MegaFon Data-Revenue Growth Slows as More Users Have Smartphones

OAO MegaFon, Russia’s second-largest wireless operator, reported that growth in data revenue slowed as most customers who can afford smartphones already have them, signaling sales increases will be harder to come by.

Data revenue rose 24.2 percent in the third quarter, compared with 28.7 percent in the second quarter, Moscow-based MegaFon said today. Its shares fell as much as 3.2 percent. The company’s third-quarter earnings topped analysts’ estimates.

MegaFon leads in mobile data revenue in Russia, according to AC&M Consulting, and some rivals are reporting faster growth as they catch up with it. VimpelCom Ltd, Russia’s third-largest operator, posted 30 percent data-revenue growth last week.

“MegaFon’s earnings came largely in line with expectations, which wasn’t enough to impress investors,” said Konstantin Belov, an analyst at UralSib Capital in Moscow. “The company’s strong financials have been already priced in, while a slowdown in data may be perceived as slightly negative.”

Shares of MegaFon fell 2.7 percent to $34.48 at 1:47 p.m. in London after dropping as low as $34.31. Some investors probably sold to ensure they would profit from the stock’s gain of more than 70 percent since the company’s initial public offering a year ago, Belov said.

MegaFon, controlled by billionaire Alisher Usmanov and partly owned by Sweden’s TeliaSonera AB, said the portion of customers subscribing to data services fell to 34.9 percent from 35 percent in the second quarter.

Scartel Deal

Third-quarter operating income before depreciation and amortization rose 10 percent from a year earlier to 35.4 billion rubles ($1.1 billion). Analysts projected 34.9 billion rubles, the average of 11 estimates compiled by Bloomberg. Sales advanced 9 percent to 77.5 billion rubles, and net income rose 2.9 percent to 15.3 billion rubles.

Oibda will be at least 44 percent of sales this year, MegaFon said. Its previous forecast was 42.5 percent to 44 percent.

MegaFon acquired data operator Scartel for $1.18 billion in October to gain a faster, so-called fourth-generation network and an edge against competitors including larger OAO Mobile TeleSystems.

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