* Raises full-year OIBDA forecast to 43 pct from 41-42 pct
* Revenue up 5 pct
MOSCOW Aug 20 Russia's top mobile phone
operator MTS on Tuesday reported rising revenue and
hiked its profit margin forecast partly on the back of higher
data usage - one of the key drivers of growth in Russia's
competitive mobile market.
MTS, part of oil-to-telecoms conglomerate Sistema,
was the last of Russia's "Big Three" mobile operators to report
second-quarter earnings. Its shares rose nearly 4 percent in New
York after profit beat analyst expectations and reversed a loss
a year ago, helped by settlement of a Kyrgyz lawsuit.
MTS has faced tougher competition from No.2 operator Megafon
, which has expanded in the Russian market
with the acquisition of fourth-generation (4G) provider Scartel
and seen its shares soar since going public in London last year.
The pair also compete with Vimpelcom, which some
analysts say has lagged in Russia after diversifying into Italy
as well as some emerging markets.
"It looks like Megafon is the best performer (in the second
quarter) followed by MTS and Vimpelcom," said Sergey Vasin,
analyst at Gazprombank. "MTS (has been) the leader (in Russia)
for a long time and didn't realise how dangerous Megafon was. I
think MTS has every chance and every tool to keep leadership in
hand. But Megafon can get closer that's for sure."
MTS is the largest of Russia's big three mobile operators.
According to its figures, it has 71 million mobile subscribers
in Russia. Megafon has said it has 66 million mobile
subscribers, while Vimpelcom has reported 57.1 million.
MTS said its OIBDA margin - operating income before
depreciation and amortization - stood at 45.5 percent and it
raised its full-year forecast to 43 percent from 41-42 percent.
This was boosted by high-margin data services, lower sales
of loss-making handsets and compensation related to the
settlement of the Bitel dispute, analysts said.
Megafon reported an OIBDA margin of 47.5 percent for its
second quarter. Vimpelcom reported an EBITDA margin - earnings
before interest, tax, depreciation and amortization - of 42.4.
MTS, which also operates in Ukraine, Armenia and
Turkmenistan, showed revenue of 5 percent, with a 4.4 percent
gain in Russia where mobile services rose 5.9 percent.
"In Russia revenue... was boosted by strong performance of
our mobile and fixed operations," said MTS CEO Andrei Dubovskov
on a conference call, who said increased data and smartphone
usage was a key factor.
Russia-focused Megafon previously reported consolidated
revenue up 8.4 percent, with mobile data up 28 percent.
Vimpelcom reported Russian revenue increased 5 percent with
mobile data revenue up 37 percent.
The mobile operators have shown growth despite Russia's
economy slowing - growth was just 1.2 percent year-on-year in
the second quarter - as customers have demonstrated their
reliance on phones.
"It becomes a very essential part of life for Russians, the
cellphone," said Vasin. "It is also much easier to buy the
latest iPhone and show off to your friends than a Mercedes -
that's beneficial for mobile (operators)."
MTS said second-quarter net income was 29 billion roubles
($881 million) versus a 23 billion rouble loss a year ago when
its earnings were hurt by the suspension of its licence in
another central Asian state, Uzbekistan. Its struggles in
Uzbekistan put it in contrast to Megafon, whose pure Russia
focus is said by analysts to have helped it attract investors.
MTS's earnings were boosted by booking a $320 million gain
from the settlement of a dispute over the 51-percent stake it
bought in Kyrgyz operator Bitel in 2005. The company wrote off
that amount in 2006 after it failed to gain operational control
of what was then Kyrgyzstan's biggest mobile operator because
its ownership was in dispute.
Analysts polled by Reuters had forecast net profit of 23.7
billion roubles including the Bitel gain, and about 14.8 billion
after stripping it out. Excluding the Bitel gain, net profit was
13 billion roubles, MTS said.
MTS expects to pay dividends of 19.8 roubles per share for
2013, giving it a dividend yield of 7.1 percent, according to a
presentation. Megafon has a dividend yield of 4.8 percent while
Vimpelcom has a dividend yield of 8 percent, according to