MOSCOW: Russian state-controlled telecoms operator Rostelecom said its second-quarter net profit fell 2 percent year-on-year and sales growth continued to slow as it has yet to feel the benefits of expansion in fast-growing market segments.
The former long-distance call monopoly in April became full-service telecoms provider after it was merged with seven regional peers, part of reforms aimed at boosting the efficiency of state telecom assets.
With plans for a secondary listing in London this year and the possibility of privatisation at a later stage, Rostelecom has said it aims to offset losses in its core fixed-line calling business by growing its share of fixed-line and wireless broadband and pay-TV market.
In the second quarter of 2011 total revenue growth at the recently beefed-up operator slowed to 6 percent year-on-year from 8 percent in the first quarter.
The company said revenues totalled 71.2 billion roubles ($2.3 billion) against a 73.4 billion rouble average forecast, with growth driven by increased broadband subscriber base.
Rostelecom's Moscow-traded stock was down 2.8 percent by 1018 GMT, underperforming the broad market and MICEX telecom index which were down 0.97 percent and 1.87 percent respectively.
AMBITIOUS TARGETS
Revenues from broadband internet and pay-TV services -- the two main pillars of future growth -- soared 26 percent and 433 percent respectively.
"We continued actively to grow our broadband and Pay-TV subscriber base. We are on track to achieve by 2015 the ambitious targets we set out in our development strategy," chief executive Alexander Provotorov said in the statement.
That growth was partly offset by an 11 percent decrease in revenues from traditional long-distance fixed-line calls amid continuing migration to mobile networks and stronger competition.
Net profit amounted to 8.55 billion roubles against a 10 billion rouble forecast and pro forma 8.76 billion roubles in the same period of 2010.
VTB Capital said the bottom line was pressured by a rise in depreciation and amortisation costs on the back of high capital spending and the acquisition of TV operator NTK, as well as a 26.6 percent rise in finance costs due to increased debt.
But operating income before depreciation and amortisation (OIBDA) came in above expectations, rising by 8 percent to 28.8 billion roubles against a 27.9 billion rouble forecast.
The OIBDA margin climbed to 40.4 percent from 39.6 percent, beating a 38 percent forecast.
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