March 21, 2017 / 12:07 PM / a year ago

Russia's MTS says revenue equally likely to rise or fall in 2017

MOSCOW, March 21 (Reuters) - Russia’s biggest mobile phone operator Mobile TeleSystems (MTS) said its revenue and core profit could rise or fall by 2 percent in 2017, citing uncertainty over competitive pressures and sentiment among its clients.

In a now mature Russian market, mobile operators are struggling to increase revenues and have been forced to cut prices to retain customers in a tough economic environment, engaging in a price war that has hurt their profitability.

MTS on Tuesday posted a 2.1 percent rise in 2016 revenue to 435.7 billion roubles ($7.6 billion), helped by strong mobile data uptake and increased handset sales.

Its adjusted operating income before depreciation and amortisation (OIBDA) was down 4.4 percent due to what it referred to as “additional expenses in retail” and macroeconomic factors.

“We remain cautiously optimistic about the telecom market and strongly feel that MTS is well-positioned to benefit from any improvement in the macroeconomic and operating environment,” Andrei Dubovskov, chief executive officer, said.

Rival Megafon last week forecast its revenues would be flat or grow slightly in 2017 while capital expenditures would decline.

MTS said its 2017 capex was expected to fall slightly to 80 billion roubles after 83.6 billion roubles in 2016 due to the completion of the bulk of its major network construction projects.

The company, for which Russia is its main market although it also operates in Ukraine and a number of other former Soviet states, also said its performance would depend on currency volatility in the markets where it operates.

Its fourth-quarter adjusted OIBDA fell 3.8 percent year on year to 41.8 billion roubles, with the OIBDA margin sliding to 37.4 percent from 39.0 percent a year earlier.

Fourth-quarter net income rose 73.2 percent year on year to 12.4 billion roubles, the company said, without providing the reason for the jump, while revenues edged up 0.2 percent to 111.6 billion roubles. (Reporting by Maria Kiselyova; Editing by Alexander Winning)

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