Megafon ups Q3 revenue 4.5% to 81 bln rubles, above forecast
MOSCOW. Oct 30 (Interfax) - MegaFon increased its sales revenue 4.5% year-on-year in Q3 2014 to 81 billion rubles, the telco said in a statement.
OIBDA rose 5.3% to 37.3 billion rubles and the OIBDA margin rose to 46% from 45.6%.
Net profit fell 16.5% to 12.8 billion rubles.
Revenue was higher than the 80.9 billion rubles that analysts predicted in a consensus forecast for Interfax. The analysts also forecast OIBDA of 37 billion rubles and net profit of 12.6 billion rubles.
SG&A grew 1.1% to 18 billion rubles. Commercial expenses fell 9% to 4.2 billion rubles, with advertising costs falling 15% to 1.65 billion rubles.
Free cash flow fell 9.4% to 25.4 billion rubles owning to higher capex, which grew 31% year-on-year to 14.2 billion rubles.
Net debt grew to 140.3 billion rubles from 118.8 billion rubles during Q3.
MegaFon revenue structure in Q3 2014 (mln rubles);
| Q3 2014 | Q3 2013 | % change | |
| Wireless Services | 69 726 | 68 177 | 2,3 |
| Including data revenue | 17 355 | 12 632 | 37,4 |
| Wireline Services | 5 182 | 4 621 | 12,1 |
| Sales of equipment & accessories | 6 158 | 4 745 | 29,8 |
Wireless voice revenue decreased by 5.4% y-o-y to 43.5 billion rubles due to intensified price competition, migration of our subscribers to more attractive bundled tariffs and our decision to cease targeting seasonal guest workers.
The subscriber base grew 4.7% in Q3 to 71.5 million.
Revenue in Russia, which accounts for 99% of MegaFon's business, grew 4.4% year-on-year to 80 billion rubles.
MegaFon financial highlights for Russia (mln rubles):
| Q3 2014 | Q3 2013 | % change | |
| Revenue | 79 997 | 76 594 | 4,4 |
| Wireless Services | 68 663 | 67 232 | 2,1 |
| Including data revenue | 17 121 | 12 426 | 37,8 |
| Wireline Services | 5 180 | 4 617 | 12,2 |
| Sales of equipment & accessories | 6 154 | 4 745 | 29,7 |
| OIBDA | 37 141 | 35 340 | 5,1 |
| OIBDA Margin | 46,4% | 46,1% | 0,3 pp |
| Net Profit | 13 297 | 15 754 | -15,6 |
The telco affirmed its FY 2014 revenue growth forecast of 6%-8%, but now expects this to be closer to 6%.
An OIBDA margin of at least 44% is still expected.
According to the Interfax-EFIR terminal, the consensus among analysts from investment banks is for MegaFon's sales revenue to grow 8.6% this year to 322.866 billion rubles. The OIBDA margin could be 44%.
MegaFon's rivals Mobile TeleSystems (MTS) and VimpelCom have already lowered their revenue growth forecasts for the year. Mobile TeleSystems (MTS) lowered guidance to just over 1% from 3.5% in August, but expects revenue from its Russian operations to grow 4%-5%. VimpelCom said in May that it now expects revenue and EBITDA to grow 3%-4% this year, while previously it thought these would be level with 2013.
MegaFon's capex forecast for 2014 was lowered to 55 billion-58 billion rubles from 58 billion-64 billion rubles.
MegaFon said that in January-September 2014, its overall revenue grew 6.9% year-on-year to 232.9 billion rubles, OIBDA rose 2% to 104 billion rubles and the OIBDA margin fell to 44.7% from 46.9%. In Russia, revenue grew 6.95 also, OIBDA rose 2.8% and the margin fell, from 45.1% to 47.4%.
Capex grew 54.6% year-on-year in 9M to 36.2 billion rubles and capex/revenue grew to 15.5% from 10.7%. Capex rose 31.4% in Q3 to 14.3 billion rubles and the ratio grew to 17.6% from 14%.
In Q3, MegaFon upgraded its G/LTE network in St Petersburg with its flagship 4G+/LTE Advanced network and launched operation of 4G/LTE networks in Smolensk, Ivanovo, Novgorod and some cities in Karelia and Mari El. MegaFon's high speed mobile Internet is now available in 68 out of Russia's 85 regions.
"This year, as our plans to build grids have come to fruition and thanks to an effective approach to selecting suppliers, we have lowered our capex forecast. This will realistically be lower," MegaFon CEO Ivan Tavrin said on a conference call.
He said MegaFon, like the whole telecommunications sector, would feel the effect of the economic slowdown on its results.
"The dollar is already trading at more than 43 rubles. This is bound to have an effect on equipment purchases from China and Europe, and payments to our roaming partners," Tavrin said.
