By Olga Razumovsksya
MOSCOW--Russia's leading telecoms operator MTS said Tuesday its
net profit tumbled in the fourth quarter as the company suffered
from rapid depreciation in the ruble and in the Ukrainian hryvnia,
and lost a deposit it had with an insolvent Ukrainian bank.
MTS, or Mobile TeleSystems, said its net profit fell 91.7% in
the fourth quarter to 1.6. billion rubles ($25.88 million). MTS
said it had booked a 5.1 billion rubles loss on a deposit with
Ukraine's Delta Bank, which was declared insolvent by Ukraine's
central bank on March 3.
MTS Chief Executive Andrei Dubovskov said the insolvency of the
Ukrainian bank won't impact the company's investment abilities in
Ukraine.
MTS's revenue in the fourth quarter went up 2.3% to 107.19
billion rubles, the company said. Its fourth-quarter adjusted
operating income before depreciation and amortization, was down
5.3% to 42.60 billion rubles. This was affected by the company's
relaunch of operations in Uzbekistan, higher taxes and an increase
in employees' salaries in September, MTS said.
This year, MTS overall revenue is seen growing by 2%, and by 3%
in Russia only, Mr. Dubovskov said. He also said he expects 2015
adjusted earnings to increase by more than 40%, while capital
expenditures, including spending on faster third generation
licenses in Ukraine, to stand at 85 billion rubles.
But high volatility of Russia's and Ukrainian's currency
together with a "significant macroeconomic instability" may
influence the company's financial and operational results and lead
to a revision of MTS outlook on revenues and adjusted earnings, Mr.
Dubovskov said.
Vasyl Latsanych, MTS marketing executive, said that the company
considers the 2% revenue growth forecast as realistic thanks to the
growth in data services consumption. The company had invested
significantly in the fast Long Term Evolution, or LTE, network in
Russia and expects the investment to pay off, Mr. Latsanych
said.
Write to Olga Razumovskaya at olga.razumovskaya@wsj.com
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