Ob-la-di, OIBDA, life goes on for MegaFon

MegaFon, Russia's second-largest mobile operator – and a fixed-line provider – boasted of "solid [Q1] results amidst external challenges."

It went on to remark that service revenue, net profit and operating income before depreciation and amortization (OIBDA) were all up, year-on-year, "in spite of plummeting roaming and retail revenues."

Thanks to greater operational efficiency and cost reductions, maintained MegaFon, OIBDA was up 2.2%, year-on-year, to 36 billion Russian rubles (US$510 million). OIBDA margin was up 1.3 percentage points over the same period, to 45.3%.

As welcome as this upside is, lockdown measures affecting roaming and retail only came into force in March. According to news reports, Moscow won't reopen all non-food trade until June.

Q2 figures may well be much grimmer, not least because Q1 service revenue only just scraped into uptick territory (0.9%) compared with the same quarter last year (and that was with about one month of lockdown compared with a much longer impact period expected in Q2).

At RUB73.4 ($1 billion), Q1 service revenue would have been lower were it not for increases in B2B wireline revenue and mobile data – as more people worked from home – which helped offset roaming losses. It remains to be seen if MegaFon can pull off the same trick in the current quarter.

"In March we experienced increases in voice and mobile traffic of between 10% and 15%, while usage of home Internet jumped by 50% in just a few days," said Gevork Vermyshyan, MegaFon's CEO. He added that "significant investments" needed to be made in order to meet increased demand on network capacity.

Total Q1 revenue was down 0.7%, year-on-year, to RUB79.6 billion ($1.1 billion), largely because of a 16.3% dip in retail, to RUB6.2 billion ($88 million), as sales of equipment and accessories got squeezed.

— Ken Wieland, contributing editor, special to Light Reading

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