Page 99 - bne IntelliNews Country Report: Russia Dec17

Uzbekistan, and Ukraine. Reported revenues increased 4% y/y to $2.456bn, in line with Interfax consensus, aided by a rising number of mobile customers (+2.3% y/y to 211mn). Reported Ebitda rose 16.4% y/y to $1.042bn and was 9.5% ahead of Interfax consensus. A one-off adjustment to a vendor agreement is the primary reason for the robust y/y Ebitda uptick in July-September - up 3.2% y/y to $993mn. The respective margin was almost flat y/y at 40.4%. Profit for the period was $125mn, down 72% y/y, while underlying FCF contracted 2.9% y/y to $475mn, while net debt/LTM Ebitda increased to 2.3x, from 1.8x last year.
9.2.9 Utilities corporate news
The state-owned Russian Railways (RZD) monopoly is considering the sale of its 39.8% stake in the power company TGK-14, Interfax reported on November 10. The company is looking into combining this stake with that of Blagosostoyaniye Pension Fund, and thus selling up to 90% of the company's shares. RZD has hired VTB as its financial advisor with recommendations on the sale to be finalised by November 20. "The news has already sparked a 16% rally in TGK-14's highly illiquid shares," Aton brokerage said in a research note. "Based on the current multiples of Russian power generators we see the company's fair equity value in the RUB5.8-8.8bn ($98mn) ballpark, which implies RUB5.2-7.9bn for a 90% stake." "We see Inter RAO and Siberian GenCo as the most likely bidders for this asset," it added. TGK-14 operates seven coal-fired CHPs with 650MW of installed electric capacity in Zabaikalye region and Buryatiya Republic. Inter RAO has a considerable cash pile (approximately RUB100bn) and also operates two power plants, Gusinoozerskaya and Kharanorskaya TPPs, in TGK-14's regions.
9.2.10 Metallurgy & mining corporate news
Russian oligarchs Oleg Deripaska, the owner of UC Rusal , and Norilsk Nickel main owner Vladimir Potanin have refused to joint forces in creating in a giant metals company any time soon, Potanin was quoted as saying by Vedomosti on November 29. "Me and [Deripaska] agreed that UC Rusal and Norilsk Nickel are different enterprises, and there is no synergy between them in sight," Potanin said. "So, in the mid-term perspective, they will develop separately." A spokesman for Deripaska added that US Rusal's holdings in Norilsk Nickel has always been considered as a strategic investment, and nothing has changed. The government has always been keen on creating a Russian metals super-company. The possibility of merging US Rusal and Norilsk Nickel was first floated 10 years ago. Back then, Potanin planned to buy Mikhail Prokhorov's share in Norilsk Nickel to consolidate ownership of the company. However, the negotiations failed, and a nearly 50% stake was eventually acquired by UC Rusal. UC Rusal's plan was to combine the two companies and, possibly, attract other partners, such as Metalloinvest , Evraz , Mechel and Uralkali , in an attempt to create the Russian analogue of BHP Billiton. But discussion of the specifics has always hit a road bump. The Russian government supports the idea, sort of a "Gazprom of metal", run by Kremlin-friendly tycoons. Now, apparently, the Kremlin will have to wait for a better time.
Russia's metals major Magnitogorsk Iron and Steel Works (MMK) reported 4.5% quarter-on-quarter IFRS revenues growth in the third quarter of 2017 to $2bn on November 9, the revenues beating consensus
99 RUSSIA Country Report December 2017 www.intellinews.com