By Olga Razumovskaya

 

MOSCOW--Russia's biggest telecom company OAO Mobile TeleSystems said its net profit in the second quarter dropped 21.7% to 17.1 billion rubles ($261 million), hit by decreasing operating income before depreciation and amortization, and foreign exchange losses of approximately RUB3 billion.

The company warned Tuesday that unstable macroeconomic factors in its chief operating countries, such as Russia and Ukraine, may further impact the company's financial and operational performance.

MTS's adjusted Oibda in the second quarter dropped 2.1% to RUB42.7 billion, driven by double-digit inflation in Russia, the devaluation of the hryvnia, expenses connected to MTS's relaunch of its Uzbekistan business, as well as salary increases in Russia in September 2014, the company said.

The company's second-quarter revenue increased, however, by 3.9% to RUB102.7 billion.

MTS Chief Executive Andrei Dubovskov said that ruble and hruvnia volatility will affect revenues and Oibda in Russia and Ukraine.

The company increased its 2015 capital expenditure to around RUB92 billion rubles from RUB85 billion, including investment in its 3G business in Ukraine where MTS won licences to operate earlier in the year, Mr. Dubovskov said.

The annexation of Crimea, as well as difficulties operating in eastern Ukraine where conflict has reigned for over a year, negatively affected Ukraine business, Mr. Dubovskov said.

 

Write to Olga Razumovskaya at olga.razumovskaya@wsj.com

 

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(END) Dow Jones Newswires

August 18, 2015 08:14 ET (12:14 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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