FINANCIAL

In 2020, Viva-MTS revenues amounted AMD 48.5 bln. A sound level of gross margin at 70% and OIBDA margin at 47% (before capitalization) were maintained, despite the significant negative impact of COVID-19 on the business.

COVID-19 spread in the year 2020, followed by lockdown, caused a decrease in people mobility and income level, and an absence of touristic flows. In addition, Service Centers were operating with limitations imposed by the State. These factors resulted in a decrease in revenues in the Telecommunications business in Armenia. Viva-MTS, being the leader in the Telecommunications sector in Armenia, could still hold and even increase its market share by revenues (without Interconnection and Retail).

Facing a decrease in revenues, Viva-MTS could effectively manage expenses and make safe optimizations to maintain high profitability.

in AMD

In Y2020, Viva-MTS total revenues decreased by AMD 8 bln. compared to Y2019.

The main reason for this drop was the overall crisis in the country caused by COVID-19.

The immediate negative impact was on voice and roaming services, while revenues from data services remained the growth force of mobile revenues. MTS Armenia follows the worldwide tendency to enhance data services, thus continuously improving the network and introducing competitive price plans to the market. Enhancing indoor coverage was one of the main goals in 2020.

Other VAS revenues also contributed to Revenues increase with the increase in mobile applications popularity and revenues from Bulk SMS.

The decrease in Interconnection revenues was mainly a result of SOP contract terms change with MTS-Russia (AMD -2.5 bln.).

Retail revenues were much affected by lockdown and service centers operating with limitations (keeping social distance and serving a limited number of subscribers at a time) during the pandemic. During mentioned limitations, a decision was made to prioritize Core business sales over Retail. At the end of 2020, Viva-MTS made significant promotions and sold out the stock with special sales to enter 2021 with a healthy stock.

In the field of fixed business communications, Viva-MTS is mainly represented by services for B2B subscribers. Services for B2C subscribers are available in 3 districts. The geography of the B2B network is being expanded in the regions of the RA.

After a significant decrease in revenues since mid-2019, in 2020 there was a stable increase in revenues as a result of concluding several major contracts. The decrease in operator income in the Q4 2020 is due to the nullifying of the contract price with Karabakh-Telecom for IP since Oct-20.

in AMD

in AMD

FINANCIAL STATEMENTS

IN THOUSAND DRAMS

As of the end of Y2020, Viva-MTS’ financial position showed a good balance of cash and equivalents. Current assets exceed current liabilities by 3.6 times.

Property and equipment (cost of AMD 159 bln. and accumulated depreciation of AMD 128 bln., resulting in carrying an amount of AMD 31 bln.) comprise the biggest portion of non-current assets, consisting mostly of telecom equipment.

Intangible assets (cost of AMD 28 bln. and accumulated depreciation of AMD 17 bln., resulting in carrying an amount of AMD 11 bln.) mostly include rights and licenses.

Right-of-use assets (cost of AMD 10 bln. and accumulated depreciation of AMD 4 bln., resulting in carrying an amount of AMD 6 bln.) mostly relate to the rights for placement of network equipment.

Unsecured borrowings include borrowings to Mobile Telesystems OJSC.

The Company holds 550 000 ordinary shares, each with a value of AMD 1000. Accumulated profit, after paying dividends in the amount of AMD 10.5 bln. in 2020, maintains the level of the previous year of AMD 77 bln. Payables, as well as receivables, are roughly at the level of 2019. An exception is the increase in income tax payable by AMD 1.7 bln., since the Government of the Republic of Armenia has provided an extension on tax payment terms as a support to companies in times of crisis caused by COVID-19.