Russia’s MTS increased its guidance for 2014, while warning that “the situation in Ukraine remains highly volatile and creates uncertainty at the Group level”.
“It is hard to forecast what the operational trends in Ukraine would be going forward,” Andrei Dubovskov, president and CEO (pictured), said.
In a statement, the CEO noted that the company expects strength in Russia and “better-than-expected” performances in Ukraine and Armenia to raise revenue by “at least 2 per cent” for the year. Its prior guidance had been growth of 1 per cent.
For Q3, the company reported a profit of RUB16.06 billion ($259.5 million), down from RUB18.08 billion in the prior-year quarter, on revenue of RUB107.15 billion, up 3.6 per cent.
Profitability has been pressured through issues such as increased tax and spectrum fees, higher costs in areas such as payroll, electricity and site rentals, and the impact of currency devaluation on items denominated in foreign currencies.
Revenue from its Russian mobile business increased by 9.1 per cent to RUB77.3 billion. The lion’s share of the company’s revenue – 93 per cent – comes from its home market.
MTS’ strong mobile performance was attributed to factors including subscriber migration from feature phones to smartphones, tariffs which enable it to stimulate consumption of mobile data, and the expansion of its subscriber base.
For the full year, the company is expecting MTS Russia to see revenue growth of 5 per cent, compared with prior guidance in the 3 per cent to 5 per cent range.
While Ukraine and Turkmenistan saw Q3 revenue growth, there was a decline in Armenia.
Other highlights include the signing of a deal with the Republic of Uzbekistan, resolving a long-running dispute, and enabling MTS to resume operations in the country.
It has taken possession of a controlling stake in Universal Mobile Systems in this country (a business created from the assets of MTS’ previous Uzdunrobita operation), and plans to launch commercial operations at the start of December 2014.