Not earning money: MegaFon saved 30 billion rubles to minimize currency risks
The operator "MegaFon" began a program to minimize currency risks in 2012. In 2015, the loss from exchange rate differences decreased, he said, by 41%. In 2015, it amounted to 10 billion rubles, and in 2014 - 16.9 billion rubles.
According to Gevorg Vermishyan, the company's financial director, the operator now holds about 80% of cash in dollars.
In addition, the operator began to actively use derivative financial instruments - such as currency swaps, for example. For a company, it’s like taking a loan in rubles, buying dollars on them and refinancing another loan with their help, Vermishyan explains.
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However, the cost of such funding in rubles is more attractive than with affordable ruble financing. Since 2013, Megafon has concluded several such swaps for $ 600 million.
Megafon prefers to enter into currency swap transactions during periods of ruble strengthening, when the market is volatile and the rates on instruments are lower. In addition to currency debt, Megafon hedges with swaps and capex — when an open currency position can lead him into a minus because of upcoming capex in dollars, Vermishyan said.
The operator uses these tools solely for protection against currency risks, and not for the sake of earnings, he stresses.
Almost all revenues of Megafon are received in rubles, and a substantial part of its costs is in currency, Gazprombank analyst Sergei Vasin told Vedomosti.
VimpelCom seeks to minimize losses from exchange rate differences, negotiating with vendors, confirms its representative, Anna Aybasheva. He also uses “purchasing levers and long-term partnership tools” - this significantly reduces the cost of equipment and compensates for the growth rate.
T2 RTK Holding ( Tele2 brand), among other hedging tools, began to use a non-deliverable forward in 2015, said its representative Konstantin Prokshin. The company planned its activities in such a way that all expenses for the purchase of equipment would be covered by the obligation to purchase foreign currency. “In 2015, we with the bank fixed the rate at 60 rubles / euro for a year - only because of this, the operator increased the investment program by 3 billion rubles,” says Prokshin.
MTS , according to its representative Dmitry Solodovnikov, uses a full range of tools to reduce the effect of volatility in exchange rates and interest rates.
However, MegaFon has achieved the greatest success in this direction, saving 30 billion rubles.
The revenue of MegaFon in 2015 remained at the level of 2014 and amounted to 313.3 billion rubles due to the fall in revenues from the sale of equipment, the company said in its 2015 statements . However, the financial indicators in general met the expectations, the company noted. Revenues from data transmission remain the main driver of development; the share of mobile Internet in total revenue also continues to increase.
MegaFon's net profit grew by 6.3%, to 39 billion rubles in 2015. The company attributed this growth to "a smaller amount of foreign exchange loss and profit from derivative financial instruments as a result of effective currency risk management."
Alexander Nikolaev, a member of the EPH investment committee, believes that in any country currency fluctuations are among the standard business risks: “In global practice, there are very different risk hedging mechanisms that counterparties face in their business, including changes in exchange rates.”
According to Gevorg Vermishyan, the company's financial director, the operator now holds about 80% of cash in dollars.
In addition, the operator began to actively use derivative financial instruments - such as currency swaps, for example. For a company, it’s like taking a loan in rubles, buying dollars on them and refinancing another loan with their help, Vermishyan explains.
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However, the cost of such funding in rubles is more attractive than with affordable ruble financing. Since 2013, Megafon has concluded several such swaps for $ 600 million.
Megafon prefers to enter into currency swap transactions during periods of ruble strengthening, when the market is volatile and the rates on instruments are lower. In addition to currency debt, Megafon hedges with swaps and capex — when an open currency position can lead him into a minus because of upcoming capex in dollars, Vermishyan said.
The operator uses these tools solely for protection against currency risks, and not for the sake of earnings, he stresses.
Almost all revenues of Megafon are received in rubles, and a substantial part of its costs is in currency, Gazprombank analyst Sergei Vasin told Vedomosti.
According to his estimate, about 50% of the cost of purchasing equipment, which in 2015 amounted to 70.2 billion rubles, is tied to the currency. In 2016, according to the company's forecast, they should grow to no more than 75 billion rubles. The share of loans in foreign currency from MegaFon at the end of 2015 was 37%.Among mobile operators, a significant proportion of investments that are tied to the dollar, hedging is generally common, especially in the last two years, says Fitch analyst Vyacheslav Bunkov. If, prior to the devaluation of the ruble at the end of 2014, the currency component in the capex of operators was on average about 30%, now it has grown to 50%, he says.
VimpelCom seeks to minimize losses from exchange rate differences, negotiating with vendors, confirms its representative, Anna Aybasheva. He also uses “purchasing levers and long-term partnership tools” - this significantly reduces the cost of equipment and compensates for the growth rate.
T2 RTK Holding ( Tele2 brand), among other hedging tools, began to use a non-deliverable forward in 2015, said its representative Konstantin Prokshin. The company planned its activities in such a way that all expenses for the purchase of equipment would be covered by the obligation to purchase foreign currency. “In 2015, we with the bank fixed the rate at 60 rubles / euro for a year - only because of this, the operator increased the investment program by 3 billion rubles,” says Prokshin.
MTS , according to its representative Dmitry Solodovnikov, uses a full range of tools to reduce the effect of volatility in exchange rates and interest rates.
However, MegaFon has achieved the greatest success in this direction, saving 30 billion rubles.
The revenue of MegaFon in 2015 remained at the level of 2014 and amounted to 313.3 billion rubles due to the fall in revenues from the sale of equipment, the company said in its 2015 statements . However, the financial indicators in general met the expectations, the company noted. Revenues from data transmission remain the main driver of development; the share of mobile Internet in total revenue also continues to increase.
MegaFon's net profit grew by 6.3%, to 39 billion rubles in 2015. The company attributed this growth to "a smaller amount of foreign exchange loss and profit from derivative financial instruments as a result of effective currency risk management."
Alexander Nikolaev, a member of the EPH investment committee, believes that in any country currency fluctuations are among the standard business risks: “In global practice, there are very different risk hedging mechanisms that counterparties face in their business, including changes in exchange rates.”
Source: https://habr.com/ru/post/299754/
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