Mobile TeleSystems Q3 Profit Declines 4%

11/13/2009 10:33 AM ET

(RTTNews) - Mobile TeleSystems OJSC (MBT: News ), the largest mobile phone operator in Russia and the Commonwealth of Independent States, on Friday reported a 4.1% decline in profit for the third quarter. Results were hurt by a 19.4% drop in revenues, higher debt levels and lower non-cash foreign exchange gain on U.S. dollar-denominated debt. Looking ahead, the company said it continues to see sustained macroeconomic volatility in its markets of operations that may impact the financial and operational performance throughout the Group.

Third-Quarter Results

Moscow, Russian Federation-based Mobile TeleSystems or MTS, which provides GSM services in the regions of Russia, as well as Armenia, Belarus, Turkmenistan, Ukraine, and Uzbekistan, reported net income attributable to the group of $494.4 million or $0.26 per share for the third quarter, lower than $515.6 million or $0.27 per share in the prior-year quarter.

On average, analysts polled by Thomson Reuters expected earnings of $1.25 per share for the third quarter. Analysts' estimates typically exclude special items.

In August, the company had reported net income of $563.04 million or $0.30 per share for the second quarter.

Consolidated revenues for the third quarter declined to $2.27 billion from $2.81 billion in the same quarter last year, yet topped analysts' consensus estimate of $2.18 billion. Revenues for the quarter increased 12.1% from $2.02 billion generated in the preceding second quarter.

Service revenue and connection fees for the third quarter dropped to $2.16 billion from $2.80 billion in the year-ago quarter. Sales of handsets and accessories soared to $102.87 million from $15.44 million in the same quarter last year.

MTS' net operating income for the third quarter dropped 31.7% to $638.49 million from $935.45 million in the prior-year quarter.

The company added approximately 1.86 million new customers during the latest quarter that were all added organically. This includes the addition of around 1.28 million subscribers in Russia. Total subscribers at the end of quarter were 101.38 million, up from 91.73 million at the end of the year-ago quarter.

Sales and marketing expenses for the quarter decreased to $186.14 million from $221.64 million in the prior-year quarter, while general and administrative expenses declined to $374.43 million from $407.21 million a year ago. However, cost of handsets and accessories soared to $110.15 million from $44.69 million in the same quarter last year.