MTS swings to IFRS Jul–Sep net loss because of Uzbek case reserve

MOSCOW, Nov 20 (PRIME) -- Major mobile operator MTS posted a net loss of 37 billion rubles in July–September because of a 55.8 billion ruble reserve for a potential liability under an Uzbek corruption case against the net profit of 18 billion rubles for the same period of 2017, as calculated under International Financial Reporting Standards (IFRS), it said on Tuesday.

Without the reserve, the company’s net profit could have amounted to 18.7 billion rubles.

Revenue increased 11.7% to 128 billion rubles with the figure consolidating results of MTS Bank for the first time. The consolidation effect amounted to 4 billion rubles. Revenue grew thanks to a rise of mobile data in Russia, sales of smartphones and equipment, and others.

Adjusted operating income before depreciation and amortization (OIBDA) grew 21.6% to 59.3 billion rubles. The OIBDA margin added 3.7 percentage points to 46.3%.

MTS increased its 2018 revenue growth guidance to 4–6% from 2–4%. “We see good dynamics, which we demonstrated over the recent nine months in revenue, this is why we find it comfortable to raise the revenue guidance,” CEO Alexei Kornya said.

The OIBDA growth outlook remained at about 2%. Capital expenditures are also expected at 160 billion rubles in 2018–2019.

The company put aside 55.8 billion rubles as a potential liability in an on-going investigation led by the U.S. Securities and Exchange Commission and the U.S. Department of Justice about MTS’ earlier activities in Uzbekistan.

“An investigation is being held into MTS’ activities. The reserve is an accounting practice, which allows us to make a corresponding resource for possible liabilities within the scrutiny,” Kornya told reporters.

“(The reserve) was done now because the volume of potential liabilities has become clearer, and we’ve managed to make calculations.”

(66.0081 rubles – U.S. $1)

End