Russia's MTS sees no big threat from sanctions, economic slowdown

ST PETERSBURG, Russia Sat May 24, 2014 6:52am EDT

ST PETERSBURG, Russia May 24 (Reuters) - Mobile phone operator MTS sees no serious risk to its business from Western sanctions imposed on Moscow over the Ukraine crisis or from Russia's economic slowdown, Chief Executive Andrei Dubovskov said.

MTS, Russia's biggest mobile phone operator and the number two in Ukraine, warned in its 2013 annual report that political instability in Russia's fellow former Soviet republic and a deterioration in relations between Russia and the West could have an adverse affect on its business and on its share price.

But Dubovskov said in an interview on the sidelines of the St Petersburg International Economic Forum: "We do not see the sanctions being a serious threat to our business."

"And in general we are currently not seeing any threatening signs on the market for the telecommunications business, including of a macroeconomic nature," he added.

MTS said in February its sales growth was likely slow to 3-5 percent this year, adjusting guidance to take into account Russia's slower economic growth. It repeated the outlook in March when reporting a 5.3 percent rise in 2013 revenues.

Rival Megafon also said its business was resilient to the current macroeconomic and geopolitical problems, although it said it was looking at how to cope if Western sanctions over the Ukraine crisis expand.

The European Union and the United States have imposed sanctions on some individuals and businesses considered close to President Vladimir Putin over Russia's annexation of the Crimea region from Ukraine in March.

Dubovskov also said that if MTS were to return to the former Soviet republic of Uzbekistan, which if was forced out of in 2012, it would probably not require major investments.

Vladimir Evtushenkov, the chairman and main owner of MTS' parent company Sistema , said this week Sistema was in talks with the Uzbek government on restoring operations in the Central Asian state and could return to the market as early as in 2014, according to Russian news agencies. (Reporting by Maria Kiselyova, Editing by Timothy Heritage)

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