OREANDA-NEWS. December 08, 2009. Open Joint Stock Company “MegaFon” (“MegaFon”, or the “Company”), the first pan-Russian mobile operator, announces its consolidated financial and operational results for the third quarter ended September 30, 2009.

 

Key financial and operational results for the third quarter ended September 30, 2009 versus the second quarter ended June 30, 2009

·           Revenue grew 8.1% quarter–on–quarter to 47.4 billion rubles

·           EBITDA grew 13.9% quarter–on–quarter to 23.5 billion rubles

·           EBITDA margin increased to 49.6% as compared to 47.1% in the second quarter ended June 30, 2009

·           Net income grew 26.5% quarter–on–quarter to 11.4 billion rubles

·           Free cash flow reached 18.5 billion rubles

·           Total active subscribers as of September 30, 2009 amounted to 48.5 million 

Sergey Soldatenkov, Chief Executive Officer of MegaFon, said, “In the third quarter of this year we demonstrated solid operational and financial results, buoyed by a continuing  increase in our subscriber base and improving revenue per subscriber. Contributing to these positive results were a seasonal increase in our revenue from roaming services and increase in revenue from our value-added services, mainly due to an increase in data traffic.

We are gratified that in September we became the first and only telecom company in Russia assigned with an international investment grade credit rating. Our strong creditworthiness gives us the optimal flexibility to balance between organic growth and carefully selected acquisitions. Our positive cash position is the strongest in the industry, allowing us to continue to invest actively in 3G network construction, which is one of the priority areas for our Company’s strategic development.”    

Key corporate and industry highlights during the third quarter 2009

·           The international credit rating agency Standard & Poor's upgraded the Company’s international credit rating from BВ+ “positive” to ВВВ- “stable” 

·           Standard & Poor's also upgraded the Company’s long-term Russian rating from “ruАА+” to “ruААА” 

·           On July 1, 2009, the merger of MegaFon with its major operating subsidiaries was completed. Effective from this date, Closed Joint Stock Company (“CJSC”) Sonic Duo, CJSC Mobicom-Kavkaz, CJSC Mobicom-Center, OJSC MSS-Povolzhie, CJSC Uralsky GSM, CJSC Mobicom-Novosibirsk and CJSC Mobicom-Khabarovsk ceased to exist as operating subsidiaries and instead became branches of the Company  

·           Konstantin Solodukhin, former Chief Executive Officer of OJSC Rostelecom, was appointed as Deputy Chief Executive Officer for Development of Fixed Line and Long-Distance Services 

·           MegaFon launched 3G networks into commercial operation throughout the Chechen Republic 

Key financial results

(mln. rubles)

Q3  2009

Q2  2009

Q3  2009/
Q2  2009

Q3  2008

Q3  2009/              Q3  2008

Revenue

47 444

43 878

8.1%

46 897

1.2%

EBITDA

23 547

20 666

13.9%

24 087

(2.2%)

EBITDA margin, %

49.6%

47.1%

2.5 p.p.

51,4%

(1.8 p.p.)

Gross margin

37 839

35 029

8.0%

37 540

0.8%

Net income

11 379

8 995

26.5%

12 350

(7.9%)

In the third quarter of 2009, consolidated revenue grew by 8.1%, compared to the second quarter of 2009, driven by seasonal growth in revenue from roaming services, and an increase in revenue from value-added services due to an increase in data traffic, and further augmented by an increase in proceeds from sales of equipment to customers.

The main factors propelling the 2.5 p.p. growth in EBITDA margin in the third quarter of 2009 as compared to the second quarter of 2009 were the increase in consolidated revenue and reduction in operating expenses.

The increase in net income by 26.5% in the third quarter of 2009 as compared to the second quarter of 2009 resulted from the improved EBITDA and further enhanced by earnings from cash and short-term investments. 

 Financial stability and capital expenditures

Capital expenditures and investments in property plant and equipment for the nine months ended September 30, 2009 totaled 21.4 billion rubles.

Total debt as of September 30, 2009 was 40.0 billion rubles. Cash and short-term investments amounted to 78.0 billion rubles. The Company’s net positive cash position as of September 30, 2009 was 38.0 billion rubles.

Key operational results in Russia 

 


Q3  2009

Q2  2009

Q3  2009/
Q2  2009

Q3  2008

Q3  2009/              Q3  2008

Number of subscribers (thousands)

48 061

45 361

6.0%

41 358

16.2%

Subscriber market share

23.6%

23.1%

0.5 p.p.

23.0%

0.6 p.p.

MOU (min.)

275

280

(1.8%)

295

(6.8%)

ARPU (rubles)

326

322

1.2%

388

(15.9%)

 

 

 

 

 

 

 

 The Company’s MOU per subscriber is traditionally the highest among the Russian mobile operators. MOU during this reporting period experienced a 1.8% decline mainly due to the seasonal decrease in business activities during the summer vacation period.

ARPU grew 1.2% due to the seasonal increases in revenue from roaming, which was further enhanced by increasing revenue from value-added services primarily due to robust growth in data traffic, particularly in the internet traffic. 

Data traffic for the third quarter of 2009 increased by 42% as compared to the second quarter of 2009 while voice traffic increased by 4% during the same period.

The relatively stable MOU and ARPU over the consecutive two quarters suggests that the negative impacts of the financial crisis is declining, and the demand for mobile communications is resilient and starting to pick up again.