Ukraine's mobile industry seeing long-term downward trend - Kyivstar president

MOSCOW. Aug 4 (Interfax) - The Kyivstar telecom operator is expecting further decline in the profitability of Ukraine's mobile industry, Kyivstar President Oleksandr Komarov told the Ukrainian media.

"There was an upward trend over the first and second months [of the year] until February 24, followed by a strange, situational, crisis bump. We have been on decline since then. Regretfully, I believe we are observing a long-term downward trend, and I will be glad if we hit the bottom by the end of this year. For now, the decline is continuing," the Ukrainian media quoted Komarov as saying.

Things are much worse with the margin due to a significant change in the structure of income: low-margin international income has grown, the impact of inflation and devaluation has increased, and social initiatives and free services currently provided to Ukrainians have placed an additional burden on the company, he said.

"For your understanding, the margin of about 10% in a business with over 20% reinvestment is, in principle, a negative result at the level of net cash flow," Komarov said.

As reported earlier, Kyivstar posted a 4.8% decline in EBITDA in the second quarter of 2022 amid a 3.9% growth in revenue (2% growth in dollar-denominated revenue) year-on-year to UAH 7.370 billion.

Kyivstar is the largest Ukrainian telecom operator providing communication and data services based on a wide range of mobile and fixed technologies, including 3G. As of the end of 2020, the company had about 25.9 million subscribers of mobile phone services and about 1 million subscribers of fixed Internet lines.

VEON International Group (formerly VimpelCom Ltd.) is the Kyivstar shareholder. The group stock is quoted at NASDAQ, New York.