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* Raises full-year OIBDA forecast to 43 pct from 41-42 pct
* Revenue up 5 pct
MOSCOW, Aug 20 (Reuters) - 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 Gazprombank calculations.