Page 97 - bne IntelliNews Russia Country report May 2017

VTB Bank commented on May 11. While exposure in VEON’s Algerian assets is limited (24% stake), VTB is concerned about the performance of Russian fixed revenues (down 14% y/y and 21% q/q in ruble terms despite the 40% ruble depreciation against a large proportion of contracts initially set in US dollars). “Both Pakistan and Ukraine did well, and exceeded our estimates,” VTB added. Russian revenues were down 2% y/y in RUB terms in the first quarter, mostly due to 14% y/y decline in the fixed business, which came 5% below VTB’s estimates. At the same time mobile service revenues in Russia improved slightly and were up 1% y/y in the first quarter. Ebitda in Russia alone declined by 1% y/y in RUB terms that was 3% below VTB’s expectations. VEON’s management reiterated that should the currencies remain stable, the company is likely to outperform its free cash flow target in 2017, but VTB believes that “this is unlikely to have an impact on the progressive divident policy".
Russian mobile major VEON (former VimpelCom, Beeline brand) will not sell its cellular tower assets in the short-term , Vedomosti daily reported on May 29, citing the manager of the company Shell Yonsen. “We are taking a rational decision,” VEON executive said, adding that no “acceptable proposals for the assets were received”. “We will not sell off the assets simply because of the trend,” Yonsen said, referring to other mobile majors in Russia extracting the tower assets. In January, Bloomberg reported citing unnamed sources that VimpelCom is ready to sell 12,000 towers for $800mn. However, Vedomosti sources claim that the deal was put on hold as the buyer Russian Towers did not come up with an acceptable offer. BCS Equity commented on May 29 that the delay of the deal was “slightly negative”, arguing that “possible sale of the towers was supposed to be a measure optimising the infrastructure spending, in line with the industry trend”.
The Russian-Chinese Investment Fund (RCIF) has applied to buy a stake in the Yandex.Taxi service of internet major Yandex, Vedomosti daily reported, citing the head of Russian Fund of Direct Investment (PFPI) Kirill Dmitriev. “We believe that news is positive for Yandex, as it could help Yandex.Taxi to accelerate expansion and defend its market share, while reducing cash burn,” Alfa Bank commented on May 17. The bank noted an earlier Kommersant daily report that Yandex intends to raise $150-200mn for the minority stake in Yandex.Taxi, with JPMorgan organising the sale. UBS analysts in March valued the business at $1.2bn, which makes a $150-200mn investment worth 12.5-16.7%, Vedomosti estimates. In the first quarter of 2017, the number of taxi rides ordered via Yandex.Taxi jumped 484% year-on-year, with revenues up by 75% to RUB778mn (€12.5mn). However, Ebitda remained negative at RUB1.25bn due to costs of advertising and marketing.
Russia's communications watchdog Roskomnadzor blocked access to the Chinese messenger Wechat after it refused to comply with the recently adopted law requiring that Russian citizens' personal data have to be stored within the country, Vedomosti reported on May 5. With a global user base of 890mn, Wechat is one of the world's biggest messenger services. Earlier in May, Roskomnadzor announced that four other foreign messenger services, BlackBerry Messenger, Imo, Line and Vchat, had been block in Russia on the same grounds. The law "On Personal Data" came into force in Russia on September 1, 2016. Many major foreign online companies, including Facebook and Twitter, agreed to comply with the law and agreed to transfer their Russian customers' personal data to servers located in Russia. However, some
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