Page 115 - RusRPTDec19

Russian mobile major ​Mobile TeleSystems​ (MTS) reported net profit of RUB18.4bn (14% margin) in 3Q19 under IFRS swinging from RUB37bn loss ​seen in the same period of last year when the company had to book RUB56bn for a ​settlement in high-profile Uzbek corruption case​. In the reporting quarter MTS posted revenue growth of 5% year-on-year, supported by 2% top line increase in Russia and 30% jump in UAH-denominated revenues in Ukraine, both of which accelerated as ​compared to previous quarters​. MTS adjusted Ebitda was up 6% y/y (47% margin), on the back of decent performance in service revenue in Russia, favourable comparison base for costs (higher spectrum fees in 2H18) and 29% Ebitda growth in Ukraine in hryvnia terms, BCS Global Markets commented on November 19.
Russian state-controlled integrated telecom major ​Rostelecom​ reported 12% year-on-year net profit increase, ​continuing to get support from Tele2 mobile subsidiary in 3Q19. As reported by ​bne IntelliNews,​ in addition to support from state contracts​, earlier this summer Rostelecom announced the terms of restructuring that will allow it to ​consolidate 100% in Tele2​. The mobile runner-up turned the corner in 2018 and continued to​ deliver strong results in 2019.​ In 3Q19 under IFRS Rostelecom showed 5% y/y revenue gain, with improved performance across all sectors: Pay TV (+6%), broadband (+4%), cloud services (+37%). Other telecommunications services grew 42% y/y due to higher sales of video surveillance equipment and mobile services revenue, BCS Global Markets commented on November 8. In the meantime B2B/B2G (business to government) sectors remains key revenue growth driver for Rostelecom, showing 14% gain versus 2% for B2C segment. Rostelecom’s Ebitda grew 2%, lagging behind the revenue growth due to 11% increase in staff costs and other operating costs. Free cash flow also progresses as expected, with better performance y/y to a large extent due to shift in repayment of receivables.
9.2.10 ​Utilities corporate news
Formerly sanctioned Russian metals and energy major ​En+​ is in the process of selling its coal business ​(coal-fired combined heat and power plants with a total installed capacity of 3.8GW and coal mines supplying the CHPs with fuel), which is controlled by its subsidiary Irkutskenergo, Kommersant d​ aily reported on November 20. Reportedly, the business could be sold to utility majors SGK, InterRAO, or Gazprom Energoholding for RUB25bn ($390mn). Getting rid of the coal assets for En+ is in line with the company's strategy of increasing its focus on ESG (environment, social and corporate governance), which was recently presented by the new BoD, Sberbank CIB reminds on November 20. However, the bank believes that the “heightened interest in ESG worldwide could act to limit the number of potential buyers, therefore limiting the number of parties interested in buying the assets and potentially the price as well.”
Russian grid major ​Rosseti​ (Russian Grids) reported 7% year-on-year increase in net profit under IFRS to RUB97bn ($1.5bn) in 9M19​. The company's revenues were up 2% year-on-year to RUB 734bn, while Ebitda gained 10% y/y to RUB244.6bn. As reported by ​bne IntelliNews​, ​Rosseti could hold a secondary public offering​ and is ​revising its dividend strategy​. Rosseti controls stakes in regional grid subsidiaries, among which 80% in Federal Grids, one of the ​best-paying dividend names​ in utilities universe. In the reporting quarter the top line of Rosseti was supported by tariff
115​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com