Mobile TeleSystems Profit Beats Estimates on Russia Data Growth

OAO Mobile TeleSystems (MBT), Russia’s largest wireless operator, reported earnings that beat analysts’ estimates on rising demand for Web browsing and messaging.

First-quarter operating income before depreciation and amortization climbed 5.3 percent to 41.5 billion rubles ($1.2 billion), Moscow-based MTS said today in a statement. Analysts predicted 40.9 billion rubles, the average of estimates compiled by Bloomberg. Sales rose 5.1 percent to 97.6 billion rubles, compared with the average estimate of 96.4 billion rubles.

MTS, controlled by billionaire Vladimir Evtushenkov, is competing with billionaire Alisher Usmanov’s OAO MegaFon (MFON) for leadership in a market fueled by rising demand for smartphones and tablets. Billionaire Mikhail Fridman’s VimpelCom Ltd. (VIP) is lagging behind, with its first-quarter sales in Russia dropping.

The number of customers rose by 0.8 percent during the quarter to 108.7 million, helped by demand for cheaper smartphones including those carrying MTS’s own brand. Data revenue in Russia jumped 42 percent to 14.3 billion rubles.

MTS shares had lost 14 percent this year through yesterday as Russia’s economy slowed amid a standoff over Ukraine which triggered sanctions from the U.S. and the European Union.

Net income rose less than 1 percent to 13 billion rubles.

MTS reiterated its targets for sales growth of 3 percent to 5 percent this year and a more than 2 percent increase in Oibda. The growth of Russia’s economy may slow to 0.5 percent this year from 1.3 percent last year and 3.4 percent in 2012, the Economy Ministry forecasts.

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

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Ville Heiskanen, Robert Valpuesta

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