Russia's MTS hails increased data usage as cause of Q2 growth

Russian operator MTS reported earnings for the second quarter that beat analyst estimates, and said increased usage of mobile data services by its subscribers was largely responsible for the jump.

Operating income before depreciation and amortisation rose 10 per cent to 44.4 billion rubles ($1.3 billion or €1 billion). Analysts had projected  €959 million, according to Bloomberg. Sales increased by 5 per cent to €2.2 billion, while net income reached €656 million, after a loss of €698 million in the year-ago period, when the company incurred expenses after shutting down its Uzbekistan operations after a dispute with the local government.

"In Russia revenue... was boosted by strong performance of our mobile and fixed operations," said MTS CEO Andrei Dubovskov on a conference call, who said increased data and smartphone usage was a key factor, according to Reuters.

MTS competes on the mobile market with MegaFon, VimpelCom and Rostelecom, and both Rostelecom and Megafon have recently announced new measures to increase their opportunities in this market as appetite grows for mobile data.

Rostelecom plans to set up a new mobile division and make use of an existing 450 MHz-based network for LTE services, while MegaFon is buying LTE operator Scartel/Yota for €1.2 billion and is seen as possibly the greatest threat to MTS' leading position.

"It looks like MegaFon is the best performer [in the second quarter] followed by MTS and VimpelCom," Sergey Vasin, analyst at Gazprombank, told Reuters. "MTS [has been] the leader [in Russia] for a long time and didn't realise how dangerous MegaFon was. I think MTS has every chance and every tool to keep leadership in hand. But MegaFon can get closer, that's for sure."

MTS said it has 71 million mobile subscribers in Russia. MegaFon has said it has 66 million mobile subscribers, while VimpelCom has reported 57.1 million.

For more:
- see this Reuters article
- see this Bloomberg article

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