MTS maintains profitability despite political unrest

Mobile TeleSystems (MTS), Russia's largest mobile carrier, shrugged off political unrest in Ukraine to grow net income from the business by over 100 per cent in the opening quarter of 2014.

The operator generated net income of RUB1 billion (€21.2 million/$28.9 million) in Ukraine in the three months to end-March 2014, up 105 per cent on the RUB504 million it made in the same period of 2013 despite revenues remaining largely flat with a marginal 1.4 per cent rise year-on-year.

Vasyl Latsanych, vice president of marketing and chief marketing officer of MTS, said volatility in Russian and Ukrainian markets may impact the company's performance moving forward, but noted it saw "steady, profitable growth" across all of its markets in the opening three months, despite forecasts of declines in GDP performance in its core countries.

While net income in Ukraine registered strong growth year-on-year in the first quarter of 2014, MTS' group earnings were less stellar. Group net income grew 0.5 per cent year-on-year to RUB13 billion, on a 5.1 per cent annual rise in revenue. However, on a sequential basis, net income fell 34.1 per cent, and revenue 6.9 per cent.

Russia and Armenia were weak spots for MTS in the opening quarter of 2014. Net income in MTS' home market fell 18.8 per cent year-on-year to RUB9.6 billion, while in Armenia the figure fell 30.5 per cent year-on-year to RUB1.8 billion.

Latsanych noted mobile data revenues in Russia grew 7 per cent year-on-year in the first quarter, "which was largely driven by the adoption of data plans as smartphone penetration among our active subscribers reached almost 35 per cent and our data attach rate increased to over 42 per cent."

Andrei Dubovskov, president and CEO of MTS, said the company "witnessed a continuation of the drivers of growth and profitability that have been seen over the previous 1 to 2 years."

The company continues "to see many positive trends, including rising usage of voice and strong data adoption in virtually all customer segments," Dubovskov added.

First-quarter group operating income before depreciation and amortisation (OIBDA) of RUB41.4 billion came in ahead of the average RUB40.9 billion predicted in a Bloomberg analyst poll.

For more:
- see MTS earnings announcement
- see this Bloomberg report

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