Page 96 - bne IntelliNews Russia Country report May 2017

Odnoklassniki about 9.5mn MAU, or 14%. Both are controlled by Mail.ru Group, which announced that 25mn Ukrainians might be affected should its services in the country to be blocked. Bloomberg reported citing Mail.ru Group that the effect of the share of the Ukrainian segment on revenues will be insignificant and the 2017 guidance will not be adjusted.
Russian internet major Yandex will shut its offices in the Ukrainian cities of Kyiv and Odesa , the company’s public relations officer Ochir Mandzhikov was quoted as saying Vedomosti daily on June 1. “Yandex.Ukraine is included in the sanction list and practically can’t keep operations on the territory of the country,” Mandzhikov said, adding that the accounts of the company are blocked and employees can’t be paid. Reportedly, employees in Kyiv and Odesa will be offered positions in Russian offices. The news follows reports that Yandex’s offices were raided in late May by Ukrainian security forces investigating possible treasonable actions by staff. Yandex released a statement denying any involvement of the employees of Yandex.Ukraine in any illegal activities and the transfer of information to Russian security services. The upheavals around Yandex are another consequence of the recently imposed Ukrainian sanctions on Russian internet companies and social media. However, Ukrainian President Petro Poroshenko’s latest strike at all things Russian looks set to backfire , as a decree published on May 16 that prohibits Russian social media and other internet sites used by millions of Ukrainians has drawn sharp criticism at home and abroad.
MTS reports solid 1Q17 IFRS results. Revenue declined 1.1% y/y to RUB104.7bn, in line with expectations. OIBDA added 1.8% to RUB41.8bn (3% above Interfax consensus), with implied OIBDA margin at 39.9% (vs 38.8% consensus). Net income totalled RUB12.5bn (-14% y/y; 1.3% above consensus). Capex dropped 39.5% to RUB11.1bn, which is a positive trend, and part of the reason for free cash flow increasing 11.4% to RUB22.9bn. MTS reiterated its FY17 guidance: revenue and OIBDA outlook at +2%/-2%, and capex at RUB80bn. The results look solid, especially the lower capex, and we expect a positive market reaction. MTS has suggested a RUB15.6 interim, half year dividend, which implies a 6.3% yield. The record date is 10 July.
One of Russia’s big three mobile operators MegaFon reported 1% year-on-year revenues decline to RUB74.5bn (€1.17bn) in the first quarter of 2017, the company said on May 24. The decline was in line with expectations and “generally repeated the trends of the previous quarter”, VTB Bank commented on May 25. The bank attributed a 3% y/y decline in mobile service revenues to the price decline, competitive pressure and the leap year base effect. At the same, similar to competitor MTS , sales of equipment were up 24% y/y in the first quarter, attributed to the recovery in consumer demand and a greater focus on high-end devices. Ebitda of MegaFon declined by 4% y/y, which was a positive surprise for VTB, as earnings exceeded the bank’s and consensus expectations by 4% and 2%, respectively. Nevertheless, net income declined by 57% y/y, negatively affected by a currency loss and increased interest expenses. MegaFon reported a RUB1bn loss from joint ventures, which VTB assumes is related to Euroset handset retailer.
Mobile telecom major VEON (former VimpelCom) reported consolidated Ebitda of $891mn in the first quarter of 2017 , up by 12% in year-on-year terms, but down 2% quarter-on-quarter. Ebitda's margin remained stable at 37.7%. VEON’s earnings came in at 2% behind the Interfax consensus analyst estimates, the main reason being low numbers in Russia and Algeria,
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