The fallen ruble dropped profit of "MegaFon" for 42%

The profit of JSC "Megafon" in the first quarter 2014 decreased by 42,7% to 7,228 billion rubles.


The profit of one of the mobile operators, largest in Russia, JSC "Megafon" in January-March, 2014 made 7,228 billion rubles. It is about 42,7% less, than in the first quarter 2013 – then the profit of "MegaFon" made 12,624 billion rubles. The main reason of sharp decrease in profit in the companies called the loss received as a result of decrease in ruble exchange rate to dollar and euro.

Gains the most part of the income "MegaFon" in rubles, but thus incurs considerable part of expenses in currency. The depreciation of ruble conducting to revaluation of currency obligations inevitably beats according to the income of the company. For the first three months 2014 ruble exchange rate to dollar decreased almost by 10% therefore the loss of "MegaFon" on course to differences made 4,875 billion rubles. In January-March, 2013 the loss on exchange differences was six times less – only 816 million rubles.

At the same time almost operating expenses on activity of the company increased by 8,5 billion rubles – with 48,1 to 56,5 billion rubles –. As a result, in spite of the fact that the revenue of the company grew from 67,724 billion rubles to 74,876 billion rubles (+10,6%), the operating profit of "MegaFon" was reduced from 19,6 billion rubles to 18,4 billion rubles, and the indicator of profitability of OIBDA (the operating income to a deduction of depreciation of fixed assets and depreciation of intangible assets) decreased from 47,8% to 43,4%.

"Decrease in profitability of OIBDA is caused by a number of factors, including growth of a share of less marginal proceeds from sales of the equipment and accessories, reduction of profitability of services because of the increased payment for gateway interaction caused by decrease in ruble exchange rate in 1 quarter 2014, increase in a share of proceeds from less profitable services of a fixed telephony, additional business expenses in connection with the Olympic Games in Sochi ("MegaFon" invested about 10 billion rubles in the Olympic project – Primech. RBC), the increase in the general and administrative expenses caused by growth of expenses on rent and utilities, and also expenses on radio frequencies mainly because of consolidation of "Skartel" about 4 quarters 2013", – it is noted in the report of the company.

The CEO of "MegaFon" Ivan Tavrin highly estimated results of the first quarter 2014.

"Thanks to the powerful infrastructure received as a result of integration of "Skartel" we keep leadership in a segment of rendering services of mobile data transmission. In comparison with the first quarter 2013, the revenue in this segment grew more than by 45% and exceeded 16 billion rubles. In the first quarter we managed to finish successfully the large-scale project on ensuring communication at the XXII winter Olympic and XI Paralympic Games in Sochi. According to Ipsos agency, the number of the people wishing to use services of "MegaFon" after carrying out winter Games increased by 22%", – he explained.

The number of active subscribers of "MegaFon" by March 31, 2014 grew to 69,7 million people that is 7,5% more, than was in the previous year.

"Higher the revenue and operating profit usually are expected in the second half of year in comparison in the first six months of year. Higher revenue during the period from July to September is generally connected with increase in demand for telecommunication services during the season of holidays. Higher revenue also takes place in December in connection with increase in demand for telecommunication services and the subscriber equipment from private clients. Besides, promotes growth of revenue in the second half of year the bigger number of the working days, than in the first half of year because of long state holidays in January and May in Russia is considerable", – it is noted in the report of "MegaFon".



Evgeny Kalyukov
RosBusinessConsulting
 No. of 29.05.14