Page 107 - RusRPTSept20

revenue dropped 10% y/y and EBITDA 20%, due to the former and higher costs this year due to focus on beefing up the network. In mobile, revenue fell 12% y/y, mainly driven by the 8% drop in subscriber base – Veon explains this by store closures limiting distribution and less migrant customers this year; though it notes some improvement in the last weeks of June and early July.
The Belarusian software engineering firm EPAM reported 2Q20 financial results that were well above the consensus and the company's guidance on August 6. Revenues and non-GAAP operating income beat the consensus 6% and 24%, respectively. Management's 3Q20 guidance implies some moderation of the top line growth to 8-9% y/y vs. 15% y/y in 2Q20 and the non- GAAP operating margin at 16.5-17.5% (vs. 17% in 2Q20)., VTB Capital (VTBC) said in a note. “Still, the 3Q20 guidance also exceeds the consensus. The 2Q20 outperformance and the higher-than consensus 3Q20 guidance are likely to provide support to the stock. Nevertheless, we still believe that it remains expensive, and suggest taking profits in the name. Our 12-month Target Price of $260 implies an ETR of -12%: Sell reiterated,” VTBC said. EPAM’s 2Q20 revenues increased 15% y/y to $632mn and came in 6% above consensus and 5% above our forecast. The number also significantly exceeded the company's guidance of $590-605mn. The growth was primarily driven by the strong performance of Business Information & Media (+43% y/y), Life Sciences & Healthcare (+16% y/y) and Software & Hi-Tech (+13% y/y). Non-GAAP operating profit rose 17% y/y to $108mn, 24% above consensus and 14% above our forecast. The margin of 17% exceeded the guidance of 14- 16%.
Russian fixed line operator Rostelecom released 2Q20 IFRS that beat on P&L expectations but were weaker on free cash flow (FCF). Revenue grew 13% y/y, with key drivers in mobile (+16%; no slowdown, despite lack of roaming revenue) and cloud and other digital services (+68%) Adjusted EBITDA and net income were up a respective 15% and 32%, as a result; the latter included the factor of higher interest costs due to the Tele2 deal FCF for dividend calculation in 1H20 stood at negative RUB14.8bn (vs negative RUB1bn in 1H19 pro-forma, including Tele2). This came on the back of a significant negative impact of working capital change (increase in receivable and decrease in payables), while pro-forma CapEx was virtually flat y/y Guidance 2020 including Tele2: 5%+ growth in revenue and EBITDA (vs respective +11% and +14% in 1H20). Capex guidance – RUB100-110bn, excluding state programs. New strategy including Tele2 – expected by the end of the year
MTS named among top-3 strongest Russian brands. The company said in a press release: “Our brand is not only a reflection of our company, it’s one of our most powerful tools to capture consumer mindshare and acquire new customers. That’s why we were happy to have recently been named one of Russia’s top-3 strongest brands according to an annual ranking by Brand Finance. Moreover, MTS was one of only three companies to have secured the elite AAA+ brand strength score — a testament to our stellar reputation among many Russian consumers. In addition, our brand was the most valuable in the Russian TMT sector and eight most valuable overall, moving up a spot from the 2019 rankings with an estimated value of 148bn rubles (+22% year-over- year).”
107 RUSSIA Country Report September 2020 www.intellinews.com