Page 120 - RusRPTJun20

y/y
o Mobile segment (i.e. Tele2; 34% total revenue) expanded 16% y/y driven by growth both in subscriber base and ARPU
o Fixed line business, including impact from DataLine consolidation (which we estimate at 2-3pp), grew 8% y/y mostly driven by an increase in cloud revenue
o B2G/B2B remains the key growth driver: +26% y/y vs +5% in B2C revenue
Adjusted EBITDA grew 12% y/y, thanks to the top line increase, higher amount received for “Bridging Digital Divide” project and gain from sale of PPE
Adjusted net income was up 1% y/y, lagging EBITDA due to the impact from FX loss on CapEx-related liabilities; debt is fully ruble-denominated
FCF (for dividend calculation) in 1Q20 was negative RUB6bn – improvement from negative RUB16bn in 1Q19 due to higher OCF and lower CapEx (shift within the year)
Guidance 2020 – decided to delay planned update of outlook (including Tele2) due to COVID-19 uncertainty; plan to release it later in the year
o COVID impact: some segments are expected see pressure, while the company expects an increase in demand for ‘digital services’ and services related to the digitalization of corporate infrastructure. Macro impact remains uncertain
O Tele2 cash flow – from comparison of consolidated numbers including and excluding Tele2, we estimate, it added RUB11bn to Rostelecom’s assessment of its 2019 FCF for dividend calculation (vs RUB23bn for Rostelecom standalone). Contribution is less if we include regular lease payments – RUB2.5bn vs RUB17bn.
9.2.10 ​Utilities corporate news
Unipro​ has reported weak IFRS results, with its bottom line sliding 23%, matching our expectation. However, to pile worse onto bad, the company announced yet another delay to the recommissioning of Berezovsakya GRES, resulting in a one-third cut to its previous dividend guidance. Analysts estimate that even in such a scenario, the effect of COVID-19 would force the company to finance dividend payments with 100% debt. We have lowered our 12-month Target Price 7% to RUB2.70 and, given this suggests an ETR of 4%, downgrade the stock to Hold from Buy.
InterRAO’s 1Q20 IFRS EBITDA was down 5% y/y​, driven by a combination of RSV prices under pressure, the production squeeze and a reduction in trading operations, though it was supported by capacity payments (certain DPM units entered the elevated tariff period, while some moved to the KOM market) and the Kaliningrad lease. Revenues slid 5% y/y to RUB266,906mn. Adjusted EBITDA was down 13% y/y to RUB41,377mn, in line with our forecasts but 2% above consensus. Net income was strong, with 11% y/y growth, exceeding our and consensus expectations 28-29% due to the recorded RUB8.9bn of additional finance income from FX moves. Net cash stood at RUB223.4bn.
120​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com