MegaFon Q3 revenue drops 3.9%; OIBDA climbs 2.3%

26 Nov 2020

Russian cellco MegaFon reported that its revenue decreased by 3.9% year-on-year to RUB86.5 billion (USD1.1 billion) in the three months to the end of September 2020, although operating income before depreciation and amortisation (OIBDA) rose by 2.3% y-o-y to RUB39.9 billion. Q3 2020 CAPEX decreased 5.5% y-o-y to RUB11.0 billion, while quarterly net profit jumped by 308.7% to RUB13.1 billion. Service revenue in 3Q20 was RUB78.1 billion, down 1.0% y-o-y, as the company noted quarter-on-quarter growth in mobile data/digital services revenue, partly offsetting the fall in international roaming revenue due to border closures.

With lockdown lifted in a number of regions in Q3, MegaFon stores began to gradually reopen, although consumer spending has not yet returned to pre-lockdown levels despite a positive q-o-q trend. Revenue from sales of equipment and accessories in July-September 2020 fell by 23.9% y-o-y to RUB8.4 billion. The total number of visitors to MegaFon stores was down 24% y-o-y. Cost management efforts helped to offset the negative impact of falling revenue, with OIBDA boosted by a reduction in sales of low-margin equipment and cuts in advertising budgets and general expenses. Net profit was driven by operational efficiency gains, lower finance charges due to continued deleveraging and active management of MegaFon’s credit portfolio. Reduction in CAPEX occurred mainly due to the postponement of ‘non-critical projects not related to network quality’, while significant network deployments continued; in Q3 2020 MegaFon deployed 3,000 new LTE/LTE-A base stations alone.

Russia, MegaFon