Summary of the annual performance results and management activity in the context of strategy implementation
The key outcome we aim to achieve in implementing our Customer Lifetime Value 2.0 (CLV 2.0) strategy is to increase the overall value of our ecosystem product proposal and transform that growth into increased shareholder value. From a strategic management perspective, this means that we focus our efforts in the following three areas:
- building an ecosystem of digital products;
- achieving excellence in digital technology and competencies;
- transforming into the Group with implementation of the sum of the parts principle.
In the first two areas, the majority of the necessary decisions and actions on the part of senior management and the Board of Directors have already been implemented. A set of key business areas which, according to our expectations, can demonstrate certain dynamics and give financial effect, has been formed, a system of operational management and mechanisms for interaction between areas have been built, and principles and standards of corporate management have been established. Currently, the main operational work in this area is done by local teams. The Ecosystem’s top management and corporate bodies make decisions regarding opening new areas or closing those that do not meet expectations and perform a number of high-level functions (distribution of financial flows, approval of strategy, control over the achievement of business outcomes, key personnel appointments, M&A issues). An important task at the Group level remains the search for optimal parameters and configuration of the partner program, which is the most important factor in the forming the ecosystem offer for us.
The main area of work by the Board of Directors and senior management in 2024 was “Transformation into a Group of Companies”. In this area, we not only made good progress, but also fulfilled all the tasks set at the upper limit of expectations. The above can be explained by both obvious successful activities in business areas and positive changes in our expectations regarding the further revival of financial markets and the macroeconomic environment. As a result, at the end of the year, we considered it possible and necessary to propose to shareholders to adopt an official resolution to start the asset division procedure and the process of transformation towards the Group configuration, and this proposal was supported by the shareholders.
We hope that we will be able to complete all necessary actions to reconfigure the Group in Q3 and Q4 2025. Management structures and business processes have been built in the areas, and all conditions for conducting business operations have been created. Businesses are independent enough, and the interconnections between them allow them to continue to interact smoothly as standalone legal entities. The main task of the Group’s corporate governance bodies in the near future will be the formation of corporate governance structures for new companies. They will be unified and standardized in accordance with our high standards and our rich experience in this field.
As part of its function to protect the rights and interests of shareholders, the Board of Directors took all necessary actions to organize the annual general meeting of shareholders and make decisions on paying dividends for 2023 in the total amount of RUB68.6 billion. Also in 2024, in order to preserve shareholder value, the Board of Directors continued to consider and made decisions on issues of restructuring the ownership of MTS foreign businesses and their transfer to friendly jurisdictions. In April 2024, the Board of Directors approved a new dividend policy for 2024–2026, which sets the target yield at a level of at least RUB35.0 per ordinary share of MTS PJSC with a payment frequency of once a year. This emphasizes that respecting the interests of investors is an absolute priority for us.
The following can be noted among other issues considered by the MTS Board of Directors in 2024 and the respective decisions made.
- Following the best corporate governance practices, the Board of Directors considered a number of issues related to functioning of the internal audit, control and compliance system, as well as the risk management system in MTS.
- Necessary decisions were made regarding the composition of the corporate management bodies of MTS PJSC and subsidiaries.
- An assessment was made with regard to the achieving the target KPIs in 2023 by the CEO and members of the MTS Management Board, and the target KPI levels for 2024 were also approved.
- In order to ensure the continuity of financing of MTS PJSC activities and optimal debt management, issues related to the programs for issuing and repurchasing bonds, Digital Financial Assets and other financing instruments were considered.
In 2025, we will consistently implement our transformation plan and, if necessary, make prompt adjustments based on likely changes in the macroeconomic environment and historical background. Our expectations for the future combine optimism and pragmatism. We are ready to take advantage of the opportunities that arise, but in our actions we will focus primarily on the sustainability of the current business, high financial performance, and the interests of shareholders.