Telecom operator MTS, despite challenging market situations in Ukraine, will maintain its Capex (capex spending) at RUB 90 billion or $2.48 billion for the current year.
In the first half of 2014, MTS Capex increased 15 percent to $797 million or RUB 28,871 million. Out of this, MTS invested RUB 27,071 million in Russia, RUB 1,421 million in Ukraine, RUB 172 million in Armenia and RUB 207 million in Turkmenistan.
The main focus of MTS Capex was in 3G expansion in Russia, 4G LTE roll outs in Russia, GPON investment in Moscow and telecom network modernization in other mobile markets.
In the second quarter of 2014, MTS said its Capex increased 38 percent to $518 million or RUB 18,780 million. During the March quarter, MTS Capex was RUB 10,091 million.
MTS CFO Alexey Kornya said the company is considering reallocation of Capex from Ukraine to Russia. “It will be a minor reallocation and will not impact overall Capex plan.”
Meanwhile, Russia’s biggest mobile phone operator said on Friday it had increased its contract with Swedish telecom equipment supplier Ericsson to more than $1.5 billion. MTS said it had signed a $286 million contract with Ericsson in addition to existing deals.
MTS in considering Capex of around RUB 85 billion over the next couple of years after 2014.
On Wednesday, MTS cut its full-year sales and core profit forecasts, citing instability in Ukraine, its second-biggest market.
MTS chief executive Andrei Dubovskov said: “While in Russia we still expect revenue growth at the upper end of our 4-5 percent range, the impact of the situation in Ukraine will limit the group’s revenue growth to at least 1 percent for 2014.”
MTS cut its revenue growth target from an earlier 3-5 percent range. It said it now expects operating income before depreciation and amortization to be flat year-on-year, having previously forecast a 2 percent rise.
The Ukraine crisis weighed on MTS results in the second quarter of 2014 with total sales increasing 1.4 percent to 98.9 billion rubles ($2.7 billion).
Revenue in Russia alone rose 4.5 percent to 90.4 billion rubles, driven by data services, the company said.
MTS reported a fall in profits for the second quarter, mainly because of a one-off $320 million gain it booked a year earlier in connection with the settlement of a dispute in Kyrgyzstan.
Net profit fell 27 percent to 21 billion rubles ($579 million).
