UPDATE 1-MegaFon sees sales growth slowing, focus on profit

Thu Feb 28, 2013 4:35am EST

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MOSCOW, Feb 28 (Reuters) - Russian mobile phone operator MegaFon said revenue growth would likely slow this year, and it was to focus on profitability and preparing to pay a regular dividend.

MegaFon, which raised $1.7 billion in an initial public offering in London and Moscow in November, said on Thursday it expected high single-digit revenue growth in 2013 after a 12.4 percent rise to 273 billion roubles ($8.9 billion) last year.

"Times when operators were just boosting their subscriber base and building networks have definitely passed and this all should now be done with care about efficiency," chief executive Ivan Tavrin told reporters on a conference call on Thursday.

Chief financial officer Gevork Vermishyan said its 2013 margin on the basis of operating income before depreciation and amortisation (OIBDA) should be in a 41.6-43.0 percent range - between the levels achieved in 2011 and 2012, respectively.

MegaFon, the second-biggest player in Russia behind New-York-listed MTS, had earlier set a long-term core profitability target of more than 40 percent.

"As a company strategy, apart from revenue growth and cost cuts that are aimed at showing high profitability, we also see (as important) meeting the need of our shareholders in high dividends," said Vermishyan.

The company, controlled by Alisher Usmanov - Russia's richest man and part-owned by Nordic telecoms group TeliaSonera , has yet to decide the size of its first regular dividend, he said. The payout was expected in the summer.

MegaFon had said it would pay an annual dividend of 50 percent of net profit or 70 percent of free cash flow, whichever was higher.

Its fourth-quarter net profit rose 28.3 percent to 12.4 billion roubles, compared with a forecast for 11.2 billion. OIBDA rose 24.5 percent to 31.4 billion roubles for an above-forecast 43.9 percent margin.

Quarterly revenues grew 9.3 percent to 71.5 billion roubles thanks to mobile data services which MegaFon hopes will continue driving growth this year, helped by rising use of smartphones.

MegaFon's London-listed stock was up 3.3 percent on the day to $28.27 by 0850 GMT, compared with an IPO price of $20. ($1 = 30.5625 roubles) (Reporting by Maria Kiselyova and Anastasia Teterevleva; Editing by Douglas Busvine)

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