The title of strategy — Customer Lifetime Value 2.0 (CLV 2.0) — means that we strive to maximize the time during which the customer uses our services by increasing his/her emotional commitment to our brand, as well as his/her satisfaction and loyalty through offering him/her a personalized seamless customer experience across a wide range of digital products. In this way, we strive to maximize the value that we broadcast to the customer, while simultaneously maximizing the value that we receive from them.

The main areas of our activity, which we perceive as “tools” for increasing shareholder value, are: building an ecosystem of digital products, transforming into a Group with the implementation of the “sum of the parts” principle, and achieving excellence in digital technologies and competencies.

Building an ecosystem of digital products

This is the key format of our market offer in the B2C segment. We are confident that our strong brand and deep customer knowledge, supported by advanced analytical tools (based on BigData and using AI technologies), will allow us to provide our customers with a seamless, deeply customized and personalized digital experience within the framework of the multi-product consumption of our and partner services. We clearly see that the customers, who use several our services, generate greater value and demonstrate higher levels of brand loyalty and satisfaction with services.

We will continue to build a portfolio of digital products based on our own developments, as well as complementing it with partner products. We now see with even greater clarity the fundamental role of partnerships in the development of our ecosystem. Partnerships will allow us to bring more value to the lives of our customers, directly or indirectly providing them with a convenient customer experience in various fields. The main priority of our work with partners is to expand the possibilities of partner programs and create a value proposition that will allow us to become the best possible choice for our potential partners.

Our key priorities in terms of ecosystem development over the next few years are: increasing the ecosystem customer base, developing high-quality digital products and expanding the pool of partner companies. We focus on developing innovative products in existing and promising business areas through our own R&D, partnerships and M&A transactions.

Transforming into the Group with implementation of the sum of the parts principle

Some of our business areas have reached such a scale and level of maturity that they have the opportunity to become a driver of increasing the fundamental value of MTS Group. Therefore, we launched the process of gradual spin-off of such areas into separate companies that in the future could raise external funding and become full-fledged financial market entities with significant value for the investment community in the long run. In terms of investor perception, we are striving to move away from the image of MTS as a single and indivisible entity to the image of the Group as “a sum of the parts”, where each part is valued fairly in accordance with the results of its activities and by the multipliers accepted by the market for each specific business area.

We are confident that this approach will ensure capitalization growth for the Group as a whole, and for individual business lines, high motivation for their teams, will allow them to set up internal business processes in an optimal way, in accordance with the specifics of each business, and will also expand the possibilities of raising additional financial resources.

In December 2024, MTS announced the transformation of MTS PJSC into a holding company with the separation of the Company’s business verticals into individual legal entities: Fintech, Media Holding, MTS AdTech, Urent, and MWS, where we plan to bring together all our IT-related competencies, including BigData and AI, to offer the market. The creation of separate legal structures will ensure transparency of the Group’s activities, faster decision-making in individual businesses, and even clearer investment focus in an environment of increased key interest rates.

The telecommunications business will be concentrated in MTS PJSC. Non-telecom businesses are structured into separate companies under the management of a new legal entity, MTS Ecosystem. Legally, MTS Ecosystem is a 100% subsidiary of MTS PJSC, but it will have greater independence in its activities.

It is important to say that we will remain a Group and continue to maintain and develop ecosystem links between individual areas. All of the above will be supported by clear and detailed agreements on interaction between the companies included in the Group. We also intend to ensure efficient corporate governance across all businesses of MTS Group following the uniform standards consistent with the best global practices.

Achieving excellence in digital technology and competencies

It is a continuous process of introducing advanced technological competencies, tools and solutions into the Company’s business processes and products. We are focused on developing and enhancing cutting-edge digital platforms that provide flexibility and high speed of development and launch of a wide range of internal and external products.

In order to improve the overall cost efficiency and reduce T2M, we are committed to using AI tools across all platforms, products and business processes. We are developing digital sales and communication channels (both external and internal), creating a digital corporate culture and digital consciousness among our personnel. We strive to shape the Company’s technological image in the external and internal environment.

An important external context for our priority on developing digital competencies is the active growth in demand for digital services in the B2B/B2B2X markets. Recently, the source of this growth is the companies’ common commitment to technological transformation supported by the pandemic effect, the reduced offer of such services in Russia due to the fact that global players left the market, as well as development of AI technologies. We thing that this market is a critical source of growth for digital service providers and its importance will only increase in the future.

We are confident that our IT and other digital technology competencies, which will be concentrated at MWS, will benefit our customers and partners, and we will be able to successfully monetize them in the market.

Ecosystem and digital competences

By the end of the year, MTS demonstrates stable performance in an ever-changing external environment. The number of ecosystem customers increased to 17.5 million, and ecosystem revenue increased by 22% in Q4 2024 year-on-year. The number of customers using four or more ecosystem products increased by 19%. Our MTS Premium ecosystem subscription has demonstrated a 47% increase in the number of participants and 1.6 times the involvement of participants in non-telecom products. MTS PJSC’s non-telecom lines already account for almost half (45%) of the Group’s revenue and are growing 4 times faster than the underlying telecom business. These indicators demonstrate the successful implementation of our ecosystem strategy aimed at synergy between the various business lines of the MTS Group.

As part of the retail network development, we opened the first ecosystem supermarket of a new format in Moscow with a focus on the Company’s digital solutions. In the store, customers will not only be able to purchase the latest technological innovations, but also get to know more about the digital services of the MTS ecosystem.

In 2024, we launched MTS ID solutions, which made authorization on our partners’ websites and applications much easier for the end user due to seamless authentication. Previously, MTS ID was integrated only into ecosystem products and successfully passed all testing stages.

The capabilities of Big Data play an important role in ensuring synergies within the MTS ecosystem. For example, in 2024, MTS BigData developed a new solution to combat telephone fraud, which allows banks to assess the likelihood of suspicious actions against their customers in real time and receive notifications. Using the MTS service, the accuracy of detecting fraudulent activities increased by 45%. One of the largest banks has already implemented the new technology.

The MTS ecosystem has successfully developed its digital competencies. In particular, the Company announced the launch of the DevX platform, an integrated development environment, the use of which will increase the speed of launching new products and services several times. The potential economic effect of the implementation of the platform in the next five years is expected to amount to more than 6 BRUB. We have also implemented the WordPulse speech analytics tool developed by MTS AI in a number of services. Every day, neural networks will check hundreds of thousands of customer requests by phone or in chat rooms, as well as study feedback in messengers and social networks regarding issues related to communications, the KION online cinema, MTS Bank, and other products.

Telecom

Our core telecom business shows steady growth of 7% year-on-year in communication services, and also demonstrates synergy with ecosystem areas.

In March, we launched a new telecom platform that provides companies in our ecosystem with the ability to manage resources and services in the telecom industry. It will replace the Foris billing system, which the Company has been using for more than 20 years. During the year, 30% of subscribers were transferred to the new platform, and in the next three years, all MTS subscribers will switch to the Telecom Platform.

The Company has implemented nationwide a new automated system for monitoring the quality of transport, switching and cloud networks — Network Performance Monitoring (NPM) of its own design, and has also deployed high-quality voice transmission technology VoLTE (Voice over LTE) throughout the network. We have also put into trial operation on our existing network in 37 regions of Russia 200 domestic LTE base stations manufactured by IRTEYA, a Russian telecom vendor.

MTS launched the antispam Defender AI application, which makes it possible to identify who is calling the user, even if the phone number is not registered in the phone book, and also promptly report spam calls and prevent leak of personal data. The application, which is available to subscribers of any Russian mobile operators, is already used by 18.3 million subscribers.

We are the first among Russian operators to launch the function of calls via Yandex Station together with Yandex. With it, MTS subscribers can make calls from smart speakers to any operator’s numbers at their current rate and receive calls.

MTS has introduced an artificial intelligence-based “digital assistant” function in MTS Link online communication and collaboration services: the assistant can recall the results of past online meetings, find the necessary notes, compile summaries of information on a specific topic, and highlight key points of discussions in chat rooms.

Fintech

As part of the MTS Group’s value disclosure strategy for shareholders, we conducted MTS Bank’s IPO, which was successful based on the volume of demand and the number of investor applications. The market capitalization of MTS Bank, including shares issued as part of the IPO, at the time of the start of trading amounted to about 86.6 BRUB, and investor demand was approximately 15 times higher than the IPO volume at the upper limit of the price range.

MTS Bank’s revenue in 2024 increased by 41%, and the retail loan portfolio grew by 14% in Q4 2024.

We continued to effectively expand the capabilities of our fintech products for ecosystem users and other customers. In April, the MTS Pay contactless payment service from bank cards became available to owners of smartphones running on the Android operating system. MTS introduced the Flex ecosystem service for paying for purchases without commission and overpayments in equal payments from Russian bank cards. It is also possible to pay for goods and services at retail outlets and online stores using a QR code from a subscriber’s personal account or a card of any Russian bank using the My MTS application on Android.

MTS Media Holding

In May 2024, MTS completed the consolidation of the KION online cinema, the Stroki book service, MTS Music streaming, and MTS Live and MTS Label areas into a single vertical — MTS Media holding. In 2024, all businesses demonstrated dynamic growth in key indicators.

AdTech

By the end of 2024, the revenue of the MTS advertising vertical increased by 58% compared to the same period of the previous year and exceeded 58.7 BRUB.

In April, MTS launched its own next-generation platform for agencies and major businesses to purchase ads in Telegram Ads. A technology partnership agreement was also signed, under which MTS AdTech customers will be able to launch advertising campaigns on Avito.

MTS Web Services (MWS)

During the year, MWS launched a number of new services and areas, including Russia’s first cloud-based robotics platform, RPA CloudMTS (which accelerates routine workflows by 10–20 times), a virtual infrastructure based on Russian software, an AI cloud, and more than 30 new Enterprise-level cloud products.

MTS Urent

MTS Urent’s business has been actively developing and demonstrating synergy with the MTS ecosystem. Thanks to the integration of MTS Urent with MTS ID and MTS Pay services, MTS users have the opportunity to seamlessly log into the application, quickly start and pay for trips using cashback points — as part of the 24 Tariff, MTS subscribers have already exchanged more than 10 million minutes for bonus points and traveled more than 2 million kilometers, and the My MTS application has also made available rent of powerbanks from MTS Urent. In total, over the year, unique users of our kick-sharing service made > 100 million trips, an increase of over 52%.