MegaFon reports falling Q3 profits, but revenues climb

31 Oct 2014

Russia’s second largest mobile operator by subscribers, MegaFon, sales third-quarter net income slumped by 16.5% to RUB12.792 billion (USD295.4 million) from RUB15.300 billion in 3Q13, due in part to the negative impact of the revaluation of the carrier’s US dollar-denominated obligations. However, the profit was slightly above the RUB12.6 billion forecast in a poll conducted by Reuters. Further, MegaFon noted that a rise in depreciation and amortisation charges related to its ongoing network rollout programme and the acquisition of mobile internet provider Scartel also contributed to the decline in profit. Nonetheless, a bullish Ivan Tavrin, MegaFon’s chief executive officer, commented: ‘We are looking to the future with confidence … Our operational profit is growing and once the rouble stabilises, the net profit will return to its average levels’.

MegaFon said third-quarter revenue rose 4.5% year-on-year to RUB81.066 billion, fuelled by a 37% increase in mobile internet revenue and an almost 30% increase in revenue from sales of equipment and accessories – partly because of increased sales of Apple’s devices, the carrier said. Operating income before depreciation and amortisation (OIBDA) climbed 5.3% y-o-y to RUB37.3 billion; OIBDA margin was 46.0% up from 45.6%, helped by an improvement in cost efficiency and reduction in operating expenditures. CAPEX for the quarter increased 31.4% y-o-y to RUB14.268 billion as the cellco closed out September with a total of 71.5 million mobile customers (+4.7%), including 69.1 million in Russia, and the subscribers of its subsidiaries: TT Mobile (Tajikistan), Aquafon (Republic of Abkhazia) and Ostelekom (Republic of South Ossetia).