting for more than 50% products and satellite TV. More than positive dynamics of customer loyalty over with our Company and get a full picture of SIM card sales. Revenue from smartphone 2,000 activities were held in the the last few years. of their influence on our performance. sales through the retail chain increased by 36%1 Company under this project, including compared to 2017. personnel training, recruitment of To monitor the results of our work on Retail Chain additional staff, organization of new improving processes and products, we use In MTS offices our subscribers can always workplaces, etc. As a result, the the “touch point NPS” survey system when, MTS remains the largest non-food retail receive a full range of services provided by the number of offices where customers after any interaction with the Company, we chain in Russia. At the end of 2018, operator, including the fixed broadband access are served immediately or wait for not offer our customers to give us feedback. the number of MTS outlets reached to the Internet and television, financial services more than 10 minutes and the total Such quick loyalty measurements provide almost 5,900. and so on. Any new service produced by the tNPS loyalty index rose by 10%. Company automatically becomes available for sale in its retail outlets.

SIM-Card Terminals Service for Deaf People Very soon the machines will take the lion’s intelligence will match the photo in share of the MTS employees’ daily routine: the passport and the photo taken on PA2 In 2018, PrJSC VF Ukraine signed a and start an online chat with a store in 2018, the first terminal was installed the spot, recognize, fill in subscriber data, cooperation agreement with the Ukrainian expert. The service provides the possibility for issuing SIM-cards with the function and issue a SIM-card. The whole process startup BeWarned, the developer of of online sign language interpretation of personal identification. It was installed will take just a few minutes. The SIM-card the service for deaf people, in order via the ConnectPro application installed in Innopolis, Tatarstan. is ready for use right after it has been to introduce the virtual sign language on tablets of shop employees, in case if issued. Thanks to the intuitive interface, interpreter services in the Company’s the customer does not have a smartphone. SIM-card terminal looks like an ordinary customers of all ages will be able to use stores to serve deaf customers. BeWarned also trains store experts terminal for mobile communication the terminals. to use this application and tests the payments. To get a SIM-card, you need To use the service, one just has to scan service operation. to scan your passport and allow the In 2018, MTS installed more than 30 a special QR code using their smartphone terminal taking your portrait. The device terminals at railway stations, airports, will automatically verify the document metro, hotels and shopping centers in authenticity, with the help of machine various Russian cities.

1 Including Cashback promotion campaign.

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The main priorities of working with MTS sales The calculator enables to trade an old Since September 2018 MTS has channels in 2018: device and buy a new one with a discount. stopped charging for incoming The customer only needs to enter the data • sales of V&D tariffs; about their old device on the website to see calls during trips in Russia. the discounted price of the new device. Awarded for the largest • service quality leader in the mono-brand increase top-25 in the average check retail sector; The website of MTS online store has become Our Smart Tariff online stores in Russia compared to other biggest even smarter: personal recommendations Russian online stores from by turnover • improvement of the operational efficiency; are now offered to the user based on the the Top-100. In 2018, MTS launched the first family tariff customer behavior and knowledge about Our Smart in our product line. This is another • joint sales with data generating devices; their current device. Now, when ordering a MTS step towards creating an ecosystem of new device, the user can immediately order sharing services that enables customers to • sales of key products of the MTS Group the required accessories and additional The use of big data allowed reduce their communication costs. The new (MTS Bank, Satellite TV, fixed broadband services, such as insurance purchase. us to improve the customer tariff allows a subscriber connecting up to six Internet access); family members - MTS SIM-card holders of In November 2018, MTS integrated a communication system and his home region or gadgets, setting limits of • maintaining a high client flow in MTS technology by Detectum Developer give customers exactly the services (mobile Internet, voice and SMS) for outlets. into its online store, which is based on information they need. each person separately. The tariff offers 25 GB machine learning and data analysis to of mobile Internet, unlimited calls to MTS Russia boost the conversion of search sessions (after the minute package has been exhausted), Online Store into purchases and ensure the potential In 2018, the logistics of the online store 1,500 minutes of calls to other operators in the growth of the average check. The solution continued to improve: when placing an order home region and 1,500 SMS to all the operators allows for tracking customer requests in urgent delivery option is now available, which of the home region. Our Smart also provides the the search box, taking into account possible provides for the courier delivery within four possibility to use MTS mobile TV: up to five people https://shop.mts.ru/ corrections and interpretations and also hours. The improved logistics schemes allow to can watch TV shows, movies and TV series using remembers user preferences by category receive orders without paying for the delivery. the same account. and brand. On the basis of these data, The delivery coverage area has increased and the system offers the most appropriate currently includes 80 Russian regions out of 85. All MTS Package MTS continues to strengthen its leadership selection of goods to the buyer. If there are in the e-commerce segment. 2018 was a year many relevant products found at the user In 2018, MTS subscribers have got the of active customer service development for request, the system automatically suggest Tariffs opportunity to use one personal account both MTS online store. MTS has expanded the context-sensitive filters: the most important for mobile and fixed Internet. This account functionality of its online store by operating parameters with the most popular values. MTS has a wide choice of tariffs and tariff options will provide the Internet without traffic limits. two new services: online orders for B2B The algorithm is automatically trained on for customers with any needs. For those who Besides, subscribers will be able to connect TV, clients and a trade-in calculator. events and user actions. like talking a lot and for those who like traveling calls and SMS. a lot. For those who do not want to overpay for communication, and for those who cannot go All MTS tariff plan is a service package without the Internet. connected with three telecommunication areas: Home Internet + TV + Mobile communication. In January 2018, the first tariff constructor At the end of 2018, the geography of convergent was launched, within which the subscriber may services covered 48 Russian regions (fixed MTS independently select the optimal size of the voice business regions), more than 70,000 subscribers and Internet traffic in accordance with their were connected. revenue communication style and needs. > 539 It is much easier and more > 6.9 > 40 For the fast-growing market of Internet of thous. orders mln unique Things (IoT of devices), MTS proposes a tariff convenient to pay for the whole completed RUB bln visitors delivery to plan oriented at the profile of consumption of these devices and the possibility to pay for package than for each service 12% communication services once per year. separately; now the user cred- share in turnover 80 its only one account with a sin- regions of Russia For more information on the development of the Internet of Things, gle charge date for all services. see section “Internet of Things”.

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All the current services and mobile and fixed- MTS Connect application line communication services can be additionally activated under All MTS package: In 2018, MTS updated its own application MTS Connect, which has • theme-based/premium TV packages; subsequently become more convenient for the user than other apps on the • high speed home Internet; market allowing multimedia calls:

• rewinding and recording functions in • using the application, you can call any interactive TV; number, including stationary, short numbers and other operators; • protection of children from inappropriate • content in an interactive package; no additional fees are charged for those calls; calls towards MTS • discounts on MTS mobile communication; are free and calls towards other operators are charged in accordance • payment for all services from a single to your tariff; account — mobile number. • MTS Connect users can connect to the Wi-Fi and call from outside Russia at domestic tariff. My MTS

With My MTS multiplatform application, a user no longer has to visit operator’s MTS received ISO 9001:2015 outlets on most of the issues arising from Quality Management System subscribers. MTS observes the growing Certificate popularity of the self-service application My MTS. MTS PJSC has successfully passed the ISO 9001:2015 certification, confirming that the Company is going with the times, and the quality management system meets the requirements of international standards. ISO 9001:2015 certificate is required for 33.5 all organizations in the modern business mln installations environment. This certificate is a kind of indicator that shows the reliability and responsibility of the company as a business partner. It also indicates the ability to 14.1 provide services of the declared quality to mln users per the customer throughout the entire period month of cooperation, regardless of fluctuations in the external environment. The international certificate will be valid for three years, from 2018 to 2021. The validity of the certificate is confirmed top 20 annually during the supervisory audits by of the best free programs a certification authority. in the Russian App Store In 2018, MTS IT LLC also confirmed the 2018 compliance of its quality management system with GOST R ISO 9001-2015 (ISO 9001:2015).

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DIGITALIZATION AND AUTOMATION OF THE CUSTOMER SERVICE work with employees on the issue of • Company’s Policy – Personal Data personal data. The emphasis is on clarifying Processing in MTS PJSC. Owner change process Predictive IVR Smarty the Chat Bot what is permissible and what is highly automation unacceptable. Each office has information When concluding a Communication Service posters with the principles of personal Contract, our subscribers are informed on A couple of years ago, any TA2 MTS chat bot will help the TA2 Avoiding excessive data processing and the requirements for how their personal data will be used. The customer who called the contact subscriber to choose a tariff, tell paperwork is one of the most its technical protection. Screensavers are procedure for processing the personal data center on a particular issue, was how to activate it or send Internet exciting concepts for each installed on working computers, which are of subscribers, with whom the contracts met with the same sample menu. settings. The list of the new MTS user. Currently, RTC a kind of reminder that everyone should are signed, is described in the Company’s assistant capabilities is constantly receives about 26 thousand However, since 2017 IVR has expanding. It will appear soon not appeals per month regarding ensure the confidentiality of personal data. Rules of Provision of Communication accepted an individual approach only in the personal account but the owner change of mobile Each new employee undergoes a short Services being an integral part of the to each customer. Required also in My MTS application. The numbers. This is about 9% of course on personal data processing after Service Agreement. These Rules and the information based on the huge potential of the bot is well the total number of requests. recruitment. At the end of the training, Policy of Personal Data Processing in MTS personal data of the caller, is illustrated by the example of the Now, to change the owner testing is carried out. PJSC are available on the Company’s automatically determined, for South Region and the Volga Region, you will only need to scan the official website. MTS’ partners that are example, balance and tariff plan where it has already processed passport page. The system voicing or information about more than half of the calls. 75% will automatically determine The Department for Protecting the engaged in the processing of personal blocking and ways of its removal. of MTS service chat bot calls the data, make an application, Secrecy of Communication and Security data sign a special Confidentiality Currently, IVR includes about are solved without involving a and fulfill the request itself. of Information of the Integrated Safety Agreement, which specifies the personal 130 scenarios, adapting to specialist. In 2019, MTS intends to The implementation of the the client, and their number is and Security Center, created as part data security and processing requirements, scale up the use of the chat bot to project in 2019 will be a of restructuring MTS PJSC, monitors as well as data protection means that constantly growing. all regions of its presence as well breakthrough in the Company’s as to offer bot creation services for work and will clear the way for user requests for information related ensure secure transfer of data. the external market. many other areas. to the secrecy of communication. If there are cases of unlawful treatment All complaints from personal data owners of information related to the secrecy of concerning personal data processing, communication, beyond employee’s official received by MTS PJSC in 2018 through Key changes introduced to the My MTS app Consumer Security duties, an internal investigation is initiated in 2018: with subsequent transfer of materials to Personal Data Protection the law enforcement authorities. • the Expense Control section was added, which

graphically displays all subscriber expenses 103-2, 103-3 We pay special attention to Documents according to which the personal 103-2, 103-3 MTS takes part in broken down by category, as well as the study protection of confidential data of our clients. data processing is carried out: the development of regulatory transaction history; Personal data disclosed to MTS PJSC are documents and assessment of their • • the convenient roaming mode was activated, treated as classified information and are Federal Law No.152-FZ dd. July 27, regulatory impact. The Company’s which is automatically on when you are subject to protection in accordance with the 2006 “On Personal Data”, including representatives participate in the abroad, while the application’s Internet Russian laws. amendments related to localized work of the Interim Commission traffic remains free, and the subscriber is processing of the personal data of under the Federation Council on offered tariff options to optimize the cost of The Company has a personal data protection Russian residents in Russia; the Information Society Development, communication; system: a group has been established for which develops amendments to processing of such data, and responsible • Enactment of the Government of the personal data protection laws • in the Traveling section, it became even more persons have been appointed to ensure the Russian Federation No. 687 dd. and analyzes the subordinate convenient to compare services that allow processing and security of the personal September 15, 2008 “On Approval of the regulatory acts. MTS representative travelers to cut communication costs; data. We perform regular audits to check Regulation on Peculiarities of Personal is a member of the Advisory Council the observance of personal data security Data Processing Performed Without the under the authorized body for the • a widget for tracking the balance and remaining MBs, minutes and SMS in activated requirements. Use of Automation Tools”; protection of the personal data packages was improved; owners’ rights of The Federal Service Control of personal data processing • Enactment of the Government of the for Supervision of Communications, • the application made it possible to purchase is automated at the level of business Russian Federation No. 1119 dd. November Information Technology and Mass tickets through the major online services processes. A set of measures to protect 1, 2012 “On Approval of Requirements Media (Roskomnadzor), working Ticketland.ru and Ponominalu.ru. personal data has been implemented for the Personal Data Protection when groups of which discuss new and includes anti-virus protection, event Processing in Personal Data Information initiatives. In 2019, the application will continue to improve. registration, traffic control and much more. Systems”; The key objective is to make it a single functional center for managing all the services that are In order to minimize the influence of the rendered under the MTS brand. human factor, MTS conducts systematic

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418-1 NUMBER OF COMPLAINTS CONCERNING VIOLATIONS OF CONSUMER PRIVACY RECEIVED For more details about information MTS and the Bank of Russia BY MTS PJSC IN 2018 security, read the 2018 MTS PJSC will jointly counteract computer Annual Report, section “Information attacks Indicator Number of complaints Security and Protection”. In 2018, MTS PJSC and the Bank Number of complaints received from third parties concerning violations of Russia signed an agreement 89 of consumer privacy Security on the Internet and in Life on cooperation in the field of information security and countering Number of complaints received from supervisory authorities concerning 11 Safety of children comes first for parents. computer attacks. violations of consumer privacy The development of technologies creates new reasons for concern, but also plenty Interaction with the Bank of Russia of opportunities for safety. For example, will accelerate the identification all parents are concerned about the time of vulnerabilities and malicious existing channels, including [email protected], means that we have, being a large their children spend on the Internet and the software, as well as response to were considered. The personal data owners infrastructure operator, well-organized content they see on their mobile gadgets. threats. This will protect subscribers were informed on results of consideration organizational processes are needed. It Moreover, fathers and mothers are eager to from possible losses. In turn, MTS, of their complaints within time limits is a mechanism of reactions to incidents, know where their child is, when he/she is not thanks to its competencies, will be established by the law. connected with cyber threats. around. able to contribute to improving the security of the national payment The main and most significant event in In 2016, we launched the Security In summer 2018 MTS offered its subscribers system. 2018 was the unscheduled on-site audit Operations Center (SOC) on the basis of our a profitable package Safe Childhood, which by the Roskomnadzor Office for the Security Department, and then we started includes Internet Control and MTS Search Central Federal District for compliance offering it to our corporate customers. services. of the Company’s activities with the Such SOC, working in 24x7 mode, analyzes Russian Federation laws on personal data. virus and cyber attacks, internal violations The Internet Control service sets the Subscription to the MTS Search service According to the results of the audit, no of information security policies and schedule of the mobile Internet usage at enables monitoring the location of violations were established. coordinates the removal of threats. the parent’s discretion. It is possible to pick your child in real time. You can choose the days and hours on which there will be an geolocations to receive an alert every time As part of the process of raising awareness In May 2017, SOC managed to avoid one Internet access. To save traffic, file types a child enters or leaves them. If the MTS in the field of personal data processing, the of the largest attacks in the Internet prohibited for downloading on the child’s Search app is installed not only on the Company’s employees undergo the online history, when computers were attacked by gadget can be also specified. The service parent’s smartphone but also on the child’s learning course “Personal Data Processing the WannaCry virus. This virus encrypted protects children from unwanted and gadget, the father and the mother will be at MTS PJSC” in accordance with the the victim’s data and demanded the dangerous resources as well. able to: determine the coordinates of their requirements of Federal Law No. 152. In equivalent of $300 in cryptocurrency for its child more precisely, monitor the balance of 2018, 6,735 MTS employees completed the decryption. The largest Russian companies For more information about other his/her mobile number and the battery level, course. reported this infection. In SOC MTS this MTS’ projects in the field of child as well as view the log of calls and SMS. attempt to attack was recorded and protection on the Internet, see Finally, using their smartphones children will In order to determine the applicability of reflected. section “Social and Educational be able to send a one-touch SMS alarm to the General Data Protection Regulation (or Projects”. their parents with coordinates. GDPR) to MTS and the Group companies, As for the IoT platform, sensors connected the necessary information was collected, to secure communication channels send and the data were analyzed and assessed. data to the secure MTS cloud. They are As a result, business areas that could processed in real time there and then are potentially lead to the use of the GDPR sent to the cloud storage. The interaction of have been identified. The corresponding risk the enterprise’s IT infrastructure with the was included in the risk map. IoT platform is the responsibility of a special hardware solution. IoT platform security Cybersecurity is ensured by tools similar to those used in Internet banks — secure SSL and HTTPS Cybersecurity is the basis of IoT: Internet encryption protocols, as well as by network of Things based on handicraft solutions antivirus and cyber threat protection would not work. In addition to the technical center.

78 79 MTS FOR SOCIETY technological startups.” cooperation with universities and in the fieldof medicine,including active “We supportRussiandevelopments President of MTSPJSC Alexey Kornya, O ODFIHBHVO ...... 124 OF GOODFAITH BEHAVIOR...... CULTURECOMPLIANCE AND 119 Environmental initiatives ...... 113 Environmental impact ...... Compliance ...... 110 Management of Environmental 110 ENVIRONMENTAL RESPONSIBILITY...... Social andEducational Projects 98 ...... 90 Volunteering…...... Charity ...... 82 SOCIAL RESPONSIBILITY ...... 82 81 MTS FOR SOCIETY | Social responsibility 2018 MTS Group Sustainable Development Report

MTS FOR SOCIETY PRIORITY AREAS OF MTS’ CHARITY ACTIVITIES

SOCIAL RESPONSIBILITY 103-2, 103-3

Gratuitous help Promotion of physical Preservation of social MTS took the 1st place in the social efficiency rating of for children with education and sport infrastructure serious illnesses facilities the largest Russian companies. The rating agency AK&M conducted a survey of social efficiency of the Russian economy flagships. The purpose of the study was to show the companies that bring maximum benefits to the society Support of the development Support of art and creative of education and health care systems initiatives with minimal impact on the environment and to find a balance between the environmental impact and the positive outcome for people. • We are interested in projects which can be solve social objectives that are important implemented as broadly as possible in the to their local community, forming groups countries where MTS is active; according to their particular interests. A specific feature of such local groups is the • We are ready to cooperate with the social significance and unselfishness of government authorities, non-profit their activities, which are not related to any MTS was among the leaders of organizations, business community political, religious or commercial activities. RSPP indices 2018 “Responsibility representatives in implementation of joint and Openness” and “Sustainable charitable projects compliant with MTS For 2018, MTS implemented 380 projects for Charity Development Vector” social policy and charity policy, performed assistance to local communities throughout on the equal partnership terms and the entire country: we purchased food and The Company’s charity policy in this field is subject to the condition that the legislative stationery for large and needy families, governed by the following principles: and other restrictions applicable to the helped to arrange sports grounds, to build MTS GROUP TOTAL EXPENSES FOR CHARITABLE AND Company are observed. bicycle tracks, to recover local parks, • We are dedicated to implementing long- SOCIAL PROJECTS. RUB MLN term charitable projects that are in line with the state’s social policy priorities, 781,6 Direct communication with regional contribute to solution of acute social communities problems that impact broad population 612,7 strata, and increase quality of life of the 515,5 413-1 Since the end of 2016, MTS has been 380 citizens; implementing a new type of social activity— projects direct work with regional communities. • We are implementing projects focused Here, we interact with independent on establishing equal conditions and public associations of people who, not opportunities for residents of far-away being charitable foundations or public >4.7 regions and large centers; organizations, attempt to independently thous. volunteers 2016 2017 2018 • We believe that today’s innovative technologies make a material contribution to improvement of the quality of life, so • We believe that health-improving charitable our priorities are the charitable projects projects and the projects contributing to In Orenburg we installed stations for free repair of bicycles, in Odintsovo we in which our technologies, products and harmonious development of the younger organized free skiing exercises for children from large families, and in Rostov-on-Don services help solve this task; generation are highly desired by society; we helped to improve the zoo.

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provided search parties with the equipment 102-12 MTS’ project Generation M was chosen as the headliner of the GSMA required for their work, helped young social program #CaseForChange in Russia and CIS countries athletes with equipment and travelling to competitions. Digital tools are used as A considerable part of our events targeting part of Generation M, which > 150 work with communities is performed with the events for 500 involvement of MTS volunteers—our employees establish a system of creative participate in Saturday cleanup days, plant and intellectual lifts for the thous. people trees, restore old buildings, collect clothing and essentials for the homeless. Such social development of children 30 projects go beyond internal ones and become and teenagers irrespective mln users on social an important part of the company’s dialog with networks the local community. In 2018, such volunteer of their place of residence undertakings were attended by more than and the social status of their > 1.5 4,700 employees of MTS. parents. thous. volunteers We take as an important social mission within the scope of our work with local Winners of Generation M competitions get Educational Program with communities the transfer of experience and regardless of their place of residence and wide opportunities: from internships at Russia’s the Tretyakov Gallery professional expertise, implementing projects family prosperity with the help of state- largest animation and film studios to entering of mentorship and training for school, student of-the-art digital technologies. At virtual the big stage together with the stars and In 2018, MTS together with the Tretyakov and other youth associations. In 2018, 44 creative platforms of the project — website exhibition of own works in the main museum of Gallery conducted a large educational cases of assistance to youth communities pokolenie.mts.ru, in VKontakte group and the national art of the country. For four years program on fine arts as part of the were implemented: career guidance lectures in Instagram — children from across the the winners and prize takers of Generation Generation M project. According to its and training workshops from MTS experts, country may show their talents, participating M were 350 children from 67 regions of the results, the works of young artists from all tours to company facilities, equipment for in competitions, online workshops and country, for each of which the project became over the country who became winners of sports activities and creative projects were interactive exercises from Russian starts in a creative launch pad. a large-scale Internet competition were presented to students. different areas. exhibited for the first time in the main Within the scope of the project, MTS uses museum of national art of Russia. The plans for 2019 are to increase the number Today, more than two hundred partners in innovative philanthropy mechanisms, of projects implemented to 475, to strengthen different areas participate in the Generation developing a mass movement of young During the year, on the website of the MTS the volunteer area by strategic partnership M project. First of all, these are creative philanthropists in Russia. All activities in Generation M project, children aged from with volunteer associations and city activists, organizations that are in charge of the groups and on the website of Generation M 11 to 18 from all regions of Russia were to expand the geography of the project. project competitions and offer unique are converted into “live money,” which MTS able to study fine arts from teachers of the opportunities for winners, namely Tretyakov transfers for the treatment of seriously-ill Tretyakov Gallery for free through video Gallery, Eralash, Smeshariki, the Ecole children. With the help of the unique charity workshops. According to the results of the production center, the Eksmo publishing mechanics, more than RUB 17 mln were educational program, the participants were house and many others. The project is generated and spent to help 49 children. asked to perform the following tasks: create actively supported by representatives of the authorities, with whom more than a dozen of Generation M agreements were signed for the development Awards and achievements in 2018 of the social and cultural environment in the regions, as well as large business, mass • Grand Prix of the largest award of the Eastern Europe in the field of communications https://pokolenie.mts.ru/ media and non-profit organizations. Eventiada IPRA Golden World Awards 2018

The creative group of Generation M includes • Award “Corporate Charity Leaders 2018”—winner in the nomination “The Best Program Since 2014, MTS traditionally implements the more than 150 recognized masters: teachers Contributing to the Implementation of the UN Sustainable Development Goals” pilot social project of the company—charitable of the State Tretyakov Gallery, Producer • Award “Media Manager of Russia 2018”—a winner in the nomination “Social Responsibility platform for development of children’s talents Center Ecole, Boris Grachevsky and Eralash of Media Business” “Generation M.” The objective of the project is cine magazine, Neposedy Studio, singer to give equal opportunities to Russian children Polina Gagarina, designers Vyacheslav • The Generation M project represented Russia in the global Case for Change program for creative development and personal growth, Zaitsev, Igor Gulyaev, etc. of the international association of mobile operators GSMA. The program selects and promotes the best projects around the world that use technology to solve global problems of society. 84 85 MTS FOR SOCIETY | Social responsibility 2018 MTS Group Sustainable Development Report

their own work based on the works of one of of the city. Its prototype has already been CHALLENGE of GOOD in Udmurtia Deeds launched the project Close to Your the Russian avant-garde founders, Mikhail implemented by the VKontakte community Loved Ones. Its goal is to create a comfortable, Larionov, and upload it to the Generation M https://vk.com/best_city_43. The platform The friendly team of the Technical Unit with supportive environment for children with website. publishes projects that are embodied by the support of the HR department within the disabilities to go in for sports. For this purpose, the initiative, active and responsible people framework of the project 100 Strong Deeds in 2018 MTS employees carried out gym repair Teachers of the Tretyakov Gallery selected of our city. Everyone can take part in such and the charity competition System of Good at school No. 79. 20 best artworks out of thousands of works event — with the help of money, hands, feet — sent to the competition and made up the whatever they want. Any participation involves Avant-Garde Generation M exhibition. The the creation and development of personal winners were children of different ages from rating, which, in turn, will provide a number 16 Russian centers of population: from the of advantages: gifts, discounts and special Give Good! capital to small towns and villages. The most offers. Give Good! is the MTS charity program, of Humanitarian Programs Foundation creative region was the Rostov Region: eight aimed at urgent help to severely ill and AiF. Good Heart Charity Fund, inhabitants of this region were recognized CHALLENGE of GOOD in Belgorod children. Under the program, funds CF Sunflower, Creativity Foundation. as the best. The winners also included pupils which were previously allocated for of regional art schools with special training, Taking the baton from Kirov, the employees the procurement of souvenirs, now are In 2018, the total budget of the Give and children who studied drawing on their of the Belgorod branch office launched the used for charity assistance through Good!” Program amounted to RUB 10 mln. own. The exposition as well as the exhibition Relay of Good Deeds in their region. They federal charities with an impeccable The collected funds were allocated of Mikhail Larionov were open to visitors of organized a real festival with gifts for children reputation, which provide strict financial to treatment of 68 children from the New Tretyakov Gallery on Krymsky Val of the oncohematological department of the reporting. MTS cooperates with the Center Russian regions. for a month. Regional Children’s Clinical Hospital. 27 young patients took part in an interactive game program, became the main participants in a CHALLENGE of GOOD science show and a workshop on right-brain drawing. Children were very pleased with the CHALLENGE of GOOD in Kirov miracles that the magician showed with a Donor Day magic wand and a real rabbit. In 2017, in Kirov MTS posted the first online over 800 report of the relay #challengeofgood employees (#challengeдобра). The video shot on a smartphone and edited in a mobile The event was celebrated application in a few hours, launched a marathon of kindness and sympathy among at the sixth MTS Volunteer Kirov companies and others. There are special patients in Award Ceremony our department: they have to Under the marathon dozens of good deeds struggle for their lives. Any In September, MTS Corporate University were made, including events for the socially attention, celebration and festival together with the charitable foundation unprotected people, charitable gatherings are a message to improve their Give Life and the Blood Center of the for shelters, and improvement of the urban mood. This is really important, Federal Medical and Biological Agency environment. because this even helps children of Russia held MTS Donor Day, which has already become a good tradition in to increase immunity. It is then On July 13, 2018, the project sponsors our Company. It was attended by more celebrated the anniversary of the easier for them to endure heavy than 150 employees from the Corporate #challengeofgood with the festive opening aggressive therapy. We are Center, the Moscow region, MTS IT, of the first professional certified workout grateful that such a program NVision Group and MGTS, and about field. Its construction was carried out under of good deeds was launched, 67 liters of blood were collected to save the auspices of the Best City initiative we hope that this wonderful many lives! group together with the Kirov workout43 beginning will continue. Workout Federation. This allowed to make a The first Donor Day was held in MTS in site that meets the requirements of sports Head of the Oncohematological 2011, and since then it has been held competitions. Department, hematologist annually in spring and autumn in two Tatyana Burlutskaya Moscow offices. At the festival, the Best City electronic platform was presented to the residents

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Good Caps Old Age is a Joy

In November–December 2018, in Moscow, this movement collected about 500 gifts. The winning project of the sixth MTS In 2018, employees of MTS Moscow offices New Year gifts were collected for lonely old men Then volunteers delivered gifts to care and Volunteer Award Ceremony in the collected more than 100 kg of plastic caps. In and women who are the wards of the Old Age nursing homes for elderly people in more than nomination Environmental Volunteering 2019, the campaign is planned to be replicated is a Joy Charity Foundation. Participants of 15 regions of Russia. in all regions of the Company’s presence. 102-12 In 2018, MTS joined the Good Caps charity event. The project was organized about in 2016 by the Good Caps Public Movement and the Volunteers to Help Orphans Charitable Foundation. During its existence, 7 25 it helps to collect more than RUB 1 mln and kopecks is the price RUB thous. costs purchase eight wheelchairs for children who of one cap a ton of plastic were accepted into families from childcare centers.

Caps collection centers are organized at all MTS offices in Moscow. Participation in this about action is really simple and allows us to help both ecology and people in need with minimal effort. Plastic bottle caps and bags are 500 collected and transferred to the collection are in 1 kg base of the fund’s partners. Then a large batch of caps is sent to the EcoTechnologies recycling plant. The plant weighs raw materials and transfers funds for the collected caps to the account of the Volunteers to Help Orphans Charity Fund. The proceeds are sent 4 ==8 1 to targeted assistance to the beneficiaries of the project the Loved Ones, i.e. for children mln caps tonnes baby with special needs who are brought up in of plastic wheelchair foster families.

VivaCell-MTS Supports Children with Autism

Since 2008, VivaCell-MTS cooperates expensive procedure, since each child with the non-governmental organization requires an individual approach: one International Child Development Center specialist per one child. VivaCell-MTS in Armenia, which provides special supports 37 children from 3 to 12 years educational and preventive treatment old, who attend the center. The pupils for children suffering from autism and of the center are making progress in the general mental disorders. development of social and communication skills with peers. The problem of their Special educational and preventive integration into inclusive schools has been treatment of children with autism is an resolved.

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Volunteering 103-2, 103-3 Company volunteers actively participate in MTS campaigns timed to coincide with Volunteer School in Krasnodar celebration of the Great Victory, Children’s 2018 — Volunteer’s Year Day and Knowledge Day, New Year, and also in Russia events of the Sistema and Children’s Cinema The winning project of the sixth MTS 1.5 May Charity Foundations. Company’s social Volunteer Award Ceremony in the 15 months projects are aimed at support for the foster category For Contribution to the employees MTS Corporate Volunteer children of child-welfare institutions suffering Development of Volunteering in the Movement JUST GIVE hardships, and also veterans of the Great Region. GOOD!” Patriotic War and communications industry. In addition to the theoretical part, The largest federal volunteering campaigns, The first MTS Volunteer School was held the volunteers had the opportunity to where all regions of the MTS business presence in Krasnodar in 2018, where 15 Company take part in the events and feel what participate, are “Tango of Victory,” “Green employees were trained for 1.5 months. it means to be a volunteer. Some of Express MTS” and “Christmas Trees for them managed to participate in several Children!.” In the course of the study all projects and events during their training. > 7 83 participants learned about various thous. Russian The annual award ceremony for MTS directions of social volunteering: the Heads of the largest charitable, volunteers regions volunteers, which is traditionally held on specifics of work with disabled children volunteer and non-profit organizations December 5, in 2018 gathered more than and families in difficult situations, of the city acted as the speakers. They 160 of the most active volunteers on its site. work with elderly people, donation, not only shared their knowledge and Winning projects and their participants were operational specifics of the Lisa Alert invaluable experience, but also spoke > 700 awarded in 15 nominations. search and rescue team, development about the particular types of volunteer events of the urban environment and ecology assistance required by the organization. and volunteer projects of MTS. Also, Key categories: the participants were told about the In 2019, the second group of students The MTS corporate volunteer movement JUST legal aspects of volunteering, which will will start their training. The possibility GIVE GOOD! has been helping employees allow them to carry out their activities of distance learning is being considered • intellectual volunteering to fulfill their potential for more than eight properly in the future. as well. years already. The variety of Company’s social • creative volunteering projects gives numerous opportunities for each • sports volunteering passionate employee to find their place and • contribution to the development contribute to the society. MTS has more than of regions and local communities 7,000 volunteers, for whom volunteering is the • for the popularization of telecom voice of heart. professions MGTS Volunteer Unit Happiness to Bring Happiness • for contribution to the development of volunteering in the region In a strive to do good, In April 2018, a volunteer unit Happiness to • to meet retired staff, spend holidays and give employees not only fulfill their Bring Happiness appeared in MGTS, which lectures for them, give care and attention to already has more than 150 participants. MGTS veterans; mission, but also facilitate According to the results of volunteer meetings, the strengthening of the MTS MTS PJSC received a sign of heads of three directions were appointed: • to create a website with headings about image before the society Children, Pensioners, and Animals. In 2018, a CF health, free city events, educational public recognition Volunteer of grant from Sistema JSFK was obtained in two programs, discounts, contests and with a and the state as a socially Russia in 2018 in the category areas: Children and Animals. The implemented communication forum; responsible company. program allowed to significantly improve the Socially Responsible Business social adaptation of the supported children and • to support federal campaigns. Partner in Implementing help animals in the shelter Nekrasovka. • to participate in environmental campaigns In 2018, the volunteer resource MTS Volunteer Initiatives. This The main areas of the unit’s work: with volunteers from Sistema JSFK; Service of Good Deeds was integrated into the technical capabilities of the badge is annually awarded Pulse corporate portal (together with by the Perm International • to help the orphanage: to support and socially • to support the nursing home. the Ambassador program). adapt children; Volunteer Forum.

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Tango of Victory Cleaning days in city parks and lilacs planting, cleaning of memorials and military In May 2018, MTS federal volunteer campaign glory museums territories, concerts and Tango of Victory took place again. Festive performances for veterans in different events dedicated to the celebration of the cultural centers, targeted assistance took 73rd Great Victory Anniversary took place in place. This is not the whole list of what 37 regions of Russia. The largest events were the Company’s volunteers organize in held in Moscow, St. Petersburg, Yekaterinburg, remembrance of the Great Victory. Vladivostok, Volgograd, Nizhny Novgorod and Novocherkassk.

War Buddies

The winning project of the sixth MTS Volunteer Award Ceremony in the category The Best Social Project of the Cluster 18 regions across Russia Such MTS projects as War Buddies, Poplar of Victory, and Tango > 450 of Victory provide a unique opportunity to revive our knowledge participants and help teaching our children to respect and appreciate mem- ories about the war and the Great Victory. 19 finalist teams The Poplar of Victory In 2017, MTS took the initiative of the project, which would tell about the military-historical The events of the Great Patriotic War still live heritage of the country and offer new over 100 in the memory of millions of Russians. However, opportunities for upgrading the territories. veterans of the war the physical evidence of those times diminishes The Poplar of Victory was then born. progressively every year. That is why everything that reminds us of the brave feats of our soldiers In 2018, the traditional event gained pace — On the eve of the Victory Day, MTS held a site. The rest 17 teams were connected via the is very important and helps to preserve the 15 new regions joined the project. The sprouts historical and educational quiz “The war... What video conference and competed online. The memory of those terrible and heroic days. of the legendary poplar were planted by do we know about it?”. The strongest team was final of the victory quiz served as a convincing Company employees, students, war veterans, identified in each region, which participated in evidence of our Company’s high technology level: One of these symbols was the Volgograd poplar, and MTS corporate clients. the final competition held in Nizhny Novgorod. thanks to the high quality of communication the only tree that survived the terrible Battle and the data transfer speed, online participants of Stalingrad, during which the city was almost The action became an awardee in the category 19 winners, MTS and RTC employees, partners did not feel uncomfortable compared to their completely destroyed. The tree not only survived HR-Video and Internal Communications at the and customers of MTS, reached the final. colleagues from Nizhny Novgorod. after the enemy bombardments, but also, littered Competition The Best Corporate Video 2019. Veterans were also actively involved and ready to with scars and abrasions from bullets and answer questions all together, while some of the The Kemerovo branch became the clear leader. fragments, bloomed again in the spring of 1943 questions challenged even their mind, although Hard-working employees of Kabardino-Balkarian, after the city was liberated. This tree was famous they witnessed the war themselves. Volgograd, Novokuznetsk and Kursk branches in Volgograd, but for the general public the > 2 occupied the four second places being no less history of the poplar remained unknown. 32 thous. Only representatives of Nizhny Novgorod and honorable. The third place took the team of the Russian regions participants Ulyanovsk branches were present directly on the Chechen branch.

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Mobile Fairytale Puppet Theater 8 80 thous. volunteers 10 spectators theater http://puppet-mts.ru/ companies

The winning project of the sixth MTS Volunteer Award Ceremony in the 4 80 new theater nomination Creative Volunteering events per productions year MTS is not just about telecom- 15 in 2018 theater munications. Volunteers of the productions

Company establish another the Moscow Region and the regions, and cinema communication, the best in festivals in Smolensk and Nizhny Novgorod, the world — they get in contact organized by the Children’s Cinema May Charity Foundation with the support of MTS Group. with children’s hearts. Con- nection of Good. The Cultural Holiday in the Altai Republic will remain a bright memory for volunteers. A charity event that covered the most remote areas of the Republic, such as Shyrgayta, Yabogan, Charity performances are a great way not only to Chendek, Multa and Ust-Koksa. The campaign was engage employees in corporate life, but also to do a organized by the Sistema Charitable Foundation good deed. In the Mobile Fairytale Puppet Theater, with the support of MTS Group, Detsky Mir, the which has existed in MTS since 2012, today there Government of the Republic. are more than 80 people who hold 80 events a year in sponsored orphanages, social centers, and In April, the performance Simple Rules was hospitals. The repertoire of the theater includes 15 demonstrated for the first time, introducing performances; in 2018, four performances were young spectators to the rules of road traffic and created, including the kind tale of love and loyalty behavior on the streets of the city in a game form. Elephant Horton Expects the Chick. The actors used the most difficult and interesting doll — a puppet. The first audience were children of The theater companies of the Mobile Fairytale employees, small patients of the Russian Children’s Puppet Theater work in Moscow, Krasnodar, St. Clinical Hospital and the Dmitry Rogachev National Petersburg and Ulyanovsk. At the same time, the Research Center. plans of the theater for 2019 include not only expanding the geography of its presence, but also The Best Social Project of MTS 2018. A new creating a new training performance, including experience of 2018 was the opportunity to show mastering the territory of opera space. performances for children with hearing and vision disabilities with the assistance of a sign language Volunteering magician from the Creative interpreter. On September 30, the International Laboratory It’s in the Bag became an integral part Day of the Deaf the first two performances in a of MTS Mobile Fairytale Puppet Theater. Now no new format — The Elephant Horton Expects the play is performed without fun tricks. Chick and Simple Rules took place in the memorial estate of G. R. Derzhavin in St. Petersburg. This The key events in 2018 were the festival of project was recognized as the best social project volunteer puppet theaters Doll Fest, which of MTS in 2018. The continuation will be the large- brought together more than 600 foster children scale project Theater beyond Silence to take place from children’s social institutions in Moscow, in 19 regions in 2019.

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Green Express Cultural Code The winner of the sixth MTS Volunteer Volgograd, Ulyanovsk, Murmansk Regions, >400 Award Ceremony in the nomination in the Republics of Tuva, Ingushetia, 40 MTS employees Contribution to the Development of Kabardino-Balkaria, Chuvashia, Chechnya, Russian Regions and Local Communities. Karachay-Cherkessia, Mordovia and in regions the Yamalo-Nenets Autonomous Okrug.

In the course of the event held under the Every year in September, the Green Express slogan People Do for People volunteers volunteer campaign, aimed at targeted support According to the work personally cleaned the territory, installed for children’s social institutions, starts in benches, painted walls. Directors of Russia. Namely with this project MTS corporate results for 2018, the regional branches also personally volunteer movement started its formation in participated in the project: a Director 2011. Cultural Code was Flashmob was organized in social media. The leaders have become the main recognized as the best The project participants are not only MTS PJSC headliners: In their Facebook accounts, socially-oriented project they published announcements and reviews employees, but also members of their families, as of the events and passed the baton to the well as Company partners. The RTC volunteers, in the Big Heart nomination next region. Stream, Detsky Mir Charity Fund and MGTS are for the HR-brand award. among them. Our volunteers visit orphanages, In 2019, it is planned to expand the conduct vocational guidance and master classes, In summer 2018 MTS launched a new geography of the project to 40 regions donate stationery and books, organize cultural social project — Cultural Code. This is a where MTS operates. programs, sports competitions and also interact year our volunteers visit the foster children volunteer campaign of the Company’s with children. The key purpose of the event is of sponsored child-welfare institutions and employees, which goal is to preserve and to bring joy and warmth into the lives of the throw a festival for those who are unable to support cultural values and initiatives that deprived children, as well as to draw public celebrate it with their family. Performances are unique to the territories: Developing 1.5 attention to the issues of childhood protection of actors of the volunteering Mobile Fairytale creative technologies, preserving cultural and social development of the regions. Puppet Theater of MTS, all sorts of workshops monuments, supporting craft schools and thous. on how to make Christmas souvenirs and toys, unique craftsmen, supporting initiative participants Christmas Trees for Children! outdoor sports, quests, contests, dressing up local communities and movements, as as Santa Clauses and Snow Maidens, gifts and well as unique original regional events and exhibitions, art objects. 18 The year ended with the most expected event a flood of vivid impressions help to make the regions across for foster children in social institutions—the holiday unforgettable, and children will not feel The project was held in 18 regions of the Russia project “Christmas Trees for Children!.” Every deprived. country: in Astrakhan, Kursk, Kaliningrad, Lipetsk, Penza, Nizhny Novgorod, Kemerovo,

Volunteer Guides

• the oldest Russian zoo in Kaliningrad In 2018, MTS employees had the The project is under development: a • the festival of throat singing in Tuva opportunity to get a new profession, platform is created and with its help • a free city bicycle repair station in Cheboksary plunge into the world of new knowledge, any employee will be able to obtain • a workout site in Volgograd and expand the horizons of their cultural theoretical knowledge of the tour • a sound equipment for Vykrutasy Arctic Theater in Murmansk development. The Company launched guiding, and then embody it into own a new project MTS Guides as part of the practical mini projects. The approach • the architectural lighting of Shatoy watchtower in Grozny Re-training program. to the program is very serious: at the • a croquet court in Peter the Great’s En Route Imperial Palace in Lipetsk end of the course, a future guide passes a test and receives a certificate.

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Social and Educational Projects 103-2, 103-3 MTS plans to develop the Mobile Academy state structures and non-profit organizations, project in all federal districts of Russia, in as well as to distribute training methodologies particular, to open new educational Internet among all interested parties. MTS employees are aimed at improving the quality of peo- classes and attract new partners from the ple’s life and solving urgent social problems with the help of innovations. The Company implements digital technologies in Tablet from Scratch health care, education and culture. We are focused on chil- dren who are most exposed to various risks, including the In Belarus, MTS conducts computer literacy classes for pensioners, in particular, teaches older people to use a tablet and mobile Internet. Tablet from Scratch Internet, as well as the older generation, who face difficulties program is designed to eliminate digital inequality and, as a result, make the lives in developing technological solutions. of pensioners more vivid, active and comfortable.

The program of 10 classes is designed for beginners and those who already have some experience of working with gadgets. People of a wide variety of professions, who have received special training and are ready to explain the basics of using MTS trains the audience of the Academy on modern mobile devices in an accessible form are among the volunteer teachers. confident work with Internet services: To do shopping, to make an appointment with a doctor, There is a unique tutorial shared on the project website: http://planshet.mts.by/, to communicate with relatives and friends in any which is free for downloading and can teach the older generation to use mobile Mobile Academy place at any time with the help of a smartphone devices. or a tablet. Pensioners are educated in practice how to pay remotely for communication services http://baba-deda.ru/uroki and utilities, how to obtain state services. All this makes their life more comfortable and full. Children on the Internet

PA2 In 2016, MTS developed the special One of the crucial tasks of the educational course Mobile Academy, designed for people over 50. The purpose of the Mobile education system in the Academy project is to make the capabilities As part of the project Network for All Ages digital age is the successful of mobile devices really clear and available MGTS provides a free training to Moscow for the elderly people, to raise their self- pensioners on use of various devices with adaptation of the younger esteem and to integrate them into the Internet access to solve their household generation to the conditions modern pace of life. The new academic year and social problems. Trainings take place started in autumn 2018 with a new partner — twice a week in two venues. In total, of modern life. the Honor (Pochyot) Foundation (Russian 1,000 people were trained in 2018. Railways JSC). PA2 As a universal telecom operator, providing a full range of telecommunication services, we understand the importance of protecting According to the MTS In 2018, a new online learning platform was children from possible negative situations on research, 75% of retired grad- launched — digital literacy portal gramota. the Internet like no one else does. MTS not mts.ru, adapted for various devices, which will only develops parental control and content uates of the Mobile Academy allow in the future reaching even more senior filtering methods, but also implements the use mobile Internet almost citizens of the Russian Federation and training social and educational project Kids Online them in capabilities of contemporary Internet aimed at teaching children to use Internet every day: they communicate technologies. The portal is scheduled to be in a wholesome manner for their education, actively in social networks launched in Q2 2019. development, communication and leisure, and 40 and messengers, use e-mail, to tell schoolchildren, teachers, parents about 7 Russian regions the potential risks of using the Internet, ways of years the portal of public services, > 2 protecting them from network threats. pay for housing and commu- 20 thous. people For more information on parental >400 nal services. Russian regions trained control methods, see section thous. students “Consumer Security”.

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Belarus Exhibition Children on the Internet

In Belarus, the Children on the Internet project is being implemented in The exhibition Children on the Internet is divided into topical areas, where young visitors cooperation with the Ministry of Education of Belarus and the United Nations can get acquainted with the principles of intelligent and safe behavior in the global International Children’s Emergency Fund (UNICEF) (since 2018). Over the past network in a relaxed atmosphere. The interactive format of the exhibition suggests that five years, about 9,000 schoolchildren across the country have already taken you can, and even have to touch the exhibits with your hands, play with them, and also lessons on safe use of the Internet. give rein to your imagination using unique art objects.

In September 2018, within the framework of the project, the Internet Universe exhibition The exhibition focuses on the educational part. A special class is equipped in the for schoolchildren was opened in the National Library of Belarus. These are six interactive designated area, where a lesson on useful and safe Internet is held. The lesson is zones that focus on the history of the Internet, code of conduct on the Web, secure content designed to give students the most complete image of both the positive and negative and protection of personal data. As part of the exhibition children are being interviewed aspects of using the Internet. 7 safety rules are shown through 7 stories that happen to about cyber-bullying. The obtained data will help to assess the situation in cyber-bullying the main characters Mityasik and Interneshka. Each story reveals one of the dangers of among schoolchildren, and in the future will become the basis for various activities aimed the Internet environment and teaches the child to get out of such situation. After the at improving the security of children in cyberspace. lesson, children reinforce their knowledge in a game and energetic manner. They take part in an entertaining quest, the purpose of which is to repeat simple and useful rules Over a thousand schoolchildren visited the exhibition during the first month. In 2019, the of behavior on the Internet. exhibition will be demonstrated in the regional centers of Belarus.

To protect the young users, in 2011 MTS of increasing the digital competence together with the Internet Development of primary school students. Educational Project World of Foundation and the Psychology Department Knowledge with MTS of the Lomonosov Moscow State University In 2018, interactive exhibitions Children developed a lesson Useful and Secure on the Internet and lessons were held Internet, which became the basis of the in the Far Eastern regions: Khabarovsk, In 2018, the Company launched an MTS federal educational project Children Komsomolsk-on-Amur, Yuzhno-Sakhalinsk, educational project World of Knowledge on the Internet. The methodology of Petropavlovsk-Kamchatsky, Magadan and with MTS, which will involve foster children the lesson was published by the Federal Primorye Territory. In total, more than from social institutions throughout Institute for Education Development. 12,000 children, parents and teachers took Russia. The project is comprised of several Since its establishment, the program has part in offline events. Active support for the educational units: Virtual Planetarium proven to be a reliable and effective means Children on the Internet project in 2018 was using virtual reality glasses, applied master provided by regional ministries of education, classes and a secure Internet lesson. ministries of culture, public organizations. Virtual Planetarium is a new-generation In 2019, MTS plans to actively attract mobile cinema. It looks like big 3D children travel across the Universe, have volunteers for conducting safe Internet glasses. But it is not just a 3D effect that passed special training, and experts of lessons in regional schools, mainly in helps make the picture more realistic. It MEDSI Group certified the safety of the sparsely populated and hard-to-reach provides a complete effect of being there, equipment for children. areas, where mobile Internet is often in space: it seems like you can reach the a key communication channel and stars. Exciting films with the effect of In 2018, the project covered 13 regions source of entertainment content for full presence provide for fast learning of Russia. In Virtual Planetarium children schoolchildren. The Company also initiates and contribute to deep perception of the watched films about the only star of the open regional teaching hours with well- material. Solar System: its structure, its lifecycle known Russian psychologists and security and magnetic fields. experts in order to build a constructive Virtual Planetarium is the winner of dialog between parents, school and society Telecom Idea competition and its For more information about on timely counteraction and neutralization key objectives are the accessibility Telecom Idea competition, see of actual network threats. of scientific knowledge and its section “Developing Innovative popularization. Volunteers who let the Services”.

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Financial Literacy for Everyone!

PA2 Improving the financial literacy for high school students. The Bank’s of the population and protecting the experts took active part in the second rights of consumers of financial services stage of the creative in-person and is one of the priority directions of remote competition among the MTS Bank’s social responsibility. In Olympiad participants, offering high 2018, the Bank supported a number school students topics for a creative of federal and regional initiatives on essay and following the competition financial education of the population, results named the winners in the Best and also continued to develop its own Essay nomination. educational project Financial Literacy for Everyone!. In the context of the International Charity Initiative #GenerousTuesday For example, the Bank took part in the (#ЩедрыйВторник), the Bank’s Festival of Financial Literacy organized employees visited educational by the Government of Moscow, the Bank institutions with an informative of Russia and the Moscow Department lecture on the world of finance and of Education. The Bank’s volunteers an interactive financial True or False? held lessons for students of the State quiz. In addition, the Bank arranged Budgetary Educational Institution an interesting quiz A Kaleidoscope School No. 1554 (Moscow). of Banking Professions for students of the State Budgetary Educational MTS Bank has traditionally supported Institution Lyceum No. 1571 (Moscow). one of the largest projects for The quiz was designed to tell high school promoting the financial literacy of students about operation of the Bank’s schoolchildren across Russia — the various departments when playing and XIII All-Russian Olympiad on financial probably help them choose their future market and basic consumer knowledge occupation.

MTS for Kids App includes: MTS for Kids in Belarus

• a wide selection of cartoons, books, audio • the possibility to download the content to MTS for Kids entertainment and educational read and count. MTS For Kids content does fairy tales and games in one application; your smartphone for offline use; service is available for MTS subscribers in not contain any negative information: the Belarus by subscription. The service content applications are protected against viruses • no advertising; • free mobile traffic. is designed for children from 3 to 12 years and pop-up advertising windows. And the old and includes more than 400 premium interface adapted specifically for young • simple child-friendly interface; MTS for Kids application is available by sub- games and applications. When using users allows finding the right game easily. scription only for MTS subscribers. the service, a child learns about natural No traffic is used when downloading and phenomena, learns to determine time, viewing the applications.

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Pilot ICT Educational Program in Armenia

high schools to implement the pilot program launched in 2015. The program will also include high schools in the Armenian regions, since decentralization and proportional development of the regions are also one of the priorities of the national government.

MTS IT Camp in Belarus For VivaCell-MTS, ICT development programs are Digital transformation begins with a digital culture, also important in terms of In 2018, the Ministry of Education their social significance. and it must be learned from an early age. IT Camp and Science of Armenia, VivaCell- Improving the ICT education project allows children and teenagers changing their MTS, Synopsis Armenia, Unicomp Company and the Union of Employers level targets not only usual roles of the information technologies users to in Information and Communication meeting the requirements the role of the real developer, the creator of these Technologies signed a memorandum on of the labor market, but introduction of specialized ICT subjects also creating conditions for technologies. in general education institutions. young people to stay and work in Armenia. Improving According to the memorandum, the the ICT education level is a Ministry of Education and Science long-term investment into will ensure the introduction of the the future of the country, Four thematic courses were offered for subjects Microelectronics, Information as it provides the young training: basics of robotics, video blogging, Technologies and Fundamentals of generation with the necessary 15 quadcopter piloting, digital photography, Telecommunications in the school knowledge and skills to work mobile and videography. Each course took curriculum. VivaCell-MTS will take part days in the field of information 15 days: 2 classroom hours daily. Thus, about in setting the standards and training and communication 80 80 schoolchildren aged 6 to 17, who stayed of teachers of the Fundamentals of schoolchildren at the children’s recreation camp Horizon Telecommunications subject. technologies. (Gorizont) took part in the project. In 2018, Mobile TeleSystems PJSC together with Within the framework of cooperation Ralph Yirikyan, the Ministry of Education and the Educational with the signatory organizations, five CEO of VivaCell-MTS Center of the High Technologies Park arranged more schools will join ten Armenian the IT Camp for the second time.

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Mobile Guide MTS Mobile Libraries

TA2 On the eve of the 2018 FIFA World For 2019, MTS has planned to create TA2 MTS continues the implementation the help of a smartphone or tablet, allows Cup, MTS launched mobile audio guides online guides across Russia’s regions. of the Mobile Library project to install users to upload in one click the work of on key attractions of Samara and Kazan. The link to the guide will be added posters with QR codes with links to their interest in electronic form on their in the SMS, which will be sent to MTS literature. In 2018, a project was carried device. In addition, in the Mobile Library In these cities, the information desks subscribers who enter the territory out in schools of the Samara region, readers can find information about the MTS near historical sites contain a brief of a subject for the first time. A pilot Novokuznetsk in the Kemerovo region, All-Russian charity project Generation M. description of the sight in Russian and project was implemented in Kamchatka, Orsk and Novotroitsk in the Orenburg English that is supplemented by a QR similar guides are being developed region, as well as in the city of Pskov. Advertising columns were installed in the code, which can be read with the camera in Transbaikal, Yaroslavl, Kaliningrad, In the mobile library children and adults waiting room of the Samara railway station of a mobile device and allows you to Kemerovo, Ryazan and Tver regions. will find works of Russian and foreign and in Grozny on the Square of Journalists. listen to an audio tour about memorable The project is aimed at developing classical literature, which are included places, iconic events and people who the tourism potential of the country in the school curriculum of general Plans for 2019 include the installation of a have left a legacy in the history of and providing users of social networks education institutions. bench in Kamyzyak in the Astrakhan region the city. The project supports five with good opportunities for planning (with Wi-Fi networks and a phone charging language versions: Russian, Tatar, English, tourist trips. On the spine of each book there is an unit), and literature benches in the squares Spanish and Chinese. individual QR-code, which, when read with of the city. The SMS sent on Kamchatka looks like this: Welcome to Kamchatka, the land of volcanoes, surfing and wild salmon! Learn about what to see, where to go and what to try in our region in the special review at https://media.mts.ru/kamchatka/. Historical and Cultural Project “Get to Know Novosibirsk”

TA2 Within the framework of events dedicated to the 125th anniversary of First of all, our cultural Novosibirsk, MTS installed interactive and historical project is security signs on 19 places of memory of aimed at increasing tourist the city. This is an example of how modern attraction and developing the technologies can work in the social and cultural sphere, and this is the first project infrastructure of Novosibirsk in Russia of centralized replacement using modern information of official security signs. The new signs technologies. That is why I were supplemented with an interactive am particularly proud that innovation, namely a QR code, which Novosibirsk became the allowed to free the facade of historic first city in Russia to have buildings from unnecessary information. innovative security signs. The citizens of Novosibirsk will be When scanning the QR code with a able to know more about what 2018 World Cup in Russia smartphone or a tablet, the tourist gets buildings they can be proud to a page with a detailed description of in their hometown, and the During the 2018 FIFA World Cup 11 guides were created, links to which were and photo of a historical or cultural capital of Siberia will become received in the form of SMS by everyone coming to the regions of the matches. object — a square, a house, a monument. famous for real innovations in The guides were also promoted in the My MTS application. Guest service Information about the history of the in foreign languages during the 2018 World Cup was built on the basis of MTS/ building is available in Russian and English. culture. Media. In MTS service shops, booklets with QR codes were distributed. They are To date, 70 iconic cultural and historical links to descriptions of plans and services in foreign languages (English, German, sights of Novosibirsk have already gained Anatoly Lokot, Spanish, Portuguese). The contact center recorded a greeting and created the virtual history, and by the end of 2019 they Mayor of Novosibirsk possibility of ordering explanatory SMS. will be joined by the remaining objects of cultural heritage of the city.

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Moscow Tours 2018 Bike4SDGs International Bike Ride In June–September 2018 MGTS together with residents and urban communications, the the popular project Moscow Tours conducted role of telecommunications in the life of a series of free city tours and morning photo Moscow, and master classes on photography 102-12 МTS in Belarus acted performances Moscow in Touch. Thematic were held. Together with MGTS more than as a partner of the campaign tours were dedicated to Moscow, they told two thousand people passed dozens of in support of the Sustainable about relatively unknown historical facts streets and learned interesting facts about Development Goals. The about the Russian capital, famous Moscow the Russian capital. volunteer Bike4SDGs bike ride was held in Belarus for the third time. The bike ride is inclusive: people with disabilities took part in the ride.

MTS offered to the participants >1 4 a mobile audio guide in Belorussian, Russian and English thous. campaigns mln visitors of Educational project MTS/Media on Belovezhskaya Pushcha, on CSR in social MTS/Media (+40%) networks the National Park of Belarus, a UNESCO World Heritage site. https://media.mts.ru/ Anyone can listen to the podcast from a smartphone or download it on the 34travel.me travel Average Photo: tut.by portal. PA2 Educational project MTS/Media is a unique x 1.5 reading time media platform that contains explanatory and helpful content at media.mts.ru, mts.ru, and times increase in Yandex.Zen blog. MTS/Media publications in audience 3.5 written in simple and understandable language involvement minutes are embedded in direct communications MTS Conference on Sustainable Business including Deloitte, ABBYY, IBM, Beeline, with the customer and aimed at explaining on MTS/Media to promote and research the Development Rostelecom and Blagosfera. difficult topics on technologies, promoting perception of new digital and partner MTS services and products under the MTS products by audiences. More than 1,000 On the International Volunteer Day, MTS The second day began for the teams with brand, supporting the image of MTS as a campaigns were dedicated to CSR content, organized the conference “Managing productive work on finalizing their projects progressive company accelerating the digital security, economy, improved quality of life and sustainable business development: corporate and preparing for the defense before the jury, transformation of Russian business and digital literacy. social strategies”. Participants were MTS consisting of experts from MIRBIS, PwC, MTS society. employees from different parts of the and Deloitte, Sistema Charitable Foundation. All new customers of mobile communications country, be it directors of regions, employees In 2018, MTS/Media cooperation with MTS and individual convergent MTS tariffs receive of HR, PR, security, compliance departments, The winners were “Children on the planet” Group subsidiaries and asset companies of links to explanatory materials about the marketing unit. (promoting environmental initiatives and a Sistema JSFC significantly expanded. More features of tariffs and additional features in responsible attitude towards environment than 700 campaigns in social networks relied the MTS network. An educational program was prepared on the among primary school children) and first day for the participants of the event in “Responsibility for the future: the road of life” coverage In 2019, the main factor influencing the partnership with Moscow International Higher (supporting graduates of social institutions, development of MTS/Media will be the growing Business School (MIRBIS), and the task to including through digital technologies). The jury need for creating explanatory communications solve the social question was set. In order also noted the project “Beyond Silence: theater 10 when launching new products and changing to help elaborate the project, meetings were for all” (creating conditions to make theater >700 mln people existing ones, especially in new businesses organized with companies with successful performances accessible for people with and areas for MTS. An increase in the volume experience in implementing social projects hearing and visual impairments using digital campaigns on promotion of communications is expected due to the instruments). of MTS digital products in development of IT platforms that allow for social networks personalized campaigns.

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• openness and availability of environmental In line with communications on the environmen- Environmental responsibility information; tal issues, in time for Ethics and Compliance Day in 2018 a memo on environmental friendliness • continuous improvement of MTS environ- was developed and published for all MTS employ- mental management system; ees at MTS portal.

• reduced level of negative impact on environ- Based on 2018 results: ment and aspiration for sustainability. Management of Environmental was enacted, which reflects the Company’s • 18 branches developed the draft regulations of Compliance position with respect to the environment at its A unified approach is generated at MTS maximum permissible emission of hazardous administrative facilities. branches due to the introduction of a uni- substances into atmosphere and the permits 103-2, 103-3 In its activities, MTS strives not only fied environmental-management system, to for pollutant emission into atmosphere by sta- to have a minimal impact on the environment, The fundamental principles of MTS ensure compliance and the performance of tionary pollution sources were received; but also to reduce this impact to the best of its Environmental Safety and Protection Policy are: nature-conservation legislation norms and ability. Achieving this objective, the Company requirements. • 29 branches developed design documen- is guided by the environmental legislation, as • compliance with the requirements of the tation — Draft waste generation norms and well as the principles of responsible business nature-conservation legislation of the For the reporting period, internal audit was per- waste disposal limits; the Documents to ap- conduct, strives to improve the environmental Russian Federation; formed in part of Company’s compliance with prove the waste generation norms and waste culture of employees and partners and to the environmental laws, risks were assessed, disposal limits in accordance with the require- implement services based on advanced • compliance with the requirements of national and a risk map was assembled that includes ments of the legislation were received; technologies. and international standards in the field of actions for their mitigation. environmental protection; • environmental campaigns were launched: In accordance with the recommendations External experts conducted mandatory peri- “Caps of Kindness”, “Batteries, Surrender”. of the international standard ISO 26000, • improved level of environmental awareness odical training for managers of branches and MTS implements a complex of measures in and education of all company employees; employees responsible for environmental safety Total expenses of MTS PJSC for environmental the field of “Environment”. Within the scope with subsequent awarding of certificates that protection in 2018 amounted to RUB 22.1 mln, of development of the “Ecology” compliance • implementation of environmental socially confirmed the acquired proficiency. where RUB 13.7 mln were expenses related to program, in 2018, the MTS Environmental significant projects; removal of solid domestic waste to a landfill. Safety and Environmental-Protection Policy

MTS PJSC EXPENSES FOR ENVIRONMENTAL STRUCTURE OF MTS PJSC EXPENSES PROTECTION, RUB THOUS TO PREVENT ENVIRONMENTAL IMPACT IN 2018, RUB THOUS

241.3 8,165.5

5,597.8 2,011.8 4.985.6

13,892.4 12,199.9 9,426.0

2016 2017 2018 5,912.4

Expenses to prevent environmental impact

Expenses related to handling of wastes and emissions treatment, and also liquidation of Payments for a negative impact on the environment environmental damage Preparation of ecological documents Employee training

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307-1 MONETARY VALUE OF ESSENTIAL PENALTIES AND TOTAL NUMBER OF NON-FINANCIAL Production test SANCTIONS IMPOSED UPON MTS PJSC FOR FAILURE TO COMPLY WITH ENVIRONMENTAL LEGISLATION AND REGULATORY REQUIREMENTS Within the procedure for procure- ment of smartphones and ac- 2016 2017 2018 Environmental impact cessories, MTS performs testing, as a result of which the products penalties, RUB thous. 20.00 100.00 0.00 MTS as a telecom provider objectively of questionable quality will not understands that its operations have virtually be admitted to the tender. In par- non-financial sanctions, pcs 0.00 0.00 0.00 no negative impact on the environment. ticular, examples may be given, Nevertheless, the Company considers when smartphone samples were environmental protection activities as an excluded due to sharp chemical integral component of business and works in odor and brittleness of body Within the scope of to work on environmental safety issues at the area of environmental balance and stability materials. development of the the technical block facilities; maintenance. In its attempt to minimize its environmental impact, MTS skillfully manages All customized models of subscrib- “Ecology” compliance • to introduce a new system for those insignificant sources of adverse er equipment (smartphones, USB program, in 2018, the MTS accumulation of paper waste in offices environmental impact that currently exist. modems, routers, set-top boxes) due to enactment of new waste handling have the ЕАС certificate. Besides, Environmental Safety and requirements; MTS PJSC facilities are mainly related the package and components are Environmental-Protection to facilities that produce no adverse labeled with a sign “not to dispose • to organize and perform inventory of environmental impact, besides, there are with domestic waste”. Policy was enacted administrative facilities with the purpose several facilities of III and IV categories, which to inspect availability of environmental produce insignificant or minimal adverse documents at all facilities as specified environmental impact. Design of network Plans for 2019: in the existing legislation of the Russian facilities complies with “List of Actions for Energy Federation; Environmental Protection”, development • to provide for adaptation of the Policy of which is carried out in accordance with 103-2, 103-3 Our business does not impact “Environmental Safety and Protection • to analyze all categories of products/ requirements of GOST R 21.1101-2013 the environment directly, but all our at Administrative Facilities” to new works/services of the Company as speci- (government standard). The requirement communication facilities, office buildings, requirements in environmental laws; fied in the “Procurement” Policy by ex- to implement such actions is a necessary sales offices and call centers consume perts in the field of environmental protec- factor for contractors. At the stage of facility power. Most generating stations in Russia • to provide for spread of the Policy tion and safety to determine their impact acceptance, completion of such environmental run on gas and coal and emit carbon dioxide coverage to technical block facilities at environmental protection and safety. protection actions is inspected. to atmosphere. We are aware of the fact that that adversely impact the environment, the more traffic grows and the faster the At the initial stage of radio access network subscriber base expands, the more energy we facility design, a sanitary passport is developed, consume, which inevitably results in higher which is provided for expertise to the load to generating stations and therefore organization accredited by Rospotrebnadzor harms the environment. (Federal Service for Surveillance on Consumer Requirements to suppliers Rights Protection and Human Wellbeing) Since 2010 “Strategy of Energy Savings for compliance with the SanPiN (sanitary and Energy Efficiency” has been operating Each supplier of the Company shall comply with the requirements of the MTS PJSC regulations and standards) norms. Afterwards in MTS, aimed at restriction of growth and Supplier’s Code of Business Conduct, providing that the supplier has an effective this passport is submitted to Rospotrebnadzor, reduction of electrical energy consumption. environmental protection policy, complies with the existing laws and norms with respect which issues a report on design documentation All MTS branches in regions implement their to environmental protection. Whenever possible, the suppliers shall apply preventive compliance with SanPiN. own energy savings and energy efficiency approach to environmental issues, implement initiatives that promote environmental programs. responsibility, and help to spread technologies that support environmental protection Upon completion of facility construction, the and usage of rational methods for product life cycle realization. Participants of MTS organization accredited by Rospotrebnadzor, Growth of electricity consumption is procurement procedures shall confirm their consent to compliance with the Code to submit a commercial offer. The form of the MTS PJSC procurement procedures’ performs measurements at the facility, issues related to network development (additional participant since 2016 has included questions on health, safety and environmental a report and a protocol of measurements commissioning of both base stations and protection that are submitted to Rospotrebnadzor. As a other infrastructure of the Company (data result, MTS receives a Sanitary-Epidemiological centers, call centers, etc.)), and with the Conclusion Certificate on compliance of the growth of data traffic volumes. Traffic growth functioning facility with the SanPiN. and installation of additional equipment result

112 113 MTS FOR SOCIETY | Environmental responsibility 2018 MTS Group Sustainable Development Report

302-1 POWER CONSUMPTION IN REGIONS OF PRESENCE BY MTS1 GROUP OF COMPANIES, radio modules are used (active equipment is Energy savings MLN KW/H located directly on a pillar or tower), which in MTS Ukraine does not require power consumption for 2016 2017 2018 cooling. To save energy, VF Ukraine PrJSC base stations introduced the Russia 1,052.5 1,140.7 1,224.6 When the Company purchases reserve “Power Saving” functionality that sources of power supply to feed the base disconnects transceivers of base Ukraine 264.5 259.6 263.8 stations, we follow the energy efficiency stations in hours of minimum load. criteria. The Company uses diesel generators Energy savings with account of Belarus 98.1 92.0 92.9 of leading European manufacturers (Wilson, functionality activation on the entire SDMO, Geko, Inmesol) with extremely strict network reaches 2%–5%, which Armenia 34.4 34.7 34.3 requirements to fuel consumption efficiency amounts to around 4 mln kWh per

2 and СО emissions for redundancy protection Total for MTS Group 1,477.0 1,527.0 1,615.6 2 year. of its main facilities.

The following works were performed in in increased consumption of power by base POWER CONSUMPTION IN MTS PJSC branches of the Company for energy savings station sites. Growth of energy tariffs is IN 2018, MLN KW/H in 2018: reflected in growth of consumed electricity of the possibility of their disconnection in monetary terms. • installation of motion sensors for lighting in outside working time (excluding 40.6 31.7 office passages and corridors; technological ones); We widely introduce new energy efficient equipment and implement energy 146.9 • monitoring regular operation of ventilation • upgrade of lighting systems using LED efficiency programs, without such actions, and conditioning systems, with account lamps. with account of network growth, power consumption would be considerably higher.

In order to reduce power consumption by VOLUME OF ENERGY RESOURCES USED BY MTS PJSC IN 2018 base stations, MTS: In units In monetary terms, RUB, Resource type • switches to using LED lamps in mast excl.VAT lighting systems; 1,005.3 Quantity measurement unit

• uses conditioning systems with a free Heat power 52,673.57 Gcal 84,668,452.86 cooling function; Offices Water supply 220,551.91 cubic meters 10,604,375.98

• replaces equipment for more energy Data processing centers Gas supply 1,164,281.55 cubic meters 7,540,115.68 efficient; Technologica equipment Sites Petrol 4,708,900.63 litres 155,285,211.78 • uses equipment of at least C class; Diesel fuel 3,231,360.67 litres 108,796,359.80 • installs equipment in compact telecom cabinets instead of equipment shelters; • introduces an automated system for commercial electric-power metering; • uses software algorithms to disconnect transceivers of base stations in the period • uses base stations with passive cooling Water consumption of low load; of transceivers, when feederless external 103-2, 103-3 MTS PJSC operations do not significantly by 1.1% impact water intake, nevertheless, we seek to reduce water reduced volume of consumed consumption. In 2018, the volume of consumed water water in 2018 1 The data includes power consumprion of MTS PJSC and its foreign daughter companies (PrJSC reduced by 1.1%. VF Ukraine, Mobile TeleSystems JLLC, MTS Armenia CJSC). 2 Including the volume of consumed energy in Turkmenistan.

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303-1 USE OF WATER BY MTS PJSC, THOUS. M3 Transport is reduced due to car replacement with the ones complying with Euro-4, 5 standard. Use of water, thous. m3 2016 2017 2018 In virtue of Company’s business features, In 2018 costs to purchase corporate our direct impact on environment is reduced transport with high environmental class Total: 272.707 223.09 220.55 to generation of emissions by car fleet (Euro-5 min) amounted to RUB 100.7 mln. vehicles. In total in 2018 MTS PJSC used Total 78 vehicles were purchased, 166 Including: 1,802 vehicles (5.5% less than a year before). vehicles were written off. from natural sources 3.982 1.162 0.802 When procuring motor transport, we take 305-1 from water services company 268.725 222.929 220.552 into account environmental standards of CO2 emissions from using petrol and hazardous emissions (Euro-3, 4, 5). The share diesel fuel in MTS PJSC in 2018 amounted to reused water 0.00 0.00 0.00 of vehicles complying with Euro-3 standard 10,479.8 tons and 7,516.5 tons respectively.

ENVIRONMENTAL CLASS OF MTS PJSC VEHICLES AS OF THE END OF THE YEAR, PCS. 303-2 The main source of water intake is a water services company. Most of the water used is transferred for purification to other organizations. 1,423 1,263 1,166

306-1 DISCHARGE OF USED WATER OF MTS PJSC, THOUS. M3

537 606 599 Total volume of discharged used water, thous. m3 2016 2017 2018 62 38 37 Total: 267.88 223.09 220.55

Including: 2016 2017 2018 purified water 0.063 0.00 0.00 Euro-3 Euro-4 Euro-5 sent for purification to other enterprises 267.817 223.09 220.55 (sewage) Waste full cycle of waste handling when removed from our offices: sorting and secondary raw Emissions unit of MTS PJSC with stationary sources 103-2, 103-3 We treat the issue of waste disposal materials production, provision of reporting of pollutant emissions (diesel generators, responsibly, and therefore, one of the main and supporting documentation, ability to check 103-2, 103-3 No substantial emissions of boiler houses, etc.), a Project is developed requirements to cooperation with domestic progress and quality of works provided for waste greenhouse gases are caused as a result for maximum permissible emissions of waste disposal companies is performance of handling. of MTS PJSC business. Since MTS PJSC pollutant to environment. Based on the has no production of its own, there is Project, the economic entity receives a no need to implement the Program for Permit for emission of pollutants into TOTAL MASS OF MTS PJSC WASTE IN 2018 cutting emissions. However, for each atmospheric air. Waste type Amount Circulation method

305-1 DIRECT EMISSIONS OF GREENHOUSE GASES OF MTS PJSC, TONS1 Extremely hazardous (I class) Mercury waste (luminescent lamps), un. 15,509 utilization 2017 2018 Moderately hazardous (III class)

Gas supply 1,519.4 2,136.3 Used cartridges, un. 165 storage at the landfill

Petrol 11,811.4 14,243.0 Used computer equipment, un. 570 utilization

Diesel fuel 10,034.7 10,167.5 Batteries, kg 874 utilization

Total 23,365.5 26,546.8 Low-hazard(IV class) Total IV class, tons 4,574.6 storage at the landfill

1 The calculation of greenhouse gas emissions was performed in accordance with Order the RF Ministry of Natural Virtually non-hazardous (V class) Resources No. 300 of as June 20, 2015 “On the endorsement of the methodology recommendations and guide for Total V class, tons 1,466.8 dumping/ utilization /recycling quantitative determination of the volume of exhausts of greenhouse gases by organizations engaged in economic and other activities in the Russian Federation”. 116 117 MTS FOR SOCIETY | Environmental responsibility 2018 MTS Group Sustainable Development Report

306-2 In 2018 the total quantity of the non- company, where it is disassembled, sorted, into the process of environmental projects hazardous waste of classes IV-V produced and the resulting metal scrap is weighed. implementation and objectively assess their in the process of MTS PJSC operations Further inspection and confirmation is responsibility to nature. amounted to 6 thousand tons. It was carried out that metal scrap was prepared transferred to other organizations for further according to GOST (government standards), Environmental initiatives Eco-packaging use and recycling, a small portion of waste surveyed by a pyrotechnician, neutralized, was reused. recognized as explosion-proof and may Within the scope of its environmental initiatives, Since 2016 all MTS SIM-cards are sold only in be admitted for recycling and remelting. MTS evaluates environmental impact at all environmental packaging. Packaging is made Disposal of telecommunication The final metal scrap is sold by a recycling stages of its operations: from the construction from high-performance double-layer natural equipment company, which will be in charge of its of base stations to the production and cardboard without synthetic additives and easily further recycling. packaging of SIM-cards. We aspire to have degrades in the nature. MTS packaging safety When disposing of telecommunication the entire MTS team and each employee, is approved with the Environmental Certificate equipment, we usually either sell the obsolete Our main contractor — Ekoutilizatsiya LLC — in particular, involved as much as possible of Conformity. devices back to the manufacturer, sell them has a relevant license for collection and to other companies on a competitive basis or recycling of wastes of I–IV hazard class and make agreements with specialized recycling operates in accordance with the legislation companies. Then we transfer obsolete of the Russian Federation, complying with all equipment to the site of the specialized environmental standards. MTS PJSC and MGTS PJSC are ECO BEST AWARD 2018 winners

MTS PJSC won in two nominations at once: “Ecopackaging of the Year” for “Ecopackaging” project and “Best Educational Project in the RECYCLING OF EQUIPMENT IN 2018, TON Field of Environment” for the volunteer puppet theater “MTS Mobile Fairytale Puppet Theater”. Organization Ferrous metal scrap Non-ferrous metal scrap MGTS PJSC gained a reward for its program of environmental culture MTS PJSC 188.4 156.2 popularization.

MGTS PJSC 70.8 8.2 ECO BEST AWARD 2018 is an independent public award given for best products and practices in the field of environment, energy and RTC JSC 7.5 0.4 resource savings.

Mobile TeleSystems JLLC (Belarus) 136.4 67.3

Diploma “ For innovative approach to the development of reserve volunteering”

In December 2018, MTS PJSC gained a reward of Autonomous Nonprofit Organization EcoCenter “Zapovedniki” (“Nature Computer hardware scrap selling in MGTS Reserve”) for its innovative approach to the development of reserve volunteering for the organization of eco-race and a In order to reduce the negative impact on the environment and save natural resources, series of thematic workshops on the territory of the reserve since 2018 MTS PJSC has been selling computer hardware scrap and equipment scrap to a “Elk Island” in January 2016. specialized scrap processing company. The race, which was organized on the ecological path of Previously, equipment scrap was transferred for detoxication resulting in additional costs. the reserve, was attended by 60 people. For the charitable For 2017, MTS PJSC spent RUB 107.1 thous. equipment scrap detoxication. contributions of the participants, 20 bags of carrots were purchased, which were handed over to the administration In 2018, MTS PJSC profit from sales of equipment scrap amounted to RUB 439.2 thous. of the reserve for feeding animals during the winter period.

The “innovation” approach, in the opinion of the award organizers, was that this was the first winter corporate run on the ecological trail on the territory of the reserve, contributions from which were sent to support the local fauna.

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Eco-telecom MGTS saves forests

“Eco-telecom” initiative is focused on 102-12, TA2 MGTS PJSC jointly with shaping environmental culture among the World Wildlife Fund (WWF) MTS employees and is aimed to increase implements a program to preserve personal responsibility for rational use of forest resources of Russia. MGTS resources, collection and correct waste requires 288 tons of paper for paper recycling, environmental protection. bills annually. Therefore, since 2015 MGTS challenges Muscovites to Since 2013 “Eco-telecom” initiative is reduce the amount of used paper Say to the batteries: approved by the Board of Directors of by switching to electronic bills for “Surrender!” MTS PJSC as one of the priorities in the communication services. By the end field of corporate social responsibility. of 2018 more than 600 thousand Implementation and support of subscribers of MGTS joined the environmental projects with engagement program. of the Company’s employees is approved in the strategy of the MTS HR block.

The Company strives to Clean-ups both attract employees’ MTS has been already organizing environmental Winner project of the sixth MTS Volunteer Awards Ceremony in nomination attention to the need for volunteer clean-ups for several years in a row. “Environmental volunteering” the responsible treatment They are carried out at various city sites: parks, of nature and give the museums, socially significant facilities in regions A rechargeable battery is one of the To make this campaign possible, our of Company’s presence. most dangerous types of waste, as it colleagues did a lot of work, the result opportunity to help with contains a lot of (80% of the weight) of which was signing of an agreement real deeds. Most employees really enjoy community work, heavy metals: cadmium, zinc, nickel, with the only company for recycling of and the Company’s management sees corporate mercury and lead. At a landfill the batteries in Russia – Megapolisresurs. clean-ups as one of the key components of battery’s body loses its integrity, and There are environmental posters in MTS environmental team building. its poisonous filling leaks into soil, Not only employees, but also Moscow offices, bright design and logos of which underground water, atmosphere, residents may hand in batteries in 24 attract attention of employees and make it harming the environment and human MGTS sales and service offices. For more information see section possible for them to get acquainted with the “Corporate Culture”. health, penetrating into human body with information on what they can do to protect water and food. The time for degradation environment in more detail. of a single battery is more than 100 years, and the area of contamination is around 20 m2 of land. In 2018, battery collection campaign was 1 = 20 “Paper boom” resumed in MTS PJSC administrative kg pencils from offices. Therefore, boxes with themed of batteries extracted stickers were placed in the Company’s Winner project of the sixth MTS Volunteer Awards Ceremony in nomination graphite “Environmental Volunteering” offices in 50 cities of Russia. In 2019 it is planned to place iron containers in the recycling of form of batteries being less dangerous Recyclable paper collection is a heart-warming for transportation of hazardous wastes. tradition at MTS: in 2018 MTS PJSC employees save saves collected over 24 tons of recyclable paper. 60 1 As a result of the campaign in 2018, 1518 1 1 In 2019 it is planned to organize recyclable kg of recyclable tree kg of batteries were collected and sent battery ton of water paper collection in the Company’s offices on for recycling. a continuous basis. paper

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Electronic signature for employees Mobile Technologies for Ecology

TA2 To save trees, you may not only collect and regulations review worksheets. Benefits Since 2014, MTS has been successfully recyclable paper, but also use less paper. are evident: less time and paper is wasted, implementing “Mobile Technologies for Ecol- To reduce the volume of paperwork, cut the process becomes simpler, more ogy” program, which includes environmen- costs and make a positive contribution to convenient and transparent. Everything tal lessons in schools throughout Russia. is done using employee’s the personal Over the years of its existence, more than 14.5 environmental protection, MTS launched a project of transforming documents to “digital”. accounts. 14.5 thousand teachers from more than 80 thous. The substance of the project is to sign internal regions of Russia participated in the project, teachers documents of the Company not on paper, but Within the project, an electronic digital who conducted environmental lessons in using an electronic digital signature. signature will be provided to each employee their schools, covering about 380 thou- of the Company. Currently the pilot sand schoolchildren. Pupils learned how We decided to start its introduction with two program has been launched to implement state-of-the-art mobile technologies help the project. 380 mass processes — signing vacation orders to save nature, save lives, eliminate forest thous. fires, care for birds and animals. The school- children were introduced to Econeshka, schoolchildren the heroine of MTS and the girlfriend of the 80 hero Interneshka, who is responsible for the regions environment and helps nature. Environmental initiatives in Armenia In 2018, MTS, with the support of the Auton- them how many interesting things one can omous Non-Commercial Organization learn walking in the forest. EcoCenter “Zapovedniki”, began to develop 102-12 VivaCell-MTS (Armenia) since 2006 has been cooperating with the Foundation for the a new lesson, which will tell the children how Thanks to the MTS volunteers, already in Preservation of Wildlife and Cultural Assets (FPWC, http://www.fpwc.org/). The Foundation to observe nature and how state-of-the-art 2019, the first students of the eco-lessons operates at the junction of wildlife protection, environmental education and sustainable mobile technologies can make the journey will be pupils of sponsored children’s social development. even more interesting and informative. institutions and pupils of the junior and mid- Interactive tasks will move participants dle classes in educational institutions of 20 One of the joint projects of the Foundation and along with Econeshka outside and will show regions of Russia. VivaCell-MTS is the project “Alternative Energy” aimed at protection of the environment. The project is implemented in remote villages of Armenia and provides for installation of solar heating, water heating and light diode street lighting systems. Apart from the positive New technologies to protect forests against fires environmental effect, the project helps to reduce financial expenses of local communities: solar heat and water heaters reduce costs by 50–60%, PA6 Within the governmental program of Moscow and energy efficient lighting — by 80%. region “Ecology and Environment of Moscow Region” for 2017–2026, MTS provides sites for installation of In 2018 solar stations were created to charge electronic bicycles at the second forest video cameras on cellular towers and provides the data station of the Caucasus Wildlife Refuge (CWR) and in Urtsadzor village of Araratskiy transmission from video cameras by secured dedicated marz (province). Furthermore, solar water heating system was launched at the Olani food channels at speed of up to 4 Mbit/s. Due to high quality processing plant in Shagap village of Araratskiy marz (province). In kindergarten No. 2 video, the regional dispatch service may look out for fires online, analyze data and, if required, engage the “Ekiyat” in town of Noemberyan of Tavushskiy marz (province) and in the music school in necessary forces and equipment to extinguish fires. Berdavan village of Tavushskiy marz (province), solar water heaters are installed, which will This solution makes it possible to optimize costs for make it possible to provide for proper attendance of 100 children regardless of weather ground and air patrol of the area. conditions and to cut costs for heating by 40%.

Within the joint program “Community Development”, the internal irrigation network will 115 MTS base stations are engaged in the project. The be built in Gnishik village of Vayotsdzor region. This project will help to solve the issue of same video cameras are installed in Nizhniy Novgorod, Belgorod, Bryansk and Pskov. irrigation in two communities – Gnishik and Mozrov. The drip irrigation system will make it possible to treat fruit trees and develop grape vines.

122 123 MTS FOR SOCIETY | Compliance and culture of good faith behavior 2018 MTS Group Sustainable Development Report

Compliance and culture During the year, the Compliance and business Unified Compliance System ethics section on the employees’ portal was of good faith behavior 103-2, 103-3 updated and a special compliance application For the uniform and effective management was created for smartphones, which forms of various compliance risks, MTS actively an accessible information environment at the develops a unified compliance system. MTS Company. Throughout the year, newsletters were strives to be an example of transparent and employees. All employees shall be liable for sent regularly to employees about compliance honest business for all stakeholders in all compliance with the Code and are personally programs. jurisdictions in which it operates. We value our business reputation responsible for their own actions. and corporate culture, which In addition to the traditional “tone from the top” In building the were built up over many years. In 2018 the new version of the Code has from the top management, in 2018 the Company By launching advanced services, taken effect. The general trend of document began to actively develop the “tone in the compliance system, working on current and new changes was intended to simplify the wording middle” - demonstration of a personal example for simplicity of its understanding by all of good faith behavior by middle management. we rely on applicable projects, we act exclusively employees of MTS and third parties. New The regional development directors and the legislation, regulatory within the framework of sections have been were added to the Code: directors of the branches personally addressed recommendations, industry the applicable legislation, in Role of managers, Interacting with partners the employees on compliance, reminded of accordance with the principles and suppliers, Protection of intellectual the importance of compliance training and specifics and best practices of good faith in doing business property. All other sections have been refined conducted activities in the regions. The program in the field of compliance. and the high standards of and updated. of compliance representatives was further business ethics and professional developed. As of the end of 2018, 19 volunteer conduct. You can get acquainted with the text employees from various business functions Since 2016, the Company has been operating of the Code and the video Compliance which organized consulting and training of a Compliance Committee under the President Aleksey Kornya, and Business Ethics on the official employees, actively participated in the projects of MTS, which consists of the President President of MTS PJSC website of MTS in section About MTS/ of the Compliance Department. Two compliance himself and the heads of direct subordination. MTS at a glance/ Compliance and representatives became full-time compliance The Director of the Compliance Department business ethics: http://ir.mts.ru/about- managers in the Company and MTS subsidiary. is the Chairman of the Committee. The mts/mts-at-a-glance/compliance- Committee was established with the aim and-business-ethics/default.aspx To maintain an atmosphere of openness and of making decisions on the creation and trust, the Company operates the “Single implementation of compliance programs, Hotline”, which allows among others to send which make up a single compliance system. Development of Culture of Good Faith anonymously reports of compliance violations. The main tasks of the Committee are to carry Behavior out the risk compliance management policy For more information on the Single and suggest ways of developing MTS Group in Maintaining a culture of good faith behavior Hotline, see section “Human Rights in this area. Six meetings of the Committee were Code of Business Conduct and Ethics is a long-term task, which is an integral part the Workplace”. held in 2018. of the compliance strategy of MTS Group. 102-16 The Code of Business Conduct and We form and advocate internal moral and Ethics (hereinafter referred to as the Code) ethical principles among the employees of the is a fundamental document that contains key Company, so that consciousness becomes a Days of Ethics and Compliance principles of MTS business conduct. universal internal safeguard in making business decisions. For the fourth year on October 23, the The motto of the days of ethics and compli- The Code contains the sections “MTS and Company celebrates the corporate Day ance 2018: Compliance is a good habit! Employees”, “MTS and Customers”, “MTS and Through information and training, the of Ethics and Compliance. Society”, “MTS and Laws”, “Communicating and Company contributes to raising the level In addition to the federal (main) program, reporting Code violations”, which establish the of corporate culture, awareness of ethical In 2018, the events dedicated to the regional events and competitions were Company’s responsibility to all stakeholders business. occasion lasted for four days. On October organized in the branches. More than 1,200 and the public. It also contains information 23, all MTS employees received a letter with employees took part in trainings, work- about all compliance programs of the MTS In 2018, we continued our full-time and an address of the Compliance Department shops, quizzes and creativity competitions. Director on the culture of good faith 45 employees won the competitions and unified compliance system. online training program for our employees behavior. were awarded with books and diaries with the and members of the governing bodies on the compliance logo. The Code applies to members of the Board of principles and standards of doing business Directors, management and other Company in accordance with applicable legislation.

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MTS COMPLIANCE PROGRAMS In February 2018, MTS successfully passed the certification audit and received the Certificate of the Unified Compliance System’s compliance with standards ISO37001:2016 and ISO19600:2014.

In December 2018, MTS Unified Compliance System certified its compliance with the above- Personal Data Anti-Corruption stated international standards in the course of the first supervisory audit. Inside Compliance Processing Compliance Organization

the plans to improve and develop the control environment for 2019 were adopted. Our company was one of the first Antimonopoly Labor Protection in Russia to introduce the best The Company has received new recommendations Compliance Management System international practices in the to improve the system, and the results of that Counteraction field of compliance management. work will be presented by MTS during the second of the Laundering International certification Supervisory Audit in late 2019 that completes the testing cycle of the Unified Compliance System’s of the Proceeds of Crime according to ISO standards once conformity with ISO standards. The Certificate and the Financing again confirmed the leadership of of Terrorism of Compliance is valid until 2020 and provides for Observance MTS in the implementation of anti- annual supervisory audits. of Human Rights Ecology corruption policy in the Russian at the Workplace corporate sector, as well as our commitment to the principles of fair business and compliance with business ethics. This is how The introduction of approaches we demonstrate our high level of to risk compliance management Coordinating the implementation and operation corporate culture to customers, in MTS based on the international of the Unified Compliance System is entrusted Detailed information on each business partners, investors and standards corresponds to the to MTS Compliance Department. compliance program is presented in the regulators and contribute to the leadership spirit of our Company. 2018 MTS PJSC Annual Report, section improvement of the business Compliance areas indicated above are “Compliance and Culture of Good Faith The value of an effective environment in the country. supervised by the relevant functional units, each Behavior”. compliance system for the of which implements its compliance program Company is in development of Yuliya Romashkina, and risk minimization system. a secure legal environment to Director of MTS PJSC achieve its business goals. Compliance Department Confirmation by international experts of conformity of our Unified Compliance System Audit Cycle of Conformity with the Company’s Unified Compliance System with ISO 19600:2014 and ISO As a result of the certification audit, the with the ISO standards is an 37001:2016 Standards Company received recommendations for important milestone and an improving the system, which included the appraisal of the high development MTS Unified Compliance System developed mainly as a result of completion of the project of in-depth risk level of our Compliance System. the supervisory audit of conformity of the compliance programs compliance assessment at the level of business Hence, MTS will continue further with international standards ISO 19600:2014 Compliance processes by six compliance programs, for development of the environment Management Systems and ISO 37001:2016 Anti-Corruption which such risk assessment has not been and will remain the leader and the Compliance Management Systems. In 2017, MTS launched a conducted yet (in-depth risk assessment ambassador of the best practices compliance audit cycle comprised of the certification audit and under the antitrust compliance and anti- in this field. two subsequent supervisory audits. corruption compliance programs and business ethics was carried out earlier). The project was Aleksey Kornya, The certification of the Company was decided by the Certification successfully completed in 2018, the risk maps President of MTS PJSC Committee of the International Compliance Association (ICA). for the system’s programs were developed, and

126 127 MTS FOR EMPLOYEES realization.” programs, create platformsfor the social working conditions, improveeducational care of our employees—weimprove “As aresponsibleemployer, we take Human Resources, MTSPJSC Member of the ManagementBoard, Vice President, Maria Golyandrina, CUAINLHAT AEY....163 OCCUPATIONAL HEALTH &SAFETY...... 159 GUARANTEES ...... MOTIVATIONSOCIAL AND RECRUITMENT ANDADAPTATION...... 151 DEVELOPMENT 145 TRAINING AND ...... HUMAN RIGHTS AT 143 THE WORKPLACE .... 137 CORPORATE CULTURE...... 134 PERSONNEL...... STRUCTURE 130 HR POLICY ...... 129 MTS FOR EMPLOYEES | HR Policy 2018 MTS Group Sustainable Development Report

up. These activities are implemented by the process even more exciting, the questionnaire MTS FOR EMPLOYEES units during the next year. Systematic work on is conducted like a game. Behind the new form personnel involvement allows MTS to maintain of survey lies a very serious scientific basis, high interest in work and loyalty of employees thanks to which we can get the most detailed at the highest level. and objective information about the personnel HR Policy involvement level of the Company. HR mission: Over the last years, MTS has demonstrated a steady growth in personnel involvement, which According to the results of the survey of At MTS, we create opportunities already reached the high-performance zone in MTS PJSC employees in 2018, the level of to unlock the potential of each 2015. Maintaining the dialog between heads and involvement amounts to 86 points, the level employee for a better future. employees, digitization of business processes, of loyalty to 72 points and Happy Index introduction of agile principles, reasonable (association of lots of loyal and involved Employees are a key asset of MTS. Our business construction of a C&B remuneration and employees) to 69 points. efficiency relies on professionalism, high compensation system and a corporate responsibility and good faith conduct of our structure allowed us to improve the main HR employees. We constantly strive to improve indicators. labor relations, create all conditions for safe work, promote career growth and social well- > 65 > 50% However, earlier participating in involvement being of our employees. thous. studies meant completing a big questionnaire, employees of MTS Group employees which took a long time. In 2018, we reformatted 102-7, 103-2, 103-3 Transparent and honest have more than 5 years the survey and simplified the survey process. relationship with employees form the basis of of experience Now everything is arranged simply and as MTS HR policy. Furthermore, MTS has developed comfortable as possible for participants. a benevolent corporate culture and created an Instead of long questionnaires, there are small atmosphere of gratitude, care and recognition Personnel Involvement online quests consisting of five questions to of the achievements of each member of our be completed once a week. To prevent the user friendly team. MTS implements a set of measures aimed at from being bored by monotone questions, their increasing involvement and reducing staff style changes all the time, and to make the turnover: we regularly monitor and analyze the MTS is a company where reasons for the resignations, and respectively employees can find take measures to improve the situation. The MTS wins in three categories at the HR-Brand Award 2018 opportunities for Company also develops and implements special adaptation programs for new MTS won in the category “Federation” for implementing WorkForce Management (WFM) system self-realization. employees, which have a positive impact on in its own retail network. WFM was developed by MTS and allows to create the most effective their relationship with the team, facilitate their schedule for employees on the basis of big data. MTS HR policy is implemented in full compliance introduction to the duties and help employees MTS also received an award for the volunteer campaign “Cultural Code”, which was recognized with the labor legislation and other regulations fulfill themselves at a professional and as the best socially oriented project in the category “Big Heart”. of MTS countries of presence. MTS employees personal level. Thanks to all these measures, earn fair remuneration and have a decent social MTS employees demonstrate a high degree of MTS victory in the category “Region” was won thanks to the street fountains programming protection. The Company has all necessary involvement and low turnover rates. competitions MTS Fountain Challenge, which were organized to attract students and graduates of the Krasnodar region into the IT internship program. conditions for safe labor. An important element of our HR policy consists in attracting highly For more information, see section qualified personnel, talented young people and “Recruitment and Adaptation”. mature specialists in MTS. Remote Workplaces All benefits, guarantees and compensations MTS annually conducts a survey on personnel (including those benefits, guarantees and involvement, in which employees anonymously In 2018, our Company offered the opportunity to work remotely: employees of MTS PJSC and compensations in addition to those provided for assess management, career prospects, MTS IT PJSC can combine remote work with work in the office. by the labor laws) are stipulated in various local learning and development opportunities, The project is aimed at optimizing work processes, saving resources and motivating employees. regulations of MTS PJSC. We strictly adhere to business processes as well as working The number of remote working days in a working week is determined by the employee in con- the requirements of applicable labor laws and conditions, and they express their wishes junction with his/her head and depends on the schedule of meetings that require his/her per- do our best to take into account the interests and suggestions to improve the work in the sonal presence. of staff and if work disputes arise, we are Company. Subsequently, a plan of activities committed to their fair and just resolution. aiming at increasing involvement is drawn

130 131 MTS FOR EMPLOYEES | HR Policy 2018 MTS Group Sustainable Development Report

MTS — a Company for All Ages MTS showed the most remarkable example of a social employer. The Company is not only ready to hire candidates pilot zones along with The project MTS — a Company for All Ages Employment Centers of various age groups, but also puts a lot of effort and is our social challenge in view of the demo- resources in order to change the stereotyped attitude of graphic decline in Russia observed since the vacancy closing 2017. According to the forecasts of Russian in 12 rate increased people to this problem. Federal Statistics Service, in the face of the regions current demographic pitfall, the number of personnel working age population in Russia will keep turnover by 4% The project is focused not only on the reducing until 2030. among 40+ on average Company, but also on the external employees decreased environment. It addresses the issues of Due to the current demographic The project is oriented at the 40+ audi- communication and service of elderly MTS situation in the country, the ence and actively studies the recruitment, customers. We noticed that 40+ employees business needs to look towards orientation and retention problems of the get on better with elderly customers. If we more mature candidates. The employees in this age category. by 3% combine these age audiences, we will focus project has already produced on average the satisfaction rate more on our customers, who require more results and we can observe that The project involves regional HR structures, of customers aged attentive communication from the Company a certain line in the estimation heads of many MTS divisions, and we are and want to get new digital knowledge in clear over 40 increased of an employee as a middle-age happy that more and more employees of the form. Company are getting involved. We do a lot the number of person is fading. Myths about to ensure that employees of different ages employees recruited The project MTS — a Company for All Ages elderly candidates disappear... through Employment to 17% are comfortable working together, so that includes video lessons created specifically Elena Seregina, generations have a chance to reveal them- Centers over a year to cover this topic, which are available to the Director of the Corporate selves from the best side. increased public in the MTS Mobile Academy: Social Responsibility • What does it mean for the Company to Department of MTS PJSC That is why variously aged MTS team is 1.5 times employ 40+ candidates? involved directly or indirectly in the project. • Evaluation of a 40+ candidate; The priority of the project is in recruitment, of managers working with variously aged employ- • Simulation of the interview with a 40+ classes How to Make a Proper CV and Mobile training and orientation of the middle-age ees, including those aimed at employment and candidate; Technologies for Life for urban residents and candidates for further work, as well as in the retention of middle-age specialists. In 2018, potential candidates. A master class Work use of knowledge about generation differ- more than 500 managers of the Company were • Telephone communication with a 40+ in a Multi-Age Team from MTS Corporate candidate. ences when interacting with subscribers and trained to work with middle-age candidates. University was organized for the employees customers. We aim to convey the realities of the Company, as well as an overview of and prospects of the labor market, to create The project MTS — a Company for All Ages The project received the greatest support mobile applications from MTS and prospects a positive attitude in the Company to vari- provides for better understanding and acceptance at MTS regional platforms, where employees of their development. The knowledge and skills ous age categories of employees. of the specifics of different generations. As a who have reached the age of social maturity acquired in the framework of these events will result, the interaction within the team becomes are in particular demand. In 2018, the project allow increasing the involvement of employees An important task solved within the frame- more productive and deep, while the efficiency of was presented in Ryazan, Nizhny Novgorod, of all ages and will contribute to the effective work of the project is developing the skills individual and collective work increases. Naberezhnye Chelny, Barnaul, and Ulyanovsk. implementation of MTS tasks. MTS employees conducted educational master Unique project advertising campaign

40+ employees of the retail chain and Call Centers of MTS became the models of the The social HR project “MTS: a company for all” won in the program “Best social projects of advertising campaign Searching for a Job? And we are Searching for You! Russia” in the category “Corporate projects”.

As a result, the number of responses to vacancies of retail specialists increased by 3—5% on average. The project was also among the finalists and received a diploma for the high quality of the Trainings Awards 2018 in the nomination “Territory of Inclusion”.

132 133 MTS FOR EMPLOYEES | Personnel structure 2018 MTS Group Sustainable Development Report

405-1

WORKING EXPERIENCE OF MTS GROUP1 PERSONNEL STRUCTURE OF MTS PJSC BY GENDER Personnel structure EMPLOYEES AT THE END OF 2018, % IN 2018, %

OVERALL HR COSTS OF MTS GROUP, 19 RUB BLN 20.8 28 67.9 40.6 47.9 47.4

62.0 61.0 MTS supports a gender- and age-balanced 79.2 team structure. We are sure that this 59.4 17 52.1 52.6 approach allows the Company to ensure the stability of staff, to support a healthy corporate morale and to maintain and share 2016 2017 2018 professional experience. The ratio of women 24 Top Mid-level Junior Total for the to men in MTS Group is about 50/50 with 11 management management management Company and employees minor changes by subsidiaries and regions JSC and MGTS PJSC make up more than of presence. Employees of MTS PJSC, RTC 80% of all MTS Group employees.

<1 year 3–5 years >10 years Women Men 1–3 year 5–10 years 102-7, 102-8 TOTAL HEADCOUNT, PERS.1

2016 2017 2018

MTS Group 69,322 65,003 65,102 MTS PJSC STAFF STRUCTURE BY TYPE OF EMPLOYMENT IN 2018, PERS. MTS PJSC 28,910 27,886 27,083

RTC JSC 24,538 20,474 18,814 Employment contract Type of employment Staff members and freelancers MGTS PJSC 8,562 8,934 7,292 88 2,529 Other subsidiaries 7,312 7,709 11,912 3,182

NUMBER OF EMPLOYEES OF MTS GROUP2 IN 2018, PERS.

14,247 12,836 Men Women

9,910 8,905

24,554 26,995 27,083 4,560 2,732 1,595 1,678 1,898 969 1,202 1,038 1,379 375 501 639 369 269 Permanent contract Full time Staff members

Temporary contract Part time Freelancers MTS PJSC RTC JSC MGTS PJSC MTS IT Other VF Ukraine MTS Other PJSC “MTS Bank” subsi- PJSC Armenia foreign diaries PJSC subsi- in Russia diaries

1 Unless otherwise indicated, the numbers hereinafter given do not include employees working under civil and outsourcing contracts. 2 In Mobile TeleSystems JLLC (Belarus) the total number of employees at the end of 2018 amounted to 1,831, including 614 men and 1,217 women. 1 Excluding the experience of employees of MTS Bank PJSC and Mobile TeleSystems PJSC.

134 135 MTS FOR EMPLOYEES | Personnel structure 2018 MTS Group Sustainable Development Report

PERSONNEL STRUCTURE OF MTS PJSC BY AGE IN 2018, PERS. % Corporate culture <30 years 30–49 years >50 years Total

MF МF МF МF Corporate values are an integral part of issues on forums, and reading Zaprosto our corporate culture. They are extremely corporate magazine. The portal contains Top management 0 0 13 3 6 2 19 5 important for MTS, since they unite us all links to additional resources, namely as a team and guide the activities of the the remote training and testing system, Middle Management 7 3 353 142 80 25 440 170 Company. Our values help MTS achieve high performance management system, personal results and maintain market leadership. They accounts of employees, digital library, etc. Junior Managers 81 74 808 624 226 64 1,115 762 are not only the key to the prosperity and success of the entire company, but also to Specialists 3,623 4,182 7,656 6,991 1,394 726 12,673 11,899 the growth and development of each of us. Zaprosto Magazine Total 3,711 4,259 8,830 7,760 1,706 817 14,247 12,836 The world is changing, we are not standing still, and our values evolve with us. The magazine presents the most interesting and relevant information about what is going 401-1 artnership: know what makes us a team, on in the Company. The electronic version is P namely the ability to support and help each posted on the internal portal for employees, TOTAL NUMBER AND RATE OF EMPLOYEE TURNOVER IN MTS PJSC other. the printed version is distributed in the offices IN 2018 of the company throughout Russia, and the еfectiveness: strive to ensure that every PDF version of the magazine is added to Estep leads to the achievement of goals and <30 years 30–49 years >50 years RBC Electronic Library of Online Periodicals evaluate the work based on the results. (available to all employees of the Company on Number of Number of Number of mobile devices). Turnover Turnover Turnover esponsibility: ready to undertake dismissed dismissed dismissed R rate, % rate, % rate, % responsibility for the results of your actions. persons persons persons Nine issues of the journal were published in udacity: able to be the first to step forward 2018. In 2019, it is planned to launch a mobile Aand change something. МF МF МF МF МF МF version of the magazine for smartphones (that reativity: able to find non-standard will be introduced in the new application for 1,519 1,991 41 47 1,206 1,345 14 17 105 44 6 5 Csolutions and think out of the box. employees of My MTS). Оpenness: able to work in a team. Book Exchange TOTAL NUMBER AND RATE OF NEW EMPLOYEE HIRES IN MTS PJSC IN 2018 Internet Portal “A book should be read! By <30 years 30–49 years >50 years In 2018, the new corporate portal Pulse letting a book go, you bring it became the main information resource Number Rate Number Rate Number Rate to life!” is the Bookcrossing of hired of new hires, of hired of new hires, of hired of new hires, for employees. It hosts all Company news, persons % persons % persons % regulatory and reference documents, and slogan at MTS. search tools. The portal services include МF МF МF МF МF МF translating documents, ordering corporate In 2018, MTS launched the new bookcrossing vehicles, booking conference calls and movement, which consists in the exchange 1,429 1,595 38.5 37.5 1,087 996 12.3 12.8 66 28 3.9 3.4 meeting rooms, planning vacation and of books. For this purpose, bookshelves ordering documents, discussing relevant for bookcrossing have been installed in a number of offices of the Company. There, employees can bring books from home that they no longer need, and in exchange take what they have not read yet. Thus, we extend 28.8 the life of books and preserve the forests of thous. users our planet.

17

136 137 MTS FOR EMPLOYEES | Corporate culture 2018 MTS Group Sustainable Development Report

• 200+ business books in English; Spherum Intellectual Games MGTS Mobile Application “For Your Own” • 300+ books for IT-experts; In 2018, Spherum intellectual games were Today, the corporate portal is the usual The developers of the application took held for the second time. Spherum is a universal means of communication in the into account that not everyone can find • 80+ hybrid books (audio + text); mixture of the games What? Where? When?, company. But what if half of the employees time during business hours to tell the Own Game, Brain Ring, and Squizz. do not have a workstation equipped with a management about their concerns and • collections of articles from the publishing computer? In 2018, MGTS introduced the questions. Therefore, they included a CEO house Harvard Business Review. mobile application For Your Own, gauging the page on the application, where at any The project managed corporate life of the company. time you can leave information for the top Moreover, since November 2017, the electronic to unite the whole MTS management of the company. library of periodicals Public.ru is accessible to The application offers: all employees of the Company. RBC, System Group: it involves person- The high functionality and usability of Administrator, Forbes, Open DBMS Systems, nel from different divisions the portal made it a universal assistant • quick access to your profile; Kommersant, Expert, GEO, Psychologies, to everyone. Already now the application and regions, line staff and is used by all field employees who Law, Computerworld Russia and many other • communication with colleagues in one perform work at the client’s (installation business, IT, analytical, popular science editions managers. click; of equipment, assembly, installation). It are now accessible for free and on any device. has become the main tool not only for Monthly magazines and daily newspapers are • HR and financial documents online; colleagues who do not have access to a gathered in one place with a user-friendly desktop computer because of professional reading interface. The library is updated every • instant ordering of IT services, business specificities, but also for those who morning and the entire press gets into it at the cards, cleaning, booking of meeting work out of the office: at a meeting, on a same time that it goes on sale. In addition, the 319 rooms; business trip. electronic library corporate magazine Zaprosto teams is available in the electronic library. The plans include the introduction of a • tracking of the competition MGTS Person corporate messenger, polls and voting 2 of the Year; systems within the application, the opening thous. of the Corporate Learning Center section MTS Ambassadors • impact on business efficiency; with audio and video content: lectures, participants seminars, webinars will be available 103-2, 103-3 In September 2018, the Company • increase of personal capitalization, i.e. an anywhere. launched an incentive program for employees In 2018, almost two thousand employees of opportunity to make a proposal to MGTS who participate actively in corporate MTS PJSC, MTS IT, Ticketland, RTC, NVG and Idea; The corporate mobile application will events. Employees can be both participants other subsidiaries took part in the first stage become a platform for the implementation and organizers of the events and receive of the intellectual games. Competitions were • attractive offers and profitable of volunteer club and programs to adapt Ambassador’s points in different categories: conducted by HR staff and moderated by promotions from partners. both new employees and retirees to living intelligence, IT, creativity, volunteering, ecology, representatives of the Security Block. In all conditions outside the company. sports. At the end of the year, the points earned regions the game was held simultaneously, can be exchanged for souvenirs. and audio questions were recorded in advance by professional speakers to make In 2019, it is planned to increase the number of the game transparent and fair for all. 119 participants of MTS Ambassadors program to teams reached the second stage and met in Electronic Library and make it more convenient, so in 2018 we 15,000 employees. In addition, new activities will face-to-face matches in seven cities. This introduced to the attention of our employees a be included in the project. The scoring process time, the organizers prepared their own set TA2 For more than six years, the MTS Corporate new resource, namely the library Alpina Digital. will be fully automated. And the most active of questions for each region in order to avoid University makes it possible for the Company’s It includes a special mobile application, thanks ambassadors will be able to exchange points not information leakage. employees to use the electronic library. We to which reading books is even more convenient. only for souvenirs, but also for training try to expand the capabilities of the library It also has: In November, 24 teams gathered in Krasnaya . Polyana in Sochi to participate in the last • 1,800+ business books, more than 180 audio stage of the games. Two teams took part in versions; the final, where they had to provide not only correct, but also quick answers. As a result 15 900 • 400+ summary (brief books—for those who is 8.8 of a challenging battle the team from Pskov thous. thous. books saving their time); thous. employees exchanged their Colleagues of Oleg became the winner. active users downloaded points for souvenirs

138 139 MTS FOR EMPLOYEES | Corporate culture 2018 MTS Group Sustainable Development Report

Strong in Spirit Action (for intermediate level) and Profi (for advanced runners), so anyone could participate in MTSRUNNING regardless of their 403-6 The federal sports event Strong in Spirit 927 level of training. is aimed at promoting an active and healthy employees from lifestyle through the development of strength, In 2019, it is planned to increase the distance of the final race to 91 Russian cities endurance, flexibility and speed. The event 21 km, and the number of participants to 1,200 people. consists of three stages: training sessions, qualifications, on-the-spot stage. In 2018, the team stage of the competition was held in Clean-up Day in Otradnoye Adygea, it gathered the best 200 employees of the Company according to the results of the The annual Eco-Fest clean-up day was organized by remote selection. MEDSI in the sanatorium Otradnoye. Employees of Sistema JSFC and its subsidiaries, including MTS Group took part in the Eco-Fest.

MTSRunning The program of the day included:

403-6 The running project seeks to promote • voluntary work, including gardening, painting and a healthy lifestyle through the existing waste collection; MTSRUNNING community in the Company. In • creative master classes; 2018, the best 100 MTS runners from all over Russia took part in the 10-km run of Moscow • games; Marathon 2018. In order to enable every • outdoor yoga; employee from any region to participate in the general race, a distance running training • interactive children’s area where experienced course with video instructions was created. animators supervised children. The participants spent three months under the careful guidance of professional trainers who developed three plans specifically for this running project: Start (for beginners), The specificity of the virtual running club is that all training >30 plans are focused on pulse 2 trees zones, which each runner thous. counts for himself. We have employees >100 quite a lot of information 12 3 m of garbage content, both video (lessons, hectares of and 100 removed instructions) and text/ territory refined flowering plants planted graphic. No need to oppress and say what to do. Modern technologies allow to provide Sports Contests motivated people with all Every year Sistema JSFC organizes summer and The players of the football the necessary information. winter sports games among its subsidiaries. In and volleyball teams Everything must be voluntary summer, participants compete in the following and satisfying. disciplines: athletics, e-sports, darts, family relay, defending the honor football, volleyball. In winter, they compete in of MTS in tournaments Sergey Cherepanov, curling, ice fishing, skiing and hockey. curator of MTSRUNNING and competitions were running club 54 athletes of MTS Group took part in the rewarded at the sixth MTS summer sports contest and 26 athletes participated in the winter sports contest. Thanks Volunteer Awards Ceremony to the active involvement of our employees, MTS in the category Sports team took the 1st place in the general team rating in winter and the 3rd place in summer. Volunteering.

140 141 MTS FOR EMPLOYEES | Corporate culture 2018 MTS Group Sustainable Development Report

Mobile Pass in 2018. This service works with MTS SIM cards Human rights at the workplace and with NFC support, allowing to use your TA2 The new Mobile Pass service became smartphone as a pass to access the Company’s available for employees of the Moscow Region offices in Moscow.

103-2, 103-3 Respect for human rights plays • the MTS conference was held with the an important role in ensuring the sustainable practical solution of business cases development of the Company and other “Managing Sustainable Business Development: stakeholders. MTS fully shares the generally- Corporate Social Strategies” for MTS regional Coworking Space recognized global approach to respect for employees and employees of functional units human rights. participating in the implementation of CSR projects (including employee rights issues); MTS has several offices in Moscow, which are located The main and most significant event in quite far from each other. Now, if an employee works in 2018 was the self-assessment of the • the project of external risk assessment at the Company’s activities for compliance with business processes level was completed for one office and is invited to a meeting in the central office, the recommendations of ISO 26000:2010 the “Human Rights at the Workplace” program. he does not need to spend 3–4 hours of his/her working “Guidance on social responsibility.” Key time to travel from office to office, but can just leave the conclusions were drawn that the Company’s During the reporting period, 47 messaged were activities in the field of human rights were received on the Single Hotline on the topic meeting room, and make himself/herself comfortable at consistent with the recommendations of of respecting the rights of employees at the one of the mobile workplaces nearby. the standard, and compared with the results workplace - all appeals were settled in the of 2015 assessment, there were positive regular course of business. changes in terms of due diligence and avoiding The speed of innovation introduction and and four smaller ones are transformed complicity. Areas for development were also In 2019, it is planned to develop a fundamental creation of new solutions is crucial for into a single room equipped with a video identified, an action plan for which will be corporate document “Principles of Observance MTS. In order to accelerate the pace and monitor for the speeches in front of the formulated in 2019. of Human Rights” and a training course on human improve the efficiency, in 2018 we offered audience of up to 44 listeners. For the rights aspects applicable to the Company’s our employees to work in a new workspace convenience of its users, the coworking In 2018, the Company continued developing activities. format being an internal coworking space is equipped with three mobile and promoting the “Human Rights at the space, where the main rules of modern video-conference stations (they can Workplace” program. The new version of CSR product development are meaningfully be moved to a convenient place for the Policy was approved with the annex “Human Single Hotline reflected through the very layout of the session). Rights” mandatory for review by all MTS working area: flexibility, speed, interaction, employees. The CSR section was finalized, 102-17 The Company operates a Single Hotline simplicity and neatness. There is also a possibility to book including human rights issues, in the MTS Code to which employees can direct their questions a workplace for the whole day: the of Business Conduct of the Supplier. and receive detailed answers from relevant A coworking space was opened in the attic coworking space is equipped with VDI departments. room on the 6th–7th floors of the Moscow work places and places to work with a As of the end of 2018: office on 1/3 Vorontsovskaya Str. It is easily laptop with the possibility to connect The Single Hotline of MTS Group includes: transformed depending on the current to the corporate network via the patch • amendments were made to regulations • quality line [email protected]; requests of its visitors, and also allows cord. There are separate tables for group on provision of additional paid days off to significantly saving the working time. (project) work, zones for communication employees who adopted a child or took • internal control and audit unit line in mini-groups (2–4 people), a silence area, custody/patronage over a child. [email protected]; Individual workplaces and meeting rooms where one can be isolated from visitors, with a simultaneous capacity of up to 130 and places in a “soft area”, which can be • procurement management unit (BUZ) line For more information see section [email protected]; people are organized on the area of 760 used without preliminary booking. “Motivation and Social Guarantees”; sq. The coworking space is open to all • HR hotline [email protected]; employees of MTS Group during working For guests of the coworking space there hours. is a dressing room, a coffee point with bar • an informational video “Human Rights at • Corporate Security and Regime Unit line tables and chairs, as well as the stock of the Workplace” was developed for MTS [email protected]; Eight meeting rooms are equipped for tea and coffee. employees https://www.youtube.com/ meetings, one of which is a transit room, watch?v=9Er0RToF3sY; • Hotlines of MTS PJSC subsidiaries.

142 143 MTS FOR EMPLOYEES | Human rights at the workplace 2018 MTS Group Sustainable Development Report

Employees have the opportunity to contact HR hotline Training and development the Single Hotline to solve issues related to compliance with the Code of Business The Company operates an HR hotline Conduct and Ethics and corporate [email protected]. This hotline receives and conflicts, receive assistance in cases when processes messages related to working The Company’s corporate values, strategic an employees has suffered from abuse conditions, payment of salaries, goals, challenges of HR management and of office, as well as report violations of bonuses, registration of benefits and requirements for professional knowledge and the requirements of the Anti-Corruption social package, intangible motivation, skills of employees lie at the heart of the MTS Legislation Compliance Policy or the Conflict annual performance evaluation, as well training system. of Interest Management Policy at MTS as issues related to recruitment, staff 103-2, 103-3 Continuous education is a PJSC. When contacting the Single Hotline, transfer and rotation, participation characteristic feature of the information In 2018, MTS PJSC expenditures for corporate employees may choose to not specify their in corporate campaigns and events, society, a key trend and the most effective training of employees amounted to RUB 146.2 data (e-mail) for feedback. Claimants benefit implementation of training programs, development approach. In the digital reality mln. from the Company’s protection against all recognition and development of talents. in which MTS operates, this is no longer a forms of persecution or discrimination. dream, but a necessity. Continuous education In 2018, the HR hotline received 125 EXPENSES FOR MTS PJSC EMPLOYEES’ creates and strengthens the ability of a messages. All messages were reviewed CORPORATE TRAINING IN 2018 BY CATEGORY In 2018, the Corporate Security and Regime person to adapt to the transformations in and inspected, and their authors OF PERSONNEL, RUB MLN Unit line was added to the Single Hotline and received feedback. business, economy and culture. Today, all MTS considers the following messages: employees actively extend their knowledge and develop their key competencies in 1.1 • damage to economic security, possible risks various areas of professional and personal and threats to the MTS economic security, development. 30.7 material or image damage to MTS PJSC as a • shortcomings in ensuring the security of result of activities of counterparties; communication facilities in the regions (including favorable conditions for committing • fraud using the MTS brand; thefts and acts of vandalism at cell sites); NUMBER OF TRAINING DAYS PER EMPLOYEE OF MTS PJSC • threats to or problems with MTS information • threats to the personal safety of employees 17.8 96.6 security; while on duty. 2.7

2 REGISTERED MESSAGES ON THE SINGLE HOTLINE LINES OF MTS GROUP 1.2 2016 2017 2018 Top managers Internal control and audit unit line 133 127 101 Mid-level managers >1.7

Quality line 99 210 199 Junior managers thous. training 2016 2017 2018 Specialists programs Procurement management unit line 369 334 292

HR hotline 135 167 125 GOALS OF PERSONNEL TRAINING AND QUALIFICATION UPGRADE Corporate security and regime unit line - - 12

RTC JSC 345 477 400

MGTS PJSC 35 41 55 Ensuring comprehensive NVision Group JSC 15 34 44 development of employees on Professional development key competencies MTS Armenia CJSC 12 41 26

Integration training for new Mobile TeleSystems PJSC 2 21 28 Training of personnel reserve and employees and when implementing successors of key positions VF Ukraine PrJSC 113 73 126 a new regulatory document/process

144 145 MTS FOR EMPLOYEES | Training and development 2018 MTS Group Sustainable Development Report

TRAINING EXPENSES OF MTS PJSC IN 2018, RUB. NUMBER OF HOURS SPENT ON TRAINING EMPLOYEES OF MTS PJSC IN 2018, BY TYPE OF TRAINING

Internal resources External providers Mandatory training Total Internal of them distance External of them distance Mandatory Total resources learning providers learning training 0 139,557,449 6,647,617 146,205,067 110,705 2,251 124,392 3,309 45,948 281,045

NUMBER OF EMPLOYEES TRAINED, PERS./COURSES

Training type 2016 2017 2018 205-2 NUMBER OF MTS PJSC EMPLOYEES TRAINED IN ANTI-CORRUPTION PROCEDURES IN 2018, PERS.

MTS PJSC Top managers Mid-level managers Junior Managers Specialists Total

Internal (full-time) training 31,068 41,695 29,246 1 158 581 12,099 12,839

External (full-time) training 8,774 10,697 14,732

Distance training 168,408 187,912 164,418

RTC JSC 404-3 Company employees participate In the course catalog employees have the annually in the procedure of performance opportunity to get acquainted with MTS Internal (full-time) training n/a 22,086 25,600 assessment, which includes both the competences. The name of each of them is a External (full-time) training n/a 123 80 assessment of key performance indicators direct link to a whole list of courses targeting and the competence development level. the development of the desired skill. After Distance training n/a 48,256 53,068 During the evaluation process managers reading the course description, one can sign MGTS PJSC provide employees with an extended feedback up for a full-time training, download the based on the annual performance. Besides, necessary literature or visit the online remote Internal (full-time) training 3,258 2,429 1,885 based on the evaluation results a plan of course page. development measures is established, and key External (full-time) training 3,076 3,750 3,494 employees included in the MTS PJSC talent The Corporate University Distance training 3,614 4,240 3,601 management program are designated. In 2018, 97% of MTS employees passed the official won the All-Russian distance performance assessment. learning competition NUMBER OF MTS PJSC EMPLOYEES WHO UNDERWENT FULL-TIME TRAINING IN 2018 and e-courses among MTS Corporate University Mid-level professionals in distance Training type Top managers Junior Managers Specialists Total managers The Company has a Corporate University learning BEST E-LEARNING that sets training standards and coordinates External 20 311 740 3,870 4,941 RUSSIA 2018. personnel training and development processes. The goals of the Corporate Internal 0 129 972 8,690 9,791 University also include building training systems for various functional divisions of Virtual Academy the Company. 404-1 NUMBER OF HOURS SPENT ON TRAINING IN 2018, BY CATEGORY OF MTS PJSC EMPLOYEES TA2 The Virtual Academy has been operating MTS Corporate University offers mandatory and actively developing in the Company since Mid-level and optional training for the employees, as 2016. It creates opportunities to establish a Top managers Junior Managers Specialists Total managers well as materials for optional study aiming self-learning organization, a single learning at professional and personal development. environment, and a common entry point for all Total 998 11,214 34,912 233,921 281,045 Depending on the goals and objectives, processes related to learning: from planning various forms and methods of training can conferences to viewing a new video course. Per employee 41.6 18.4 18.6 9.5 10.3 be selected. Mixed training significantly In the system employees can find more than improves the quality of training and the level 2,000 online courses on a variety of topics of staff competence. ranging from negotiation to Excel.

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In 2018, 78% of MTS PJSC employees under- took part in the final, where they were assessed training and with the assistance of the best took distance learning, and 36% of users com- by the top management of the Company. The market experts: pleted four or more courses. In total, 250,000 team running the RunGo project was invited to courses were completed at the Virtual Academy participate and continued to develop its product • learned new formats of distance learning; in 2018. within the framework of MTS StartUp Hub. • created their own online course; According to a satisfaction survey on the For more information about the corporate portal, 87% of respondents would accelerator, see section “Developing • have made a landing; recommend training at the Virtual Academy to Innovative Services”. colleagues. • learned to formulate an interesting offer of School of Business Coaches their program for participants; Academy of Leadership In 2018, MTS Corporate University launched • improved their coach competence: personal In 2018, the Academy of Leadership allowed the development program of the Company’s brand, presentation skills, work with the best projects to get into the accelerator of coaches — School of Business Coaches. Coach is complicated participants and learned many MTS Innovation Center, offering the possibility a profession that imposes an obligation to follow coaching secrets. of being implemented and launched on the the trend. Today, knowledge of the trends and market. 250 employees of MTS and subsidiaries the use of advanced training tools is an integral Coaches and employees involved in the training from different parts of Russia took part in the part of work of any professional coach. When process from MTS PJSC, MGTS PJSC, RTC program and united in 30 project teams. The a new technology or approach appears in the JSC and foreign subsidiaries participated in the program included remote studying how to information field of employees, the coach should program. develop corporate startup projects and putting not just be aware, but should already work out their knowledge to use on real projects. 11 teams the material in detail, understand the risks and The program includes the most advanced trends try everything himself, to reach the audience as and tools. 25 webinars with the best external an expert. and internal speakers were arranged for the participants. At the end of the project, the Every year of the program is a new development participants defended their thesis and attended Online Programs vector. 2018 was held under the name BEING the graduation party, where they met the best AWARE: coaches were emerged into online of the best. In 2018, in order to implement the new Big Data and Data Analysis MTS strategy, we began to actively train employees in the most popular digital In spring, we held the program professions. Fundamentals of Machine Learning with the help of specialists from the Big Data We Master the Digital Product! division. We have prepared a unique, RTC Distance Learning Platform unparalleled program for analysts too: Data In February, the digital product Driven: How to Make Decisions Based on Taking into account the constant updating capacity management program Product Valley was Data, which was attended by more than 600 of products and processes, the Retail launched. Employees learned from external employees. The aim of the program was to Network of MTS relied on the development and internal experts about the basics of let everyone know what data the Company of distance learning. Today, RTC (Russian 140 product management: user survey, MVP has, where to find it and how to use it. Data- Telephony Company Group) distance 10 courses product metrics, flexible management based solutions are more accurate and learning is even closer to users — the techniques and interface design. A separate profitable for the Company than intuitive platform is available at any time from any thous. users module of Interface Design was conducted solutions indeed. device: from your mobile phone, personal jointly with the laboratory created in MTS and desktop computer. service has improved. This proves the Design. In May, the Product fest-marathon Summer Marketing School positive dynamics of NPS grades and the of webinars on the Company’s products After the modernization of distance Number of Claims per BO. took place with the participation of internal In summer, employees studied digital learning in 2017, the share of retail product owners. marketing trends: they listened to webinars network employees with specialized In 2018, the key goal of RTC Training by marketing gurus from various companies knowledge increased from 30 to 70%. Center was to develop sales and and solved real case tests online. Accordingly, the quality of customer management skills.

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Joint project with Skolkovo The training program comprised five Recruitment and Adaptation Business School modules that included academic and project work. Attendees studied strategies In May of 2018, the MTS Corporate of company management under digital University, jointly with the Moscow conditions, design thinking, effective Recruitment of Young Professionals Distinguishing features of the Management School of Skolkovo, launched communications, leadership psychology, future trainee: a pro-active the second flow of the corporate training and also nuances of innovation-project Internships program for top managers of MTS Group. and corporate start-up management with attitude and stretch targets. Its 61 participants include directors of account of financial risks. Invited experts, For two years, one of the main focuses of the The Company needs not just key departments, regions and subsidiaries opinion leaders and leading professors of Human Resources Management Unit strategy focused on the achievement of significant the Skolkovo Business School spoke to has been in attracting the best students good professionals, but people business results and professional and program participants. and young professionals through internship with a technology-based personal growth inside the Company. programs: The result of training was defense of mindset, who react quickly to The training program was aimed at the projects developed in process of training, • MTS Flash — for business areas (2 months); change, are flexible and can training of a new type leaders ready which were evaluated by the jury headed to develop corporate culture, business by the President of MTS PJSC. The winner • MTS /start — for IT (3 months). adapt to any change. processes and strategic planning on was the team that developed the SmartPet the basis of a digital approach under platform, which makes it possible to In the course of the project, the need for conditions of high economic turbulence and make life of pet owners easier and enable trainees in the Company has increased uncertainty, make the necessary changes at them to take quality care of their animal threefold. In 2018, we accepted 400 people the Company. companions. for internships with one third then having been employed with the Company. This is almost twice as much as in 2017. And the program When I applied for an internship, geography expanded over a year from 23 to 50 I assumed that I would be doing regions. uninteresting and routine tasks MTS Corporate University LLC daily. It was far from reality! MTS internship project entered the TOP 5 From the very first days my in the nomination Human Resources Previously, MTS Corporate University was 2018 the license for educational activities supervisor started to immerse Management and was included in the exclusively an internal project. However, was obtained. Key organizational tasks me in the specificities of the collection of best practices of Russian Company’s activities in the as we have accumulated a huge amount were quickly solved: a chat-bot of events companies of the People Investor of expertise in the field of training and was created, the online cash register competition implemented by the Managers field of information technology HR potential development, we realized was connected to accept payments, the Association. development strategy. that we are ready to release our training organizational structure was formed, and Challenging tasks motivated programs in in-person and online the product team was assembled. me. I learned more and more formats to the external market. In the As part of the MTS Flash internship program, new things every day and kept beginning of 2018, we already had our first We launched our first online courses our branches across the country hosted developing my own competencies customers: large corporations and state From In-Person to Online Trainings university students or recent graduates. An constantly. After the internship, universities. and Infographics, as well as corporate important specifics of the internship is that I was offered to stay in the trainings for large companies. Income of its goal is not just to take trainees in order to Company as a full-time employee, In November 2017 MTS registered MTS MTS Corporate University LLC for 2018 make them do dull work. They are accepted with more responsibilities. Now Corporate University LLC, and in May amounted to RUB 4.17 mln. to fulfill certain ambitious tasks in almost all areas of the Company’s business, including not only am I involved in strategy, PR, finance, marketing, B2B, economic but I also help to develop the security, technical divisions and information Center of Agile Expertise of MTS Customers of MTS Corporate University include: MiG, Gazpromneft, BESK, technologies. Gazprombank, SIBUR, Nissan, Credit Europe Bank JSC, NSPK JSC, Bashkir Maksim Gubarev, Distribution Power Grids LLC, Cloud Retail Plus LLC, etc. Senior Analyst, Center for Strategic Initiatives

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Invitation to participate in the internship and information technologies imply a different Interaction with Universities In accordance with the signed agreement, program can be found at our partner approach to the selection and training of candi- it is planned to hold regular workshops and Changellenge or on the MTS pages on social dates. The percentage of IT trainees becoming By the end of 2018, we increased the number seminars, talk with the Company’s experts and networks. We do not refer to career sites: We part of the staff is much higher than in the busi- of IT specialists by 40%. In the future, this support business laboratories working in the may not have a vacancy, but there is a target ness direction. This is due to the current stage of figure will only go up with the growing tasks field of IT and communications. MTS will provide request for a certain result to be achieved by the development of the Company: New projects are for new advanced products. However, the labor students with the opportunity to get acquainted end of the internship. In our internship programs, constantly launched and vacancies opened for market today is not able to meet the need for with the current equipment and mechanisms of the experience of our employees is combined IT. Active digitalization of operator services also specialists with the right qualifications, so we technical services of the telecommunications with fresh ideas of the interns. contributed to the launch of MTS /start. will train high-class professionals to address industry, including the whole line of 2G, 3G, current and future business challenges. LTE-Advanced, transport radio relay and optical The innovation of the project in 2018 was the allo- Not only senior students and graduates can network equipment, meteorological and power cation of internships for future IT specialists into follow an internship, but also people who study in We need employees able to work with the equipment, Massive MIMO and 5G-ready a separate block of MTS /start. The experience second and third years. Participants of Telecom latest telecommunication technologies, technologies. of the last year showed that business direction Ideas can also enter MTS /start. as well as with clouds, big data, and the Internet of Things. Cooperation with leading The best third- and fourth-year students and specialized universities will give us the will have the possibility to complete a paid opportunity to get highly qualified young internship or pre-degree internship at the specialists and have a positive impact on the Company. This will allow them to study the development of the market in general. work of the largest player of the Russian Fountain Challenge in Krasnodar telecommunications market from the inside Strategic Partnership with MTUCI and not only receive technical knowledge, but In 2018, with a view to transform the MTS brand and attract young specialists to the also understand real business processes, and Company, the first fountain programming contests in Russia were held in Krasnodar. In 2018, MTS and Moscow Technical University acquire teamwork and time management skills Within 12 hours with the help of MTS experts, students coded and programmed a of Communications and Informatics (MTUCI) that will help them adapt quickly to the business fountain for their favorite song. began to cooperate in training students in key environment. areas for the telecommunications industry: As a result, the five best works were launched on the Aurora fountain with music Radio and Television, Communication Networks Cooperation with MAI ranging from La La Land to Beethoven. About 2 thousand spectators from all over the and Systems, Information Technologies. city came to see this for themselves. Two winning students from Kuban State University Thanks to the cooperation between MTS and received a prize of RUB 100,000 and a free pass for an internship. Moscow Aviation Institute (MAI), educational programs will be adapted to real business challenges related to digital products creation, analytics and big data management. Key areas of the cooperation: Designing High-load Cooperation with market leaders Internet Services, Machine Learning and Big Data Management. is an opportunity for us to raise MTS in Slippers the value of our graduates on a MAI students will have the opportunity to highly competitive labor market. complete a paid internship at MTS. Over In June 2018, informal meetings of students continued to talk with speakers even at the MTS is among the top companies the course of two years, masters under the and employees were held at MTS offices end of the speeches. where our students would like to guidance of leading developers, team leaders in Innopolis, Moscow, St. Petersburg and work, and we are grateful to the and architects of the Company will build Foris Krasnodar. The speakers talked about what The informal setting, board games, Company for its willingness to Business Framework, which is a cloud-based cases they solve in their work and what they delicious food and a pair of red slippers for cooperate. This allows us to adapt solution to rapidly launch new products on have to deal with every day; they shared everyone created a friendly atmosphere. the learning process to the needs the market, design architectures of high-load stories and answered questions about The guys were imbued with the spirit of of the market and keep pace with systems, build NoSQL storages, and develop their products. HR managers presented the Company, where there is no place for the times. web interfaces and new MTS products. the internship program, and students were dress codes, formal modes of address and able to speak directly with future managers other intricacies. As a result, not only did we Sergey Erokhin, Graduates of the programs will be able to work and apply for an internship. The students receive a lot of positive emotions, but also as analysts in the field of Big Data, specialists Rector of MTUCI appreciated this approach and actively a good pool of potential trainees, many of in machine learning and artificial intelligence, participated in the discussion, and some whom became part of the Company or system analysts. The best graduates will be hired in MTS Group companies.

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Cooperation with USUE preparation of individual development Technology Initiative (NTI) on Augmented and In 2018, MTS experts held a series of programs, time management. Virtual Realities (AR/VR). On the basis of the master classes and lectures at FEFU, the In Yekaterinburg, the branch of MTS PJSC in first AR/VR program in Russia opened in FEFU main goal of which was to teach students the Sverdlovsk Region signed a cooperation Within the framework of the agreement, the in 2017, the undergraduates developed a virtual soft skills necessary for their development agreement with Ural State University of School of Analytical and Digital Marketing was MTS office at the hackathon Cybervostok. In and successful career. A series of special Economics (USUE) on the education and opened, which will enable students to acquire three days, students created an application lectures on telecommunication technologies professional training of students. practical skills in solving real business cases. prototype, which offers job seekers a virtual is planned in 2019 at the Project Activity tour simulating their future workplace and Center of FEFU. The branch’s management and USUE In addition, the agreement provides for functionality. developed a social adaptation program for joint participation in creative and charitable students in the form of summer traineeships events, creation of an unhindered environment and internships in MTS divisions such as IT, for students with health restrictions in the marketing, finance, sales, procurement and university. In October 2018 in Blagoveshchensk, the three- technical support. day Far Eastern hackathon AmurDigitalHack was Cooperation with FEFU held by MTS with the support of the Amur Region According to the agreement signed by Government at Amur State University. The best the parties, each trainee will be assigned MTS actively cooperates with universities projects received a ticket to the MTS business a mentor, who will introduce the future of the Primorsky Krai. MTS and Far Eastern accelerator. specialist into the world of real business, Federal University (FEFU) cooperate on the provide them with specialized literature and implementation of the Russian Technopark In the Magadan Region, MTS and Northeastern teach professional expertise. program, under which young scientists create State University signed a strategic partnership innovative scientific projects using digital agreement to improve the level of professional The program of social adaptation of students services. This will allow to form a stream of training of students and implement social will continue during the academic year projects fostering business acceleration and projects for students and teachers. In as well. MTS management and leading work out ways, together with the university, to accordance with the agreement, MTS will provide specialists will meet with future specialists enter the markets of the Asia-Pacific region. students with the opportunity to study and in auditoriums, master classes and webinars. complete an internship with leading specialists HR specialists of MTS will hold trainings With FEFU, MTS joined the Consortium of of the Company. During the Young Professionals on the following topics: job interviews, the Center of Competence of the National regional championship (WorldSkills Russia), MTS held a special panel discussion on Digital Transformation at the university.

In Kamchatka, in partnership with Kamchatka MTS joined the consortium of the Center of Competence of NTI for Machine State University, MTS held an eSports Learning and Cognitive Technologies established at the St. Petersburg tournament for students on the occasion National Research University (ITMO). of World Information Day and International Information Protection Day.. Machine learning is one of the key technologies for MTS. MTS laboratory opening at ITMO will help to attract the best scientists to work on the Company’s objectives, as well as involve In 2018 in the Rostov Region, MTS concluded students in practical activities, get an additional resource to verify hypotheses and test new cooperation agreements with Southern Federal products. University and the North Caucasus branch of MTUCI, according to which the Company During the training, students will have the possibility to use the results of MTS analytics: for implemented an internship program and MTS example, data on technical shortcomings of a given service. As a result, the trainees work on experts held lectures for students. the solution and acquire knowledge, and MTS gets an improved service. MTS also implements lecture programs for key Scientific work of novice IT professionals is complemented by professorial expertise, which universities of Kirov, Kostroma and Yaroslavl. is not in the business. This approach aims at increasing the complexity of the Company’s products and its innovation.

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Adaptation of New Employees

For new employees, the Company implements an adaptation program. On the first day, new employees receive a welcome package, which is a compliment allowing them to feel the Company’s Social HR care from the very beginning of their work and providing a personal history in MTS. The Social HR project is focused on support and arranging actions aimed at attracting New MTS employees must take integration and adapting senior employees and young courses: professionals with disabilities, as well as at creating an accessible and comfortable • introduction to MTS is a basic training course environment for all staff categories. for new employees that gets them acquainted with the Company’s business principles, The Business Advisory Board on Disability, history, organizational and corporate culture; that unites more than 40 major companies, has been operating in Russia for ten years • distance course MTS Development: from already. Its employs people with disabilities Data to Digital Transformation provides and facilitates the development of their new employees with information about MTS professional skills. MTS is a member of the digital transformation, its implications and Board since 2013. conditions, and answers to the questions: why does the Company start to move in a new The Company’s policy guarantees that direction and why does each employee need to candidates with disabilities, if they fully meet take part in its digitalization. the relevant requirements, will be recruited.

• video course Personal Efficiency in the Digital Era.

For more information about new employees’ adaptation, see the 2017 MTS Group 382 Sustainable Development Report, p. 99. people with disabilities work in MTS Group

Buddy Program

The Buddy program was implemented at issue (familiarity with the processes, MTS in 2018. Employees take part in it, structure, products and services). A public whom we call Buddies. They are always on the corporate portal is the platform for ready to help new colleagues in the first discussion and development of the program months of work in the Company and and its participants. Each new employee throughout the whole period of adaptation can find a buddy in their office or contact or suggest who to apply to for a particular a co-worker from another region.

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In the reporting period, MTS traditionally • Cinema Without Barriers, an international Motivation and Social Guarantees supported a series of major social events in this film festival about the life of people with area: disabilities. This festival is unique in our country as it does not just touch upon • Path to Career, a competition for young the problems or successes of people with A competitive payroll system consisting part and a different frequency of payments. applicants with disabilities; disabilities, but also shows real stories of of fixed and variable parts is introduced in For employees of the Company who are overcoming barriers inside and around us. the Company. A compensation and benefit responsible for direct sales, there is a • charitable beach volleyball tournament in package, meeting the requirements existing on commission scheme of bonuses (direct interest support of inclusive sports. MTS corporate In 2019, it is planned to further develop the the labor market, is provided to the Company’s from sales). team in volleyball traditionally takes part in Social HR direction: expand internship, practice employees. the competition with other business teams and recruitment opportunities for persons In 2018, an average salary in MTS PJSC, (Stream, Philips, DPD, Nestle, KPMG and with disabilities and elderly people; involve the MTS personnel remuneration systems including salary and bonuses, amounted to Kaspersky). This year our athletes took the Company’s employees in social events aimed are based on salary competitiveness and RUB 75 thousand. third place. All funds collected during the at socializing the vulnerable groups of society. remuneration fairness principles. The Company tournament are allocated to the organization In addition, it is expected to audit workplaces, uses an integrated approach to the system In 2018, labor costs for MTS Group amounted and development of sports programs for offices of RTC JSC and the Company website’s of staff motivation and applies the best to RUB 63.1 bln. children with disabilities; usability for disabled people. international practices of remuneration that ensure objective evaluation of the performance of employees and MTS as a whole and allows PAYROLL EXPENSES STRUCTURE IN MTS GROUP, to motivate the employees, thus increasing RUB BLN their efficiency. The principles of payroll competitiveness and fair reward underlie every Path to Career system of MTS personnel remuneration. 12.6 11.7 12.1

102-12 14.3 The Path to Career contest for Perspektiva and employees of leading Financial incentives 13.9 14.7 people with disabilities focuses on both Russian and international companies share graduates and last-year students. The with participants the secrets of successful The amount of a fixed part of the remuneration objectives are professional realization job seeking, a perfect interview and a good (official salary) is defined considering salary 33.9 33.6 36.2 and successful employment of proactive presentation. ranges established for each position category and talented specialists with disabilities (grade) based on labor market analysis in the in leading Russian and international During the final, the contestants participate host region and the Company’s Positioning companies. in a business game, take individual Policy in respect of the labor payment market. 2016 2017 2018 interviews to demonstrate all the acquired To take part in the contest, applicants knowledge and skills to representatives The variable premium part includes bonus send their essays to the organizers on the of large businesses and the jury. Apart payment according to clear and transparent Expenses for insurance payments topic Me and My Future Work. Authors of from valuable gifts, winners receive an principles of establishing the target bonus sizes the most interesting works are invited for employment or internship offer in a large and calculating its actual values based on key Premiums and remunerations further participation in the competition. company. performance indicators and individual tasks For the next two months, applicants stated in evaluation forms of each employee. Wages assimilate the materials of the educational Employees of the Department of Corporate program. Specialists of the regional public Social Responsibility and the Department The ratio of variable and fixed parts of organization for people with disabilities of Attraction and Adaptation of MTS total income is balanced for each position Non-financial incentives PJSC traditionally attend finals of the in accordance with its potential impact on competition and conduct mock interviews business results. The stronger is the influence, We pay great attention to non-financial for applicants. If the contestant is ready the higher is the proportion of the variable incentives. An achievement recognition to complete an internship in the Company, component. system, functioning in MTS, stipulates 80% such an opportunity is always provided. implementation of incentive programs of The Company has a bonus system for various orientations. of the Path to Career In 2018, Moscow, Nizhny Novgorod and employees engaged in sales and customer contest’s finalists are Novosibirsk took part in the project, and in service, the basic principle of which is the Production programs are aimed at increasing successfully employed 2019 they will be joined by St. Petersburg, motivation to achieve a specific result. the labor productivity and the personal Kazan and Voronezh. A distinctive feature of the system is the efficiency of the Company’s employees. structure of income with a larger variable Every year, we select the best employees,

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managers and project teams. Successes and Based on the results of the year, the following disease, in the period of maternity leave, etc. In achievements of MTS employees are regularly categories are awarded: best executives and some cases, the Company pays the housing rent publicized in corporate print media and in the managers, best teams and cross-functional for employees and compensates the expenses news feed of the corporate portal. projects, best social projects. Recognition for relocation, thus supporting the desire of programs are accompanied with a wide media Social Guarantees employees to move and develop. Non-production programs are aimed at campaign and information sharing on employees’ strengthening the corporate culture and achievements in all MTS offices. Winners of the 103-2, 103-3, 401-2 The Company provides its 403-6 In addition to the above compensations increasing the involvement of employees. programs from different regions of Russia and employees with a broad compensations’ and and benefits, MTS employees have opportunities foreign subsidiaries are invited to Moscow to benefits’ package aimed at social protection for living a healthy life and going in for sports. A unified system of recognition and rewarding attend the awarding ceremony. of employees. We believe that enhanced All employees have an opportunity to participate the professional development of employees commitments are necessary to provide additional in the Health Days, bike rides and sports is operating in all MTS Group companies. In 2018, 391 MTS employees received institutional social protection measures for employees, competitions. For employees with a certain Existing Recognition Programs of MTS Group awards from the Ministry of Digital Development, allowing them to feel comfortable and confident length of service in the Company, we provide are intended to reveal both individual and Communications and Mass Communications of in any situation. MTS provides its employees with compensation of costs for swimming pools and team achievements of employees, as well as to the Russian Federation, 323 of them received the full range of social guarantees established by fitness clubs. distinguish the best ones. certificates of appreciation and 68 thanks. applicable legislation, but not limited to. Besides, employees can take part in the In the Company, all employee benefits fall into Cafeteria of Benefits Programme where based social and corporate ones. The system of benefits on employee’s individual decision his/her set of RESULTS OF THE FEDERAL RECOGNITION PROGRAMS IN 2018 for MTS employees does not differ by region, benefits may be changed. Such approach enables except for the Far North and equated localities, to fully meet personal needs of the employees Recognition program Number of applications, pcs. Number of winners, pers. where employees are provided with additional avoiding huge costs. compensation of travel expenses to the place of Professional of the Year 102 23 vacation. Medical care

Manager of the Year 109 11 Corporate benefits (including cars or 403-6 MTS gives additional social protection compensation of costs for their usage, mobile to all employees by providing them with Our Team 32 28 communication with a high spending limit, and medical and accident insurance. Every year we Well Done! 78 25 compensations of relocation for work in another conclude voluntary medical insurance contracts region) are provided irrespective of the length of with insurance companies, which enable our Social Project 23 13 employment in the Company, work time duration employees to get medical aid in modern clinics. or contract terms. The benefits are given based The voluntary medical insurance program covers on the needs of the service. the costs of ambulatory medicine, dental care, doctor calling and residential treatment. Social benefits including the voluntary medical insurance (VMI) and health and accident Corporate pension fund scheme insurance, additional payment for the sick list or financial aid are given to all employees at their We strive to provide to our employees both principal place of work except the employees stability and development in the present and hired under term labor contracts for periods of maintenance of the quality of life in the future, less than three months or working for less than after the completion of work activities. Pursuing one third of the standard work time. the state pension reform, the Company is implementing a project of transferring the The temporary disability-related additional accumulative component of the labor pension payments are made regardless of the length of from the RF Pension Foundation to the Bolshoi service in the Company, they do not depend on Non-State Pension Fund. As to supplementary the work time or contract term. corporate pension fund schemes, they are not implemented at MTS. In certain cases, any employee can be provided with material assistance. MTS makes additional In 2018, the total costs of MTS Group for payments in addition to the standard statutory providing personnel with social guarantees benefits for temporary disability because of amounted to RUB 293.4 mln, the cost of voluntary illness and industrial accident or occupational medical insurance amounted to RUB 367.4 mln.

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Occupational Health & Safety Extra Holidays for Foster Parents

Foster parenthood is not only a feeling of between the need to earn money and the OHS Management System happiness when a baby who was glaring at you desire to introduce the baby quickly to the • Providing units with regulatory documents, like a tiger yesterday, suddenly starts calling warmth of their home. The Company provides 103-2, 103-3, 403-1, 403-2, 403-3 The Company pays communicating the existing laws and you mother and father. It is also collection five additional holidays in a calendar year for close attention to ensuring favorable and safe regulations on labor protection to the of documents, interviews with psychologists employees who decided to adopt a child from working conditions. In the field of occupational employees; and officials, numbers in special queues and a public institution in order to complete the health and safety MTS is guided by the laws of trips to various cities in a search of a child. necessary documents related to this decision. the Russian Federation, as well as international • Promotion of labor protection knowledge. A future parent can either take five days in law and local regulations. The most favorable Previously, those who planned to adopt a a row or take days off by turns. and safe conditions are created for work. MTS PJSC is attached to the Moscow tripartite child had to take an unpaid leave or spend agreement for 2016-2018 between Government their regular vacation on these child search The Company operates a two-tier system of Moscow, Moscow Trade Union Association trips, but starting from November 14, 2018 of OHS management, focused on creating and Moscow Employers Association. MTS has introduced additional holidays for a safe working environment, prevention of employees who are preparing to become This is not an additional paid occupational injuries and personnel training of 403-4 The division managers of employees’ foster parents, custodians or guardians, and vacation or an unpaid leave. safe work rules. representatives participate in monitoring for employees who have already accepted These are extra holidays that and development of annual Plans of Labor a child into their family. can be taken exclusively on Key areas of labor protection work carried out in Protection in Macro-Regions and Regions working days, and they will MTS PJSC: for the forthcoming year (10%) and in the The time period from a decision to adopt be paid as if the employee is development of the List of measures to a child to the moment when he/she starts working on these days. • Ensuring the priority of preserving life and improve conditions and protection of labor of running around his/her new home can take health in the workplace; the Employees, whose workplaces were put to more than a year. At this time, the future Irina Vedenicheva, a special assessment of working conditions. father and mother study at the school of Director of Compensation, • Improving the OHS management system; foster parents, collect documents and wait Benefits and Administration for their turn to adopt, because the terms Department • Timely training of managers and specialists can reach up to one and a half years. If the on labor protection; family wants to adopt a baby quicker, the guardianship authorities recommend them • Organization of preventive and regular to register in remote regions of Russia, medical checks of employees; where queues are usually shorter. However, For employees who have already adopted to search for a child throughout Russia one a child, have taken custody or guardianship • Timely provision of employees with special MTS PJSC EXPENDITURES FOR OHS ACTIVITIES, needs not only desire and money, but also of the child, MTS also provides five additional clothing, footwear and other personal RUB MLN time. Few people are ready to take an unpaid paid days off not in the calendar year, but protective equipment; leave and fly nine hours to Petropavlovsk- once within a year from the date of adoption, 86.9 Kamchatsky without a guarantee of custody or guardianship. For foster parents • Organization of the production control and a successful result. this period is calculated from the court evaluation of the special labor conditions; decision date. For other categories this 82.1 Since November 2018, MTS employees period starts from signing of the Guardian/ • Ensuring the safety of production equipment do not have to make such a tough choice Custodian Appointment Certificate. and processes; 79.6

• Accounting and analysis of occupational injuries, organization of investigation of accidents and activities to prevent occupational injuries and diseases; 2016 2017 2018

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Since 2018, the Company the employee’s health in the workplace, prevention and timely establishment of the has been developing a set signs of occupational and general diseases, of measures to promote and prevention of accidents. Preliminary and periodical medical examinations were the concept of zero injuries organized in MTS PJSC for 3,308 and 10,367 and improve the culture of people respectively within the reporting occupational safety. period. 40 employees needed a job change, 59 employees were recommended to have health resort treatment upon the results of the One of the key mechanisms for the prevention periodical medical examinations. of occupational injuries is the accurate and timely assessment of occupational risks that may arise in the workplace, as well as their competent management. In 2018, the In 2018, representatives and Company’s branches began to conduct subsidiaries of MTS PJSC took part in relevant activities. the fourth All-Russian Labor Safety Week in Sochi. The busy schedule Their particular focus is on the promotion of made it possible to participate in occupational safety issues; various forms of professional discussions, study work are applied. Every year in April, various best practices and experience of actions are taken in anticipation of Global colleagues, learn about the main Labor Protection Day aimed at improving the directions of the labor protection labor conditions and protecting Company law improvement, as well as get employees to prevent occupational injuries recommendations and answers to and diseases. The conscious change in the practical questions. attitude of employees and managers to the responsible creation of safe working conditions in the Company is of great importance. At the end of 2018, a distance Working with the Social Insurance Fund learning video course “Safety Culture” was developed and prepared for placement in the Annually MTS PJSC cooperates with the Social Virtual Academy. Insurance Fund of the Russian Federation (RF SIF) for financial support of preventive Personal protective equipment (PPE) plays measures to reduce accident injury rate and an important role in the prevention of occupational diseases of employees and health employee’s direct exposure to harmful and resort treatment of employees working with (or) hazardous production factors. MTS PJSC hazardous and (or) dangerous production developed and approved standards of issuing free special clothing, footwear and other FUNDS RECEIVED BY MTS PJSC FROM SIF IN 2018, personal protective equipment to workers RUB MLN who are engaged in work with harmful and (or) dangerous working conditions. The certified 9.1 PPE is timely purchased, the time of use and inspection of personal protective equipment 6.8 is adhered to PPE storing and accounting is properly arranged.

MTS employees engaged in work with harmful 2.6 and (or) dangerous working conditions undergo preventive (at employment) and periodic (during work) medical examinations. The purpose of the periodic medical examination is a dynamic monitoring of 2016 2017 2018

164 MTS FOR EMPLOYEES | Occupational Health & Safety 2018 MTS Group Sustainable Development Report

factors, as well as to obtain discounts on district levels. In 2018, a number of MTS Due to long-term medical leave of the 403-10 Among the employees with high insurance tariff for compulsory social insurance branches became winners of various review employees (including those, who got injured in probability of occupational injury are vehicle against industrial accidents and occupational competitions on labor protection. 2017), the accident severity and the lost day drivers and technical specialists (working at diseases. In 2017, the total effect of these rates increased compared to the previous year. heights or with electrical equipment) who activities amounted to RUB 6.8 mln. On In 2018 the Company held the review contest maintain the communication network. No account of the Russian Federation SIF funds: for the best conditions and health and safety occupational diseases were revealed in 2018. status among all branches. Following its CAUSES OF ACCIDENTS IN 2018, % • medical examinations were performed; results, the winners were: Duty doctor in the office 12.5 • overalls, safety shoes and other PPE were • 1st place—MTS PJSC Branch in Kaluga; purchased; 403-6 In a number of MTS offices • 2nd place—Branch of MTS PJSC in in Moscow, general practitioner’s 12.5 • special assessment of labor conditions was Novosibirsk Region; appointments are organized several made. 37.5 times a week within the framework of • 3rd place—MTS PJSC branch in Tyumen the VMI program. Region. The duty doctor is provided with a Special Assessment of Working Conditions minimum set of tools and medicines, and in case of an emergency he Special assessment of working conditions Occupational Health and Safety Training will administer first aid and call the is one of the most important directions in 37.5 ambulance. labor protection. This process allows to fully 403-5 In 2018, 22,554 people passed external identify and objectively assess harmful and/ and internal training in occupational safety or hazardous production factors and risks in at MTS PJSC. Managers, experts, members of the workplace and plan measures to improve commissions on health and safety and other Road accidents Healthy lifestyle club in MGTS working conditions. As of December 31, 2018, categories of employees passed it. Various Personal negligence 23,926 workplaces (94% of the total number of training systems are used for internal training 403-6 In order to support those who workplaces) were assessed in the Corporate on health and safety, including a remote Poor work organization want to lead a healthy lifestyle, MGTS Center of MTS Group and branches of MTS health and safety training system of the MTS Poor condition of buildings, structures, opened an issue-related lecture hall. PJSC; the work on carrying out a special Corporate University — Virtual Academy. territories The first lecture was held with the assessment of working conditions will be help of a MEDSI specialist, and the continued in 2019. The Company provides training on first aid topics of next lectures were chosen to people injured at the production facility. by employees on the Pulse corporate More detailed information on the Its main objective is to practice independent portal. assessment results is available at actions and behavior of employees aimed at http://www.company.mts.ru/comp/ preservation of life of every injured before social_responsibility/ocenka/ arrival of rescue services. MTS PJSC INJURY INDICATORS

Indicator 2016 2017 2018 Evaluating Effectiveness Accidents

Accident Frequency Rate (Fr)1 0.16 0.22 0.27 Every year the Company assesses the 403-9 In 2018, 8 accidents occurred in MTS effectiveness of OSH management system PJSC, including one group fatal, as the result Accident severity rate (Sr) 51.57 21.3 106.6 based on quantitative indicators that objectively of a road accident, and one serious accident. assess the degree of implementation of the In total, ten people were injured, two of them Occupational injury and working time loss rate (OIR) 0.02 0.03 0.03 labor policy. As a result of evaluating the OSH were women. An internal investigation into the management system effectiveness of every causes of the group accident was initiated. Lost day rate (LDR) 1.46 0.48 2.18 region, an action plan on the improvement of In order to prevent road accidents and labor protection is approved. injuries, an unscheduled inspection and an Workplace absenteeism rate (AR) 4.19 4.27 4.36 extra training of employees on observance of The OHS management system in MTS PJSC the road safety rules were carried out. has been recognized at the regional and

1 Accident Frequency Rate determines the number of accidents during the reporting period per 1,000 employees.

166 167 MTS FOR SHAREHOLDERS compliance with business ethics.” to the principles of fair businessand corporate sector, as well asour commitment of anti-corruptionpolicy in the Russian leadership of MTSin the implementation ISO standardsonceagainconfirmed the “International certification according to Director of MTSPJSCComplianceDepartment Yuliya Romashkina, UPYCAN...... 175 SUPPLY...... CHAIN CORPORATE GOVERNANCE ...... 171 170 FINANCIAL RESULTS ...... 169 MTS FOR SHAREHOLDERS | Financial Results 2018 MTS Group Sustainable Development Report

MTS FOR SHAREHOLDERS Corporate Governance

Shareholder Structure JOINT-STOCK CAPITAL STRUCTURE OF MTS PJSC AS Financial Results OF DECEMBER 31, 20181, % 102-5, 102-7 The Company’s major shareholder is Sistema PJSC, which held 45.81% of shares as of 102-7 The revenue of MTS Group showed a MTS GROUP CONSOLIDATED REVENUE, RUB BLN December 31, 2018. significant growth in 2018. It increased by 8.4% 480.3 to RUB 480.3 bln. The main reasons for this Detailed information on shares and the growth were the results obtained in Russia due share capital structure of MTS PJSC is to the market recovery, continued growth in the 45.80 available in the 2018 MTS PJSC Annual 45.81 data transmission services usage, significant 442.9 Report, section “Capital and Securities”. growth in smartphone and equipment sales, 435.7 as well as the growth of system integration services and other digital services, besides the consolidation of MTS Bank. In 2018, MTS Dividend Policy revenue in Russia was up by 8.7% and reached 2016 2017 2018 RUB 448.1 bln. The MTS Group revenue was In 2016, a new dividend policy was approved for 0.00 0.38 also affected by higher income from data 2016–2018, in accordance to which the Company 2.80 5.21 2018 MTS GROUP REVENUE STRUCTURE IN RUSSIA, transmission services in Ukraine due to the set a target dividend yield at the level of RUB BLN NUMBER OF ORDINARY SHARES active development of 4G. 25.0–26.0 rubles per share of common stock of 1.3 MTS PJSC (50.0–52.0 rubles per ADR) for each JSFC Sistema PJSC - 915,468,219 69.1 MTS remains a major source of replenishment calendar year. At the same time, the dividend MGTS PJSC - 7,569,230 of federal and regional budgets. In 2018, policy assumes a minimum dividend payout by MTS Group paid RUB 19.8 bln of income tax, Stream Digital LLC - 104,165, 997 7.4 MTS in the amount of 20.0 rubles per share which is 11.8% more than in 2017. In 2018, the 11.9 Bastion LLC - 55,886,0088 (40.0 rubles per one ADR) a year. decrease in income tax payments against 2017 MTS PJSC - 17,664 was influenced by the claims and liabilities revaluation (exchange differences), decrease in Dividends are paid in two installments during the Shares in free circulation - 915,274,457 the amount of payments based on the results of 60.4 calendar year. At the same time, MTS is shifting tax audits, and the use of existing overpayments to a more even distribution of dividend payments MTS PJSC DIVIDEND PAYMENTS, RUB BLN on tax formed in previous periods. during the year. 312.6 52 52 52 More detailed information on the For 2018 calendar year MTS paid RUB 26.0 financial results of MTS Group is per ordinary share (RUB 52 per one ADR). In presented in the 2018 MTS PJSC Annual Mobile communication System integration addition, MTS provided additional yield in 2087 Report, section “Financial Overview”. Fixed-line communication Sale of goods for its shareholders of 11.1 rubles per share Banking activities Other services and additional RUB 22.2 bln due to the share redemption program. PAID INCOME TAX BY MTS GROUP, RUB THOUS. 2016 2017 2018 2016 2017 2018

Russia 10,603,890 21,264,671 18,662,882

Ukraine 37,219 594,645 954,735

Armenia 379,234 123,171 0 1 All ordinary registered voting shares at the disposal of MTS PJSC, in accordance with requirements of current legislation do not grant a voting right, are not counted during voting, dividends are not accrued for them. Belarus 1,958 13,416 11,926 The ownership interest of JSFC Sistema PJSC includes ownership interests of its following subsidiaries: LLC Foreign SPV 351,386 431,348 147,376 Sistema Telecom Assets (11.03% of shares of MTS PJSC) and Sistema Finance S.A. (3.02% of shares of PJSC MTS). Vladimir Petrovich Evtushenkov is a controlling person of JSFC Sistema PJSC. Total 11,687,3571 22,427,252 19,776,919 The stake of Sistema PJSFC, including indirect ownership through controlled entities (MTS PJSC, MGTS PJSC, Stream Digital LLC and Bastion LLC) is 54.2% of shares of MTS PJSC, while an effective interest is 50.005%. 1 Including paid income tax in Turkmenistan, the Czech Republic and Uzbekistan in amounts of RUB 228,680, MGTS PJSC, Stream Digital LLC, Bastion LLC are subsidiaries of MTS PJSC. RUB 77,956 and RUB 7,033, respectively. Shares in free circulation include 8.1% of shares of MTS PJSC and ADR for 37.7% of shares of MTS PJSC.

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On March 21, 2019, MTS Board of Directors The remuneration system applied in MTS is The risk management and internal control Elena Kokhanovskaya. Best approved a new dividend policy for 2019–2021, aimed at the growth of Company’s shareholder system was developed taking into account Corporate Communications according to which the target dividend yield value, and the level of remuneration paid is fair generally accepted conceptual foundations Director of Russia is not less than RUB 28.0 per ordinary share and sufficient for motivation of employees and COSO (The Committee of Sponsoring of MTS PJSC (RUB 56.0 per ADR) during each members of management bodies. Organizations of the Treadway Commission), is Elena Kokhanovskaya, Director of Public calendar year. efficient and is aimed at assuring reasonable Relations at MTS PJSC, became the confidence in achievement of objectives faced by best director in the TOP-100 СOMM All- Detailed information on the dividend the company. Russian rating of directors of corporate policy and payment of dividends is The MTS corporate governance communications and corporate relations available in the 2018 MTS PJSC Annual system is recognized as the best The Company has an efficient system of control departments in 2018. She also entered Report, section “Interaction with among Russian companies over transactions executed amidst the conflict of the top-5 special categories of the Shareholders and Investors”. interests. rating For the Most Effective Work in MTS’ Corporate and Legal Affairs Unit the Field of External Communications The dividend payment statistics and became the winner of the prestigious The information disclosure system is built taking of the Corporation in Russia and For the Regulations on the Dividend Policy competition Best Legal Departments into account requirements of listing rules of the Most Effective Work in the Field are available on the Company’s website of Russia — 2018 in the category the Moscow Exchange and NYSE, is efficient of Interaction of the Corporation with at http://ir.mts.ru/investors/shares/ For Building an Effective System of and assures compliance with the transparency Public Authorities in Russia. dividends/default.aspx. Corporate Management. The annual principle. competition is held among the MTS took first place in the ranking of leading Russian companies by the law The Company’s systemic approach also covers the best organizations in Russia in the Corporate Governance magazine Legal Insight. areas where compliance with legislation is field of corporate communications Development essential. Thus, systems of assurance of and corporate relations. MTS Public The competition’s expert council compliance with anticorruption, antitrust, insider Relations Department became the first Key principles of MTS corporate governance: noted the Company’s merits in legislation and intellectual property legislation in the ranking of the best departments improving the activities of the Board were built at the Company based on best for corporate communications and • comprehensive protection of shareholder of Directors, creating an online international compliance standards. corporate relations in Russia. rights and interests; remote electronic voting system for the shareholders’ meeting, In 2018 we continued the work on development • information openness and transparency; driving business transparency, and of the Company’s corporate governance The internal audit service of developing and implementing of best system. For the last years our attention MTS was highly appraised for the • single corporate policy in respect of practices of the Bank of Russia’s was primarily focused on introduction of compliance with international subsidiaries; Corporate Governance Code. Corporate Governance Code provisions. The standards result of this was compliance with the most • independence of the Board of Directors in recommendations of the Code. In 2018, the internal control and audit definition of the Company’s strategy, approval service of MTS underwent an external of business plans, other important decisions; The Chairman of MTS Board of Key attention in 2018 was paid to issues of independent assessment, according Directors Ron Sommer wins the succession of the Board of Directors (in to the results of which its activities • control over management activities; Director of the Year award particular, its composition was updated, and were recognized as compliant with the further changes were identified in this area), International Professional Standards • observance of business ethics when doing and the remuneration system of the Board of of Internal Affairs Audit and the Ethics business; Ron Sommer won the XIII National Directors, which was substantially reworked Code of the Institute of Internal Award Director of the Year in the in accordance with the best practices and Auditors. • doing socially responsible business aimed category Chairman of the Board recommendations of regulators. at assuring sustainable development of the of Directors: Contribution to the Maksim Mamonov, Director of Internal Company, its welfare growth. Corporate Governance Development. Following the results of 2017, we entered TOP- Control and Audit of the Corporate 10 companies in accordance with the National Center of MTS PJSC won in the Procedures of preparation and conduction of Directors are awarded for their Corporate Governance Index, and in 2018 we category Head of Internal Audit Service the General Shareholder Meeting enable MTS to personal contribution to the remain among the first ten companies of this of the Year, and the Internal Control and assure equal attitude to all shareholders from implementation of high corporate rating. Audit Unit headed by him was one of the the company when they exercise their rights to governance standards. Organizers of two laureates in the category Internal participation in company’s management and the award: Association of Independent Audit Service of the Year. profits’ receipt. Directors, PwC, RUIE.

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MTS top managers took six first places in the Communications and 102-9, 103-2, 103-3 Telecommunications category of the rating Top 1000 Russian Managers according Supply Chain to the Association of Managers of Russia and Kommersant publishing house.

• a special method for procurement of MTS became the only telecommunications company, top managers of which marketing activities from companies within entered all 11 categories of the rating, and a leader of the rating by the number of the MTS Group was developed; first places. MTS builds its relationships with suppliers • effectiveness of the pilot business process based on the principles of good faith, integrity was estimated in terms of working with Place Category Name Position and transparency. Procurement management Contractors in bankruptcy or at the pre- is intended to maximize the business expansion, bankruptcy stage. The business process was 1st Top Executives Aleksey Kornya President of MTS PJSC satisfy the Company’s needs and offer the best recognized to be efficient and was extended value for money. for another year; Management Board Member, 1st Financial Directors Andrey Kamensky Vice President for Finance, Investment and M&A The Company’s procurement is made in • as part of the assessment criteria of accordance with the MTS Procurement a potential or existing contractor, general Management Board Member, Rules (https://tenders.mts.ru/), developed in principles for assessing the tax integrity 1st IT Directors Andrey Ushatsky Vice President for Engineering accordance with the legal requirements and of suppliers were established. For this and IT aimed at the efficient use of funds, increasing purpose, the Contractor Questionnaire competition and transparency. requests information on the availability of Corporate Governance 1st Maksim Kalinin Corporate Governance Director contractor’s resources to be used to fulfill Directors The equal access to the procurement obligations under the contract, as well as procedures is ensured by setting equal the planning data to attract and use the Directors for Interaction Director of the Regulatory Risk 1st Andrey Rego competitive opportunities and unified rules resources of subcontractors / sub-agents / with Public Authorities Management Department for all participants of the procedure before its intermediaries and/or act as a third-party start. agent; Directors of Public and 1st Dmitry Solodovnikov Head of the Press Service Corporate Relations The Company has a Code of Business Conduct • an automated CSR survey was implemented of the MTS PJSC Supplier (https://tenders.mts. as part of the registration process of new Management Board Member, ru/upload/SUPPLIER_CODE.rar) containing suppliers in the e-procurement system 2nd Directors of Legal Affairs Ruslan Ibragimov Vice-President, Corporate and minimal standards that are expected from of MTS PJSC and annual notification Legal Issues suppliers. In addition to good faith and was sent to already registered suppliers integrity, the Code highlights the significance about the need to update their data in Management Board Member, of supplier compliance with environmental the questionnaire with the analysis of the 2nd Directors of Logistics Valery Shorzhin Vice-President for Procurement protection laws and human rights. acquired information being performed and Administration automatically; Key results of the procurement Management Board Member, management system enhancement in 2018: • requirements for the provision of documents 2nd Marketing Directors Vyacheslav Nikolaev Vice President of Strategy and Marketing certifying the customs clearance of goods • a pilot business process Procurement in accordance with the current legislation Management Board Member, of Innovations was developed and of the Customs Union were added to the 3d HR Directors Maria Golyandrina Vice-President, Human implemented, which established Procurement Rules; Resources, requirements for preparing, finding new business solutions, testing hypotheses for • a pilot project had been developed and Management Board Member, start-up products / technologies. Innovative was under implementation to ensure 3d Commercial Directors Kirill Dmitriev Vice-President for Sales and solutions and start-ups development uninterrupted procurements of auxiliary Maintenance through mentorship, training and expert and technological equipment. This project support within the framework of MTS introduced rules and procedures for Accelerator was implemented; monitoring contracts in the termination zone, as well as estimating the demand in • a system for managing intellectual property order to maintain the construction process risks in terms of procurement was developed and control the necessary operational and implemented; stock.

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In the reporting period, the following external NUMBER OF NOTIFICATIONS OF PROCUREMENT TOTAL AMOUNT OF MTS PJSC PROCUREMENTS, vendor links were actively used: PROCEDURES PUBLISHED ON MTS PJSC RUB BLN PROCUREMENT PORTAL MTS PJSC won the prize in the category • the line of the Procurement Management Unit 133.2 “Leader of Procurement Processes Digitalization 2018” of the Leader of (for messages on products and services supply 3,561 104.2 and questions about tender participation 3,180 94.8 Competitive Procurement Award, the terms) is [email protected]; 2,694 main professional competition for Russian customer companies. • the e-mail address for suppliers’ questions and consultation of the suppliers on navigation MGTS PJSC was awarded the prize for in the Procurement Procedure Newsletter the “Best Supplier Work System”. Opt-In System on the Procurement portal is The competition was attended by 188 [email protected]; 2016 2017 2018 companies from all over the country • procurement portal http://tenders.mts.ru is 2016 2017 2018 and from all sectors of the economy. the Procurement Procedures Publication and Newsletter Opt-In System. PROCUREMENT STRUCTURE OF MTS PJSC IN 2018, % TOTAL NUMBER OF MTS PJSC SUPPLIERS SUB- SCRIBED TO THE NEWSLETTER OPT-IN SYSTEM AS OF 6.7 Consultations are provided for all requests from We always aim to purchase services and THE END OF THE YEAR existing and potential suppliers, explanations and 11.5 products from local suppliers, thus promoting answers are given on the questions received. economic development in the regions and

10,643 countries of MTS presence. MTS has implemented the Oracle Sourcing IT system module, which enables the Company A significant part of the procurement of mobile 9,880 52.0 to conduct 100% procurement procedures in operators accounts for communications 14.7 electronic form. Oracle Sourcing is an integrated equipment, IT solutions and various subscriber ERP solution providing for complete automation 8,900 equipment purchased from world leading of the supplier selection process, including foreign manufacturers, since domestic electronic trading on own electronic trading manufacturers do not have this equipment platform. 2016 2017 2018 15.1 and solutions in sufficient quantities and in the necessary range. Due to the business specifics E-procurement provided for savings from the of the high-tech telecom sector, the share of procurement activities of 7.7% (5.6% target), of procurements (80% target) carried out in SMEs in MTS PJSC procurements is relatively while the individual project procurements can compliance to preset target deadlines. The Equipment IT small. The lack of guaranteed supply by SMEs take place with significant (more than 20%) procurement planning system was improved: the Trading and marketing Other in terms of volume, time and quality hinders year-to-year savings. Regulatory deadlines for planned procurement procedures accounted Trading and marketing the significant growth of their share in the procurement and contract signing procedures for 82% of the total volume (compared to 74% Company’s procurements. were developed and approved in 2018 to in 2017). At the same time, certain project measure the “timing” indicator with 84.3% procurements were made “out of schedule”. 204-1 LOCAL SUPPLIERS SHARE,1 %

2016 2017 2018 APPEALS RECEIVED BY COMMUNICATION LINES WITH SUPPLIERS MTS PJSC 81 85 82 2016 2017 2018 MGTS PJSC 99 100 98 Number of appeals received at [email protected], pcs. 351 334 292 RTC JSC 98 99 99 Share of processed requests, % 100 100 100 MTS PJSC Subsidiaries 83 89 55 Number of appeals received at [email protected], pcs 250 213 166 VF Ukraine PrJSC 77 78 46 Share of processed requests, % 100 100 100

1 In terms of this Report a “local supplier” is defined as an enterprise, which address coincides with the address of a company of the MTS Group. For example, the suppliers from Ukraine are considered local for MTS Ukraine.

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THE AVERAGE EFFICIENCY OF PROCUREMENT PROCEDURES IN 2018 received information is analyzed automatically. Environmental Requirements for Suppliers In addition, a questionnaire for English-speaking Russia Ukraine Belarus Armenia suppliers, similar to the Russian version, has MTS PJSC Supplier Code of Business Conduct been developed and is currently at the IT urges in a declarative form that the Suppliers The average efficiency of procurement procedures, % 7.8 9.15 24.1 7.78 implementation stage. shall have an effective environmental policy and comply with the current environmental protection The annually updated Participant Questionnaire laws and regulations. Whenever possible, the not only helps obtain up-to-date supplier Suppliers should practice a proactive approach to Joint Procurements In 2018, MTS PJSC continued to provide information, but also supports development environmental issues, undertake initiatives focused outsourcing of procurement activities for eight of the training events for suppliers in terms of on improving their environmental responsibility, MTS PJSC makes joint procurements partner companies in various procurement CSR, Compliance, Policies and Company Codes and facilitate propagation of environment friendly with a number of its partners. Apart from categories. Procurement takes place in the pursuant to the MTS PJSC Strategy. technologies and the use of efficient methods of economic benefits, unification of technical form of joint procedures, accession or individual product life cycle implementation. Participants of and functional requirements, approaches and procedures. The total budget of partner When completing the Questionnaire, the supplier the MTS procurement procedure have to confirm methods is achieved in the framework of such procurement procedures amounted to some also puts his signature in order to certify that he their consent to compliance with the Code in order cooperation. RUB 2 billion. read and understood its content: to submit their commercial offer.

MTS PJSC PROCUREMENT OUTSOURCING • MTS PJSC Anti-Corruption Laws Compliance The design of the network facilities includes Policy (http://s22.q4cdn.com/722839827/files/ the List of Environmental Protection Measures Procurement categories Partner companies doc_downloads/compliance/anti_corruption_ to be developed pursuant to the requirements laws_compliance_policy_eng.pdf); of GOST R 21.1101-2013. The requirement to Commerce and Marketing Ozon, Medsi, Binnopharm, LitRes, YouDo, implement such measures is a stop factor for Leader-invest • MTS PJSC Code of Corporate Conduct and contractors. Implementation of environmental Ethics (http://s22.q4cdn.com/722839827/ protection measures is verified at the facility IT Sistema Capital files/doc_downloads/compliance/Code- acceptance stage. Commerce and Marketing, IT, Products and Services, of-Corporate-Conduct-and-Business- MTS Bank Subscriber Equipment Ethics_2018.pdf); Pursuant to MTS PJSC qualification requirements, only the suppliers of the procurement category • MTS PJSC Code of Business Conduct of the Infrastructure Services, Technology are obliged Supplier (http://s22.q4cdn.com/722839827/ to have the environmental certificate. In 2018, Participant Questionnaire regarding the application of CSR standards files/doc_downloads/compliance/eng_ MTS PJSC procurements in this category by the contractor, as well as questions supplier_code.pdf). amounted to RUB 9.6 blln accounting for 7.2% of An integral part of the MTS Group on occupational health and safety, and the total procurement volume. procurement documentation1 is the Participant environmental protection. A participant who Questionnaire, which is mandatory for all failed to fill in or complete the Questionnaire contractors to fill in. The supplier is expected to cannot be selected as a winner. assist the Company in complying with applicable anti-corruption legislation and business ethics Code of Business Conduct of the Supplier requirements by providing all the necessary thous. participant information and representations in this area, questionnaires registered The provisions of the Code of Business Conduct of the Supplier set forth minimum standards requested in accordance with the procurement >3 that are expected from suppliers. procedures. The relevant Participant Questionnaire in the system has accelerated the The Company has implemented an automated MTS requires its suppliers to strictly adhere to the principles of legality and transparency, and supplier’s verification process for compliance Corporate Social Responsibility survey also expects suppliers to assist the Company in maintaining a culture of zero tolerance to any with the requirements of MTS PJSC when conducted when registering new suppliers in the illegal or unethical business conduct and strictly observe the provisions of the applicable anti- bidding, including CSR. e-procurement system of MTS PJSC, as well as corruption legislation. introduced the system of annual notifications The Participant Questionnaire contains a CSR sent to already registered suppliers when In case of non-compliance by the supplier with standards, relevant laws and regulations, survey. The section includes general questions the questionnaire data shall be updated. The the Company reserves the right to suspend or terminate cooperation under the current legislation, as well as to draw respective conclusions regarding future cooperation.

1 MTS Armenia CJSC has adapted the relevant regulatory documentation which is being coordinated and is planned to be approved in 2019.

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Social Responsibility Supplier Assessment Project within the JAC Association

102-12, 102-13 At the end of 2017, MTS learning the experience of the world’s joined the JAC international association largest telecom and IT companies and of telecom operators (Joint Audit applying the best practices to interact with Cooperation, http://jac-initiative.com/). suppliers in MTS. JAC is the only association in the world that deals with audits and development CSR audits are conducted in accordance of telecom and IT suppliers in terms with JAC principles based on the of responsible business practices. The international CSR standards (SA8000, Association was established in 2010 and ISO 14000) and covering five main areas: currently is comprised of 16 global telecom operators, including Deutsche Telecom, • working conditions; Orange, Telecom Italia, Swisscom, Verizon, Vodafone and others. • health and safety;

The Association targets improving the • environmental impact; performance of all participants in the supply chain in the field of Information and • ethical standards; Telecommunication Technologies, including Annual Supplier Assessment efficiency and productivity growth of its • management systems. member companies and their suppliers, MTS PJSC assesses suppliers annually. The SUPPLIER ASSESSMENT BY SUPPLY CATEGORY, reduction of pollution and any kind of the On average, each JAC member company assessment is performed throughout Russia by UNITS environmental impact, improvement of the conducts 5 audits per year. In 2018, the Company’s employees, who interacted with working conditions of employees, economic MTS organized 4 audits, and 6 audits are the suppliers in the course of their work during 44 development and reduction of risks to scheduled for 2019. the last year. ensure continuous supplies. 154 Based on the results of each audit of The Net Promoter Score (NPS) method is 54 As part of its JAC membership, MTS the supplier, an audit report is formed, a used to calculate the total. When calculating along with other members annually corrective action plan is approved, and the NPS for the supplier, evaluator’s answers organizes audits of suppliers in the field its implementation is carefully monitored. to 30 questions from different areas of of CSR for the benefit of all members of Audit reports, corrective action plans and cooperation are taken into account: Assortment the Association, attracting leading audit progress information are stored in a single and Development Plans, Commercial Issues, companies experienced in conducting such database accessible to all JAC members. Process Documentation, Quality and Logistics, audits. Cooperation, General Satisfaction. 123 This approach allows members of the As a member of the socially oriented Association saving their financial and In 2018, 395 suppliers were assessed. 99 international association JAC, MTS time resources spent on conducting 935 employees of the Company participated in supports the UN program Transforming Our audits. As a result of joint efforts, each the assessment from the Corporate Center level World: Agenda for Sustainable Development JAC member gets opportunities for more to the regional level. Equipment Subscribers’ equipment until 2030. As a member of JAC we are effective interaction with its suppliers,

entitled to conduct audits of international which provides for timely identification Information technology Marketing suppliers, including not only those, who of production weaknesses, elimination of NPS SUPPLIER RATING SCALE Services cooperate with MTS, but also many others. shortcomings and, ultimately, improved

In addition, JAC membership allows sustainability of its supply chains. -100% 0% 10% 40% 75% +100%

D C B AB A

180 181 MTS FOR SHAREHOLDERS | Supply Chain 2018 MTS Group Sustainable Development Report

EMPLOYEES THAT PARTICIPATED IN Using the Results of MTS PJSC Supplier SUPPLIER ASSESSMENT Assessment

INFORMING COMMERCIAL MATTERS EFFICIENCY The results of the annual supplier assessment are used when selecting candidates and winners in the categories Quality Supplier, 704 Reliability Supplier and Supplier of the Year for 661 their awarding at MTS Supplier Day.

Suppliers with grades A and AB receive 301 the MTS Supplier Certificate, as well as an 28 5 2 285522 24 1 81 67 individual file with the assessment results by 164 36 144 all assessment criteria, including information 41 on those interaction areas which require 2016 2017 2018 improvement. DOCUMENTED PROCESS PAYMENTS Companies are selected among the suppliers Functional units (Customers) who received low grades to conduct an audit of their quality management system. A C Logistics AB D Purchasers The results of the annual assessment can be used when selecting a supplier during B procurement. 24 16 4 27 34 1 DISTRIBUTION OF SUPPLIER RATINGS IN 2018 Annual Supplier Poll 74 The Company conducts an annual supplier poll Voice of the Supplier. This process is part of Supplier – Customer Relationship 2019 and Medium Term Targets for the MTS PJSC Supplier Management System Satisfaction Model is formed based on Procurement Management System and a way of developing relationship with the results of the Voice of the Supplier Enhancement suppliers. annual supplier poll and Annual Supplier 24 26 Assessment. This model provides insight 2019 goals and objectives of the Procurement The supplier poll Voice of the Supplier has been into the Supplier – Customer mutual cross- Management Unit fully comply with the MTS 3D transferred to the NPS method, similar to the assessment and helps identify negative strategy and focus on three aspects: 00 Annual Supplier Assessment. NPS Grade was factors hindering the effective and mutually AABBCDcalculated based on the responses of each beneficial cooperation of supplier companies • Category Management: supplier. and MTS PJSC. Although the 2018 model showed a high level of satisfaction with – Business development and innovation Despite the high grades, negative and According to the poll’s results in 2018, the both parties, certain areas were identified, initiatives support, unacceptable grades C and D were identified total NPS Grade for MTS PJSC increased by which revealed partial dissatisfaction of for the supplier companies, including within the 0.2 pp compared to the previous year: the supplier or the customer and required – Procurement terms optimization, assessed categories. special attention in order to improve the • NPS 2018: 76.4%, Grade A (Excellent); quality of interaction. Following the results, • Digitalization: Based on the results of work, the average NPS proposals were developed to optimize the rating remained approximately at the level of • NPS 2017: 76.16%, Grade A (Excellent). processes and improve interaction with – Business process simplification, the previous year (73.7%),while an increase of suppliers and included in the action plan for 3% was identified in cooperation with suppliers However, despite the high total NPS Grade for the medium term. – Reduction of routine operations, in all assessment categories: Assortment MTS PJSC, the survey identified areas for MTS and Development Plans, Commercial Issues, development as a customer also by categories • Organization: Process Documentation, Cooperation, General included in the action plan aimed at optimizing Satisfaction. Except for a slight decrease in the and improving the Company’s operations. – Resources optimization, Quality and Logistics category by – 0.5%. – New partnership models development.

182 183 GLOSSARY 2018 MTS Group Sustainable Development Report

Convergence is the process of an approach of Fiber-optic communication line (FOCL) — a GLOSSARY diverse electronic technologies as a result of type of data transfer system based on using their rapid development and interaction. optical dielectric waveguides, known as ‘optical fiber’. Corporate culture — a system of standards, 3G, the third generation — a set of services that work not for the ultimate ordinary consumer, values, attitudes and commitments that Global Reporting Initiative (GRI) — a non- combines both high-speed mobile access to but for the same companies, that is, for another predetermine the company’s way of addressing governmental organization that cooperates the Internet services and radio communication business. the issues of internal integration and external with all stakeholders. The GRI was established technology. Mobile communication of the third adaptation, and guiding and motivating day-to- in the US in 1997 by CERES (Coalition for generation is built on the basis of packet data B2C (Business to Consumer) — is a term day behavior of organization’s members while Environmentally Responsible Economies) and transfer. 3G networks UHF frequencies, typically designating the commercial relationship between also being affected by this behavior. the Governing Council of the United Nations in the range of about 2 GHz, transmitting data at an organization and a private, so-called “final” Environment Program (UNEP). up to 3.6 Mbit/s offering conferencing, watching consumer. Corporate social responsibility (CSR) — the of movies and TV on the mobile phone, etc. company’s responsibility to stakeholders, which GPON (GigabitPON) means Passive Optical Blog is a website whose main content is means that business decisions are taken with Network that providing multifunctional high- 4G (LTE) — the 4th generation of mobile regularly added posts containing text, images or due regard to the interests of stakeholders. It quality reliable broadband Internet access at telecommunications technology featuring high multimedia. The people who operate a blog are is a part of the company’s ongoing strategy to unprecedented high speeds of up to 1 Gbps. data rates and improved voice communication called bloggers. increase its presence in society and to develop The subscriber uses a single fiber optic line quality. As 4G is commonly referred to cutting- its business; it is also a chance to make a positive fed directly in his/her apartment to receive edge technologies that enable data speeds of up Big data is a series of approaches to handle huge impact on the community in which the company telephony, Ethernet data, or video services with to 10 Mbit/s for mobile subscribers. data volumes and a significant diversity in order operates. guaranteed quality. to get the perceived results. 5G — the fifth generation of mobile Corporate volunteering — voluntary activities GPRS (General Packet Radio Service) is an communication, the data transfer speed in Bot is a special program that performs of employees for the good of society, based add-on over GSM mobile communication mobile networks of the ‘fifth generation’ should automatically and/or according to a predefined on the Company’s CSR strategy. Corporate technology (global standard for digital mobile reach 10 Gb/s. schedule any actions through interfaces volunteering is supported and encouraged by the cellular communication) which performs packet intended for people. Company. data transfer. ADR, American Depositary Receipt stands for freely circulating in the US stock market Broadband — a high-speed Internet access that Corporate values — corporate culture GSM (Global System for Mobile derivative securities for shares of a foreign is much faster than traditional dial-up access and components that have special emphasis in Communications) is the global standard of company deposited in an American depositary does not monopolize the phone line. In addition the minds of the Company’s employees thus digital mobile cellular communication. bank. to its high speed, broadband is always on and governing their social behavior. ensures a so-called bidirectional communication, Hackathon is a forum for developers, during Agile — flexible approaches to software i.e. the ability to both receive and transmit data Customer Journey Maps is the so-called which experts from different areas of software development, focused on the use of iterative at high speeds. “consumer travel map”, a history of the development (programmers, designers, development, the dynamic formation of customer’s experience, starting with the first managers) are working together to solve a requirements and ensuring their implementation Charity — voluntary transfer to people or legal contact, through the process of involvement, problem. as a result of constant interaction within entities on non-commercial basis (free of charge and ending with long-term relationships with the self-organizing working groups, consisting of or on favorable terms) of assets, including cash, company. High-Definition Television, HDTV — a set of specialists of various profiles. performance of work, provision of services and high-quality TV broadcasting standards based other support free of charge. e-Health (Electronic Health) is an on modern standards of image scanning that API (application programming interface) is implementation of health functions using provide a greater resolution compared to a set of ready classes, procedures, functions, C&B (Compensation and Benefits) is a information and telecommunication standard-definition TV and uses the latest structures, and constants provided by the system of remuneration and compensation of technologies. digital video and audio coding standards. application (library, service) or operating system personnel. for use in external software products. Factoring (derived from “factor”— intermediary, HR management process — an end-to-end Competences — knowledge, skills, abilities and sales agent) is a set of financial services for integrated human resource management ARPU — means average revenue per user. behavioral characteristics necessary for a job. producers and suppliers making sales on a system, which covers all stages of a company’s deferred payment basis. interaction with employees, from attraction B2B (Business to Business) — is a term defining Compliance (agreement, correspondence, and hiring to the retirement and post- the type of information and economic interaction comes from the verb to comply — to fulfill) Femtocell is a low-power and miniature cellular retirement support. classified according to the type of interacting is an agreement with any internal or external communication station, designed to serve a small entities. In this case, they are legal entities that requirements or standards. area.

184 185 GLOSSARY 2018 MTS Group Sustainable Development Report

HSPA+ is a High-Speed Packet Access Plus. Marketplace (online marketplace, online OEBS (Oracle E-Business Suite) is a replicable personnel, create favorable working conditions, e-commerce marketplace) is an e-commerce integrated software application complex from develop corporate culture and support the IFRS — International Financial Reporting platform that provides information about Oracle. local community and charity; such activities Standards. the product or service of third parties whose have systemic nature, are associated with the operations are processed by the marketplace OTT, OTT technology (Over the Top) is a method Company’s business strategy and aim at meeting Inclusive environment — an integrated approach operator. of providing video services via the Internet the balanced needs of various stakeholders. that promotes social integration of persons without a physical connection to the operator’s From the management point of view, a social with disabilities and is based on the principles of Massive MIMO is a technology in which the networks. program is a complex of measures streamlined social and cultural rehabilitation. number of user terminals is much less than the in terms of resources, action parties, and number of antennas of the base station (mobile Personnel development — a system of activities timelines that ensure efficient addressing of Intellectual volunteering — a kind of station). implemented by the Company with the purpose internal (internal corporate program) or external volunteering that includes arranging and of recruitment, adaptation, and retention of corporate social tasks (external corporate conducting intellectual activities. Material Aspects — aspects that reflect employees and contributing to the fulfillment of program). the organization’s significant economic, their professional and creative potential. Internet — a global system of integrated environmental and social impacts; or Social report (sustainable development report) – computer networks that uses IP protocol and the substantively influence the assessments and Quality of life — a set of socio-economic and a document offering a well-balanced analysis packet routing technology. The Internet forms a decisions of stakeholders. other criteria that reflect the level and extent of of the company’s impact on the economic, global information space and is the physical basis the achieved well-being of a person and society environmental and social spheres. for the World Wide Web (WWW), and many other M&A (Mergers and acquisitions) is the class of in various spheres: education, employment, data transfer systems (protocols). economic business and capital consolidation health, human rights, income, security, Software by Subscription, SbS Sales Pattern is processes occurring at the macro and infrastructure, culture and leisure. a new business model, which became technically Internet of Things (Internet of Things, IoT) microeconomic levels, as a result of which larger possible due to huge development of the network is the concept of a computer network of companies appear on the market. Retail is the sale of goods (services) in small infrastructure over the last few years and physical entities (“things”) equipped with built-in quantities, per item. which offers only temporary subscription for technologies for interaction with each other or Mission — the purpose of an organization, the the product unlike models for sale of software with the external environment and according meaning of its existence, that makes it different Reverse is an accounting term meaning such with eternal license, which have already become to which the organization of such networks is a from other similar organizations. a reverse book entry (article), which is taken to traditional. phenomenon capable of restructuring economic correct an error in the recorded entry. and social processes without the participation of Mobile traffic is a transition to a site made with Stack is an abstract data type, which is a list of a human. a mobile device (smartphone, communicator, Roaming — a special communication (mobile elements organized by LIFO principle (last in — tablet, computer connected to the Internet using telephony, Wi-Fi) service offered to subscribers first out). IoT networks (Internet of Things Networks) a modem). outside of their ‘domestic’ mobile operator’s are a variety of autonomous physical devices coverage area by using resources of other Stakeholders — natural and legal persons or connected to a single network through digital Moscow Exchange is the largest exchange network operators. The subscribers are not groups that have an impact on the company’s communication channels. holding in Russia and Eastern Europe. required to enter into an agreement with the activities or are affected by them and have “hosting” operator and the service fee is charged the right, in accordance with the law and LAA (License Assisted Access) is a solution that Motivation — a mechanism to enhance to their accounts. When using the voice roaming international conventions, to directly initiate demonstrates the possibility of simultaneous use performance and efficiency, the process of service, the subscriber usually retains his/her legal proceedings against the company. of the licensed and non-licensed spectrum. providing incentives to an employee or staff existing mobile telephone number. Stakeholders include company’s shareholders, group for engaging in activities that serve the investors, employees, suppliers, contractors, Life Quality is a set of socio-economic and company’s purpose. Safe working conditions — elimination of the consumers, trade unions, mass media, people other criteria that reflect the level and degree impact of harmful and hazardous working who live on the territory where the company of achieved well-being of a person and society MVNO is a Mobile Virtual Network Operator. conditions or keeping them within the hygienic operates, and etc. in various areas: education, employment, health, standards. human rights, income, security, infrastructure, NB-IoT (NarrowBand Internet of Things) is a Stakeholder engagement — company’s activities culture and leisure. standard for cellular telemetry devices with low Social partnership — constructive and mutually to understand the expectations and concerns of data exchange rates. beneficial cooperation between three sectors stakeholders and to involve them in the decision- M2M (Machine to Machine) is the common name of society: government agencies, commercial making process. of the technologies enabling various devices to Occupational safety — a system of ensuring enterprises and nonprofit organizations in order exchange information between each other or to safety of life and health of employees in the to address the social issues for the benefit of the Standards of the Global Reporting Initiative transmit it in one direction. There are wired and process of their labor activity, including legal, entire population or local communities. (GRI) is an internationally accepted sustainable wireless systems to monitor sensors or some social and economic, organizational and development reporting system related device parameters (temperature, inventory level, technical, sanitary and hygienic, therapeutic and Social program — activities that the Company to economic, environmental and social location). preventive, rehabilitation and other measures. voluntarily engages in to develop and stimulate performance.

186 187 GLOSSARY 2018 MTS Group Sustainable Development Report

Sustainable business development — a VoD (Video on Demand) is the system of consistent system of economic and social individual delivery of TV programs and films to a ABOUT THE REPORT activities based on ongoing interaction with subscriber via digital cable, satellite or terrestrial stakeholders. That implies that the use of television network from a multimedia server materials and human resources, the vector of in various multimedia containers (for example, investment and technology development are well MPEG, AVI, FLV, MKV or QuickTime). MTS Group presents its 11th Sustainable In addition, when developing the Report, the harmonized and focused on strengthening the Development Report. The previous Report was comments and recommendations of the Council current and future business potential. Young specialists — graduates of higher or published in 2018. on Non-Financial Reporting of the Russian Union vocational educational institutions whose of Industrialists and Entrepreneurs obtained System integration is a complex solution for employment experience after graduation does The purpose of this Report is to inform a wide in the framework of public endorsement of the automating business processes of an enterprise, not exceed three years. range of stakeholders about the principles, 2017 Report were used. including the creation of new and unification of objectives, practical results and plans of MTS existing disparate information systems into a Wi-Fi (Wireless Fidelity) is a standard for Group in the field of sustainable development and single information space. wireless data transmission over radio channels. corporate social responsibility. Identification of Significant Topics (Aspects) to be Disclosed in the Report tNPS (Transactional net promoter score) is WFM (Workforce Management) is the system of the index of determining the adherence of automation of labor resources management. Reporting Principles 102-46 In preparing this Report, MTS Group consumers to a product or company (the updated the significance level of the disclosed willingness index to recommend) is used to The Report was prepared in compliance with the aspects. For this purpose, a significance matrix assess the readiness for repeated purchases. GRI Sustainability Reporting Standards (core from the Company’s Report 2017 was used and option), the best domestic and international an online survey of MTS employees (860 people) VAS (Value Added Services) is a term popular in practices, and a pilot version of the industry- and subscribers (1,000 people) was conducted the telecommunications industry for designation specific Appendix for the telecommunication in February 2019. Based on the survey results, of services provided not by the core of the sector. a matrix of the most significant topics was network, but by additional platforms.

Vendor is a company supplying/manufacturing goods and services under own widely promoted trademark.

RESULTS OF THE SURVEY ON SIGNIFICANT TOPICS IN 2019

Development of innovation services Financial performance of Service quality MTS Group Telecommunication infrastructure Compliance with development Remuneration level in legal regions of MTS Group requirements operation Respect for human rights Responsible Importance for employees employees for Importance business conduct Social programs for MTS Customer privacy Customer health Group employees Creation of jobs in regions of and safety operation

Safe Internet development

Economic Social Importance for subscribers

188 189 ABOUT THE REPORT 2018 MTS Group Sustainable Development Report

MTS MATERIALITY MATRIX1 Reporting Boundaries 102-50 This Report summarizes all aspects of the Company’s social activities from January 1 to 2 MTS Group prepares its non-financial report at December 31, 2018. the corporate level. The 2018 Report includes the Development of Innovation activities of MTS PJSC and its subsidiaries in all Services regions and countries of presence. 1.9 Service quaity

103-1 Responsible Business TOPIC BOUNDARIES Conduct 1.8 Materiality topic GRI topic Borders Customer Health and Safety Telecommunication Infrastructure Development; Compliance The most material topics Access 1.7 Personnel to Telecommunication Service quality - MTS Group Social Guarantees Services

Non-discrimination, child labor, forced or Customer Privacy; Human rights compulsory labor, rights of indigenous MTS Group 1.6 Economic Employment peoples, human rights assessment Influence on stakeholder assessments and decisions on stakeholder Influence Performance Procurement Practices; Job creation; Telecommunication infrastructure Digital divide - MTS Group Human rights development 1.5 Occupational health&safety Environmental compliance, socioeconomic Labor management relations Compliance MTS PJSC compliance

Local communities 1.4 Anti-corruption; Development of innovation services Technology applications MTS Group Charity Sector government Training and Education; control Development Responsible business conduct - MTS Group Volunteering of Safer Internet

1.3 Financial results Economic performance MTS Group 1.5 1.55 1.6 1.65 1.7 1.75 1.8 1.85 1.9 1.95 2 Significance of economic, environmental and social impacts of MTS Customer privacy Customer privacy MTS PJSC

Personnel social guarantees - MTS PJSC

compiled, which included economic and social • compliance with the law; Compensation rate - MTS PJSC aspects being of major importance for both groups of stakeholders. Only about a third of the • innovative services development; Less material topics respondent subscribers and about a half of the respondent employees considered environmental • responsible business conduct; Procurement practices Procurement practices MTS Group aspects to be really important for their inclusion in the Report. • financial results; Employment Employment MTS PJSC

Labor management relations Labor/Management relations MTS PJSC 102-47 Based on these two matrices, a list of the • consumer privacy; most significant topics was developed: Occupational health & safety Occupational health & safety MTS PJSC • social guarantees for the staff; • service quality; Training and education Training and education MTS PJSC • remuneration level. • respect for human rights; Local communities Local communities MTS PJSC These ten topics are disclosed in detail in the • telecommunication infrastructure Report, while the remaining topics are presented Anti-corruption Anti-corruption MTS PJSC development; briefly. Access to telecommunication services Access to telecommunication services MTS Group

1 The matrix reflects only the most material subjects. MTS specific subjects, which do not have equivalents in the Development of safer internet - MTS Group GRI Standards, are highlighted red.

190 191 ABOUT THE REPORT 2018 MTS Group Sustainable Development Report

Report Endorsement Materiality topic GRI topic Borders 2018 MTS Group Sustainable Digital divide - MTS Group Development Report passed the procedure of public assurances Sector government control - MTS PJSC of an independent party in the face of non-financial reporting Charity - MTS Group Council the Russian Union of Industrialists and Entrepreneurs. Volunteering - MTS Group

Not material topics disclosed to be in line with best practices We will do our best to consider all public endorsement-based Diversity and equal opportunity Diversity and equal opportunity MTS PJSC comments in respect of MTS Group and incorporate them Energy consumption Energy MTS PJSC in the next cycles of our non- financial reporting. Water consumption Water MTS PJSC

Emissions Emissions MTS PJSC

Waste Effluents and waste MTS PJSC

Interaction with stakeholders while preparing this Report

On March 28, 2019 an extended meeting of the CSR Committee was held. The following was presented at the meeting:

• CSR and Sustainable Development Strategy 2019; • the results of MTS PJSC self-assessment in accordance with ISO 26000:2010; • list of CSR and sustainable development key performance indicators. The second part of the meeting was held in the format of a facilitation session Approval of the Essential Topics and Concepts for MTS Group Sustainable Development Report 2018. The trainer of MTS Corporate University acting as the facilitator of this session suggested to focus on the Company’s key stakeholders and the way they were using Stakeholders on mutual respect, partnership, and fairness. We the Report. Effective work in groups allowed forming a pool of ideas with regards to seek to build on our stakeholder engagement the stakeholder groups to focus on when preparing the Report, the benefits they may 102-42, 102-43 MTS considers itself responsible practice and keep it at a high level. We have an derive from the Report, and the actions to be taken to achieve this target. Some ideas to all stakeholders: shareholders and investors, ongoing dialog with stakeholders and provide all the were implemented in the short version of this Report, while the ideas related to the employees, consumers, partners and suppliers, information about our social activities. promotion of the Report will be implemented in 2019. government agencies and local communities. The Company aims to understand needs and We are building a CSR system which would meet expectations of each of them. When engaging with requirements of stakeholders and striving to use these groups, we strive to comply with the balance all our potential to realize and anticipate their of interests and build dialog and cooperation based expectations.

192 193 ABOUT THE REPORT 2018 MTS Group Sustainable Development Report

102-40 Stakeholder Business partners and groups Clients Shareholders and investors Employees Local communities Authorities contractors

Significance for us We respect and value our clients MTS is a joint-stock company; therefore, Human resources are MTS operates in all We are confident that We strive to build long-term and believe that the progress of our our main goal is to ensure the growth of our main value. Caring regions of Russia, the development of the relationships with our business business in today’s highly competitive business value and optimize the return for employees is one CIS and foreign Russian economy and partners. Effective engagement environment is possible only if the on investment to our shareholders. We of our key priorities on countries. the implementation of with them helps MTS to use new market opportunities, provide highest quality of our goods and services also strive to ensure the highest level which the success of our nation-wide projects We are committed better quality of client service is secured. of information disclosure to give our business in today’s market need concerted efforts to long-term and improve our technologies. shareholders a true and fair view of the depends. We are constantly of the government and We seek to improve the quality of and sustainable The transparency of relations with state of affairs of the company. improving social and labor the business community. suppliers and partners, especially service and make the interactions with development, relations in the following in the field of procurements, clients easier, in particular, by deploying We adhere to the highest standards which combines We are caring for the areas: occupational safety is a most critical aspect of our new methods of connecting services and of corporate governance and build up successful business social and economic and health, social support, corporate social responsibility. paying for them, as well as by launching efficient communication between all with human values development of the host opportunities for career new services. parties involved in this process. and national regions, knowing that and personal growth. development high performance in We also pay great attention to ensuring priorities. this area is a key factor security and confidentiality of personal contributing to our data, fighting fraudulent SMS messages, successful business in respecting content copyrights, as the long run. well as running responsible marketing campaigns.

102-44 • Cost of service; • Financial results; • Career opportunities; • Creating new • Socio-economic • Transparent procurements; Stakeholder • Quality of service; • Dividend policy; • Remuneration and social jobs; growth; • Long-term sustainability. interests • Easier interaction with the Company; • Risks and opportunities; guarantees; • Investments in • Consumer protection; communities; • Privacy of personal data. • Efficient governance; • Skills development • Creating new jobs; opportunities; • Charity; • Transparency; • Tax deductions. • Volunteering. • Educational • Long-term sustainability. and cultural programs; • Volunteering.

Methods of Most of our communications are via Our Department for Corporate Finances For efficient MTS is actively We actively participate Our procurements processes interaction con- tact centers and the Internet. and Investor Relations is the main communication with engaged with in the work of regional adhere to a special policy By calling the contact center, any of link to connect the Company and its personnel we have provided local communities consultative bodies developed by the Company our subscribers can obtain detailed investors. We use various formats for to our employees a number (population, public and working groups. to comply with regulatory information about MTS services, new direct communication with our investors of ways to efficiently organizations and This helps us better requirements. This policy tariffs, and provide feedback on the and shareholders in all major financial communicate with the associations, health understand the ensures the efficient use of quality of the connection, client service, centers around the world, regularly publish Company’s management, authorities, trade expectations of the funds, increases the com- etc. We also conduct special surveys information on our financial results and key expressing opinions on MTS unions and the state and be its reliable petition and makes us more to assess client satisfaction. Any MTS corporate events, as well as analyze the development prospects and media) of the host partner. transparent. The equal access client can easily provide feedback on opinion of investors and shareholders on plans, submitting proposals regions. to the procurement procedure the quality of our services by sending an the Company’s business. on how to optimize is ensured by preemptively e-mail to our website www.mts.ru. business-processes and using equal competitive Any shareholder or investor can ask a services, introduce new opportunities and unified question or express a wish by contacting services. rules for all participants of the the Department for Investor Relations. procedure. We regularly carry out All relevant information about MTS sociological studies to Every year, we conduct a Voice activities is publicly available on our evaluate the Company’s of Supplier opinion poll. website in the Investor Relations section moral climate. These http://www.company.mts.ru/comp/ir/ . As a part of our anti- studies allow us to verify corruption policy, we conduct our HR strategy and tactics training and certification of against actual expectations MTS contractors on topics of employees. relating to the applicable anti- corruption laws.

194 195 APPENDICES | Key Mts Awards 2018 2018 MTS Group Sustainable Development Report

MTS won in the social efficiency rating of the largest Russian companies in mechanical October APPENDICES 14 engineering, communications, transport and diversified companies according to the 2018 research conducted by AK&M Rating Agency

Victory at the World Branding Awards in the "National" category of the nomination October 15 Key Mts Awards 2018 "Telecommunications". MTS was recognized as the best telecommunication brand in Russia 2018

MTS Corporate University project "Children on the Internet" won in the category "Best October 16 Course of Skills" of the Best E-Learning Contest 2018 2018 Maksim Mamonov, Internal Control and Audit Director of MTS PJSC Corporate Center, became the winner in the category "Head of Internal Audit Service of the Year", and the March 1 Internal Control and Audit Unit chaired by him was one of the 2 winners in the category 2019 MTS received the public title "Volunteer of Russia 2018" in the category "Socially October 17 "The Internal Audit Service of the Year" Responsible Business Partner in Implementing Volunteer Initiatives" 2018

Victory in the category "Products and Service. Mobile Operator" of the Annual National December MTS entered the Top-20 rating of the 200 largest Russian private companies according to September 2 18 Consumer Confidence Award "Brand No. 1 in Russia" 2018 Forbes. 2018

Victory of the Corporate and Legal Unit in the category “Information Sector” at the “Best December MTS won and took the 26th place among TV companies in the RBC Rating of the 500 September 3 19 Legal Departments” Competition according to Corporate Lawyer Magazine 2018 largest Russian companies 2018

MTS website won prizes in the categories "The Best Disclosure of Corporate Governance MTS top managers entered all categories of the 19th annual rating "TOP-1000 Russian December September 4 Data" and "The Best Corporate Website Design and Navigation" at the Moscow Exchange 20 Managers" according to the Russian Managers Association and the Kommersant 2018 2018 Annual Report Competition Publishing House. Victory in six key rating categories

Second place in the X International Competition of IR-cases 2018 for the project of the December 5 Andrey Ushatsky won in the nomination "The Best IT Director" of the national rating "TOP- new website for investors 2018 1000 Russian Managers". Andrei Kamensky (category "The Best Financial Director") and September 21 Maxim Kalinin (category "The Best Corporate Governance Director") were among three 2018 finalists of the Award. MTS entered the TOP-5 companies of CCM Index with the best corporate governance December 6 practice (according to the National Association of Corporate Directors) 2018 The project "MTS - a Company for all Ages" became a finalist of the Trainings 2018 Award September 22 Competition, the first professional award in the staff training and development market in 2018 MTS was among the leaders of RSPP indices “Responsibility and Openness” and Russia “Sustainable Development Vector”, representing the best Russian practice in the field December 7 of information disclosure on sustainability and CSR, reflecting the positive dynamics of 2018 MTS took the first place among telecommunication brands and the general eighth place in August social and environmental performance 23 the rating Russia 50-2018 according to Brand Finance 2018 MTS charity project Generation M won Grand Prix at the Eventiada IPRA Golden World Awards, the largest International Communication Award in Eastern Europe. MTS project November MTS was awarded Grand Prix in the key corporate nomination of IR Magazine Russia & CIS 8 24 July 2018 became a winner in the category "Corporate and Public Projects. The Best Cultural 2018 Awards 2018 Project" Valery Shorzhin entered the TOP-5 of the Best Procurement Directors of AK&M Rating 25 June 2018 Ron Sommer, Chairman of the Board of Directors, won in the category "Chairman of the Agency’s Procurement Directors Rating November 9 Board of Directors: Contribution to the Development of Corporate Governance" of XIII 2018 National Award "Director of the Year" Creative and charitable project Generation M won in the XVIII National Prize “Media 26 June 2018 Manager of Russia 2018” in the category “Social Responsibility of Media Business” MTS Bank was recognized as the leading financial and lending institution in the introduction of artificial intelligence and machine learning technologies according to the November MTS received the Silver Mercury Award in the categories “Telecom and Technologies” and 10 results of the Artificial Intelligence in the Banking Sector research based on the RAEX 2018 27 “The Best Company in Social Networks or Other Non-Media Distribution Tools” with its June 2018 (RAEX-Analytics) and Expert RA rankings project MTS. Real Games

Elena Seryogina, Director of MTS Corporate Social Responsibility Department, October MTS won in the rating of companies with the best system of corporate communications 11 was included in the Top-50 CSR Managers Rating of the Russian Managers Association 2018 28 and corporate relations in Russia of the All-Russian Rating of Directors for Corporate June 2018 Communications and Corporate Relations ТОР-СОММ

MTS PJSC Procurement Unit won in the nomination “Leader of the Procurement October 12 Processes Digitalization” of the Award “Leader of Competitive Procurement”. MGTS PJSC PR Director Elena Kokhanovskaya won in the All-Russian Rating of Directors for Corporate 2018 29 June 2018 was awarded the prize for “The Best Supplier Work System” Communications and Corporate Relations TOP-COMM

Valery Shorzhin won in the nomination “The Best Procurement Director in the field of October The Corporate and Legal Issues Unit was awarded in the contest Best Legal Departments of 13 30 May 2018 Supplier Relationship Management” of the Award “Leader of Competitive Procurement” 2018 Russia 2018 of Legal Insight Magazine for building an effective corporate governance system

196 197 APPENDICES | Key Mts Awards 2018 2018 MTS Group Sustainable Development Report

1 The Company took the second place in the Marketing Campaign Effectiveness Index 31 May 2018 GRI content index according to Effie Awards Russia 102-55 SmartMed telemedicine platform developed by MTS in cooperation with Medsi won in the 32 May 2018 Disclo- RSPP category “New Technologies in Medicine” of Innovation of the Year 2018 Award by CNews sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject MTS Retail Chain became the winner of the CX Awards 2018 in the category “Best Practice 33 May 2018 of Customer Analytics and Feedback” GRI 102: Organizational profile -- - General Disclo- The Company was awarded in the nomination “Leadership Index” of the Ranking of the 102-1 Name of the organization 2nd page of the cover - - - 34 April 2018 sures Best Companies for Work and Career compiled by Rabota.ru portal 2016 102-2 Activities, brands, prod- 7, 14, 32, 124 - - - ucts, and services MTS Media project won in the categories “Client Media: web-media” and “The Best Media in the Field of Technologies / Telecommunications” of the contest “Digital communications 102-3 Location of headquarters 212 - - - 35 April 2018 AWARDS - 2018” held by the Russian Association of Directors for Communications and Corporate Media 102-4 Location of operations 7 - - -

The projects “Zabugorishche”, “HYPE”, “Communication in Metro” were awarded in five 102-5 Ownership and legal form 171 - - - 36 April 2018 categories of the national Effie Awards Russia 2018 102-6 Markets served 7, 14 - - -

MTS Bank became the winner of the XVI National Annual Award “IT-LEADER” in the 37 April 2018 102-7 Scale of the organization 106,138,139, 2018 MTS PJSC 8- category “Commercial banks” Annual Report, section “Inter- action with Shareholders and Investors” MTS Internal Control and Audit Unit passed an external independent assessment March 38 for compliance with the requirements of the International Professional Standards of 2018 102-8 Information on employees 134 - 3.1.1 Labor prac- Internal Audit and other workers tices

102-9 Supply chain 175 - - Fair oper- Victory in the category “Leader Company in the Promotion of Environmental Safety” of March 39 ating prac- Eco Best Award — 2018 2018 ticies

MTS Bank became the winner in the award “Information Security of Banks of Russia” February 102-10 Significant changes to the 17, 22, 60 - - - 40 organization and its supply for successful implementation of R-Vision platform 2018 chain

MTS entered the Rating of the Most Expensive Telecommunication Brands of February 102-11 Precautionary Principle or According to precautionary - - Environ- 41 the World - Telecoms 300 2018 according to Brand Finance 2018 approach principle MTS strives to avoid ment environmental damage, even if some cause and effect MTS Bank won in the category “Choice of Readers. The Best Retail Financial Product” for relationships are not fully the project “Microloans for Mobile Commerce Services Payment” according to the readers established scientifically January 42 of The Retail Finance magazine. Ilya Filatov, MTS Bank Management Board Chairman won 2018 the 1st place in the category “The Best Banking Retail Manager” according to The Retail 102-12 External initiatives 8, 85, 88, 109, 120, 122, 158, - 1.1 Organiza- 180 tional gov- Finance edition ernance

MTS took the 2nd place among the 197 largest Russian companies by the criterion 102-13 Membership of associa- 7, 180 - - - January 43 “Anti-corruption documents”, according to the results of Transparency International – tions 2018 Russia study on the corporate reporting transparency Strategy

102-14 Statement from senior 4--- decision-maker

102-15 Key impacts, risks, and 2018 MTS PJSC Annual -- - opportunities Report, section “Risk Management”

1 For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report.

198 199 APPENDICES | GRI content index1 2018 MTS Group Sustainable Development Report

Disclo- RSPP Disclo- RSPP sure base sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject Standard ber Disclosure name disclosure comments SDG tor 2010 subject

Ethics and integrity Stakeholder engagement

102-16 Values, principles, 124 16 1.1 - 102-40 List of stakeholder groups 194 - - - standards, and norms of behavior 102-41 Collective bargaining MTS concludes a labor con- 8 3.1.4 Labor prac- agreements tract individually with each tices 102-17 Mechanisms for advice and 143 - - - employee, there are no col- lective bargaining agreements concerns about ethics in the Company, but for MGTS PJSC Governance 102-42 Identifying and selecting 193 - - - 102-18 Governance structure 8, 2018 MTS PJSC Annual -- - stakeholders Report, section “MTS Group Governance System” 102-43 Approach to stakeholder 193 - - - engagement 102-19 Delegating authority Delegating authority from -- - Board of Directors or Man- 102-44 Key topics and concerns 194 --- agement Board takes place raised on a level of orders towards vice-presidents and further Reporting practice from them to department directors 102-45 Entities included in the https://moskva.mts.ru/up- -- - consolidated financial load/contents/10677/mts_ 102-20 Executive-level responsibil- 10, Vice-President, Human -- - statements annual_report_2018.pdf p. 17 ity for economic, environ- Resources, Vice-President mental, and social topics for Finance, Investments, Mergers and Acquisitions 102-46 Defining report content 189 --- and topic Boundaries 102-22 Composition of the highest 2018 MTS PJSC Annual 5, 16 3.1.12 - governance body and its Report, section “MTS Group 102-47 List of material topics 190 --- committees Governance System” 102-48 Restatements of informa- None - - - 102-23 Chair of the highest gover- 2018 MTS PJSC Annual 16 - - tion nance body Report, section “MTS Group Governance System” 102-49 Changes in reporting No material changes ---

102-25 Conflicts of interest 2018 MTS PJSC Annual 16 - - 102-50 Reporting period 191 --- Report, section “Corporate governance development” 102-51 Date of most recent report September 2018 ---

102-28 Evaluating the highest 2018 MTS PJSC Annual -- - 102-52 Reporting cycle Annual --- governance body’s perfor- Report, section “Evaluation mance of the Board of Directors’ 102-53 Contact point for ques- 212 --- performance” tions regarding the report 102-32 Highest governance body’s 10 - - - 102-54 Claims of reporting in This report has been pre- -- - role in sustainability re- accordance with the GRI pared in accordance with the porting Standards GRI Standards: Core option 102-35 Remuneration policies 2018 MTS PJSC Annual -- - 102-55 GRI content index 199 --- Report, sections “Information on the Remuneration of members of the Board of 102-56 External assurance None --- Directors”, “President and Management Board of MTS” Material topics

102-36 Process for determining 2018 MTS PJSC Annual -- - Economic performance - remuneration Report, sections “Information on the Remuneration GRI 103: 103-1 Explanation of the material 191 - - - of members of the Board Manage- topic and its Boundary of Directors”, “President ment Ap- and Management Board proach 103-2 The management approach 2018 MTS PJSC Annual Re- 1, 5, 8, 1.1 Fair oper- of MTS” 2016 and its components port, section “Management 16 ating prac- Report” tices 102-37 Stakeholders’ involvement Not involved 16 - - in remuneration 103-3 Evaluation of the manage- 2018 MTS PJSC Annual Re- -- - ment approach port, section “Management Report”

200 201 APPENDICES | GRI content index1 2018 MTS Group Sustainable Development Report

Disclo- RSPP Disclo- RSPP sure base sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject Standard ber Disclosure name disclosure comments SDG tor 2010 subject

GRI 201: 201-4 Financial assistance re- In the reporting period MTS -- Fair oper- GRI 103: 103-1 Explanation of the material 191 - - - Eco nomic ceived from government PJSC and its subsidiaries did ating prac- Manage- topic and its Boundary Perfor- not receive financial assis- tices ment Ap- mance tance from government. proach 103-2 The management approach 115 16 1.1, 2.12 Fair oper- 2016 2016 and its components ating prac- tices Procurement Practices Fair oper- ating prac- 103-3 Evaluation of the manage- 115 - - - tices ment approach GRI 303: 303-1 Water withdrawal by source 116 6 2.3 - GRI 103: 103-1 Explanation of the material 191 - - - Water Manage- topic and its Boundary 2016 ment Ap- 303-2 Water sources significantly 116 6 - - proach affected by withdrawal of 103-2 The management approach 175 16 1.1 Fair oper- water 2016 and its components ating prac- tices Emissions Environ- ment 103-3 Evaluation of the manage- 175 - - - ment approach GRI 103: 103-1 Explanation of the material 191 - - - Manage- topic and its Boundary GRI 204: 204-1 Proportion of spending on 177 12 - - ment Ap- Procure- local suppliers proach 103-2 The management approach 116 16 1.1, 2.12 Fair ope- ment 2016 and its components rating prac- Practices tices 2016 103-3 Evaluation of the manage- 116 - - - Anti-corruption Fair oper- ment approach ating prac- tices GRI 305: 305-1 Direct (Scope 1) GHG emis- 116, 117 3, 12, -- Emis- sions 13, 14, GRI 103: 103-1 Explanation of the material 191 - - - sions 15 Manage- topic and its Boundary 2016 ment Ap- proach Effluents and waste Environ- 103-2 The management approach 2018 MTS PJSC Annual Re- 16 1.1 Fair oper- ment 2016 and its components port, section “Compliance ating prac- and Culture of Good Faith tices GRI 103: 103-1 Explanation of the material 191 - - - Behavior” Manage- topic and its Boundary ment Ap- 103-3 Evaluation of the manage- 2018 MTS PJSC Annual Re- -- - proach 103-2 The management approach 117 16 1.1, 2.12 Fair oper- ment approach port, section “Compliance 2016 and its components ating prac- and Culture of Good Faith tices Behavior” 103-3 Evaluation of the manage- 117 - - - GRI 205: 205-2 Communication and train- 120, 2018 MTS PJSC Annual 16 - - ment approach Anti- ing about anti-corruption Report, section “Anti-cor- corrup- policies and procedures ruption” GRI 306: 306-1 Water discharge by quality 116 3, 6, 2.7 - tion 2016 Efflu- and destination 12, 14 2.7.2 ents and Energy Environme waste 306-2 Waste by type and disposal 118 3, 6, 2.8 - 2016 method 12 GRI 103: 103-1 Explanation of the material 191 - - - Manage- topic and its Boundary Environmental compliance Environ- ment Ap- ment proach 103-2 The management approach 113 16 1.1, 2.12 Fair oper- 2016 and its components ating prac- GRI 103: 103-1 Explanation of the material 191 - - - tices Manage- topic and its Boundary ment Ap- 103-3 Evaluation of the manage- 113 - - - proach 103-2 The management approach 110 16 1.1, 2.12 Fair oper- ment approach 2016 and its components ating prac- tices GRI 302: 302-1 Energy consumption within 113 7, 8, 2.2 - Energy the organization 12, 13 103-3 Evaluation of the manage- 110 - - - 2016 ment approach

Water Environ- ment

202 203 APPENDICES | GRI content index1 2018 MTS Group Sustainable Development Report

Disclo- RSPP Disclo- RSPP sure base sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject Standard ber Disclosure name disclosure comments SDG tor 2010 subject

GRI 307: 307-1 Non-compliance with en- 112 16 2.10 - GRI 403: 403-1 Occupational health and 163 8 - - Environ- vironmental laws and reg- Occu- safety management system mental ulations pational Compli- Health ance 2016 and Safe- ty 2018 Emloyment Labor prac- tices 403-2 Hazard identification, risk 163 8 assessment, and incident investigation GRI 103: 103-1 Explanation of the material 191 - - - Manage- topic and its Boundary ment Ap- 403-3 Occupational health ser- 163 8 proach vices 2016 103-2 The management approach 130 5, 8, 1.1 Fair and its components 16 operating practices 403-4 Worker participation, con- 166 8 sultation, and communica- tion on occupational health MTS PJSC has no official 103-3 Evaluation of the manage- 130 - - - and safety joint health and safety com- ment approach mittees. There 5 joint health and safety committees with members from management GRI 401: 401-1 New employee hires and 136 5, 8 3.1.2 - and workers in MTS Armenia Employ- employee turnover 3.1.3 CJSC ment 2016 401-2 Benefits provided to full- 161 8 - - 403-5 Worker training on occupa- 166 8 time employees that are tional health and safety not provided to temporary or part-time employees 403-6 Promotion of worker health 140, 161, 167 8 Labor management relations Labor prac- tices 403-7 Prevention and mitigation MTS expects that the Sup- of occupational health and pliers that do business with safety impacts directly the Company will comply GRI 103: 103-1 Explanation of the material 191 - - - linked by business relation- with health and safety rules Manage- topic and its Boundary ships adopted in the Company ment Ap- and create healthy work proach environment and safe labor 2016 103-2 The management approach 130 16 1.1 Fair and its components operating conditions for all its employ- practices ees. Besides, any Supplier’s representative that provides services on site on the terri- 103-3 Evaluation of the manage- 130 - - - tory of the Company should ment approach comply with safety regula- tions set by MTS. GRI 402: 402-1 Minimum notice periods In case of a change in the 8- - Labor/ regarding operational conditions of labor contract 403-9 Work-related injuries 166 Breakdown 3, 8 3.1.5 - Manage- changes or its termination at the ini- by gender 3.1.6 ment tiative of the Company, all is omitted 3.1.7 relations MTS employees receive notice 3.1.8 2016 thereof two months in ad- vance. 403-10 Work-related ill health 167 3, 8 - - Occupational health and safety Labor prac- tices Training and education Labor prac- tices GRI 103: 103-1 Explanation of the material 191 - - - Manage- topic and its Boundary GRI 103: 103-1 Explanation of the material 191 - - - ment Ap- Manage- topic and its Boundary proach ment Ap- 2016 103-2 The management approach 163 16 1.1 Fair proach and its components operating 2016 103-2 The management approach 145 16 1.1 Fair practices and its components operating practices 103-3 Evaluation of the manage- 163 - - - ment approach 103-3 Evaluation of the manage- 145 - - - ment approach

204 205 APPENDICES | GRI content index1 2018 MTS Group Sustainable Development Report

Disclo- RSPP Disclo- RSPP sure base sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject Standard ber Disclosure name disclosure comments SDG tor 2010 subject

GRI 404: 404-1 Average hours of training 146 Breakdown 4, 5, 8 3.1.10 - GRI 408: 408-1 Operations and suppliers at None 8, 16 - - Training per year per employee by gender Child la- significant risk for incidents and Ed- is omitted bor 2016 of child labor ucation 2016 404-3 Percentage of employees 147 Information 5, 8 - - Forced or compulsory labor Human receiving regular perfor- is disclosed rigths mance and career develop- in days, ment reviews breakdown by gen- GRI 103: 103-1 Explanation of the material 191 - - - der and Manage- topic and its Boundary employee ment Ap- category is proach 103-2 The management approach 143 8, 16 1.1 Fair omitted 2016 and its components operating practices Diversity and equal opportunity Human rights, 103-3 Evaluation of the manage- 143 - - - Labor prac- ment approach tices

GRI 103: 103-1 Explanation of the material 191 --- GRI 409: 409-1 Operations and suppliers at None 8 - - Manage- topic and its Boundary Forced significant risk for incidents ment Ap- or com- of forced or compulsory pulsory labor proach 103-2 The management approach 130 5, 8, 1.1 Fair labor 2016 and its components 16 operating 2016 practices

103-3 Evaluation of the manage- 130 - - - Rights of indigenous peoples Human ment approach rights

GRI 405: 405-1 Diversity of governance 135 5, 8 3.1.12 - GRI 103: 103-1 Explanation of the material 191 - - - Diver- bodies and employees 2018 MTS PJSC Annual Manage- topic and its Boundary sity and Report, section “Corporate ment Ap- equal op- Governance” proach 103-2 The management approach 143 1, 5, 8, 1.1 Fair oper- portuni- 2016 ty 2016 and its components 16 ating prac- tices Non-discrimination Human rights, 103-3 Evaluation of the manage- 143 - - - Labor prac- ment approach tices GRI 411: 411-1 Incidents of violations in- None 2 3.2.3 - GRI 103: 103-1 Explanation of the material 191 - - - Rights volving rights of indigenous Manage- topic and its Boundary of indig- peoples ment Ap- enous proach 103-2 The management approach 143 5, 8, 1.1 Fair oper- peoples 2016 and its components 16 3.2.1 ating prac- 2016 tices Human rights Human 103-3 Evaluation of the manage- 143 - - - rights ment approach GRI 103: 103-1 Explanation of the material 191 - - - GRI 406: 406-1 Incidents of discrimination None 5, 8, 3.2.2 - Manage- topic and its Boundary Non-dis- and corrective actions 16 ment Ap- crimina- taken proach tion 2016 103-2 The management approach 143 1, 5, 8, 1.1 Fair 2016 and its components 16 operating Child labor Human practices rights 103-3 Evaluation of the manage- 143 - - - GRI 103: 103-1 Explanation of the material 191 - - - ment approach Manage- topic and its Boundary ment Ap- GRI 412: 412-1 Operations that have been Human rights reviews and -- - proach 103-2 The management approach 143 1, 8, 16 1.1 Fair Human subject to human rights impact assessments were 2016 and its components operating rights reviews or impact assess- conducted in MTS PJSC. practices assess- ments ment 103-3 Evaluation of the manage- 143 - - - 2016 ment approach

206 207 APPENDICES | GRI content index1 2018 MTS Group Sustainable Development Report

Disclo- RSPP Disclo- RSPP sure base sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject Standard ber Disclosure name disclosure comments SDG tor 2010 subject

Local communities Community GRI 419: 419-1 Non-compliance with laws None 16 3.4.2 - involvement Socio- and regulations in the and devel- economic social and economic area opment Com- pliance GRI 103: 103-1 Explanation of the material 191 - - - 2016 Manage- topic and its Boundary ment Ap- Access to Telecommunication Services 10, 11 proach 103-2 The management approach 82 1, 5, 8, 1.1 Fair 2016 and its components 16 operating practices GRI 103: 103-1 Explanation of the material 191 Manage- topic and its Boundary ment Ap- 103-3 Evaluation of the manage- 82 - - - proach ment approach 2016 103-2 The management approach 27 and its components GRI 413: 413-1 Operations with local com- 83 - 3.3.3 - Local munity engagement, impact 103-3 Evaluation of the 27 commu- assessments, and develop- management approach nities ment programs 2016 Provi- PA2 Policies and practices 30, 71, 98, 99, 103, 108 10 413-2 Operations with significant No significant negative im- 1, 2 3.3.3 - ding to overcome barriers actual and potential nega- pact Access for access and use of tive impacts on local com- telecommunication munities products and services including: language, Customer Privacy Consu mer culture, illiteracy, and issues lack of education, income, disabilities, and age GRI 103: 103-1 Explanation of the material 191 - - - Manage- topic and its Boundary PA4 Quantify the level 27 10 ment Ap- of availability of proach 103-2 The management approach 76, 77 16 1.1 Fair telecommunications 2016 and its components operating products and services practices in areas where the organization operates 103-3 Evaluation of the manage- 76, 77 - - - ment approach PA6 Programmes to 123 provide and maintain GRI 418: 418-1 Substantiated complaints 78 Information 16 - - telecommunication Custom- concerning breaches of is disclosed products and services in er Priva- customer privacy and loss- on all com- emergency situations and cy 2016 es of customer data plaints for disaster relief without breakdown Development of Innovation Services 9, 11 by substan- tiated and non-sub- GRI 103: 103-1 Explanation of the material 191 stantiated Manage- topic and its Boundary ment Ap- Socioeconomic Compliance Fair proach 2016 103-2 The management approach 32 operating and its components practices 103-3 Evaluation of the 32 GRI 103: 103-1 Explanation of the material 191 - - - management approach Manage- topic and its Boundary ment Ap- proach 103-2 The management approach 2018 MTS PJSC Annual Re- 5, 8, 1.1 Tech- TA2 Examples of 18, 21, 22, 40, 41, 51, 52, 54, 57, 9, 11 2016 and its components port, section “Compliance 16 nology telecommunication 60, 76, 106, 107, 120, 122, 138, and Culture of Good Faith Applica- products, services and 142, 147 Behavior” tions applications that have the potential to replace physical objects 103-3 Evaluation of the manage- 2018 MTS PJSC Annual Re- -- - ment approach port, section “Compliance and Culture of Good Faith Behavior”

208 209 APPENDICES | GRI content index1 2018 MTS Group Sustainable Development Report

Disclo- RSPP Disclo- RSPP sure base sure base GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: GRI num- Link to page/other sources, Omission/ UN indica- ISO 26000: Standard ber Disclosure name disclosure comments SDG tor 2010 subject Standard ber Disclosure name disclosure comments SDG tor 2010 subject

Development of Safer Internet 9 Sector government control

GRI 103: 103-1 Explanation of the material 191 GRI 103: 103-1 Explanation of the material 191 Manage- topic and its Boundary Manage- topic and its Boundary ment Ap- ment Ap- proach 103-2 The management approach 76 proach 103-2 The management approach 76 2016 and its components 2016 and its components

103-3 Evaluation of the manage- 76 103-3 Evaluation of the manage- 76 ment approach ment approach

Personnel Social Guarantees 8 --Company’s engagement in 76 development of regulatory GRI 103: 103-1 Explanation of the material 191 documents and their im- Manage- topic and its Boundary pact assessment ment Ap- proach 103-2 The management approach 161 --Compliance with Russian 76 2016 and its components legislation on personal data

103-3 Evaluation of the manage- 161 Service quality ment approach GRI 103: 103-1 Explanation of the material 191 --Total costs for providing 162 Manage- topic and its Boundary personnel with social guar- ment Ap- antees proach 103-2 The management approach 69 2016 and its components Digital divide 10 103-3 Evaluation of the manage- 69 GRI 103: 103-1 Explanation of the material 191 ment approach Manage- topic and its Boundary ment Ap- Charity proach 103-2 The management approach 30, 98 2016 and its components GRI 103: 103-1 Explanation of the material 191 Manage- topic and its Boundary 103-3 Evaluation of the manage- 30, 98 ment Ap- ment approach proach 103-2 The management approach 82 2016 and its components Telecommunication Infrastructure Development 9, 11 103-3 Evaluation of the manage- 82 GRI 103: 103-1 Explanation of the material 191 ment approach Manage- topic and its Boundary ment Ap- --Total expenditures for 82 proach 103-2 The management approach 27 charity and social projects 2016 and its components Volunteering 103-3 Evaluation of the manage- 27 ment approach GRI 103: 103-1 Explanation of the material 191 Manage- topic and its Boundary --Capital expenditures 28 ment Ap- proach 103-2 The management approach 90, 139 --Number of base stations 27 2016 and its components

Responsible Business Conduct 16 103-3 Evaluation of the manage- 90, 139 ment approach GRI 103: 103-1 Explanation of the material 191 Manage- topic and its Boundary --Total number of Company’s 90 ment Ap- volunteers proach 103-2 The management approach 124 2016 and its components --Number of volunteering 90 events 103-3 Evaluation of the manage- 124 ment approach

210 211 APPENDICES | Contacts

Contacts

Mobile TeleSystems PJSC Contact person:: 102-3 102-53 Address: 4 Marksistskaya Str., Moscow, Marina Kurinkova, 109147, Russia Project manager Department Phone: +7 (495) 911-71-51, of Corporate Social Responsibility 8 (800) 250-08-90 Division for personnel management Web: www.mts.ru of MTS PJSC Phone: +7 (916) 761-89-87 Email: [email protected]

Short version MTS PJSC of the 2018 MTS Annual report 2018 Group Sustainable Development Report

2018 MTS PJSC Full version Annual Report of the 2018 MTS (Russian version) Group Sustainable Development Report (Russian version)

© MTS PJSC, 2019

© Nexia Pacioli Consulting LLC, consulting for the Report preparation, 2019 www.pacioli.ru

© JSC “Financial publishing house “Business Express”, design, 2019 www.dex.ru

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