MOSCOW: MTS expects revenue to rise by more than 4 percent this year but core profit could fall for the second consecutive year due to intensified competition, it said here the other day.
Russia’s biggest mobile phone operator forecast operating income before depreciation and amortisation (OIBDA) falling by 2 percent or rising by 1 percent in 2016, after a 2 percent fall in 2015 to 175.5 billion roubles ($2.6 billion).
“Our markets remain volatile due to … heightened competition in retail distribution in Russia,” MTS said in a statement, predicting revenue to rise by more than 4 percent from 431.2 billion roubles in 2015, on the back of growing take-up of mobile Internet services and smartphone sales.
Competition increased after MTS cut prices for handsets last year in response to a drop in demand from consumers hit by higher inflation due to a weaker rouble and Western sanctions over Ukraine.
In 2015, MTS’s adjusted OIBDA margin dropped to 40.7 percent from 43.6 percent in 2014, while sales grew 5 percent and its free cash flow was down 10.8 percent at 51 billion roubles.
Other factors, seen hurting profitability, were large-scale investments in Ukraine and developments in other foreign subsidiaries as well as macroeconomic factors and currency volatility, MTS said.
It forecast capital expenditure at 85 billion roubles this year. In 2015, it was 96.1 billion roubles, which MTS said was slightly higher than expected due to currency volatility.
MTS also posted a five-fold increase in fourth-quarter net profit to 7.1 billion roubles, mainly because its year-ago numbers were hit by foreign exchange losses and provisions.
Quarterly sales grew 5.7 percent to 113.3 billion roubles, adjusted OIBDA slid 1.9 percent to 43.5 billion roubles and OIBDA margin lost 3 percentage points to stand at 38.4 percent.
