Page 127 - RusRPTJun19

9.2.8 Telecoms corporate news
One of Russia's "big four" mobile operators VEON (formerly VimpelCom) showed 6% revenue decline to $2.2bn and Ebitda slip to 4% to $0.82bn at 39% margin in the first quarter of 2019. The company's results in 1Q19 were affected by weaker currencies in Russian and Pakistan, which if unaccounted for, would make 7% and 10% revenues and Ebitda growth, respectively. Previously in the fourth quarter VEON reported unexciting results. But in the first quarter of 2019 "the numbers came in ahead of our expectations on EBITDA thanks to better profitability in Ukraine and more significant cut in HQ costs; this still suggests a decline y/y due to currency headwinds in the countries of operation," BCS Global Markets commented on May 3. Country- wise, the international major VEON showed good performance in local currency in Ukraine, Pakistan and (less expected) in Bangladesh, weak in Uzbekistan (taxation change) and Algeria (competition), moderate in Russia, BCS GM summed up.In Russia, revenue grew 4% in the reporting quarter, with the key growth driver being doubling of the handset sales, mobile service revenue growth of 1%. Company's Ebitda in Russia was up 1% to 37% margin. VEON's total net income stood at $0.56bn (versus $0.1 bn loss a year ago) due to "above-mentioned one-off, lower interest expense and 1Q18 affected by loss in Italian unit (Veon sold its stake last year)." The free cash flow of the company (FCF) remained stable at $0.38bn versus $0.33bn in 1Q18.
Russian state integrated telecom major Rostelecom posted 46% year-on- year and 140% quarter-on-quarter jump in net IFRS profit in 1Q19 to RUB5.6bn ($86.4mn), which was due to Ebitda increase and Rostelecom's share in the increasing profit of Tele2 mobile subsidiary. In March Rostelecom said it would consolidate 100% control over mobile phone operator Tele2. Currently Rostelecom holds 45% in Tele2, with the rest controlled by Tele2 Russia Holding AB, owned by VTB Bank (50%), Invintel B.V. of steel tycoon Alexey Mordashov (40%), and Rossiya Bank of Yury Kovalchuk. In 1Q19
127 RUSSIA Country Report June 2019 www.intellinews.com