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Megafon says net profit lifted by forex gains


MOSCOW, Apr 28 (Reuters) Megafon, Russia's second-biggest mobile phone network operator, reported a 19.4 percent rise in its first-quarter net profit on Thursday thanks to foreign exchange gains but core earnings declined amid intensified competition.

Net income rose to 8.8 billion roubles ($135 million), up from 7.4 billion roubles a year ago, the company said in a statement.

But operating income before depreciation and amortisation (OIBDA) declined 5.4 percent to 30.2 billion roubles, with the profit margin of 40.8 percent down from 43.7 percent.

The decline was due mainly to higher dealer commissions as it boosted its subscriber base by 6.2 percent to 76.4 million users, Megafon said.

"We are facing competitive challenges ... that have forced the industry players to undertake aggressive initiatives to maintain or improve their market shares," Megafon said, adding it had reduced tariffs.

Earnings were also eroded by higher costs related to the expansion of the network.

The company reaffirmed it expected its revenues to be flat or grow at a single-digit rate in 2016 and its OIBDA to be in the range of 120-126 billion roubles.

It revised its capital expenditures forecast to no more than 70 billion roubles from 75 billion roubles.

In the first quarter capital expenditure jumped 76.7 percent on a year ago at 14.3 billion, including 2.2 billion roubles paid for additional radio spectrum. ($1 = 65.2380 roubles)


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