Mobile TeleSystems Beats Estimates as Users Spend More

OAO Mobile TeleSystems (MBT), Russia’s largest wireless-service provider, boosted fourth-quarter profit by 39 percent, beating analysts’ estimates as subscriber numbers increased and customers spent more browsing the Web.

Net income rose to $547 million from $394 million a year earlier, the company, known as MTS, said today in a statement. Analysts projected $466 million, the average of estimates compiled by Bloomberg. Sales gained about 6 percent to $3.17 billion, also beating estimates.

MTS, controlled by billionaire Vladimir Evtushenkov, added 1.8 million subscribers for a total of 101 million, and data revenue in Russia rose by about a third. The company wants to improve its profit margin after it fell below the level of its peers in the fourth quarter.

The margin for operating income before depreciation and amortization shrank by 2.1 percentage points to 40.7 percent of sales as the company invested in expansion of its retail network and shut operations in Uzbekistan. Rival OAO MegaFon had a 43.9 percent Oibda margin in the fourth quarter, while VimpelCom Ltd. (VIP) had 41.1 percent.

MTS said it’s targeting a margin of 41 percent to 42 percent in 2013 to 2015. The operator wants to boost revenue 5 percent to 7 percent in local currencies this year from the equivalent of $12.4 billion last year and plans capital spending of 20 percent of sales, it said.

The stock rose as much as 2.4 percent and was up 2 percent at $20.40 per American depositary receipt at 10:55 a.m. in New York. That extended the gain this year to 9.4 percent.

The board will meet in April to determine the size of 2012 dividends, Chief Financial Officer Alexey Kornya told reporters in Moscow today. Management will propose paying dividends of at least 18.3 rubles (59 cents) a share, or $1.2 billion in total, he said.

MTS posted net income of $1 billion last year. Excluding impairment costs and court claims in Uzbekistan, profit was $2 billion, according to the statement.

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

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

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