MTS President: “We have never spent so much before”

Mobile Internet continues to be a key driver of growth for telecom operators. However, the profitability of Internet services also falls due to lower prices - this is part of the marketing strategy and the struggle for the market. Tele2’s entry into the Moscow market reinforced this trend.

Capital expenditures of the MTS operator over the past year amounted to 96.1 billion rubles, which is 4.2 billion more than in 2014.

“2015 is really a record year. We have never spent so much before, ” said MTS President Andrei Dubovskov. However, the share of these costs in revenue is almost unchanged, at just over 22%.

He explained that capital costs include the development of data transmission networks in all markets of presence, the completion of a project to deploy GPON networks in Moscow, the modernization of fixed-line networks in the regions and the resumption of the provision of communication services in Uzbekistan. MTS plans to reduce capital investments in 2016 to 85 billion rubles.

MTS revenue in Russia in 2015 amounted to 391.2 billion rubles, an increase of 4.4% compared with the previous year. And in the IV quarter of 2015, revenue fell by 1.3%, to 102 billion rubles. The net profit of MTS in Russia in 2015 increased by 19.7% and amounted to 53.1 billion rubles.

The MTS OIBDA in Russia showed zero growth, reaching 165.1 billion rubles.

The operator's OIBDA margin has been falling since 2014. Then it was 44%, and in 2015 it was already 42.2%. In the fourth quarter of 2015, the operator's OIBDA margin was 40.1%, while MegaFon’s ratio was 36.6%, and VimpelCom’s - 37.5%.
')
At the end of 2015, the revenue of the operator Vimpelcom in Russia decreased by 1.2% to 336.5 billion rubles, revenue from mobile services showed an increase of 0.2% and amounted to 221.9 billion rubles. Revenues from data transfer in 2015 amounted to 44.7 billion rubles, which is 17.4% higher than in 2014.

Unlike competitors, Vimpelcom in 2015 reduced capital expenditures by 13% to 52.1 billion rubles, and in 2016 it will refuse to invest in 3G. The company's management considers the most promising technology LTE.

The driver of revenue growth MTS was the transfer of mobile data. Revenues from this service in 2015 increased by 19.8%, to 77.2 billion rubles. Impressive growth - by 37.4% - showed revenue from sales of handsets and accessories (40.3 billion rubles). Revenue from the MTS mobile business in Russia amounted to 336 billion rubles (an increase of 5.2% yoy), revenues from fixed services fell by 1.5% yoy to 61.6 billion rubles.

Mobile data transmission has become a driver not only for the MTS, but also for the MegaFon operator.

Megaphone CEO Tavrin noted that mobile revenue increased by 0.2% year-on-year. The growth of revenues from mobile data and VAS services, he said, offset the decline in revenue from voice services.

The net profit of MegaFon over the last year grew by 6.3% to 39 billion rubles, the revenue remained at about the 2014 level. The company earned in 2015 313.4 billion rubles.

The revenue of the Russian division of MegaFon decreased by 0.8%, amounting to 308.4 billion rubles, profit showed a 9% increase, to 42.2 billion rubles. The mobile operator has increased capital expenditures in 2015 by 15.5%, to 23.6 billion rubles.

MegaFon's net debt at the end of December amounted to 180.8 billion rubles, which is 47% more than at the end of September last year. The company decided to raise capital through the issuance of exchange bonds.

The Board of Directors of PJSC Megafon at its meetings on March 16 and 18 approved the program of exchange bonds with a total nominal value of up to 80 billion rubles or the equivalent in foreign currency. The program is unlimited, bonds within it can be placed for up to 30 years. Coupon rate on issues should not exceed 15% per annum.

The entry of Tele2 into the Moscow region reduced Rostelecom’s net profit by 3.5 billion rubles. This was reported on March 14 by RNS with reference to the financial director of the company Kai-Uwe Melhorn. “We are consolidating the figures for the assets on the basis of our participation - 45%. In 2015 - 3.5 billion rubles a negative effect, “said Melhorn.

According to VTB Bank (one of the operator’s shareholders), Tele2’s net loss in 2015 amounted to 7.6 billion rubles.

The company itself plans to publish reports in early April. Tele2's revenue for the year earlier was revealed by another shareholder, Rostelecom. In his report, an indicator of 94.8 billion rubles was named, with VTB it is slightly lower - 94.6 billion rubles. The cost of Tele2 amounted to 50.5 billion rubles compared to 43.4 billion rubles in 2014.

The main factors affecting profitability are macroeconomic instability and increased competition in the market. “One thing is clear: we do not see stable trends that would reverse the situation and reduce competition,” summarizes Mevaphone CFO Gevorg Vermishyan.