Global telecommunications companies have been undergoing the test of time in recent years. Traditional communications services may continue to make up the bulk of telecommunications companies’ revenues, but the sector’s growth rate is expected to decrease in the next few years. At the same time, the global telecom faces large-scale challenges not only in maintaining existing infrastructure, but also in introducing new technologies such as 5G networks and the spread of AI, which requires significant investment. According to TMT Consulting’s calculations, the Russian telecommunications market grew by 6.2% in 2024, to 2 trillion rubles, but the forecast by 2029 is expected to reduce the average annual growth rate to 4%. In recent years, the telecommunications sector has been developing even more slowly. To maintain the status quo, we need to increase the demand for telecom services in the digitalization industry. B2C penetration has almost reached the ceiling. In order to reverse this industry trend, we rely on services such as spam and fraud protection.

In addition, in the absence of prospects for intensive growth of traditional telecom, companies around the world are looking for new points to increase value and enter into fierce competition with companies outside telecom. In the face of an industry storm, MTS will remain on the crest of the wave, and current industry trends will be a powerful incentive to transform our management model. At the end of last year, we launched large-scale changes that will allow us to stand the test of time and remain the undisputed leader in high-tech industries.

Already this year, we have created the MTS Ecosystem group of companies, which will manage ecosystem verticals outside of telecom. We had to significantly adjust investment for 2025. Conservative cost management measures will allow us to free up additional cash flow and maintain a high level of dividend payments for investors in the coming years. MTS has always strived for transparency in its relations with investors and has always sought to meet expectations. I would like to focus on the baggage of assets with which we embarked on the transformation. By the end of 2024, MTS demonstrated a high double-digit revenue growth rate due to increased revenue from basic telecom services and fast-growing areas.

MTS AdTech is the fastest growing business in the ecosystem, which started with a single product and now represents a full-fledged advertising vertical. Over the past two years, MTS has expanded its perimeter by entering into partnerships in the field of data and active acquisitions: deals with Buzzoola, Segmento, GetBlogger. We have also built one of the leaders of the kick-sharing market, MTS Urent service, with the widest geographical presence among competitors. In the reporting year, we improved our RnD competencies in kick-sharing by merging with Eleven, which in the future will allow us to localize the production of electric scooters in Russia and bring new models to the market.

MTS Media Holding has become one of the main drivers for replenishing the ecosystem base, which already has 17.5 million customers. In the past, we completed the consolidation of all media assets into a single business vertical, which included MTS Live, Kion, MTS Music, MTS Label and Stroki. This is our first vertical highlighted as part of the transformation. It involves close cooperation between services that are integrated into the media universe and enrich the entertainment sector of our customers every day.

MTS Web Services is our new technology company that consolidates ecosystem assets in IT, AI, cloud and data, namely MTS Digital, MTS AI, MWS (formerly MTS Cloud), Big Data, as well as assets in the field of innovation and cybersecurity. MWS has one of the best expertise in the industry, high-quality business solutions, and intends to realize its ambitions in the future. After the creation of a new technology company, MWS solutions will become more replicated beyond the MTS perimeter. We see great growth prospects in terms of AI offerings. MTS has highly competitive products, in particular, the Kodify AI assistant, which helps programmers write code, fix bugs, and conduct auto-testing. With it, team productivity can increase by more than 50%. There is also the Cotype model, which speeds up text preparation and information analysis by creating chatbots and text services. MTS has extensive expertise in the field of platformization. The ecosystem is actively developing a single technology platform, The Platform, and now plans to bring its components to the foreign market: intelligent, technological, infrastructural, cloud and business platforms, as well as platforms for data analysis and storage.

And finally, Fintech. The stock exchange placement of our bank’s shares last year was a record in terms of demand and the number of investor applications. The funds raised and the organic dynamic growth of the Fintech business will make it possible to implement an ambitious strategy.

Together with you, we have gone through the process of establishing new business verticals. They have grown into mature independent businesses before our eyes, and some already occupy leading positions in their own niches. And this, of course, could not have been achieved without the trust of our partners, the enthusiasm of our employees, and their confident aspirations to change the familiar.

Yours sincerely,
CEO of MTS