Megafon Q4 profits lower on Olympics costs, Yota takeover

Russian mobile operator Megafon reported fourth-quarter revenues up 11.4 percent year-on-year to RUB 79.732 billion. Mobile service revenue rose 10.0 percent to RUB 69.109 billion, led by a 40 percent increase in data revenues to RUB 15.058 billion and the consolidation of Scartel (Yota). Wireline revenues were up 5.9 percent to RUB 4.812 billion, and equipment sales jumped 37.4 percent to RUB 5.811 billion, as smartphones reached just over 50 percent of handsets sold. 

OIBDA declined by 2.9 percent to RUB 30.522 billion, and the OIBDA margin dropped by 5.1 percentage points to 38.3 percent, hurt by costs for the Olympics and the introduction of number portability in Russia, as well as the consolidation of Scartel from October. The net profit decreased by 45.7 percent to RUB 10.082 billion, amid negative forex effects, higher financing costs and a one-time gain in the year-earlier period. 

Capital expenditure totaled RUB 23.853 billion, up by 47.8 percent on the roll out of the LTE network, which reached 39.5 percent of the population at year-end. Free cash flow over the full year was still up 16.3 percent to RUB 82.293 billion, and net debt was down 14.1 percent to RUB 102.235 billion at the end of 2013. The subscriber base totaled 70.1 million, up by 8.5 percent compared to the end of 2012. 

For 2014, Megafon forecast revenue growth of 6-8 percent and OIBDA margin of at least 44.0 percent. Capital expenditures will increase again in 2014, to an estimated RUB 58-64 billion.