MTS Q2 Profits Down 15% Due to Currency Changes

Russia based mobile network operator, MTS has reported second-quarter revenues of US$2.02 billion - down 23% on the year ago. Net income was down 15% at US$563 million, largely to the depreciation of the ruble - but up sharply on Q1, when the company reported US$53 million loss.

Mr. Mikhail Shamolin, President and CEO of MTS, commented: "The Company demonstrated sound results during the quarter on the back of seasonal and organic growth. Despite continuing macroeconomic volatility in Russia and the CIS, strong subscriber additions, a seasonal increase in usage and on-going cost saving initiatives facilitated quarter-on-quarter revenue growth and higher operating margins. As our markets are changing, we are adapting our strategic priorities to meet new challenges and seize opportunities by developing our monobrand retail channel and entering the broadband market to deliver wider Internet access, integrated communications services and innovative solutions to our customers."

MTS says that it continues to see sustained macroeconomic volatility in its markets of operations that may impact the financial and operational performance throughout the Group.

MTS' expenditure on property, plant and equipment in the second quarter totaled approximately $410 million, of which $185 million was invested in Russia, $83 million in Ukraine, $126 million in Uzbekistan, $13 million in Turkmenistan and $4 million in Armenia. MTS spent approximately $80 million on the purchase of intangible assets during the quarter of which $68 million was spent in Russia, $10 million in Uzbekistan, $1 million in Turkmenistan and $1 million in Armenia.

As of June 30, 2009, MTS' total debt was US$4.6 billion.

The Company added approximately 2.8 million new customers during the second quarter of 2009 that were all added organically. During the quarter, MTS:

• Added 2.3 million subscribers in Russia;
• Lost 155,000 subscribers in Ukraine;
• Added 0.6 million subscribers in Uzbekistan;
• Added approximately 128 thousand subscribers in Turkmenistan;
• Subscriber count in Armenia declined insignificantly.
• Added approximately 60,000 subscribers in Belarus.

Posted to the site on 12th August 2009