Mobile data demand boosts MegaFon earnings

Russia’s MegaFon has flagged growth in revenue and profits on the back of rising demand for mobile data services and an increase in smartphone sales.

The operator – Russia’s third biggest after MTS (Moscow, Russia) and VimpelCom (Amsterdam, Netherlands) – said revenues for the three months ending September were up by 9%, to RUB77.5 billion ($2.37 billion), while net profit rose by 2.9%, to RUB15.3 billion, compared with the same period last year.

Russia’s MegaFon has flagged growth in revenue and profits on the back of rising demand for mobile data services and an increase in smartphone sales.

The operator – Russia’s third biggest after MTS (Moscow, Russia) and VimpelCom (Amsterdam, Netherlands) – said revenues for the three months ending September were up by 9%, to RUB77.5 billion ($2.37 billion), while net profit rose by 2.9%, to RUB15.3 billion, compared with the same period last year.

“We have continued to make progress on our strategic objectives in the course of the third quarter of 2013,” said Ivan Tavrin, MegaFon’s (Moscow, Russia) chief executive. “The steady increase in our customer base, strong growth in data and value-added services, remain key drivers of our revenue increase.”

MegaFon says its customer base grew by 5.6%, compared with the third quarter of 2012, to about 66.3 million subscribers, with some 23.2 million of these using data services.

A 24.2% rise in mobile data revenues was fuelled by increased smartphone sales and continued expansion of the operator’s 4G LTE network.

What’s more, thanks to the growing adoption of mobile data services, MegaFon was able to report a 3.6% rise in average revenue per user (ARPU), to RUB343 per month, at a time when many of its international peers are struggling to prevent ARPU from declining in the face of competitive and regulatory challenges.

MegaFon says LTE is now available across 31 regions in Russia, representing about 30% of the country’s population.

The operator has been spending heavily on the rollout of its network, investing RUB10.9 billion in capital expenditure during the third quarter, 51.5% more than in the same period of 2012.

In August, MegaFon announced plans for a $1.18 billion takeover of LTE operator Scartel (Moscow, Russia) that should boost its position in Russia’s nascent 4G market.

“We completed the previously announced acquisition of Scartel on October 1 2013 and are confident this transaction will further strengthen our position as mobile data leader in Russia,” said Tavrin.