Russia’s MTS reported mixed numbers for Q2 2016, as competition in the country and continued economic woes across its markets took their toll.
On the positive side, revenue increased 5.3 per cent to RUB108.1 billion ($1.69 billion), with Andrei Dubovskov (pictured), CEO, stating that on this level its performance “outpaces the market”. This was attributed to strong retail sales; stable service revenue despite ongoing weaker usage in some mobile market segments; growth in B2C home internet and pay TV markets, and growth in Ukraine through 3G data adoption.
But this was accompanied by a 47 per cent drop in net profit year on year, to RUB9.1 billion from RUB17.1 billion. The profit decrease was less pronounced on an operating basis, falling 10.9 per cent to RUB20.1 billion from RUB22.5 billion.
Factors noted include higher retail expenses and roaming costs for its Russian business; increases in finance charges, and a smaller forex gain compared with the prior period.
In Russia, which is by far its biggest unit, net profit dropped 42.5 per cent to RUB10.8 billion, on revenue which increased 3.3 per cent to RUB97.4 billion. Mobile strength offset some weakness in MTS’ fixed business.
Across its other units, it was a mixed picture. Ukraine, and Belarus saw improved profitability, while Armenia and Uzbekistan were in the red.
The company ended the period with 109 million mobile subscribers, up 3.5 per cent year-on-year.
Looking forward, MTS expects that profitability will continue to be impacted by factors such as competitive pressure in Russia; the buildout of 3G and “non-market factors” in Ukraine; and macroeconomic issues and currency volatility.
It has also trimmed its revenue growth expectations, following its disposal of its Uzbek business.