MTS: Net Profit Up 3% in 3Q, 2014 Growth to be Single-Digit

By Olga Razumovskaya

MOSCOW--Russia's largest mobile telecommunications company Mobile TeleSystems (MBT) reported incremental net profit growth in the third quarter and warned that the days of double-digit growth might be over due to the dire macroeconomic situation.

MTS said its third-quarter net profit was up 3% on the year at 18.1 billion rubles ($554 million) thanks to growth in data-providing services. In the same quarter a year ago, the company reported a 74% jump in net profit.

Andrei Dubovskov, MTS chief executive, said at a presentation of the financial results that a certain slowing on the market is becoming obvious due to unfavorable macro conditions on MTS's main markets, Russia and its ex-Soviet neighbors.

Mr. Dubovskov said he sees single-digit revenue growth in 2014, given Russia's current economic situation.

The economy ministry has lowered its 2013 gross domestic product growth forecast several times due to sluggish external demand for Russian exports along with weak domestic activity. Now it sees 2013 growth at around 1.5% compared to a previous call for 3.6% growth.

Multiple downward revisions of Russia's GDP forecasts together with minimal industrial output growth cannot help but have an adverse effect on revenues, Mr. Dubovskov said.

MTS said its third-quarter revenue was 4% higher at RUB103 billion from RUB99.4 billion a year earlier. TOperating income before depreciation and amortization, or Oibda, rose 5% to RUB46 billion from RUB44.3 billion a year earlier.

The company also said its third-quarter net profit, taking into account one-offs from currency fluctuations and compensation from the dispute around Kyrgyz operator Bitel, was down 14% on the year.

Write to Olga Razumovskaya at [e-mail]

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