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20 20 SUSTAINABLE DEVELOPMENT REPORT
#CONTENTS
About the Report 2
Message from MTS PJSC President 6
Message from the Chairperson of the ESG Committee 8
Message from the Chairperson of the Sustainable
Development and CSR Committee 10
WeAreTogether# COVID 12
MTS Ecosystem Sustainable Development
Management 18 Management 40
Business Model 19 Sustainable Development
and CSR Strategy 42
Our Markets 22
Sustainable Development
Network Infrastructure and ESG Management System 54
Development 32
MTS’s Corporate Responsibility
Open Innovations 36 Principles 62
Financial Results 38
Responsibility Contacts 171
and Priorities 78
For Shareholders – Openness Appendices 173
and Transparency 80
Achievements 174
For customers – Systematic
Approach and Consistency 84 Membership of Associations
and Organizations 178
For Personnel –
Responsiveness and Care 100 Public Certification of the Report 179
For Partners and Suppliers – GRI Content Index 180
Trust and Cooperation 122
For the State – Reliability
and Scale 128
For Local Communities –
Support and Development 132
Environmental
Responsibility 158[102-43] [102-44] [102-46] [102-47] [103-1]
MTS Group presents its 13th Industrialists and Entrepreneurs obtained in the framework of public
Sustainable Development certification of the 2019 Report were used.
Report. The business strategy
of MTS Customer Lifetime Value MTS runs regular surveys of key stakeholder groups to identify
2.0, focused on building long- the most relevant topics to be addressed in greater detail. The
term, sustainable relationships final assessment of the significance of the topic for inclusion in
with customers and partners, the Report is also influenced by a comprehensive analysis of the
including through the provision Company’s representatives service on public and state committees,
of better customer service management decisions, strategic priorities approved by the Board of
and the development of an Directors, and the issues raised during regular IR events. Thus, when
ecosystem of digital solutions, drafting a Report concept, the working group has the fullest possible
identified the priority areas information on the preferences of all key stakeholder groups.
of the Report for 2020: the
company’s contribution to In addition, the company traditionally conducts a spot measurement of
the formation of a sustainable the preferences of the main audiences interested in obtaining detailed
society in part of the creation information about the company’s activities aimed at sustainable
of socially significant digital development. From January to February 2020, we conducted an online
products and the development survey of the main stakeholder groups (over 5,000 respondents).
of infrastructure that reduces The survey covered 36 topics across three core dimensions: economic,
the level of inequality in society, environmental and social.
the creation of jobs and care
for employees, as well as direct The most relevant aspects for respondents in both groups are
investments in social initiatives, presented in the materiality matrix (pp. 4–5). Top 10 topics relevant to
work with communities in the all stakeholder groups:
territories of the company’s
operations, environmental and • service quality;
socio-cultural programs. • information security and data protection;
• consumer privacy;
3
The Report has been prepared • consumer health and safety;
in accordance with the GRI • responsible business conduct;
Sustainability Reporting • job creation in the regions of operation;
2
Standards (Core option) and • development of innovative services;
national and international • compliance with legislative requirements;
best practices. In addition, • telecommunication infrastructure development;
when developing the • respect for human rights.
Report, the comments and
recommendations of the Board As a digital company, MTS has no significant environmental footprint.
on Non-Financial Reporting At the same time, given the relevance of global climate change for MTS, we
#ABOUT
of the Russian Union of included environmental safety aspects within the boundary of the Report.
About the Report
THE REPORT
Sustainable Development Report 2020Top-10 topics MTS customers Corporate Authorities
relevant to all stakeholder (retail consumers) consumers
groups
Service Quality of products Quality of products
quality /services /services
• service quality 80% 84% 63%
• information security and data protection
• consumer privacy Consumer health Information security and Information security and
• consumer health and safety and safety data protection data protection
• responsible business conduct 73% 81% 62%
• job creation in the regions of operation
• development of innovative services Health-saving products Health-saving products
Consumer privacy /services /services
• compliance with legislative requirements
71% 72% 58%
• telecommunication infrastructure
development
Respect for
• respect for human rights human rights Consumer privacy Consumer privacy
STAKEHOLDER REQUESTS1
67% 70% 57%
Safer Internet Introduction of innovative Introduction of innovative
development technologies technologies
67% 63% 55%
5
4
Local Non-governmental Personnel (MTS MTS Partners MTS Shareholders
Communities organizations employees)
CORE SOCIAL
Health and safety Responsible business Development of innovative Information security and Information security and
of operations conduct services (5G, IoT, М2М) data protection data protection
82% 88% 71% 82% 89%
About the Report
Information security and
Statutory compliance data protection Service quality Consumer privacy Consumer privacy
80% 86% 68% 77% 84%
Training and career development Quality of CSR management Respect for human MTS Group financial
system for employees and social reporting rights Service quality performance
Sustainable Development Report 2020
76% 77% 63% 77% 79%
Implementation of projects
Labor conditions of high social and/or environmental Health and safety
(labor protection system) significance Consumer privacy of operations Service quality
75% 70% 61% 74% 79%
Information security and The Company's MTS Group financial Responsible business Responsible business
data protection environmental initiatives performance conduct conduct
70% 68% 59% 72% 79%
1 The factors relevant to MTS and considered or called
important by >50% of respondents.MESSAGE FROM
MTS PJSC
PRESIDENT
[102-14]
Dear friends and colleagues! creating new entities using the possibilities of the also our social programs aimed
digital world. at developing the creative and
My colleagues at MTS and me are intellectual potential of the country’s
lucky to work in the industry and in a Today, the MTS portfolio includes a wide range of population, especially the young
company that is not only one of the digital and media products related to key social areas: generation, which in a few years
first to respond to the surrounding education, culture, ecology, fintech, security, tourism, will become a full participant in
reality, but also independently sets leisure, entrepreneurship and small businesses. Our economic and social life of our
trends, helping to solve global social mission is to bring new technologies to these areas. society. Together with regional
problems with its own services, Therefore, we are actively launching projects based on communities, we identify the needs
innovations and expertise. the Internet of Things, Artificial Intelligence, Big Data, of people in different territories and
5G and NB-IoT networks, which can give a new impulse involve the population in the creation
Remember how dramatically the to the qualitative development of smart cities in Russia, of joint projects in the field of culture,
life of society has changed over their social infrastructure, industry and culture. education and environmental
the past year, when the pandemic education, offering our digital
literally «pushed» the world We pay special attention to social entrepreneurship technologies as a resource for
into the river of transformation. and small business. For this audience, MTS has created solving significant social problems.
7
Remote work, virtualization of a special online platform of digital products: from More than 6,000 MTS volunteers in
communications with a decrease advertising tools for promoting products and services different territories are involved in
6
in the overall mobility of the based on big data to online cash registers and cloud such activities. Often our employees
population, changes in patterns services. We also help startups to develop their projects are the initiators of social projects
of behavior and consumption within MTS 5G Center and the corporate accelerator, for the local communities. MTS is
Message from MTS PJSC President
- many processes that were where there is a social track for startups in the area of building up around the company the
expected to occur only in a few eco-tourism and eco-education. We have launched the community of not indifferent public,
years, occurred in a matter of first Development Kit in Russia to create prototypes including B2B customers, partners, Vyacheslav Nikolaev,
months. And it is precisely the of devices for the Internet of Things networks, and representatives of local authorities Рresident & CEO
capabilities of digital ecosystem such sets of equipment are already available in many and the media.
companies, such as MTS, that Russian universities. In 2020, MTS and its partners
in the new circumstances have launched several R&D laboratories for the development Implementing our business strategy
ensured effective interaction of Artificial Intelligence solutions, including in healthcare. from quarter to quarter, we certainly
between the population, business In several Russian regions MTS also presented several take social responsibility for our
and government, as well as integrated projects in the area of «smart» urban actions and their results. We are In 2020, MTS entered the TOP-5 in the rating of Russian
determined the vector of creating infrastructure: «smart kindergarten» in Perm, «smart consciously moving at the forefront companies - leaders in the field of sustainable development
Sustainable Development Report 2020
digital products for years to come. video surveillance» in the city squares of Primorye, of the social agenda, setting trends in the complex ESG ranking of Russian companies,
Technological companies have «smart parking» in Tatarstan, a digital residential in the market and using new tools conducted annually by the independent rating agency
essentially become the basis for complex in Moscow, and others. We still have a lot to do that increase the sustainability of RAEX-Europe, and became the leader of the rating among
the development of the country’s to make such projects truly widespread in Russia, but society and our business. This year, IT and telecom companies. This is a fair assessment of
social infrastructure, supporting it is already clear that such initiatives are qualitatively for the first time, MTS placed a social our work, and I am sure that commitment to the best ESG-
the state’s policy of digitalization changing people’s lives and becoming drivers of social bond issue on the Moscow Stock practices, following the principles of responsibility, integrity
of key sectors of the economy, and economic development of the territories. Exchange, that would help us to and transparency in relations with all parts of the society -
contributing to the development of finance a network deployment for customers, partners, suppliers, employees, shareholders -
a new society with an emphasis on All MTS technologies and products are about people about five thousand social objects in will increase the competitive advantages of the company
an individual, revealing his creative and for people. It is the awareness of the potential rural areas of a number of Russian and will help to expand the potential of our activities for
potential, providing resources for benefits for society that inspires the creation not only regions. positive changes in society.
self-realization in a new society, the business products of the MTS ecosystem, butMESSAGE FROM
THE CHAIRPERSON
OF THE ESG
COMMITTEE
MTS strives to be a leader in the field of sustainable study, medicine - everything depends on the telecom Many of MTS social projects
development and to achieve results that are services now. went online: the Mobile Fairy
meaningful for all groups of our stakeholders. That Tale Theater performed online
is why we are constantly improving the ESG- factors’ To organize life and leisure during the period of performances, dozens of online
management system. In 2020, a new MTS Strategy self-isolation, MTS made free of charge such digital events were held within the
for Sustainable Development and Corporate Social services as «MTS Fitness», «MTS Library», MTS Music framework of “Generation M”
Responsibility for 2021-2025 was developed. In March and the telehealth SmartMed application, which allows project, we launched the “Cultural
2021, the Corporate Governance Committee of the to get urgent online advice. Taking into consideration Code” project to digitize cultural
Board of Directors was transformed into the ESG the transition to distance learning, MTS made its and historical heritage sites.
Committee. This change is not accidental. A growing Smart University service free of charge to prepare
number of investors around the world are considering schoolchildren for the Unified State Exam. To provide MTS takes an active position in
these three areas – corporate governance, the interesting leisure time MTS hosted more than the environmental agenda. The
environmental and social responsibility – collectively. thirty online concerts of Russian pop-stars on the MTS company develops digital services
9
This is an important step for the company to focus on Life platform. for «smart cities», and these
our long-term goals and identify the routes to achieve services would allow to reduce
them effectively. MTS promptly made the necessary changes to resource usage and greenhouse
8
the tariff policy to protect vulnerable groups of gas emissions from various
The results of the implementation of the first MTS subscribers and provide them with the opportunity to industries, urban and social
CSR strategy for 2017-2020 did not go unnoticed. communicate regardless of their financial condition. facilities of the Russian regions.
In 2020, MTS took the first place in the rating of Even with a negative account balance, users of home
Message from the CHairperson
social efficiency of the largest Russian companies Internet, cable and satellite TV from MTS continued We are particularly proud that
(AK&M), the fourth place in the ESG rating of Russian to use all services. Business clients were able to use MTS, together with AFK “Sistema”, Regina Von Flemming,
companies (RA EX Europe) and entered the Top-10 the cloud services from our provider #CloudMTS have become the only Russian Deputy Chairperson of the MTS Board of Directors, an Independent
of the ESG Committee
local employers in the rating of employers of Russia on special terms. For small enterprises, MTS Bank companies outside of resource- Director, Chairperson of the ESG Committee of the Board of Directors
(Forbes). canceled the commission for transfers to the accounts intensive industries to receive
of legal entities in other banks for all cash and a level «B» or higher in the CDP
The past year 2020 has become special and unique settlement service programs, and provided favorable rating. This achievement is
for all of us, without any exception. The main terms for Internet acquiring. another demonstration of the supporting ecotourism through digital technologies.
background for the corporate events was the fight strengthening of our leadership We believe that it is necessary to talk about a
against the virus, self-isolation and the change The Company continued to scale up our inclusion in reducing greenhouse gas responsible attitude to nature, so environmental
Sustainable Development Report 2020
in the usual way of life because of the pandemic. initiatives, aimed at the availability of services, at the emissions activities. education has become the leading theme of the
And it was also the pandemic, that has shown that hiring people with disabilities and of mature age, “Green Marathon” project, which was attended by
telecommunications has become an essential part creating within the Company a culture supporting In 2020 году МТS launched more than 20 companies of the Sistema Group.
of maintaining a healthy lifestyle. Remote work, inclusive communities. the SCR-project “The Place of
Power”, aimed at preserving Looking back, I can assure that despite of all
the natural heritage, developing challenges, MTS Group managed to show outstanding
environmental education and results in accordance with the strategy and our plans.MESSAGE FROM
THE CHAIRPERSON
OF THE SUSTAINABLE
DEVELOPMENT AND
CSR COMMITTEE
It were two words - «care» and In terms of human resources, the new conditions
«support», that became the most required the skills not just to preserve the efficiency
significant to people during the of the current team, but to attract the professionals
past year. Throughout the whole for the rapid launch of the services that would help
year, we tried to care and to people to maintain their usual life. Though many
support those who suffered in companies during that period drastically cut or even
the newly tough circumstances. completely quitted the recruitment of new employees,
The strengthening of our social we continued to attract experts to MTS to meet the
work was directed both to our growing needs of the business.
11
customers, partners, population
of the country in general, and, of The HR team held remote interviews, hired new
course, to the employees of MTS employees and ensured their smooth onboarding.
10
Group. Internships also turned to online format, that enabled
young candidates to try their hand even in the
In March 2020, most of MTS departments of the company located in other regions.
Group team started a remote
of the Sustainable Development
MEssage from the Chairperson
work. Meanwhile the company We continued to work actively with students and
provided safe and comfortable young professionals In partnership with the leading
working conditions for the educational institutions of the country. Together Tatyana Chernysheva,
and CSR Committee
specialists, whose physical we launched several educational programs, Vice President for Human Resources,
presence at the working place where students get education considering the Chairperson of the ESG and CSR Committee
were vitally important to provide epidemiological requirements. They are Master’s
communication services and degree program «Digital Technologies in Business»
digital products to millions of MTS by MTS, SKOLKOVO and MIPT; the MOOVE program
customers. together with the SKOLKOVO Business School; the
AI laboratories at Skoltech and at the Samara State
Sustainable Development Report 2020
We did not suspend our activities Medical Institute; a special ITMO Master’s program
for a single day during the «Technologies of Conversational Intelligence» .
pandemic. MTS digital services
helped people to continue their The tremendous experience of 2020 made us to take a
education, to get medical care fresh look at the ordinary business processes and laid
without visiting a clinic, and simply the foundation for further growth. I am confident that
to stay in touch with family and this will help us successfully navigate new challenges
friends during self-isolation. that are still beyond the horizon.WEARETOGETHER#
COVID
MTS responded promptly to the Member of the Management Board and MTS PJSC
coronavirus emergency. As soon Vice President for Finance. The group included Online concerts
as it became clear that Russia almost all MTS top management, its task was to
would not be able to avoid disease monitor the situation, quickly develop and take [TA2]
outbreak, a task force was created measures to protect employees, customers and
to counter the spread of the new partners. MTS provided an opportunity for people to spend Kasta, Vyacheslav Butusov, Neschastny Sluchai,
coronavirus infection under the time interestingly without leaving home, watch Sekret, Pelageya, The Hatters, Chizh & Co, Gruppa
leadership of Andrey Kamensky, performances of their favorite performers online in Skryptonite, MOT.
the absence of offline events and share emotions with
other residents of our country who found themselves Two virtual youth festivals were also held: MTS Live
in the same circumstances, discussing live concerts Youth Rap and MTS Live XR—Russia’s first music
on online platforms, - the company organized a festival with XR (extended reality) technological
series of live broadcasts of concerts of cult Russian insight. You can watch recorded concerts on MTS TV
Clients support performers. and MTS Live platforms.
During the year, over 30 popular Russian musicians
and bands of various genres performed for MTS
Live, including: Morgenstern, Chaif, Anacondaz,
#STAYHOME
In March 2020, MTS prepared • offered a range of digital services in a single
a set of measures to help bundle #StayHome: when connecting to the MTS
13
the Company’s customers TV platform and subscribing to the Just TV bundle,
experiencing difficulties caused by users got access to 50 TV channels, over 500
coronavirus restrictions: series, fiction and documentary films for one ruble;
12
"
• enabled subscribers to receive All online MTS Live concerts held in 2020 were free and available to
incoming calls from any • provided free access to MTS Library, MTS Fitness, subscribers of any operator: we created content that helped keep the
operators when they ran out MTS Music, and SmartMed service; audience and the artists connected. Our concerts are first of all an emotional
of credit or had their number product, which allowed to create an association of the MTS with music
blocked; • provided free access to popular educational and entertainment and to charge people with positive energy during this
platforms and resources on culture and arts—
#WeAreTogether# COVID
challenging period.
• made free calls to the hotline Netology, Arzamas, Coursera, Geek Brains,
of Russian Federal Agency for Synchronize, the Mariinsky Theatre in St.
Tourism, Moscow Healthcare Petersburg, the Hermitage Academy, and Mobile Mikhail Minin
Department, The Ministry of Theater. CEO of MTS Entertainment
Foreign Affairs of the Russian
Federation Situation Center, and
airlines providing flights both
within the country and abroad as
Sustainable Development Report 2020
well. Users abroad also became
able to send text messages and For more information, see section For Customers – Systematic
receive incoming calls from Approach and Consistency..
hotlines and airlines for free;
During self-isolation, the MTS TV online movie theater launched online lockdown concerts of Russian
celebrities for which they performed songs at home or in rehearsal studios. About 20 performers, including
Uma2rman, Dolphin, Yolka, and others, took part in these concerts."
During the quarantine restrictions, digital
solutions were in high demand among
30
businesses of all sizes to help quickly
move operations online to ensure the
continuity and efficiency of companies’
concerts business processes. MTS provided special
preferential terms of connection for almost
all such services so that the transition to
a remote work safe for employees and
customers was relaxed and did not require
urgent additional investments. In the long
20
run, digital solutions implemented during
this period will help businesses recover
faster and improve their efficiency even
online lockdown concerts after they return to business as usual.
Dmitry Khalin,
Member of the Management Board,
Vice President for Cloud & Digital Solutions of MTS PJSC
60
viewers
mln
Business support
MTS also supported the services for remote storage and corporate data
entrepreneurs who had to adapt exchange. This was crucial for small and medium-
to work in conditions of general sized businesses that needed to adapt to new
social isolation, maintaining the challenges.
500,000
15
same pace of work and not losing
the efficiency of processes. Another important bonus for entrepreneurs was
a three-fold increase in the duration of uninterrupted
14
Some companies moved to voice calls from 60 to 180 minutes specifically to
remote work, which resulted in facilitate conference calls and negotiations in remote
likes, reposts and comments an increased mobile Internet work environments.
consumption. For such customers,
MTS provided a solution of To support small businesses, we created Know in
increased traffic on their tariffs Person online card for entrepreneurs who continued
#WeAreTogether# COVID
through additional bundles to operate during quarantine restrictions, and
+Internet for Business. Some organized online ordering and delivery services for
MTS Live website MTS TV website For more of the companies that had independent stores.
https://live.mts.ru/ https://mtstv.mts.ru/ information about to suspend their activities
MTS Entertainment,
see the Our Markets temporarily were also supported As for individual entrepreneurs and small businesses,
section. by MTS and provided with the MTS Bank canceled the fee paid by legal entities
postponed payment option or and individual entrepreneurs for transfers between
free blocking of services for the banks within all settlement and cash management
Sustainable Development Report 2020
required period. services, and provided favorable conditions for online
acquiring.
While understanding the
importance of ensuring reliability
and continuity of operations for
business, we offered favorable For more information, see section For Customers – Systematic
terms of access to our cloud Approach and Consistency.Community and state support
#WEARETOGETHER
[PA6]
MTS launched many social Together with Sistema PJSFC, we also provided The products offered by MTS today will be useful to ensure the safety of
initiatives aimed at improving the regional hospitals with free COVID-19 tests. employees and eliminate the rapid spread of various infections in
quality of life of people during the the enterprise or office even after the pandemic is over.
pandemic. • In April, together with MEDSI, we opened free
access to telemedicine services so that people can
• Together with psychologists monitor their health without going to clinics without
from Lomonosov Moscow an urgent need in the context of the spread of Company employees, including top managers, made regular donations to partner
State University and the coronavirus. charity funds to purchase the necessary protective equipment for doctors.
Russian Presidential Academy
of National Economy and • When classes reverted to online learning, MTS
Public Administration, MTS offered the opportunity to use education services
launched a free hotline Help for free to help prepare schoolchildren for exams. Institutional Investor, a leading international publishing house for financial
Staying Home, which worked research, highlighted MTS President Alexey Kornya as a leader who has made
throughout the quarantine and • Training courses for the older generation were a significant contribution to the fight against the COVID-19 pandemic effects.
helped Muscovites overcome launched to help them acquire skills in using
distress, anxiety, depression, and grocery delivery, receiving online medical
loneliness. consultations, and applying for services from the
public authorities from the comfort of their own
• MTS developed a free tariff homes. Volunteer promotions MTS, MTS aimed at social support of citizens during the
dedicated to doctors and period of coronavirus infection, were marked by letters of thanks and diplomas of
medical personnel involved in • MTS social projects such as Going to School with the President of Russia.
the treatment of patients with MTS, Generation M, Poplar of Victory, puppet shows
COVID-19 in Russia. of MTS Mobile Fairytale Puppet Theater, Cultural
Code moved online, and also new ones appeared,
• MTS allocated funds to support taking into account the current realities in their
17
doctors and medical institutions, concept—To a Fairy Tale from Home, Memory
regional communities and Through Generations, Place of Power.
volunteers helping the elderly.
16
Employee support
In March 2020, MTS joined the global Folding@Home project, studying the
#WeAreTogether# COVID
COVID-19 virus. The #CloudMTS provider allocated cloud resources for computer
modeling of new virus mechanism and finding therapeutic remedies. Resources The first of the employee All meetings moved online. Traineeships, interviews,
allocated for the Folding@Home project will allow computing operations at up to protection measures was the and employment were remote.
3.6 petaflops. transition to a new mode of
operation. Part of the staff were In addition to the hotline, MTS created a mailbox,
Kommersant shifted to remote work. For those Myhealth@mts.ru, to answer any question about
who had to stay at their workplace introduced or planned measures to combat
due to the nature of their work— coronavirus spread. Employees had to incur
Sustainable Development Report 2020
technicians, field technicians, additional medical expenses due to the coronavirus
salespeople in company stores, disease were provided cash compensation.
MTS’ digital technology also made For more information, see section For Local Communities – and satellite TV agents—regular
Support and Development.
working in the pandemic easier health checks were organized,
for businesses and government personal protective equipment
agencies. In particular, For more information, see section For the State – Reliability was provided, and instructions For more information, see section For Personnel –
and Scale. Responsiveness and Care.
MTS developed a set of solutions on protection against coronavirus
to monitor the health of employees infection were given.
and control compliance with
infection prevention measures.MTS ECOSYSTEM
MANAGEMENT BUSINESS MODEL
In 2020, we continued to implement the strategy called Customer
Lifetime Value 2.0 (CLV 2.0), aimed at building a full-scale digital
business on a sustainable telecommunication base. This strategy details
the existing strategic goals of MTS and is focused on creating a product
ecosystem based on the core telecommunication business with
a seamless transition between services to maintain the best customer
experience.
At the heart of our value proposition is the Customer, to whom we
offer a wide range of digital services. We strive to maximize the client’s
“Lifetime” (Lifetime - the time during which he uses our services),
creating and gradually strengthening emotional attachment to the
brand, increasing the level of satisfaction and customer loyalty.
We focus on offering more Value to the client and at the same
time maximizing the value we get from him in the long run. «2.0»
symbolizes our transition from the ideology of operating in one – the
telecommunications – market (which we conventionally call «1.0») to
the ideology of a digital service provider operating in diverse markets
and offering a variety of products to meet the needs of customers
in different areas of their lives in order to maximize value (both for
19
clients and for the company) from the entire portfolio of services in the
aggregate.
18
For more information, see MTS PJSC Annual Report 2020.
1
MTS Ecosystem Management
Our strategic priorities
Wide range
of digital
services
Sustainable Development Report 2020
CUSTOMER LIFETIME VALUEО КОМПАНИИ
02 ОТЧЕТ
МЕНЕДЖМЕНТА
MTS BUSINESS MODEL: MORE REVENUE
AND INCOME
THE SOURCE OF
YOUR DIVIDENDS GROWTH AS SIMPLE
MTS BUSINESS MODEL: STABLE TELECOM AS ONE, TWO, THREE...
AND GROWING ECOSYSTEM MORE \\ We reinvest cash flow received from the existing
(first of all, mobile) business...
ECOSYSTEM
Development CLIENTS
of new INCREASE IN ECOSYSTEM
products CLIENT ENGAGEMENT
1
...TO MAINTAIN LEADERSHIP
OF OUR BASIC TELECOM
BUSINESS AS A FOUNDATION
Development FOR OUR FURTHER GROWTH...
of products
Independently
Through partnerships
and M&A
...TO PROMOTE AND IMPROVE
OUR DIGITAL SERVICES THAT
2 WE OFFER TO OUR EXISTING
CLIENTS FIRST...
21
20
Payment ...AND ALSO TO DEVELOP COMMON
system ECOSYSTEM PLATFORMS AND
SYSTEMS THAT LINK UP ALL OUR
3 PRODUCTS AND GIVE OUR CLIENTS
MTS Ecosystem Management
THE OPPORTUNITY OF THEIR
Flexible Unified premium CONVENIENT AND PROFITABLE
subscription system (MTS Cashback) INCREASE CONSUMPTION...
model IN PENETRATION
OF MULTI-PRODUCT
...WHICH IN COMBINATION
CONSUMPTION INTO
Premium
subscription
Unified identification
system
3 THE CLIENT BASE
=
GIVES A MULTIPLICATIVE
EFFECT, GREATLY
Sustainable Development Report 2020
INCREASING
THE RESPONSE FROM
2 1
Development of
In maintaining a competitive level
basic telecom business AN AVERAGE CLIENT
of basic mobile business:
+ Subscriber base for further growth
and income for its fundingOUR MARKETS
[102-1] [102-2] [102-4] [102-5] [102-6] MTS Group’s Key Markets
MTS PJSC is a leading MTS innovative services and solutions make a Major operators
Operating segment Target market
company in Russia and the CIS’ significant contribution to the development of within MTS Group
providing its customers with an the digital economy, government and business
Mobile services
ecosystem of digital services in the countries of presence. For tens of millions MTS, MGTS, Stream Fixed-line communication
MTS Telecom MTS Armenia (Viva-MTS),
built on the foundation of core of MTS subscribers, the Company’s services are Mobile TeleSystems Fixed broadband access
TV
telecommunication business. an opportunity to stay in touch every day, work
successfully, even in severe epidemiological
MTS retail chain Retail sales of digital services and
conditions, gain access to medicine and education, MTS Retail (Russian Telephone Company—RTC) equipment (including the online store)
and generally improve the quality of their lives.
Banking and financial services
MTS Fintech MTS-Bank Fintech services and applications
Big Data
Artificial Intelligence
OTT applications
MTS Digital, ServiceHub
Moving to the digital business ecosystem1 MTS Digital1 Fintech services for banking process
MTS Artificial Intellligence Center automation
Telemedicine
Online education
Telecom the Company serves Cloud services
86.3
Internet of Things
Industrial automation
MTS, Smart City
MTS Cloud & Digital B2B IT-GRAD 1 Cloud, MTS Automotive
NIS Data centers
million System integration
MTS StartUp Hub
mobile subscribers in the IPTV
services out of three
users of at least two
countries of presence Cable and satellite TV
MTS Media, Content distribution and production
MTS Media Satellite TV Kinopolis Film Studio
23
OTT-platfrom
2.47 5 product lines
Online-cinema
Fintech
TOP-
Ticket aggregator
22
(Ticketland, Ponominalu and MTS Live
ticket services)
million MTS Entertainment MTS Entertainment LLC MTS Live Arena
Organization and production of events
Partnerships with sites for events
active MTS Bank clients Russian banks in terms of loan million
portfolio growth rates2
MTS Ecosystem Management
7
6.6 3
Media
>
million
TOP-
TV users according to the amount of TV
Sustainable Development Report 2020
subscribers in Russia
Cloud
and digital
solutions
> 2
corporate customers
thousand 78 regions
covered by NB-IoT network
1
Until 2021—MTS IT.
#CloudMTS
1
At the end of 2020.
2
According to Banki.ru.MTS Telecom
[103-2] [103-3] [PA4]
78.5
Mobile business in Russia
In 2020, the main driver of change was the COVID-19 increased. By 2019, the volume of
pandemic and the subsequent lockdown. Due to mobile traffic increased by 45.3% million
restrictions for the population, as well as the need and amounted to more than 7.1
for many companies to actively implement remote thousand PB. It is important to note subscribers in Russia
operation in the reporting year, the demand for the that the main growth fell at the
provision of data transmission services significantly high-speed 4G segment.
Mobile data penetration (proportion of monthly active users), %
Fixed-line communication
65
63
59 In the context of the fixed-line communication In 2020, MTS continued to implement a large-scale
53 and broadband access (BBA) market saturation, program for the modernization and construction of
47 49
44 MTS main strategy in this market is attracting and fixed networks: the project affected more than 45
42
35
39 retaining subscribers through the development of cities, where tariff plans with Internet access speeds
30 package and convergent offers, as well as expanding of up to 1 Gb/s became available.
the product portfolio.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
It is planned to modernize more than 80% of the capacity by 2023 as part of the
Mobile traffic, PB investment program for the development of fixed networks.
3,461 5,741
1,269 2,016
25
959
1,364
1,434 In the broadband market, the penetration of broadband TV market as a whole the dynamics of connections
24
1,383 access in 2020 amounted to 61%. The growth of the continued to decline. The growth driver is IPTV
18 17 20 18 subscriber base in the market was 2.1% (1.6% in 2019). In connections bundled with fixed broadband access.
addition to expanding coverage, growth was facilitated
2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020
by the connection of new subscribers during the period New TV platform, expanding the capabilities of
2G 3G 4G
of self-isolation who previously used mobile Internet. As traditional TV with interactive components, continued
MTS Ecosystem Management
a result of this, the growth of the base turned out to be to develop. Interactive TV products (IP TV and Hybrid
higher than last year’s values. TV) were relaunched in all cities where the fixed-line
Voice traffic, million minutes 375 business was present.
In the fee-based TV market, MTS demonstrates stable
363 366 363
positive dynamics and an increase in the number of MTS revenue in fixed-line communication segment
users, despite the fact that in the Russian fee-based increased by 3.4% in 2020.
Sustainable Development Report 2020
2017 2018 2019 2020
At the end of 2020, MTS showed an increase in the subscriber base of fixed
broadband access and television by 10% and 9%, respectively, which significantly
exceeds the market average.
In the summer of 2020, due to the borders closure, the traffic of subscribers on trips
across Russia also increased.Mobile business abroad
MTS Retail
Armenia Belarus
In Armenia, under the Viva-MTS trademark, The coverage of the GSM mobile network by the The MTS retail chain remains the main channel for attracting subscribers: over 39.4% of
the Company offers communication services in operator Mobile TeleSystems PJSC (MTS PJSC SIM card sales are carried out through MTS stores. The owned retail store network delivers
the GSM, UMTS and LTE standards. Viva-MTS subsidiary) is 98.1% of the territory of Belarus, superior performance by both the number and quality of new SIM card subscribers. MTS
subscribers have access to innovative tariffs and where 99.9% of the population of Belarus lives. remains the largest non-food retail chain in Russia, with MTS’s retail network comprising
services, convenient service formats that meet MTS The 4G standard covers 76.5% of the population. 5,244 stores at the end of 2020.
Group international standards.
At the end of the year, MTS’s subscriber base in
In 2020, the 4G/LTE technology became available Belarus amounted to 5.68 million users, 3.8 million
to 91.5% of the population of Armenia. At the end of people of which used data transmission services.
2020, 96% of Viva-MTS cell sites supported 4G/4G+ The market share at the end of 2020 amounted to MTS Fintech
technology. 47%.
MTS Bank is responsible for the creation, development and sale of financial services for the
Viva-MTS maintains its leading position in the The main priorities of the Company’s activities in entire MTS Group, which combines its own financial technologies with the capabilities of
market, far ahead of its competitors. The market 2020 were the infrastructure development and MTS’s Big Data, providing the MTS Group with a competitive advantage in this market.
share at the end of 2020 stayed at 59%. At the communication quality improvement.
end of 2020, the subscriber base amounted to 2.15 Despite the significant negative consequences of the pandemic for the entire banking
million users. To increase the speed of wireless fixed broadband sector, MTS Bank ended 2020 with an increase in its loan portfolio and a positive financial
access and the coverage of the country’s territory result. The retail loan portfolio grew by 29.7% year-on-year to RUB 117.6 billion. In 2020,
The main priority of MTS in the Armenian market in with mobile services, the installation of new 3G MTS Bank entered the TOP-5 according to the growth rate of the retail loan portfolio at the
2020 was the further expansion of the range of V&D and 4G cell sites continued in 2020. end of the year among 30 leading Russian banks1 and the TOP-10 banks according to the
tariffs targeted at the youth segment, in addition size of the credit card portfolio.
to the existing ones. The growth in the number of
V&D tariff users was 4 p.p. compared to 2019. The
average use of data transmission in 2020 increased
by 40%.
MTS Digital
The MTS Digital is focused on the development of digital solutions and the implementation
27
of projects at the request of corporate customers. Within the framework of present
directions MTS develops its own innovative products in the areas of automated building
management, information security and financial management.
26
MTS has a Big Data Center (Big Data), which helps to develop existing products and
creates new ones based on the analysis of anonymized big data of tens of millions of MTS
Viva-MTS is actively developing new products and services based on cloud clients. For example, this is a service for organizing advertising campaigns MTS Marketer,
infrastructure and virtual space, which are in demand among corporate customers. geoanalytical products for business and government, and others.
MTS Ecosystem Management
Another priority area for MTS development is the creation of products based on artificial
intelligence and the integration of relevant technologies into existing solutions. Thus, MTS
develops video analytics services, virtual assistants and a number of other promising
products.
Sustainable Development Report 2020
MTS is a member of the AI Alliance, which develops AI technologies
in Russia.
1
According to Banki.ruMTS Cloud & Digital B2B
Cloud Ecosystem
MTS cloud ecosystem includes infrastructure solutions based on private, public and hybrid In 2020, MTS became the first operator in Russia to launch eSIM for the Internet of Things
clouds, a range of advisory and professional services, as well as data center and telecom and the M2M segment in accordance with international GSMA standards and regulatory
services. MTS cloud business includes the providers #CloudMTS and IT-GRAD, the 1cloud. requirements. The technology will allow the production and sale of equipment already
ru individuals and small businesses-oriented platform, and the Avantage data center. Our provided with communication, which will greatly simplify the integration and testing of IoT
customers: the Dymov Group, the Segezha Group timber holding, the Salym Petroleum devices in production, reduce the net cost and SIM cards logistics and maintenance costs,
oil production company, the Kortros Group, Utair airlines, ABBYY, Gazprombank and other and improve the reliability of equipment.
major Russian and international companies.
Internet of Things MTS joined the working group of the Sphere space subprogram to create
In 2020, MTS began offering five types of the Internet of Things satellite system. MTS specialists from the Satellite
MTS has the largest NB-IoT basic and most popular NB-IoT equipment Communication Systems division were involved in the State Space Corporation
network in Russia, which operates for B2B customers in vertical markets: gas, Roscosmos initiative working group to assist in the development of preliminary
in 78 regions1 of the country. This electricity, water meters; sensors for doors and project materials for determining the parameters of subscriber devices, services
is Internet of Things network hatches opening, and also released a NB-IoT and Internet of Things traffic when creating the IoT Marathon multi-satellite low-
designed specifically for the Development Kit for the development of energy- orbit data transmission system.
smart city, housing and utilities efficient devices.
infrastructure and smart real
estate solutions. The network is
highly energy efficient and allows
connected devices to operate for
up to 10 years without battery For more information on MTS NB-IoT network
29
coverage, see our website at
replacement. NB-IoT has a high https://moskva.mts.ru/business/podderzhka/
degree of protection and improved nasha-set
penetration: the network works
28
even in hard-to-reach locations for
other communication standards.
The capacity of the NB-IoT the NB-IoT standard in accordance with the current In December 2020, MTS and Microsoft signed an agreement on the development
network is 50 times that of 4G, specifications and capabilities of its own IoT platform. of the Russian Internet of Things market. The companies will integrate the
which allows to connect multiple It is planned to create a certification center for NB-IoT Microsoft Azure IoT Central global platform and Russia’s largest Internet of Things
MTS Ecosystem Management
devices per cell site. network equipment and launch new products in the MTS network NB-IoT, and will begin to provide access to the service for managing
areas of housing and utilities infrastructure, real Internet of Things Microsoft Azure IoT Hub devices through the #CloudMTS cloud
In 2021, MTS plans to increase the estate and retail. service provider.
coverage of the NB-IoT network
to 83 regions of Russia, expand MTS maintains its leadership in the number
support for special functions of of IoT SIM cards with a market share of about 43%.
Sustainable Development Report 2020
At the beginning of 2021, MTS deployed an NB-IoT network at the Russian For more details, see sections For Customers – Systematic Approach
and Consistency, For Local Communities – Support and Development.
Antarctic Station Progress in Antarctica to transmit data from devices of the
Arctic and Antarctic Research Institute (St. Petersburg).
Network-powered trackers, multisensors and sensors will allow to explore the
movement of glaciers and snow cover, monitor the integrity of snow runways
and microclimate in residential and workrooms.
1
As at December 31, 2020.MTS Media
250
At the end of the year, the MTS
MTS Media is a subsidiary of television broadcasting, content distribution and satellite TV subscriber base grew
MTS PJSC, which develops media production, and management of the Kinopolis Film by 17% and exceeded the million
assets and television products, Studio. mark. Converged solutions and MTS Satellite
including IPTV, cable and satellite an affordable high-quality linear TV channels
product became the drivers of
growth.
47
Content Production
In 2020, MTS Media began active a new level media offer. Under the agreement, MTS
development of a new direction— Media received rights, including exclusive ones, to use HD channels
the production of exclusive content. content from the Channel One Russia library of feature
Within the framework of present and documentary films, as well as new products that
3
directions joint projects of an had not previously been aired by the broadcaster.
online cinema with the production
companies Bazelevs by Timur On December 18, 2020, two of MTS Media’s own
Bekmambetov and Sreda by round-the-clock TV channels began test HD Ultra HD channels
Alexander Tsekalo, as well as the broadcasting of films and series. KinoJam 1 TV channel
film companies KIT and RWS are is dedicated exclusively to domestic cinema, while
now being implemented. KinoJam 2 channel will present popular foreign TV
series and films.
In March 2020, MTS Media and
Channel One Russia announced
a strategic partnership to form
MTS TV
MTS Entertainment
The MTS TV platform provides In 2020, a large-scale improvement of the MTS TV
31
subscriptions with access to platform was carried out: more content became Strategy for building MTS organizing concert and theatrical performances, MTS
a wide range of TV channels, available to users, viewing became more comfortable ecosystem involves the Live Arena and management of a sites network in the
also acting as an aggregator thanks to the ability to share content from mobile development of an entertainment regions of Russia. MTS ticket services are present in
30
for the main Russian streaming devices to large screens using Chromecast and business. MTS Entertainment is more than 60 cities of Russia.
services—Amediateka, IVI, Airplay. In addition, Android devices now have the a subsidiary of MTS that unites
Megogo and Start. A subscriber ability to save content locally for playback without projects and assets of offline MTS Entertainment’s debut project in 2020 was
of any operator can subscribe Internet access. entertainment and related online investment in the musical Chess, which premiered in
to the MTS TV video service and services. Current projects in this October 2020 and became one of the key theatrical
MTS Ecosystem Management
use it on a smartphone, tablet or area: Ticketland and Ponominalu premieres of the year. At the end of 2020, the musical
computer, on interactive consoles ticket services, MTS Live portal gathered more than 41 thousand viewers.
or Smart-TV. The MTS TV platform and application, direction for
unites
MTS is major Russian
operator in terms of the
number of subscribers,
6.6 million
Sustainable Development Report 2020
one of the three leaders in TV users
the Russian market among
fee-based TV operators and is included in the
3
and is the only Company on
TOP-
the market that distributes
content in all environments:
cable, satellite TV, IPTV and services
its own OTT platform.
according to the number of TV
subscribers in RussiaNETWORK INFRASTRUCTURE
DEVELOPMENT
[103-2] [103-3]
LTE
MTS is constantly developing its which made it possible to increase the coverage and In July 2020, MTS was the first among Russian telecom operators to receive
network to ensure high-quality capacity of the network and provide customers with a license to provide 5G mobile services.
voice communications and mobile a high level of service, including data transmission
Internet. In 2020, the Company speeds and the video views quality, as the most
continued to increase the capacity demanded services.
of its LTE network throughout the Transport and backbone data
Russian Federation. The volume In 2020, over 16.3 thousand new cell sites were transmission networks
of construction in 2020 exceeded launched, 14.5 thousand of which operate in the LTE
volume of 2019 by more than 20%, frequency bands.
The growth of urban and zonal Thanks to operative control, the MTS network
16.3 4
fiber optic communication lines withstood the explosive growth in traffic when self-
> >
(FOCL) in 2020 amounted to isolation began in April 2020, and the restrictions
more than 9 thousand km, the imposed in connection with the COVID-19 pandemic
thousand thousand total length of FOCL reached did not affect the quality and pace of new network
250 thousand km. In 2021, it is construction.
new 3G and LTE cell sites new sites built planned to commission another
launched in Russia 6 thousand km. For more information on the services and products of MTS, see
section For Customers – Systematic Approach and Consistency.
33
Developing the MTS network, we pay great attention not only to the new
32
construction site, but also to the optimization of the existing infrastructure.
In 2020, traffic to users (downlink) exceeded 7.06 Tbit/s (an increase
of 46%), and traffic from users (uplink) reached 2.27 Tbit/s (an increase of 50%).
5G
MTS Ecosystem Management
In addition to existing on the basis of which a number of 5G solutions and
network development, MTS technologies are being tested.
is strengthening its leading
positions in the implementation The deployment of 5G networks is involved in the
of new technologies. In July 2020, Digital Economy of the Russian Federation national
MTS was the first in Russia to program as an essential component of the country’s
receive a license to provide the economic growth.
Sustainable Development Report 2020
5G/IMT-2020 standard mobile
communication services in the It is planned to continue the deployment of 5G pilot
24.25–24.65 GHz range in 83 zones in Moscow and other regions of Russia in 2021.
regions of the country. As of today,
seven permanent 5G pilot zones For more information on MTS’s participation in the Digital Economy
national program, see section For the State – Reliability and Scale.
have been organized in Russia,MTS KEY EVENTS
IN THE 5G DEVELOPMENT
FIELD IN 2020
Moscow •M
TS and Huawei announced the start of a big
upgrade of the mobile network in Moscow
and Moscow Region and the Moscow region to the 5G-ready
(September) level to increase network performance and
introduce innovative services.
Vladivostok • In Vladivostok, MTS demonstrated Russia’s
first on-air streaming of the federal TV channel
Central Federal • MTS and Ericsson signed an agreement to (October) GTRK Vladivostok via the fifth-generation
deploy 5G-ready equipment and Ericsson network, using equipment of leading
District (March) solutions for a large-scale upgrade of 2G/3G/4G telecommunications solutions provider Huawei.
MTS network across 16 regions of the Central The broadcast was held from the territory of
Federal District of Russia. the Far Eastern Federal University, where MTS
opened the first pilot 5G zone in the Far East
Russia (July) • MTS announced that it has received the first
license in Russia for the provision of mobile
communications services of the 5G/IMT-2020
Moscow, Skolkovo •M
TS and Skolkovo Institute of Science and
Technology (Skoltech), one of the leading
standard in the 24.25-24.65 GHz band across 83 (October) non-governmental educational and research
regions of the country. The license was granted institutes in Russia, have launched a pilot 5G
by Roskomnadzor until July 16, 2025. The first network at the Skolkovo Innovation Center to
test the development of 5G technologies and
35
users of the fifth generation network will be
business clients and large industrial enterprises. the creation of promising domestic industrial
ICT solutions and services based on them with
the involvement of Skolkovo residents and
34
industrial partners of Skoltech.
Tomsk (August) •W
ith the assistance of Tomsk region
administration, MTS launched in Tomsk the first
MTS Ecosystem Management
pilot communication network of fifth generation
on the basis of Tomsk State University of
Control Systems and Radioelectronics and
Micran JSC, one of the leading developers
and manufacturers of telecommunication
equipment in Russia.
"
The launch of the 5G zone in Skolkovo is another
step in the long-term cooperation of MTS and
Skoltekh in creating an infrastructure for R&D
Sustainable Development Report 2020
in broad cooperation with the residents of
the Skolkovo Foundation. I am sure that the
activities of our joint innovation cluster, driven
by the synergy of the scientific potential and
IT competencies of all its participants, will
accelerate the entry to the market of both
competitive domestic telecom equipment and
ready-made industrial 5G solutions and services
for various sectors of the economy.
Dmitry Khalin,
Member of the Management Board,
Vice President for Cloud & Digital Solutions of MTS PJSCYou can also read
