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Mobile TeleSystems PJSC (NYSE:MBT)
Q4 2020 Earnings Call
Mar 4, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Dear ladies and gentlemen, welcome to the Conference Call of Mobile TeleSystems. At our customer's request, this conference will be recorded. [Operator Instructions]

May I now hand you over to Polina Ugryumova, Director of Investor Relations, who will lead you through this conference. Please go ahead.

Polina Ugryumova -- Director of Investor Relations

Welcome everybody to today's event to discuss MTS Fourth Quarter and Full Year 2020 Financial and Operating Results.

Before we start, I must remind you that, except historical information, any comments made during this call may constitute forward-looking statements. Important factors could cause our actual results to differ materially from those contained in our projections or forward-looking statements. These in turn imply certain risks, a more thorough discussion of which are available in our Annual Report and Form 20-F or the materials we have distributed today. MTS disavows any obligations to update any previously made forward-looking statements, spoken on this conference call or make any adjustments to previously made statements to reflect changes in risks.

I also want to mention that following the sale of NVision in Q4 2020, we have retrospectively restated our Group profit and loss statements for comparison on a like-for-like basis. As always, you can find our press release and presentation for this call on our IR website.

Today's presenters are Alexey Kornya, President and Chief Executive Officer; Slava Nikolaev, First Vice President for Customer Experience, Marketing and Ecosystem Development; Inessa Galaktionova, First Vice President for Telecommunications; Andrey Kamensky, Vice President for Finance; and Ilya Filatov, Vice President for Financial Services and CEO of MTS Bank, who will speak in Russian and I will translate.

So with that, let me turn it over to Alexey and get us started.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Thank you, Polina, and welcome to everyone joining us. At the global level, 2020 was a year of unprecedented challenges. Before we begin, I'd like to thank the entire MTS team for the effort, dedication and professionalism over the past year. Our sector continues to play middle role in keeping our customers and communities engaged, informed and in touch.

Against this backdrop, MTS performed admirably in 2020. We proved the agility of our team, the reliability of our network and the rationality of our long-term growth strategy. Overall, I'm happy to report that MTS closed fourth quarter in a position of strength. We followed through our full year guidance targets to our Group revenue and adjusted OIBDA. Cash capex was also in line with guidance when including the effects from derivative instruments.

Let me walk you through the headline results. For the year, Group revenue was up 5.2% year-over-year to reach nearly RUB500 billion. Core telecom services were the key driver, but we saw an additional and substantial positive impact from new areas beyond connectivity. Overall, our three non-core verticals contributed nearly a third of Group top-line growth. For the quarter, revenue growth accelerated from third quarter to 7.4% year-over-year, in part, reflecting easier roaming comparables due to travel seasonality. Group adjusted OIBDA in 2020 increased 1.7% year-over-year to around RUB215 billion. Growth was driven by core telecom services, as well as the positive impact in retail, which reflected both our long-term optimization measures, as well as the temporary cost savings related to COVID-19. At the same time, adjusted OIBDA growth was constrained by multiple factors, primarily the decline of relatively high margin roaming revenue, as well as other one-offs and provisions at MTS and MTS Bank. For the quarter, Group adjusted OIBDA grew 1.3% year-over-year to RUB52.5 billion.

Turning to the earnings waterfall. Full year Group net profit increased 13% year-over-year -- 13% to RUB61 billion on the back of service growth, improved cost of debt and the impact from realized derivative contracts used to mitigate ForEx exposure. At the same time, net profit growth was constrained by a high base from sale of associates in 2019, impairment of ticketing assets, change in discontinued operations and the negative impact from MTS Bank at the Group level. For the quarter, Group net profit amounted to RUB13.1 billion.

Strategically, we moved forward at the pace of our digital transformation, expanding in the adjacent segments, scaling our digital ecosystem and modernizing our brand for the future. In Telecom, we saw top-line growth in both wireless and wireline segments. Strategically, we continued to invest in capacity and coverage, drive fixed mobile conversions and by additional sales at the leading edge of 5G and eSIM technology.

In retail, we optimized our footprint by over 400 stores and more than doubled e-commerce sales. In Cloud & Digital solutions, we expanded our customer base and saw double-digit revenue growth. In Fintech, net interest income at MTS Bank grew by nearly itself, despite marketable agility and challenges amid the pandemic. In Media, we added 1.5 million new OTT users, more than the total we had at the beginning of the year. And across our ecosystem, we quote some of the extra digital payer wins in 2020, driving uptake of new products and services. Overall, we delivered on the first full year under our CLV 2.0 growth strategy.

As we head into 2021, I am confident the company is well-positioned for continued success. With that, I will hand it over to Slava for a customer experience and ecosystem update.

Vyacheslav Nikolaev -- First Vice President for Customer Experience, Marketing, and Ecosystem Development

Thanks, Alexey, and good afternoon and good morning to everyone joining us. With global digital acceleration over the past year, we moved proactively to deepen customer engagement and drive penetration of new products and services and we saw real results. Today more than 7 million customers are using two or more MTS services across Telecom, Fintech and Media. Our MTS Cashback loyalty program now has over 9 million registered users. By the end of the year, our customer care app, MyMTS, reached nearly 24 million monthly active users, a substantial fraction of our physical user base. This is an audience that has an established financial relationships with us and has already taken a proactive step to get closer to us. They're a prime addressable market as we seek to increase our pool of multiproduct clients.

Now a few words on Media. After many years of relative stability, MTS TV reached an inflection point in 2020. Year-over-year growth in overall Pay-TV users accelerated to an impressive 44% standing at 6.6 million at year-end. And the key driver was over-the-top, which saw explosive triple-digit user growth up 142% year-over-year in Q4. These numbers indicate to us that our audience is now reaching critical mass. That makes it right time to speed up execution on our content strategy. Last year, we took the first step by drastically expanding our library of international titles. This year, we are adding the second piece of the puzzle by filling out a select fleet of local regional content. We have a lot in the pipeline for 2021, so stay tuned.

Turning to Ecosystem subscriptions. We continue to refine MTS premium to enrich the value proposition. For example, in Q4, we expanded our exclusive partnerships to include a joint tie-in with Yandex. Plus. Partnerships are a critical component for our ecosystem and this kind of one of a kind benefits are a great example of how we differentiate our value proposition. More recently, in Q1, we launched a new subscription, [Indecipherable], which is Russia's first one-stop shop subscription that combines mobile and digital services via dynamic pricing and discounts. We offer users and easy-to-use interface across the full spectrum of services from gigabytes and minutes to music and video streaming. We think this is a powerful tool to drive customer lifetime value by catering to the diverse needs of different users.

We are also continuing to revamp our mobile apps in particular by integrating a unified approach to client ID. Our research indicates Russian consumers prefer separate apps as opposed to a single super app so they can pick and choose the specific services they want. At the same time, it is critical we ensure a seamless customer experience across the MTS ecosystem. We've already built our client ID module into more than a dozen apps and we will continue to enhance cross-app functionality going forward.

Overall, we are creating a unique and fresh digital lifestyle experience to delight and wow our customers. We made some great progress in 2020 and we think we are off to a good start in 2021. With that, let me hand it over to Inessa for a Telecom and B2B update.

Inessa Galaktionova -- First Vice President for Telecommunications

Thank you, Slava. As we've learned over the past year, connectivity is more essential than ever, and I'm happy to report we demonstrated solid progress in 2020 across our core Telecom business. In mobile connectivity, we saw mobile revenue service growth accelerated to 6.4% year-over-year in Q4, up from 3% in Q3. That reflected both steadily underlying dynamics, as well as the comps given 2019 roaming seasonality. In addition, we see promising indicators that our convergent and ecosystem offerings are helping boost ARPU and reduce churn, increasing overall customer lifetime value.

Turning to subscribers. We continue to see a restoration in our mobile subscriber base, which at the end of Q4 stood at 78.5 million, nearly returning to pre-COVID levels. We also see health cohort dynamics, according to our tracking, our share of data users exceeds our overall market share, a promising indicator for future growth. We also continue to see stable retention of loyal customers who have been with us for 12 months or longer. And fixed line revenue increased 5.3% year-over-year in Q4, reflecting both sold performance in the consumer segment, as well as B2G project to bridge the digital divide.

In 2020, we had more than 350,000 net adds, and according to third-party estimates, last year, MTS became the largest private broadband provider in Russia by subscribers. In retail, we executed on our optimization plan while delivering double-digit growth in sales of handsets and accessories. Moreover, online e-com sales more than doubled year-over-year. In the long term, we expect to steadily ramp up customer acquisition and service via online channels.

We are moving forward on our plan to revamp outlets to feed up for purpose performance. Today, around 90% of our stores are standard format in size. As we'll [Indecipherable] before, we plan to bring that down to around 60% over time with the remainder being compressed into mini formats or in a few cases expanded into showrooms.

A few words on network development. Given surging data consumptions on the one hand and competitive pricing on the other, it's absolutely critical that we extract maximum value for every ruble invested in our network. To do that, we're taking an approach, we call Smart Rollout. First, we're deploying big data analytics to better understand network health. Second, we're forecasting future demand to add capacity just-in-time before conjunction becomes critical. And third, we're targeting coverage expansion by looking at where demand will be, not just where people leave. To date, we estimate Smart Rollout already has saved us billions of rubles versus traditional on-the-ground network link.

Finally, a brief update on B2B. Overall Cloud & Digital Solutions revenue was up 25% year-over-year in Q4. We continue to see growing demand for enterprise and SME clients and according to our consulting, last year, we were number two player in the Russian Infrastructure-as-a-Service space. In IoT, subscribers grew 30% during the year and then we expanded our network to cover over 70 Russian regions. In private LTE, we launched Russia's first operational product 5G network together with Gazprom Neft. And we have a number of similar projects in various stages with other leading Russian companies.

With that, let me hand it to Ilya for a Fintech update.

Ilya Filatov -- Vice President for Financial Services

[Foreign Speech] Thank you, Inessa. 2020 was a challenging year for the [Technical Issues] Overall, MTS Bank was among the top-5 fastest growing Russian bank [Technical Issues]

[Foreign Speech] Overall MTS Bank assets increased 20.9% in 2020 to reach RUB217.1 billion. The overall loan portfolio ex-provisions grew 24.1% and the retail loan portfolio was up 29.7% year-over-year to RUB117.6 billion.

[Foreign Speech] On the back of loan growth, full year net interest income increased 32.5% to RUB15.5 billion. Net fee and commission income reached RUB6.7 billion, contributing 30% of operating income before provisioning. We're making progress in developing stable commission-based daily banking services. For the full year, fee and commission income accounted for just under half of overall retail operating income ex provisions.

[Foreign Speech] Among our many initiatives to develop our transactional retail business, I would like to highlight the upgrade of our smart banking app. We have added the feature that allows users to integrate data from third-party bank accounts and in the near future, we plan to add additional functionality for personalized offers, savings goals and financial advice.

[Foreign Speech] Despite the negative impact driven by significant provisioning in the middle of the year, MTS Bank delivered RUB1.1 billion in net profit for the full year.

[Foreign Speech] In Q4, cost of risk for the retail loan portfolio stood at 5.4%, the share of non-performing retail loans declined to 9.5% in Q4, loss of 10.2% in Q3. Overall, the Bank remains committed to a conservative approach to resource with year-end NPL coverage standing at 128%.

[Foreign Speech] We remain at a comfortable level of capitalization. As of January 1, 2021, our N1.0 [Phonetic] capital adequacy ratios stood as 13.1%, which reflects a healthy safety margin above minimum regulatory requirements of 10.5%. At the same time, the company is actively developing it's Fintech vertical and high rate of growth made necessitate and additional capitalization. In the mid-term, we do envision potential further capital injection.

[Foreign Speech] We continue executing on our strategy with a focus on developing digital channels and maintaining a sober approach to risk management. We plan to expand our loan portfolio, grow retail commission income and develop digital services within the MTS ecosystem to become closer to our customers.

[Foreign Speech] Now I will give the floor to Andrey for a finance update.

Andrey Kamensky -- Vice President for Finance

Thank you, Ilya. Group Cash capex for the year came in at RUB91.6 billion when adjusted for forex-related swap contracts. This was driven primarily by sustained network investment. In 2020, we added 14,500 LTE base stations in Russia with our 4G coverage reaching around 85% of the country's population. Group free cash flow in 2020 amounted to RUB61.6 billion, when excluding the impact from MTS Bank, as well as proceeds from the sale of Nvision and MTS former Ukraine operations. The year-over-year dynamic in part reflects a high base from 2019 that included a contribution from our former Ukrainian operations. In addition, free cash flow was impacted by higher capex, excluding Ukraine. At the same time, this was nearly entirely offset by strong core Russian performance, reflecting the health of the underlying business, as well as a relatively lower tax payments and financing costs.

Turning to the balance sheet. We continue to make progress on optimizing our debt portfolio and with a favorable interest rate environment. In Q4, we took a number of notable actions, including restructuring and raising the loan with Sberbank, as well as signing a preferential loan agreement with VEB.RF to finance digital projects at the state subsidized rate. At the end of Q4, our gross weighted average interest rate declined to 6.3%, down 136 basis points year-over-year. Overall, tenure remains healthy with a comfortable repayment schedule. At the end of the year, the current portion of outstanding debt stood at less than 10% of the total and our leverage remained relatively steady at a comfortable level.

Now, let me hand it back to Alexey for his closing remarks.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Thank you, Andrey. I am encouraged by our 2020 results and the solid progress we achieved across both core connectivity, as well as new growth segments. Looking ahead, there remains significant uncertainty in 2021 above all the timing and pace of roaming recovery as international travel resumes. At the same time, we have tailwinds working in our favor, such as lower roaming-based headroom for ARPU growth and sustained momentum in new segments.

Taking all factors into account, we are providing initial 2021 guidance or 4% or higher growth in both group revenue and adjusted OIBDA in 2021. This upbeat target is a reflection of our confidence we have that MTS will deliver in the year ahead. In addition, we expect cash capex to come in around RUB100 billion and RUB110 billion for the year. We recognize that this is a material increase which reflects several factors, including [Indecipherable], the competitive environment, and our investment plans in new segments. We see 2021 in particular as a critical year for the execution of our growth strategy as we are prepared to make smart bets for the future.

Turning to shareholder remuneration. For the year, we came in slightly above our minimum dividend policy target on top of which we paid out a special dividend and carried out a RUB15 billion buyback program. All told, in 2020, MTS delivered a record higher returns for shareholders. Looking ahead, 2021 will be the last year of our current dividend policy. As you know, our policy is based around an absolute per share minimum payout. While, this provides a predictable baseline, we appreciate that it can also limit market expectations on dividend upside on the back of strong operational performance. We understand this issue and we'll take it into consideration when formulating our new dividend policy that will take effect in 2021.

Moreover, following our buybacks, there are fewer MTS shares outstanding, which provides additional flexibility in increasing the payout per share. In this context, and given our strong results, cash position and 2021 outlook, MTS management plans to recommend an increase in our per share regular dividend payout in 2021 above the level in 2020.

Two years ago, we embarked on a journey to become more than a Telecom. We are now well under way. We have mapped out the roll-forward. We have put a strong team in place and we have gained momentum toward becoming Russia's premier network-native ecosystem of digital products and services.

So with that, let me hand it back to Polina for Q&A.

Polina Ugryumova -- Director of Investor Relations

Thank you, Alexey, and thank you to the rest of the speakers. As we take questions, please be aware that there may be a slight delay for translation. Operator, with that, let's open the line for the questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And the first question received is from Ivan Kim of Xtellus Capital, your line is now open. Please go ahead.

Ivan Kim -- Xtellus Capital -- Analyst

Good evening. Two questions from my side, please. First on capex. I was wondering the capex guidance is fairly wide. So what would prompt you to spend RUB110 billion, let's say, over a RUB100 billion? So what's -- if there is a kind of higher spending, what it will be driven by? And then also, longer term, is it safe to assume that the capex will be now above RUB100 billion mark for the next few years? That's the first question.

And then the second question on the trends that you're seeing in January, February on mobile service revenue growth. The exit growth was pretty good, strong, didn't decelerate in the domestic business. So are you seeing the same kind of 6% growth in January-February? Thank you.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Ivan, thank you for the question. Capex range will be defined at the pace at which we'll embark our digital investment projects, forex dynamics and that is basically where we see whether there will be new initiatives on investments in new projects and ideas, which will take in next year, so that they will affect the overall capex this year, actually. So three factors.

And with mobile service revenue, I'll pass it over to Inessa.

Inessa Galaktionova -- First Vice President for Telecommunications

Yeah. So my answer will be pretty short. So we do expect a positive growth dynamics in Q1 this year. As you know, there will be some slight price increase, which was actually pre-discussed with a regulator. Yes. So we do expect positive trend in Q1 in mobile revenue growth but not on the level of Q4.

Ivan Kim -- Xtellus Capital -- Analyst

Okay, thank you for this. And, Alexey, can I just follow up on the longer-term capex? So do you think the longer-term capex will stay above RUB100 billion now?

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Yeah, yeah. Not necessarily. I think it will depend on a number of factors including the need for 5G investments and forex dynamics.

Ivan Kim -- Xtellus Capital -- Analyst

Okay, thank you.

Operator

The next question received is from Slava Degtyarev of Goldman Sachs. Your line is open. Please go ahead.

Vyacheslav Degtyarev -- Goldman Sachs -- Analyst

Yes, thank you very much for the presentation. Couple of questions. Firstly, can you comment on the scope of the 5G capex investments in 2021 and also the use cases that you're deploying that capex for? And also, with the economics there, do you recover those investments in a short period of time? And my second one would be, if you can provide a few details on the benefits of the partnership with Yandex on the premium subscribers and whether there are any early results there? Thank you.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

On the capex, there will be no material 5G capex in 2021 since there is still remains uncertainty over frequencies as well as local equipment requirements for 5G network rollout, no material 5G capex in 2021. And for the second, I'm passing to Slava.

Vyacheslav Nikolaev -- First Vice President for Customer Experience, Marketing, and Ecosystem Development

It's very simple. MTS -- customers of MTS Premium could get Yandex.Plus at a cheaper price and could get also a three-month free of charge and it works vice versa, too. So we are mutually expanding the number of customers who use services of two ecosystems at a discount and we believe, of course, we are selecting the partners in this initiative, and we think it's definitely for the benefit of MTS customers.

Current results, it's too early to speak about current results. We see a good response to that when we were delivering the message to subscriber base, but it's still at a very early stage of this curve that I think will show significant results. So it's not going to be 1% or 2% of MTS Premium. I expect it to be closer to from 10% to 20%.

Vyacheslav Degtyarev -- Goldman Sachs -- Analyst

Thank you very much.

Operator

The next question received is from Max Zander [Phonetic] of Venetian Capital, your line is now open. Please go ahead. Mr. Zander, Your line is now open. Are you on mute maybe?

So we go on to the next question here with Anna Kurbatova from Alfa Bank. Your line is now open. Please go ahead.

Anna Kurbatova -- Alfa Bank -- Analyst

Good evening. Thank you very much for taking my question. First question is also follow up on the capex guidance. I wonder what amount within this guidance represents may be rollover of projects which were not completed last year. And the second question, if you could give some updates on your Media vertical so because you established the entity one year ago, more or less, and so it's interesting in terms of the progress there in terms of your plans for the in-house content development and also if you could provide some update what's going on with MTS Arena? So when it will be go operational? Thank you.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Well, on capex guidance, historically, it is the high portion of roll over projects because this is infrastructure time consuming investment, so it's usually about 30% of our capex, so higher comps is rollover. But, of course, the decisions on 2021 capex are usually taken late 2020, early 2021. So you have full capability to define the level of capex each year.

Vyacheslav Nikolaev -- First Vice President for Customer Experience, Marketing, and Ecosystem Development

And on, first, on Media vertical update. First of all, we see, apart from the figures that I told you earlier, which are I think impressive by themselves, we can also say that we see a major improvement in the product itself. We have application that has much higher marks in all stores given by our customers, which is a great thing. Second, we have a better retention of customers because we have better libraries in the application. And most importantly, I think, is that later this year, pretty soon, I'm not telling the date, very soon you're going to see a major relaunch of MTS TV with original content and a lot of new features. So as I said, stay tuned, it's going to be interesting and it's going to be soon.

On MTS Arena, we expect it to launch in the middle of this year. The -- it will be technically ready before that. But the main point is an ability to create the proper line up for offline concerts, which is not an easy task now because international travel is still restricted and there are still concerns about how it's going to match the flow of pandemic. So it's still unclear. The exact date is still unclear. It's definitely this year. I would -- my suggestion is that is going to be slightly closer to autumn, but it still has to be determined.

Anna Kurbatova -- Alfa Bank -- Analyst

Thank you very much for that. Just may I have a quick follow-up on capex? You -- well, there are some operators who are allowed to, let's say, to save something in terms of Yarovaya-related project last year. So the government allows to postpone some capacity expansion to later years amid the COVID pandemic. So could you, a bit, update on what's going on there? So if you, let's say, underspent something last year on Yarovaya, does it mean that this year you will -- we will need to invest for what was initially projected for the year '21 and plus what was underspent for last year or it's more be -- will be some kind of softer trajectory? So thank you.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Yeah. Thank you. Look, the limitations or ease on now Yarovaya spend does not relate to a first phase of Yarovaya infrastructure build up. So effectively we will have to build what was initially planned. So there the easiness of future capex, after the initial infrastructure was provided by those adjustments you just mentioned. However, the initial infrastructure need to be built at the initial kind of initial design and initial capacity. Thus the commitment, which we identified of RUB50 billion over the five -year period is still intact.

Anna Kurbatova -- Alfa Bank -- Analyst

Thank you very much.

Operator

And the next question is from Maria Sukhanova from BCS. Your line is now open. Please go ahead.

Maria Sukhanova -- BCS -- Analyst

Yes, good afternoon. I have three questions. So first one, you've mentioned price increase for your existing customers. Could you please specify what was the average percentage? Second, you also mentioned that you see lower churn on convergent offers. Is there any number that you could share with us? So just to better understand how it works. And thirdly, there was an article in Commerce Trends saying that's, first, you have this experiment of free access to socially important sites and there was an article saying that it might be expanded into video. Is this true? Is this kind of talks -- discussions happening with the carriers and if they are, how significant do you think this risk is? That's it.

Inessa Galaktionova -- First Vice President for Telecommunications

Yeah, so I will answer the first question on the tariff adjustments. Actually, it's very limited ones. So we don't -- it's not even material in terms of the level of increase.

Vyacheslav Nikolaev -- First Vice President for Customer Experience, Marketing, and Ecosystem Development

On the second question I can answer that. There are different convergent offers and when we're talking about Mobile Plus 6 [Phonetic], it is usually -- the churn rate is less by 1.5, 1.7 times. So it's already significant when we have more products in one convergent offer like [Indecipherable]. If the client gets three and more services then it's lower to up to 3 times.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

And on accessible Internet project, the discussion is right now in place. So it is too early to say what will be the final consideration for this initiative from the government.

Maria Sukhanova -- BCS -- Analyst

Thank you.

Operator

[Operator Instructions] And the next one is a follow-up of Ivan Kim. Your line is open.

Ivan Kim -- Xtellus Capital -- Analyst

Yes, hi, again. Just two quick questions on buyback. So do you foresee conducting buyback this year? And then secondly on MTS Bank capital injection that you mentioned before, so what sort of range should we expect there, about RUB5 billion? Or if you can give us any guidance on that. Thank you.

Andrey Kamensky -- Vice President for Finance

Yes Ivan, thank you. I will take both questions on the buyback program. Actually based on the very good results of 2020, I think that we are going to very soon announce another buyback program. It's not defined yet, but most probably it will come. In terms of MTS Bank capital injection, actually, it will depend on the dynamic of the bank. So far we see that it's growing quite rapidly based on the first month of this year. So, of course, it will depend on that, but it would be -- so far the estimation is a bit less than RUB5 billion.

Ivan Kim -- Xtellus Capital -- Analyst

Great. Thank you very much for this.

Operator

The next question is from Henrik Herbst of Morgan Stanley. Your line is now open. Please go ahead.

Henrik Herbst -- Morgan Stanley -- Analyst

Yeah, thanks so much. I had a few questions please. So in the first one, just if you can help us a little bit with the cash flow expectations for 2021. I know you -- I mean you -- can you help us with OIBDA and capex, but below that, is there anything in particular we should be aware of? Maybe you can help us, please, with how we should think about working capital going into 2021?

And then secondly, when you think about the investments in content, how do you think about that business? Is that a -- you think about it as a stand-alone business with content investments and the TV business generating some stand-alone returns, so is it part of the returns essentially coming from lower churn etc., in the mobile business, or how do you think about the investments in that business? Thanks very much.

Andrey Kamensky -- Vice President for Finance

So, Henrik, thank you very much. In terms of the cash flow situation for 2021, I think you have all the components. Actually, we gave guidance on OIBDA and on capex. In terms of the working capital, usually the -- it's not that material on the cash flow, although we constantly working from one year or to another to optimize it. So I think it will be more or less comparable with this year.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

As far as content investment concerns, we are not looking at return on particular content production. Of course, we are following and doing all the analytics of what is activity on -- with the specific content, being it our own production or partners or acquired and so on so forth. However, of course, we are considering it in a more complex way. We are achieving effectiveness. But as far as the return on investments, we are looking at this convergent offers, the bundling of this product into our packages and effectiveness of overall our Media business, which includes also satellite TV, IP TV, cable TV. So it is not only online media platform, it's all the complexity where our content will be delivered. And we have quite a scale which allows us to do those content investments because right now we're having more than 5 million of customers in our Media business. That includes all means of delivering content, which I just mentioned, Mobile, OTT, Satellite, IP TV and Cable.

Henrik Herbst -- Morgan Stanley -- Analyst

All right. Thank you very much.

Operator

And the next one is from Max Zander again. Your line is now open. Please go ahead. So Mr. Zander, we still cannot hear you.

So we take the next one, it's from Nikhil Mishra of HSBC. Your line is now open. Please go ahead.

Nikhil Mishra -- HSBC -- Analyst

Hi, yeah, thank you for the presentation. Just one question. Integration revenues were quite strong in Q4. Can you give a bit of color on what was the key drivers and also some outlook for 2021?

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Sunil, we apologize. Could you repeat the question? We didn't get it fully.

Nikhil Mishra -- HSBC -- Analyst

Yes. So, yeah, integration revenues were quite strong in Q4. So can you give us a bit of color on what were the key drivers and also any outlook for 2021?

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

You mean the revenue, what were the drivers of revenue growth and what is the outlook...

Nikhil Mishra -- HSBC -- Analyst

Integration revenues.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Integration revenues. Okay. Honestly speaking, not fully getting which line you're referring, because this year -- this quarter after deconsolidation of NVision, we are showing the figures already without integration services revenue. So to what you might refer is the cloud business, where we had some growth and positive strong dynamics. Also, we have quite a good dynamics on sale of equipment. We'll check -- I suggest to take it offline. We will check what particular -- and you connect with our IR team to specify what exactly line of our P&L you refer so that we can specify.

Nikhil Mishra -- HSBC -- Analyst

Sure, sure. Thank you.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Okay. Sunil, I think we get it. We have Czech -- in Czech Republic, the business -- the plant with some equipment production and because of forex dynamics and quite a good growth even in Czech koruna, we had positive -- strong positive impact from this -- from our Czech business. But it wasn't that material.

Nikhil Mishra -- HSBC -- Analyst

All right. All right, thank you.

Operator

And the next question is from Alexander Vengranovich of Renaissance Capital. Your line is now open. Please go ahead.

Alexander Vengranovich -- Renaissance Capital -- Analyst

Yes, good afternoon. Two questions from my side. So first one on your mobile retail. So we're seeing that over fourth quarter, there were some slight increase in the number of the stores, which kind of contradicts the previous trends we've seen for the whole year. So I'm just wondering how should we look about your store count this year, whether you continue to plan the reduction of the number of the stores and how do you see your competitors reacting in that. Is that a market trend which continues this year?

And second question is on your, probably, M&A strategy, maybe your B2B business. So recently, there was an article in the press that you might be looking at potential acquisition of entities, which is focusing on different types of the B2B products in telephony. So I'm just wondering whether these type of the services, is there a focus for you for your B2B segment? Do you continue to plan to an issue of product offering for B2B clients and whether you have any aggressive plans maybe for the development of your cloud business, because obviously you are number two player on the cloud market? You also have quite strong presence in terms of the data storage capacities. So can you also please provide some more color on what are your plans with regards to the development of this business segment this year and going forward? Thank you.

Inessa Galaktionova -- First Vice President for Telecommunications

Okay. I will take the first question regarding retail. So first of all, we have the stable situation with the number of retail stores. So we optimized since 2020, 600 of stores and in Q4, we neither increased or decreased any stores. In 2020, actually, we are not already taken into our consideration any further retail optimization -- footprint optimization, because we don't see the number of stores already as a, how to say, a big factor for any distribution to any kind of big influence for the distribution. Yes. So in the current fleet, as well, we don't see any competitive dynamics happening in the retail footprint optimization. So as well, we don't plan to do any steps in that area.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

And as far as our M&A strategy concerns, yes, we do look at non-organic opportunities for expanding our business in our existing verticals as well as beyond those verticals. And speaking about existing businesses, yes, where we see interesting technological opportunities, we are considering them which they need to be complementary, they need to be positive business case of internal development versus non-organic growth and also that we need to have positive perspectives for the market growth in particular segments.

If we talk about B2B segment, which is slightly different topic, yes, we believe that we have very good and strong potential in B2B segments, especially with the development of 5G era, which, I think, will be even more important, because it is Internet of Things and those things will be very much delivered to customers and will be brought to the market through corporate segment. So B2B is becoming a more of our focus and important. And in this context, we think of developing our B2B ecosystem. So that is the reason we build a separate digital B2B in cloud vertical. And that helped us already, as you rightly mentioned, to become number 2 cloud IoT provider in Russia, although two, three years ago, we were not visible in this market and the cloud is one of the most promising segments, including potentially H-cloud, which in cloud businesses, we'll be investing, and this is one of the most interesting areas in corporate segments which we see and we will keep connected for investments.

Alexander Vengranovich -- Renaissance Capital -- Analyst

Thank you.

Operator

The next question is from Anna Kurbatova of Alfa Bank. Your line is now open. Please go ahead.

Anna Kurbatova -- Alfa Bank -- Analyst

Thank you very much for taking my follow-ups. Basically, the first one is just a clarification. You mentioned in the introductory speech that in Q4 OIBDA was impacted by provisioning. So is it possible to share with us rough estimates -- rough number for the amount of provisions? And the second question also to like double check the timeline with the new dividend policy. So would it be correct to assume that the Board of Directors will make a decision maybe in April, yes, April, May, and the new dividend policy will be applied from 2021? So the interim dividend which you normally announce in October, November already will be paid that amount in line with the new policy. Am I correct? This is the question. Thank you.

Andrey Kamensky -- Vice President for Finance

Yes, Anna, thank you very much. I'll take the first question in terms of OIBDA dynamic in the fourth quarter, as we mentioned, actually. Besides all the positive factors that we saw in the fourth quarter, it was constrained by the number of factors, some provisions on the Bank caused by the pandemic and also some provisions that we made and we booked, that now judgments were prudent to make. And the biggest part of them are related to operational provision concerning specific business activities. So there is not something specific in that. That's a kind of regular business, that the core business that we are actually making.

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

And speaking about dividend policy, as I mentioned in my speech, we will not revise this year dividend policy. So the timing for new dividend policy will be the next year -- spring next year. And we will take into consideration that the current dividend policy is limiting and understanding of upside or following the good and strong results, which we are traditionally delivering. And taking this into consideration, this year we will recommend higher than our fixed figure of dividend in our dividend policy, we will recommend to the Board the higher figure. So demonstrating that there is an upside if there are strong results and good guidance.

Anna Kurbatova -- Alfa Bank -- Analyst

Thank you.

Operator

And the next is a follow-up of Henrik Herbst. Your line is now open. Please go ahead.

Henrik Herbst -- Morgan Stanley -- Analyst

Well, thanks very much. I realize it's getting a little bit late, but a very quick follow-up. In the last call you were expressing some concern around mobile competition. I guess, I just wanted to check whether anything changed. I mean, arguably your decision to raise pricing would suggest you're not too concerned about competition. But I just wanted to double check. Thank you.

Vyacheslav Nikolaev -- First Vice President for Customer Experience, Marketing, and Ecosystem Development

We see that pricing environment in Russia is pretty healthy now. Yes, I agree, we've seen some movements from different operators in the fourth quarter, but it seems that, especially given that our new propositions the [Technical Issues] convergent they are, as I said, some of them are really -- couldn't be compared to those of our competitors. We saw no real impact on our figures by those movements. And in the first quarter, we don't see any continuation of that. So we strongly believe that pricing environment is going to be healthy in 2021.

Henrik Herbst -- Morgan Stanley -- Analyst

Great, thank you very much.

Operator

[Operator Instructions] And the next question is a follow-up of Alexander Vengranovich. Your line is now open again, please go ahead.

Alexander Vengranovich -- Renaissance Capital -- Analyst

Thank you for taking the follow-up. Just one question on MTS Bank. So if you look at the number of the customers during 2020, obviously, there was no big increase in that number, and we haven't seen any visible impact on the improving number of the existing customers in MTS Bank. So can you please share with us your plans or maybe whether this number of, kind of, unstable number of the customers is a concern for you and you want to accelerate customer acquisitions this year? So you mentioned plans to launch and use Fintech products and also provide an indication that the Bank might require additional capitalization. So are these things connected with each other? So the main idea is actually to derive the number of the new customers to the Bank. Thank you.

Ilya Filatov -- Vice President for Financial Services

[Foreign Speech] Thank you for your questions. Obviously, the number of active clients at MTS Bank is one of the most critical metric for the bank development.

[Foreign Speech] Looking back on 2020 performance and on 2020 environment, we can confirm that the pace of the new sales growth was below what we expected in the beginning of last year. That's why the current dynamics of the active customers at MTS Bank looks more or less [Indecipherable]

[Foreign Speech] When we addressed our achievement to get to 10 million Bank clients back in November 2019 at our Strategy Day, we were referencing to the overall number of clients which -- Bank clients, as well as Fintech clients.

[Foreign Speech] Looking at -- well, our expectation, by the end of 2021, is that we are targeting to achieve close to 10 million clients, if accounting together of active MTS Bank clients as well as Fintech clients which are non-Bank clients, but still using financial services within MTS group.

[Foreign Speech] And when we talk about the potential capital injections into MTS Bank, we, first of all, are thinking about this injection as a support to maintain MTS Bank growth above the market average growth, rather than thinking about being compliant with regulation. So regulation is not a problem. So the main goal for the capital injections is simply to maintain the Bank growth rate above market average. As an example, last year, the overall industry in the retail loan segment grew like 8% to 12% and this is significantly below around 30% which was performed by MTS Bank.

Polina Ugryumova -- Director of Investor Relations

Sasha, have we answered your questions?

Alexander Vengranovich -- Renaissance Capital -- Analyst

Yeah, I think, yes. So, yeah, more or less. I think the key issues that it's probably difficult to define this 10 million of clients, I mean, in terms of the usage of the service is, obviously, the client, which have a bank account and the client, which just use, whatever, one money transfer service during the month. Obviously, the value of this clients might be dramatically different to your overall ecosystem. Right? And so this is just my concern on this year. So, I can't add more to that. So we'll be looking at your dynamics in that business segment. Thank you.

Polina Ugryumova -- Director of Investor Relations

Thank you, Sasha, we have taken your thoughts, your concerns and we'll definitely get back to you offline from IR side.

Alexander Vengranovich -- Renaissance Capital -- Analyst

Thank you.

Operator

As we received no further questions, I hand back to the speakers for closing remarks.

Polina Ugryumova -- Director of Investor Relations

Ladies and gentlemen, thank you very much for listening. As usual, we will make a replay of this call available on our IR webpage in the near future. If you have any further questions, please do not hesitate to reach out to MTS Investor Relations at any time. Our inboxes and phone lines are open. In the meantime, we appreciate your interest in MTS and wish everyone a pleasant day. Thank you.

Operator

[Operator Closing Remarks]

Duration: 68 minutes

Call participants:

Polina Ugryumova -- Director of Investor Relations

Alexey Kornya -- President and Chief Executive Officer, Chairman of the Management Board

Vyacheslav Nikolaev -- First Vice President for Customer Experience, Marketing, and Ecosystem Development

Inessa Galaktionova -- First Vice President for Telecommunications

Ilya Filatov -- Vice President for Financial Services

Andrey Kamensky -- Vice President for Finance

Ivan Kim -- Xtellus Capital -- Analyst

Vyacheslav Degtyarev -- Goldman Sachs -- Analyst

Anna Kurbatova -- Alfa Bank -- Analyst

Maria Sukhanova -- BCS -- Analyst

Henrik Herbst -- Morgan Stanley -- Analyst

Nikhil Mishra -- HSBC -- Analyst

Alexander Vengranovich -- Renaissance Capital -- Analyst

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