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MTS Q2 revenues up 3.9%, raises capex forecast

MTS Q2 revenues up 3.9%, raises capex forecast

Revenues of Russian and CIS operator MTS increased 3.9 percent year-on-year in the second quarter to RUB 102.7 billion. OIBDA totaled RUB 42.7 billion, down by 2.1 percent from the same period of 2014 due to extra costs in Ukraine and Uzbekistan, and the OIBDA margin dropped to 41.6 percent, down by 2.6 percentage points. Net profit fell 21.7 percent to RUB 17.1 billion, hurt by one-time valuation changes related to currency fluctuations. MTS maintained its full-year outlook for group revenue growth over 2 percent in 2015, an OIBDA margin over 40 percent and revenue growth in Russia over 3 percent. 

In its main market Russia, revenues totaled RUB 94.3 billion in Q2, up by 4.4 percent from a year earlier, and OIBDA increased 2.2 percent to RUB 41.2 billion. The OIBDA margin amounted to 43.7 percent, down by 0.9 percentage points from a year ago amid higher costs for increased handset sales. Russian mobile service revenues rose 2.8 percent to RUB 72.7 billion, led by a 23.4 percent rise in data revenues to RUB 18.9 billion. MTS’s mobile subscriber base reached 75.4 million at the end of June, up by 4.8 million year-on-year, while ARPU totaled RUB 324, down by 3.5 percent. The operator said nearly 45 percent of active customers were using smartphones, after it cut prices to help drive data services usage. 

MTS increased its guidance for capital expenditure this year to RUB 92 billion from an earlier estimate of RUB 85 billion. This is due to expected higher spending on the 3G roll-out in Ukraine. In the first half of the year, the company invested RUB 53.6 billion.

MTS also responded to recent reports that some of its assets may be threatened with seizure under the US investigation into possible corruption at its former activities in Uzbekistan. The operator said the seizure is aimed at assets of an unnamed Uzbek official, who is alleged to have received bribes for facilitating the company’s entry on the mobile market there. None of MTS’ assets are affected by the complaint lodged in a federal court in New York by the US Department of Justice, the company said, reiterating that it’s cooperating with the DOJ and SEC investigations in the US.  

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