The Company was able to increase its net profit and reduce leverage despite the continued impact of the pandemic.
Key results for Q3 2020:1
Revenue impact
Service revenue in Q3 was RUB 78.1 billion, down 1.0% y-o-y. This result demonstrates the q-o-q growth on the back of increase in mobile data revenue and digital revenue. Although falling international roaming revenue due to border closures still weighs on the Company’s topline.
With lockdown lifted in a number of regions in Q3, MegaFon stores began to gradually reopen, although consumer spending has not yet returned to pre-lockdown levels despite a positive quarter-on-quarter trend. Revenue from sales of equipment and accessories in Q3 fell by 23.9% y-o-y to RUB 8.4 billion. The total number of visitors to MegaFon stores was down 24% y-o-y.
Cost optimisation
Our cost management efforts have helped to offset the negative impact of falling revenue: MegaFon increased its OIBDA by 2.3% y-o-y to RUB 39.9 billion, primarily as a result of a reduction in sales of low-margin equipment and cuts in advertising budgets and general expenses.
Net profit grew to RUB 13.1 billion, driven by operational efficiency gains, lower finance charges due to continued deleveraging and active management of our credit portfolio, and gains on hedging instruments used to manage the Company’s FX liabilities.
The best mobile network in Russia
The Company invested heavily in supporting stable network operation and expansion in the face of increased network load, the reduction in CAPEX occurred mainly due to the postponement of non-critical projects not related to network quality. In Q3 2020, the number of base stations grew by 6.8% to 192,000, including more than 22% growth in 4G/LTE, with approximately 3,000 new base stations being added in LTE and LTE Advanced standards alone.
Financial results (in millions of RUB, except as indicated)
Three months Nine months Q3 Q3 Q3 2020/ 9m 9m 9m 2020/ Revenue 86,522 89,991 (3,9%) 244,617 255,759 (4,4%) Service revenue 78,084 78,906 (1,0%) 224,834 230,426 (2,4%) Sales of equipment and accessories 8,438 11,085 (23,9%) 19,783 25,333 (21,9%) OIBDA 39,853 38,970 2,3% 111,491 113,100 (1,4%) Net profit 13,086 3,202 308,7% 22,230 8,326 167,0% CAPEX 10,971 11,607 (5,5%) 35,593 35,994 (1,1%) Download full press release in PDF PJSC “MegaFon” is a pan-Russian operator of digital opportunities, operating in all segments of the telecommunications markets in Russia, and in the Republics of Abkhazia, South Ossetia and Tajikistan. It focuses in particular on quality of service and providing Internet at top speeds to its subscribers. MegaFon is a recognised market leader in the provision of mobile data services, was the first operator in Russia to launch commercial operation of a third generation (3G) network, the first operator in the world to launch commercial operation of an LTE Advanced (4G) data network and was the first operator in Russia to complete a 5G international videocall. Additional information about MegaFon and the products and services provided by the Group can be found at http://www.megafon.ru. The above discussion and analysis should be read in conjunction with the Group’s consolidated financial statements which are available for download on the Group’s website at: http://corp.megafon.com/investors/ Certain statements and/or other information included in this document may not be historical facts and may constitute “forward looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 2(1)(e) of the U.S. Securities Exchange Act of 1934, as amended. The words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plans”, “forecast”, “project”, “will”, “may”, “should” and similar expressions may identify forward looking statements but are not the exclusive means of identifying such statements. Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues, operations or performance, capital expenditures, financing needs, our plans or intentions relating to the expansion or contraction of our business as well as specific acquisitions and dispositions, our competitive strengths and weaknesses, the risks we face in our business and our response to them, our plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industry and the political, economic, social and legal environment in which we operate, and other information that is not historical information, together with the assumptions underlying these forward looking statements. By their very nature, forward looking statements involve inherent risks, uncertainties and other important factors that could cause our actual results, performance or achievements to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the political, economic, social and legal environment in which we will operate in the future. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. We expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect actual results, changes in assumptions or in any other factors affecting such statements.
1 Based on the IFRS interim condensed unaudited consolidated financial statements for 9M 2020 reviewed by JSC KPMG. Due to manual rounding, financial and operating results may differ from those presented here. All changes are shown for the same periods in the current and previous year on a quarterly or annual basis, unless otherwise indicated.
2020
2019
Q3 2019
2020
2019
9m 2019
For more information
Media:
pr@megafon.ru+ 7 925 696-05-07
Investors:
ir@megafon.ru+ 7 495 926-20-12
Notes to editors
Disclaimers, statement regarding inside information and forward looking statements