Page 169 - RusRPTApr21

socially important sites in Russia – no clarity at this point.
Rostelecom reported 4Q20 IFRS results on March 9. Revenues came in at R163.0bn, up 22.7% y/y.
The B2B/G segment recorded revenues of R73.3bn, up 48%, making it the key driver for top-line growth. The segment with the highest revenue growth was digital services (up 52.9% y/y to R30.4bn), which was mainly boosted by growth in regional digital projects, rising demand for digital platforms in healthcare, public administration and elections, and the promotion of cloud and cybersecurity services. Mobile service revenues expanded 14.7% y/y to R47.3bn, with the subscriber base up 1.5% y/y to 46.6mn. EBITDA expanded 9.5% y/y to R44.5bn, with the margin receding 3.3 pp y/y to 27.3%. The company posted a net loss of R2.1bn.
For 2020, capex net of state programs totalled R107.1bn, or 19.6% of revenues, down from 22.2% of revenues in 2019. FCF came in at R22.6bn (down 25%), partially due to the high-base effect from the repayment of accounts receivable in 2019 for a project to connect medical institutions to the Internet. Net debt/LTM EBITDA was 1.9, down from 2.0 in the year-ago period.
For 2021, the company expects both revenues and EBITDA to increase by at least 5%, which is below the respective Bloomberg consensus forecasts of 7% and 8%. The company projects high single digit growth for its mobile segment revenues, driven by a rising share of active mobile internet users. It forecasts capex at R110-115bn (excluding state programs). The management will recommend a dividend payment of R5 per share (for a 4.7% dividend yield), which is at the low end of the dividend policy and in line with our expectation.
Our view: The results came in 5.3% above the consensus on the top line but missed by 2.4% on EBITDA. We believe the key factors to watch out for now are the timing of an updated strategy and a recovery in FCF.
VEON announced 10 March, that Bangladeshi subsidiary Banglalink had acquired a 9.4MHz spectrum in 1800MHz (4.4MHz) and 2100 MHz (5MHZ) for c. $115mn. The purchase will increase Banglalink’s total spectrum holding from 30.6MHz to 40MHz, keeping it Bangladesh’s leading private operator in terms of spectrum per subscriber, according to VEON. On the one hand, the increased spectrum will help VEON to further expand its 4G coverage in Bangladesh. We note that back in 2018, the company acquired 10.6MHz of (technology-neutral) spectrum in 1800MHz (5.6MHz) and 2100MHz (5MHz) for $324mn (including VAT), a dollar per MHZ rate more than double the current acquisition price. On the other hand, the acquisition is likely to push VEON’s total capex in Bangladesh for 2021 above our current projections, which could
169 RUSSIA Country Report April 2021 www.intellinews.com