Page 155 - RusRPTSept22
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     ● In Russia total revenue declined 1%, while EBITDA grew 12% (42.5% margin) in ruble terms. The reason for revenue decline was a 28% drop in handset sales. Meanwhile, mobile service revenue continued to grow by 3%. Veon attributes EBITDA growth to organic factors – revised pricing for devices, optimised mobile services bundle.
● Key growth drivers were businesses in Kazakhstan (in local currency, revenue +20%, EBITDA +20% excl. one-offs) and Pakistan (+11%; +20%). In Ukraine, performance has expectedly worsened (+4%, -5%).
● Net debt/EBITDA including lease grew to 2.9x from 2.4 in 1Q22 – Veon mainly attributes this growth to ruble appreciation. The company had $2.3bn cash at end 2Q22, including $1.9bn at HQ.
● Equity FCF for 1H22 also got impacted by the increase in debt and lease payments – at negative $9 mn in 1H22 vs positive $86 mn in 1H21 before spectrum payments; respective negative $310 mn and positive $10 mn after spectrum payments. Capex, meanwhile declined 22% y/y to $382 mn (22% revenue).
● Algeria put option deal proceeds - on June 28 Veon signed the deal and definitive documents related to the execution of the put option. Recall, it should receive the $0.68bn settlement.
Veon announced the closure of the Algeria put option deal. The company has received the $682mn payment as planned. As a result, Veon now has $3.1bn cash at HQ. Recall, the deal concerns Veon exercising a put option to sell its 46% stake in Algeria business. Veon notified it exercised the option a year ago, the price of the deal was revealed in spring.
MTS released 2Q22 IFRS results yesterday. The numbers appeared fairly
weak on banking provisions, drop in handset sales.
● Revenue grew 1% y/y to Rb128bn. This came on the back of 4% y/y growth in the connectivity segment in Russia (thanks to tariffs increase earlier in the year), a 36% growth in banking revenue, offset by a 47% drop in handset sales (due to import restrictions).
● EBITDA declined 9% to Rb52bn (41% margin) mainly due to extra provisions in banking amid a more challenging macro environment. Excluding the banking segment, EBITDA was around flat y/y, we estimate.
● Net income declined 36% y/y Rb11bn (9% margin) – result of lower EBITDA, higher interest costs and D&A, partly offset by FX gain.
● MTS’ CapEx for 1H22 stood at Rb59.4bn (23% revenue; +8% y/y), with slowdown in investments in 2Q22 (to 17% revenue) due to the hurdles in purchasing new equipment.
● MTS’ estimated FCF before Bank stood at negative Rb5bn in 1H22 (vs +ive Rb17bn in 1H21). Meanwhile, total levered FCF including Bank, on our estimates, stood at negative Rb15bn (vs -ive Rb17bn in 1H21).
● Net debt/EBITDA in 2Q22 stood at 1.9x (excl. lease), vs 1.6x in 2Q21.
Swedish telecom equipment major Ericsson announced closing its
 155 RUSSIA Country Report September 2022 www.intellinews.com
 


















































































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