MegaFon Quarterly Earnings Beat Estimates on Data Revenue

OAO MegaFon (MFON) posted a 28 percent increase in fourth-quarter profit, beating analyst estimates, as Russia’s second-largest mobile-phone operator increased data revenue and cut costs.

Net income climbed to 12.4 billion rubles ($406 million) from 9.7 billion rubles a year earlier, MegaFon said today in a statement. That beat the average estimate of 11.3 billion rubles from five analysts in a Bloomberg News survey. Sales rose 9.3 percent to 71.5 billion rubles.

MegaFon, controlled by Russian billionaire Alisher Usmanov and Sweden’s TeliaSonera AB (TLSN), sold $1.83 billion of shares in an initial public offering in London last year. The margin for operating income before depreciation and amortization rose to 43 percent from 41.6 percent of sales as MegaFon cut subscriber acquisition costs by switching to revenue-sharing with retailers. Data revenue surged 26 percent in the fourth quarter.

“This combination of increasing revenues and management’s intense focus on operating efficiency and cost control has generated record operating income before depreciation and amortization,” Chief Executive Officer Ivan Tavrin said.

The stock rose as much as 4.1 percent, the most since Feb. 1, before trading 1 percent higher at $28.32 at 9 a.m. in London, giving the company a market value of $17.6 billion. The shares were first sold at $20 apiece in November.

MegaFon had net debt of about $4 billion as of Dec. 31., after acquiring shares from Russian billionaire Mikhail Fridman in April.

The size of the dividend will be decided in the second quarter, Tavrin told reporters today, adding that the company forsees “high single-digit” revenue growth this year.

To contact the reporter on this story: Ilya Khrennikov in в Москве at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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