MTS revenues up 3.6% to USD3.1bn; Uzbek impairment charges impact on bottom line

29 Aug 2012

Moscow-based telecoms giant Mobile TeleSystems (MTS) has reported revenues of USD3.122 billion for the three months ended 30 June 2012, a rise of 3.6% year-on-year. Adjusted OIBDA for Q2 increased 9.1% year-on-year to USD1.374 billion, while the company reported a consolidated net loss of USD682 million for the three months in question. The group’s domestic unit contributed the lion’s share of 2Q12 sales, reporting revenues of RUB82.827 billion (USD2.589 billion) for April-June 2012, an increase of 8.9% y-o-y. Elsewhere, MTS Ukraine saw revenues rise 7.2% y-o-y to UAH2.397 billion (USD291.4 million), reporting net income of UAH509.5 million, an increase of 57.4% year-on-year. Meanwhile, the company’s stricken Uzbek subsidiary MTS Uzbekistan recorded sales of USD132.8 million, up 22.3%. However, in light of ongoing legal proceedings in the country, MTS has provisioned a figure of USD579 million for ‘the impairment of goodwill and long-lived assets in Uzbekistan’, alongside an additional USD500 million to provision for tax and anti-monopoly claims within the country, leading to a reconciled net operating loss of USD284.4 million.

Andrei Dubovskov, president and CEO of MTS, commented: ‘Group revenue for the quarter increased 4% quarter-on-quarter to reach over USD3.1 billion, in spite of a significant weakening of our core currencies versus the US dollar. We saw sustained growth in usage of voice and data products in each of our markets of operation. We also see signs of stability and moderate competitive pressures in our markets. Year-over-year our mobile business grew by 10% to RUB69.3 billion. As we predicted, we continue to see benefits in our mobile business through a combination of strong tariff plans, prudent sales strategies and continued investments in our networks … In Uzbekistan, despite the successful growth and development of our telecommunications business, as we have recounted in our public disclosure, our subsidiary has been subjected to numerous actions by various authorities that have led us to suspend our operations. While we continue to challenge the allegations against MTS-Uzbekistan and make use of the appeals process within Uzbekistan, we are also evaluating other appropriate legal strategies to defend our legitimate rights and investment interests. We also remain engaged to secure the release of our imprisoned employees. In Turkmenistan, we came to an agreement with government authorities in over the resuming of our operations and will re-launch services in September. We do not anticipate large costs to get the network up and running; our asset remains intact and in good condition.’

Russia, Mobile TeleSystems (MTS), UMS (Mobiuz)