Page 12 - bne_Tech_03_2020

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March 2020 www.intellinews.com I Page 12
Russian telecom major Rostelecom misses on earnings in 4Q19, cash flow solid
Russian state-controlled integrated telecom major Rostelecom reported 4Q19 IFRS results, showing 9% year-on-year revenue growth, but having Ebitda shrank by 4% on surge in staff costs and spending related to state contracts (up by 19% y/y and 34% y/y, respectively). Net income dropped by 95% y/y.
As reported by bne IntelliNews, in 2019 Rostelecom consolidated control in the "big four" mobile operator Tele2, while remaining the major recipient of B2G telecom and infrastructure contracts. Rostelecom is also in focus regarding the planned rollout of 5G in Russia.
The company's revenues in 4Q19 were supported by the B2G and B2B segment the most, showing 25% y/y growth versus 1% for B2C. By services, the revenues grew the most due to an increase
in cloud services (+58%), other telecom (+12%) and non-telecom revenues (+76%).
Despite the dive in Ebitda Rostelecom maintained solid cash collection, with the free cash flow
for dividends for 2019 overall amounting to RUB22.8bn versus RUB14.8bn in 2018, as the RUB18.5bn contribution from change in working capital more than offset the 37% increase in capital expenditure (to RUB100bn including state contracts; RUB72bn excluding these contracts).
BCS Global Markets on March 4 welcomed
strong FCF and noted that it will ensure the management’s target for 2019 dividend per share of RUB5 (6% yield), as expected. At the same time the company plans to present the new strategy and dividend policy in 3Q20, which is important for the outlook.