(Reuters) – Russia’s biggest mobile operator MTS on Wednesday reported a 76.2% year-on-year drop in first-quarter net profit to 3.9 billion roubles ($62.9 million), which it blamed in part on higher interest rates.
MTS said in early March, days after Russia sent tens of thousands of troops into Ukraine, that “current and potential external factors beyond its control” may impact its operations and financial results.
Russia hiked interest rates to 20% after unprecedented Western sanctions before two cuts to leave the key rate at 14%. MTS said profit was also negatively impacted by the “revaluation of securities in the current macroeconomic environment”.
MTS did not provide forecasts, but said group revenue increased by 8.5% to 134.4 billion roubles, while operating income before depreciation and amortisation (OIBDA) was also higher, up 2% to 56.5 billion roubles.
President and CEO Vyacheslav Nikolaev described the results as solid and said the company was focused on ensuring daily business continuity and remained confident in its ability to navigate challenges.
Moscow-listed shares in MTS were 12.8% higher by 1408 GMT, having leapt more than 20% earlier in the day after its board had recommended a dividend of 33.85 roubles per share.
“The previous three-year dividend policy completed at the end of 2021,” MTS said. “Adoption of a new dividend policy has been postponed for the time being.”
Nikolaev said MTS had high-potential digital business lines and a resilient core telecoms business that meant it would continue developing long term.
MTS is one of several Russian companies developing services beyond its core business, including MTS Bank, e-commerce and streaming service KION. In December it signed a deal to acquire biometrics company VisionLabs.
Kommersant reported last month, citing sources, that MTS has been forced to indefinitely postpone the sale of its tower assets, although MTS said it was continuing to look at different scenarios and was in contact with potential investors.
($1 = 62.0000 roubles)
(Reporting by Reuters; editing by David Evans)
