MegaFon's net income nearly halved in the fourth quarter of 2013, blighting an otherwise successful year when sales and operating income increased at Russia's number two operator.
The company's fourth-quarter net profit fell 45.7 per cent year-on-year to 10 billion rubles (€201 million/$276 million) as higher capex associated with the rollout of LTE offset an 11.4 per cent rise in sales. MegaFon spent heavily on networks during the quarter in preparation for the Winter Olympic Games in Sochi, and predicted a rebound in earnings through 2014 on growing demand for mobile data services.
Analysts quizzed by Reuters predicted an average fourth quarter net profit of 12 billion rubles.
Operating income before depreciation and amortisation (OIBDA) fell 2.9 per cent year-on-year in the fourth quarter to 30.5 billion rubles, compared to an average 31 billion rubles forecast by analysts polled by Bloomberg.
Full-year earnings were brighter, with net income up 16.3 per cent over 2012 at 51.6 billion rubles, and OIBDA up 13.2 per cent at 132.5 billion rubles. The company's OIBDA margin increased 1.6 percentage points to 44.6 per cent, and profit margin by 1.1 percentage points to 17.4 per cent.
Ivan Tavrin, MegaFon CEO, said 2013 was a year of "ambitious projects" for the company, with the acquisition of mobile operator Yota (Scartel), deployment of 270 LTE base stations, "and provision of state-of-the-art communications during the Olympic Games in Sochi." He added that MegaFon's 2013 revenue significantly exceeded "the average industry growth".
MegaFon predicted revenue growth in the range of 6 per cent to 8 per cent through 2014, and OIBDA margin of at least 44 per cent.
One analyst told Bloomberg he is buoyed by MegaFon's full year forecast--enthusiasm reflected in a rise in the operator's share price in early trading in London.
(€1 = 49.4317 rubles)
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