Page 122 - RusRPTMay19

Russian internet major Mail.ru reported net profit drop of 47% year-on- year to RUB1.6bn under IFRS, the company said on April 25. Net income dropped due to lower Ebitda and emerged interest expense, BCS Global Markets commented, reminding that Mail.ru took out debt due to significant M&A-related payments in 1Q19. “The numbers came in weak on EBITDA; on revenue could have been better as well (though in line with consensus),” BCS GM noted, while reminding that Mail.ru warned of the possible weakness in Q1 due to shift of marketing costs to the start of the year. In the 2H19 Mail.ru expects both acceleration of revenue growth and moderation of costs (as in 2018). Revenue was up 22% y/y in the reporting quarter driven by 19% increase in ad revenue (deceleration from 38% in 4Q18), 22% growth in games, 167% growth in Youla platform revenue (to RUB0.38bn and 2019 revenue target is RUB2bn versus RUB1.2bn in 2018), and 108% growth in Delivery Club revenue (to RUB0.88bn). Ebitda in the reporting period declined by 26% y/y due to higher marketing costs (+88%), and agent and partner fees (+42%). Excluding the Delivery Club food delivery service and Youla platform, revenue was up 18% (to RUB 18.9bn), Ebitda declined 10% (to RUB6.2bn), net profit declined 19% (to RUB3.96bn).
9.2.8 Telecoms corporate news
MTS is in negotiations to buy 100% of online cinema ivi, RBC reported on April 9. According to one source, MTS is ready to pay around RUB20bn. An ivi shareholder confirmed the news, noting that not all shareholders are happy with the price. Boguslavskiy (Chairman of ru-Net, key shareholder of ivi) said there is interest from a number of investors, but no negotiations are in the advanced stage yet. Ivi is the largest classic online cinema in Russia, generating RUB3.94bn revenue in 2018 (up 62%) and increasing its share in online cinema market to 36%, according to TMT Consulting; the market was up 45%. 70% of ivi’s revenue comes from user payments – the top growing category for the company, up 87% – the remainder is mostly ad revenue. According to company comments to Vedomosti in February, the business is profitable, but details were not disclosed. The deal would be in line with MTS's strategy for strengthening its expertise in adjacent areas via acquisitions. RUB20bn price tag suggests 5x 2018 revenue, which looks reasonable.
One of Russia's "big four" operators MobileTeleSystems (MTS) is considering the acquisition of “the Russian Netflix,” online cinema provided ivi, the market leader with a 36% share, for RUB20bn ($309mn), RBC business portal reported on April 8 citing unnamed sources. The news confirm that the "rush to create the Russian Netflix has intensified", Sberbank CIB commented on April 9, reminding that internet major Yandex has also expanded the portfolio of its video content services. Since its launch in 2009, ivi.ru (known just as “Ivy” in Russia) rapidly became the nation's premier site for legally watching movies. Revenues doubled every year and the company is widely seen as a candidates for a eventual billion-dollar IPO in the not too distant future. "We are positioned in the movie business and closer to Netflix than [US online TV broadcaster] Hulu, but we also have some TV shows, music and a kids' portal. But movies is our main thing," Oleg Tumanov, CEO and chairman of ivi.ru, said in a rare and exclusive interview with bne IntelliNews in 2013. The company has come on by leaps and bounds since then. ivi posted 62% year-on-year increase in revenues to RUB3.94bn in 2018, outgrowing a market that expanded by 45%. 70% of ivi’s revenue comes from user payments, which is the top growing category for the company boasting
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