Interaction with Shareholders and Investors

Share Capital

Information on the number of shareholders

Total number of persons registered in the shareholder register of the issuer as of the end of Q4 2020: 982.

Total number of persons included in the list of persons compiled by the latter (as of September 7, 2020) having a right to exercise (implement) rights to shares of MTS PJSC and for compilation of which nominal issuer’s shareholders presented data on persons, for the benefit of whom they owned (own) shares of MTS PJSC: 184,582

The management of MTS PJSC has no information Information is understood as documented data received by (transferred to) the management. about existing share-ownership interests exceeding 5% of the authorized capital of MTS PJSC apart from the above-mentioned.

Information about securities

Shares

Shares of MTS PJSC are circulated on the leading Russian platform — Moscow stock exchange (MOEX) and are listed on the New-York stock exchange in the form of American Depositary Receipts — ADR (ratio: 1 ADR to 2 shares). From October 3, 2003, shares in MTS PJSC were included in the list of non-listed securities of the Moscow Interbank Currency Exchange. In December 2003, shares in MTS PJSC were included in “B” quotation list at MICEX. Since October 2010, shares have been traded in the “A1” quotation list. Since June 2014, shares in MTS PJSC have been traded in the first level of the MICEX securities list.

The ordinary shares in MTS PJSC fixes for its owner (shareholder) a given volume of property rights, including the right to participate in the Company’s management, the right to obtain a portion of Company’s profits in the form of a dividend as well as the right to obtain a portion of the property left after Company’s liquidation.

The Company’s issued and placed shares are ordinary registered shares in the same par value.

Dynamics of prices and volume of trading in MTS PJSC common shares

Trading platform: MOEX (Moscow), issuer code MTSS

American Depository Receipts

On June 30, 2000, MTS successfully floated the issue of American Depository Receipts (ADRs) of the third level at the New York Stock Exchange. MTS PJSC became the second company in Russia to implement the ADR program of the highest level.

On April 20, 2010, MTS PJSC announced a change in the ratio between ADRs and company shares starting from May 3, 2010. As a result of this change, the ratio of ADRs to ordinary shares was changed from 1:5 to 1:2. Thus, holders of MTS ADRs registered at the end of the work day of April 28, 2010 received additional 1,5 ADRs for every available ADR.

As of December 31, 2019 the total number of ADRs for ordinary registered share amounted to 356,699,642 ADRs, which makes up 713,399,284 ordinary registered shares or 35.70% of the company’s authorized capital.

A depository under the ADR program and shareholder of MTS PJSC is JP Morgan Chase Bank, N.A., to which a depository account of depository programs was opened.

Dynamics of prices and volume of trading in American Depository Receipts of MTS PJSC

Trading platform: NYSE (New York), issuer code MBT

Dividends and share redemption program

History of dividend payment in 2020

For the calendar year 2020, the total amount of dividends was 29,50 rubles per ordinary share of MTS (59,0 rubles per ADS American Depositary Shares ). The total amount paid was RUB 58,9 billion, in addition to special dividends paid in Q1 of 2020 in the amount of RUB 13,25 per ordinary share (RUB 26,50 per ADS).

2020 Stock Buyback Program

In March 2020, MTS launched a program of buyback of own ordinary shares and American depositary shares for a total amount not exceeding RUB 15 billion. The program was in effect until the end of the 2020 calendar year.

In December 2020, MTS completed the share buyback program announced on March 31, 2020. Since the announcement of the program, MTS subsidiary Bastion LLC, has completed buyback of 45,501,316 ordinary shares (including ADSs) for a total amount of about 15 billion rubles, which is 2.28% of the total number of MTS outstanding shares. This number includes 22,758,872 ordinary shares (including ADSs) purchased from Sistema Finance S.A., a subsidiary of Sistema PJSFC.

Dividend Policy

The current dividend policy for 2019–2021 was approved on March 21, 2019 by the MTS Board of Directors, in accordance with the policy, the target dividend yield is at least 28.0 rubles per ordinary share of MTS PJSC (56.0 rubles per ADR) per during each calendar year.

The dividend policy provides for dividend payment in two instalments during a calendar year — annual payments based on the results of the previous year and payment of interim dividends for the first six months of the current year. When determining dividend payments, MTS takes into account a number of factors, including operating cash flow, capital expenditures and debt position.

In addition to regular payments within the framework of the dividend policy, the Company may increase the shareholders’ benefit by implementing a program of share redemption in the open market. When deciding on the launch and size of the redemption program, the Board of Directors takes into account the current availability of funds, operating performance indicators, the amount of debt, the Company’s future cash requirements and the overall market situation.

Debt policy and portfolio

MTS Issuer Credit Ratings Data as of December 31, 2020.

Credit agencies Fitch and Standard&Poor’s and RA Expert assigned the following ratings to the Company’s debentures.

Bonds

MTS PJSC is one of the largest issuers of corporate bonds in Russia. The Company uses funds from bonds’ placement for debt portfolio refinancing and implementation of its investment program.

For the period of 2020, the following bond issues were issued / redeemed:

Events after the reporting date

The proceeds from the issue of bonds will be used to finance a project to connect 4995 socially significant facilities to the fixed Internet: schools, medical institutions, fire departments, police stations, government and local authorities, election commissions and military registration and enlistment offices — in Amur, Kaliningrad, Kemerovo, Leningrad, Tambov, Tver, Yaroslavl regions and in Moscow.

Communication Policy

One of the most important goals of MTS is to maintain strong trustful relationships with shareholders and investors, based on the principles of direct dialog in accordance with the relevant legislation and prevalent international practices.

The current information disclosure system is built taking into account the requirements of listing rules of the Moscow and New-York stock exchanges, operates in the Company and ensures compliance with the transparency principle.

In order to improve its activities in the sphere of compliance with the interests of investors and shareholders, and the establishment of trusting relations with partners, MTS continuously strives to improve the level of its transparency and openness.

In accordance with the principle of general availability, the Company publishes announcements of significant events on the website of the US Securities and Exchange Commission https://www.sec.gov. , on the website of the Russian Information Agency (news feed) http://www.disclosure.ru. , on the official website of MTS: for shareholders http://www.company.mts.ru/comp/ir/control/data/. and investors http://www.ir.mts.ru. .

MTS also publishes other information on its official website. The “For investors and shareholders” https://moskva.mts.ru/about/investoram-i-akcioneram/. section includes internal corporate documents, annual reports, reports on sustainable development, materials for shareholder meetings, information on the registrar and auditor, information on dividend policies, quarterly financial statements under IFRS and RAS, and information on quoted prices of shares and bonds. The annual report of MTS PJSC is also available on the Apple App Store https://apps.apple.com/ru/app/godovaa-otcetnost-gruppy-mts/id919440557?mt=8%2F/. .

The Company’s management is involved in the maintenance and development of an effective dialog with equity market participants. MTS representatives regularly participate in international conferences, hold road shows and meetings with in investors, and organize days of analysts. Quarterly publication of financial results is carried out with phone conferences involving MTS managers. Financial statements are published as supported by presentation materials for better coverage of achieved results and presentation of the Company’s strategy.

In 2020, the MTS IR team issued more than 100 press releases, blog posts, and other written messages, as well as held more than 140 in person and online meetings with representatives of leading institutional funds, inter alia within the framework of 16 international conferences in New York, London, Boston, San Francisco and other cities. In 2020, the Company’s activities were affected by the pandemic and the restrictive measures introduced in connection therewith. Since March 2020, there have been no in person events for investors. During 2020, MTS continued to build effective online communications with investors.

MTS is continuously improving its interaction with investors and shareholders, using the best experience of other companies and monitoring the latest legislation changes and key standards in this area.

In order to promptly respond to stakeholder appeals to the Company, the information resource “Unified Hotline” has been created. The subject of communications covers a wide range of issues related to the various activities of MTS and its subsidiaries. A single hotline enables all stakeholders to receive comprehensive information on topics of interest.

The list of the main stakeholders of MTS PJSC includes shareholders, investors, employees, customers / subscribers, mass media, the state, local communities, business.

In case of questions related to MTS activities, investors may contact the services on interaction with shareholders and relations with investors.

Contact information for investors and shareholders:

Corporate Governance Development of MTS PJSC:

Roman Safronov

(Director for Corporate Governance)

Phone: +7 (495) 911 6555.
Fax: +7 (495) 911 6569.
E-mail: shareholder@mts.ru

Investor Relations Department, MTS PJSC:

Polina Ugryumova

(Director of the Department)

Phone: +7 (495) 223 2025.
E-mail: ir@mts.ru

Investor’s calendar for 2021

The investor’s calendar is posted on the MTS website at: Investors calendar — Moscow (mts.ru).

Matters of interest for investors

The issues that interested investors in 2020 can be divided into three main blocks.

Macroeconomic matters:

• the impact of the pandemic on the Company’s business;
• investment appeal of the Russian market;
• main macroeconomic parameters and their impact on the company’s business.

Industrial matters:

• main trends and drivers of the industry;
• competitive environment;
• pricing policy;
• surplus retail optimization;
• frequency distribution, the beginning of construction of 5G networks in Russia;
• regulatory environment

Matters related directly to the company’s business and performance:

• events and initiatives that the Company implements to support its subscribers during the introduced restrictive measures caused by the pandemic;
• the Company’s development strategy;
• capital investments, Yarovaya Law;
• dividend policy and share buyback program;
• development of new business verticals, including fintech and media verticals;
• investment in digital areas;
• launch of new services and products, partnerships.

Answers to the most frequently asked questions from investors:

What measures is the company taking in connection with the pandemic and the spread of the virus, how did the pandemic and the restrictions introduced in connection therewith affect the business of MTS?
MTS is striving to support its subscribers, and during the pandemic, we took many initiatives: we offered free calls to state hotlines and access to websites (Ministry of Foreign Affairs, Federal Agency for Tourism, Ministry of Health, Rospotrebnadzor, etc.), provided customers with access to services with a negative balance, launched attractive products and ecosystem services for customers who stay at home, at a minimal cost. For medical specialists, MTS offered a three-month 100% discount for mobile communications, and together with MEDSI we opened free access to online consultations with medical specialists. In addition, we organized remote learning for Moscow schools using the SmartUniversity service and provided free access for citizens from home fixed telephony subscriber devices to socially significant Internet resources. From the financial standpoint, the pandemic and the restrictive measures introduced in connection therewith had some negative impact on the MTS business: MTS lost revenues from international roaming, in the retail segment we had to close most of the stores, additional reserves were created in the bank due to the volatile macroeconomic environment.

What prospects does MTS see for 5G deployment?
In addition to developing the existing network, MTS is strengthening its leadership position in terms of new technologies. In July, 2020 MTS was the first in Russia to receive a license to provide mobile services under the 5G/IMT-2020 standard in the 24,25-24,65 GHz range in 83 constituent entities of the country. More than six 5G pilot zones were arranged in three regions of Russia, 5G technology testing was carried out in two regions, and in March 2021, MTS announced the launch of Russia’s first large-scale 5G user pilot network in the 4,9 GHz range in 14 popular locations in Moscow.
At the same time, discussions continue on the allocation of spectrum in Russia for 5G, which is a forerunner of a large-scale mass deployment of fifth-generation communications. At the present time, the MTS business strategy continues to focus on investing and monetizing its 4G network infrastructure to provide reliable, world-class communications for the company’s tens of millions of mobile subscribers.

What are the company’s plans for capital expenditures?
MTS is a recognized leader in the mobile segment of the telecommunications industry in Russia. Our goal is to constantly improve the quality and reliability of the network, therefore the expenses allocated to maintain and improve the mobile and fixed telephony networks are high and depend on many factors. In 2020, capital expenditures amounted to 96,9 billion rubles (91,6 billion rubles, taking into account the effect of financial derivatives). In 2021, the company’s forecast for capital expenditures is 100-110 billion rubles, which is explained by the high foreign currency/ruble exchange rates and the need to acquire equipment in foreign countries, the growing need to invest in new ecosystem areas, the need to maintain a high level of investment in network development to maintain leadership in the telecommunications industry.

What successful outcomes of implementation of the CLV 2.0 strategy can be mentioned?
2020 was the first full year of implementation of the MTS CLV 2.0 development strategy. The new strategy details the existing strategic goals of MTS and is focused on creating a product ecosystem based on the main telecommunications business with a seamless transition between services. Key achievements in 2020 as part of implementation of the CLV 2.0 strategy.

What are the company’s plans regarding payment of dividends?
The MTS dividend strategy was adopted and shall be valid until March 2022 and provides for payment of dividends for a calendar year in the amount of at least 28 rubles per ordinary share. Meanwhile, in the current year, MTS management plans to recommend to the Board of Directors to pay general annual dividends in calendar year 2021 above the level of 2020, which was already above the minimum established in our applicable dividend policy.

What are the company’s plans to optimize its retail chain?
The total number of own and franchised retail outlets of MTS in 2020 decreased by 435 retail outlets and to 5244 retail outlets as part of the company’s strategy to optimize its retail network. Further optimization plans depend on many factors, such as: the company’s competitive position in the market, the macroeconomic situation, prospects for further rapid growth of the company’s e-commerce channels (in 2020, sales through MTS online channels more than doubled in monetary terms vs 2019 indicators). MTS is closely monitoring the retail environment and will continue to improve its retail strategy in line with market dynamics.