Russia's MTS says Q2 net income down 22 pct
MOSCOW, Aug 18 (Reuters) - Mobile TeleSystems (MTS) , Russia's biggest mobile phone operator, said on Tuesday its second-quarter net profit fell by around 22 percent from a year ago, eroded by higher costs and a cut in handset prices.
The company, controlled by the Sistema conglomerate of billionaire Vladimir Yevtushenkov, said net profit fell to 17 billion roubles ($260 million) in April-June from around 22 billion roubles a year earlier.
MTS said its expenses rose across the board. The cost of handsets sold surged 30 percent, while finance costs were up 62 percent, the company's report showed.
The company earlier slashed handset prices in a bid to attract customers faced with falling incomes and high inflation, to keep stimulating data traffic. It also increased the pace of opening of own retail stores, analysts said.
MTS's total revenues rose 3.9 percent to 102.7 billion roubles and by 4.4 percent in Russia alone where data revenues surged 23.4 percent and handset sales were up 26.7 percent.
The surge in low-marginal handset sales contributed to the 2 percent drop in operating income before depreciation and amortisation (OIBDA) to 42.7 billion roubles and erosion of the OIBDA margin which slid to 41.6 from 44.2 percent a year ago.
MTS said it still expects its OIBDA margin to exceed 40 percent in 2015 and sales to rise by more than 2 percent in total and by more than 3 percent in Russia alone.
But the firm raised its 2015 forecast for capital expenditures to 92 billion roubles from 85 billion roubles to take into account planned investments in the development of third-generation mobile networks in Ukraine.
($1 = 65.6900 roubles) (Reporting by Anastasia Teterevleva; Writing by Maria Kiselyova; Editing by Mark Heinrich)
