The macroeconomic weakness, negative currency effects and uncertain political environment in Ukraine led the company to lower its revenue growth outlook for 2014 to 1 percent. Russia is still expected to grow at the high end of its initial guidance of 3-5 percent, after a revenue increase of 4.5 percent in Q2. Group OIBDA is forecast stable year-over-year, and MTS maintained its capex budget at RUB 90 billion over the full year, after RUB 28.9 billion in H1.
MTS' mobile customer base rose 1.3 percent compared to the end of Q1 to 110.12 million at the end of June, led by a 1.5 percent increase in Russia to 77.27 million. The operator increased mobile service revenues in Russia 6.3 percent to RUB 70.9 billion, while fixed-line revenues fell 1.0 percent to RUB 15.6 billion due to more government contracts in the year-earlier period.
Mobile ARPU in its home market rose 0.7 percent year-on-year to RUB 308, helped by upselling tariffs with data services. ARPU from data and other VAS totaled RUB 103.2, up from 90.1 a year ago. Total revenue from data increased 39.7 percent to RUB 15.3 billion. MTS said 7 percent of customers were using LTE devices already, and 4G phones accounted for 9 percent of unit sales in its shops. Overall smartphone penetration was at 37.0 percent of customers in Russia.
In the fixed-line market, MTS finished the quarter with 7.294 million customers, down by 32,000 from three months earlier. The operator blamed the drop on the migration of TV customers to digital from analogue, which resulted in some customers on the 'social' package canceling services. The migration to digital and shift to GPON in Moscow helped ARPU rise 7.8 percent year-on-year to RUB 330. Homes passed increased to 12.390 million from 12.347 million over the same period.
