OIBDA

OIBDA (Operating Income Before Depreciation and Amortization) is the operating profit of a company before depreciation of fixed assets and amortization of intangible assets.

The formula for calculating the OIBDA indicator looks like this:

OIBDA = Operating profit + Depreciation and amortization

This indicator can be disclosed by organizations in financial statements prepared in accordance with IFRS. OIBDA reflects the profitability of a company’s core business and does not include non-operating income.

Operating income is the profit that a company receives in the course of its core business. Operating profit is indicated in the statement of financial results and is calculated as follows:

Operating profit = Revenue – Cost – Operating expenses

Operating expenses include administrative and commercial expenses, employee labor costs, as well as rental of premises.

Non-operating income, unlike operating income, is not permanent and is not related to the current activities of a company. It includes, for example, the income that a company receives from investing activities, including from the sale of non-current assets, securities, and dividends.

The fact that non-operating income of an organization is not taken into account when calculating OIBDA is its main difference from EBITDA, which is defined as gross profit before interest, taxes, as well as depreciation and amortization of fixed assets and intangible assets.

OIBDA is more stable indicator, which most reflects the level of solvency of a company because it does not include irregular income.

As you know, based on EBITDA, an indicator such as EBITDA margin is calculated (this is the ratio of EBITDA to the company’s revenue). A similar indicator, OIBDA margin can be calculated on the basis of operating profit before depreciation and amortization.

Let’s consider the calculation of OIBDA of MGTS according to the consolidated financial statements for 2022. The company’s operating profit is RUB 15 100 million, depreciation of fixed assets and intangible assets is RUB 9 010 million. Consequently, OIBDA is RUB 24 110 million, which is 1.7% less than in 2021.

Mobile TeleSystems also calculates OIBDA in accordance with IFRS. The graph below shows how the values of this indicator changed during 2022.