Russian mobile operator MTS reported a 76.2% drop in net profit in the first quarter.

In early March, days after Russia sent tens of thousands of troops to Ukraine, MTS said that “actual and potential external factors beyond its control” could affect its operations and financial results.

Russia raised interest rates to 20% after unprecedented Western sanctions, before making two cuts to leave the key rate at 14%. MTS said earnings were also negatively affected by a “revaluation of stocks in the current macroeconomic environment.”

MTS did not provide a forecast, but said that group revenue rose 8.5% to 134.4 billion rubles, while operating profit before depreciation and amortization (OIBDA) also fell. An increase of 2%, 56.5 billion rubles.

CEO Vyacheslav Nikolaev described the results as strong and said that the company focuses on the continuity of day-to-day business and remains confident in its ability to meet challenges.

Moscow-listed MTS shares rose 12.8 percent at 1408 GMT, having jumped more than 20 percent earlier in the day after its board of directors recommended a distribution of 33.85 rubles per share.

“The previous three-year dividend policy expired at the end of 2021,” MTS said. “Adoption of a new dividend policy has been deferred for the time being.”

Nikolaev said that MTS has strong potential digital business lines and a resilient core business in the field of communications, which means that it will continue to grow in the long term.

MTS is one of several Russian companies developing services beyond its core business, including MTS Bank, e-commerce and the live streaming service KION. In December, it signed an agreement to acquire biometrics company VisionLabs.

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Last month, Kommersant, citing sources, reported that MTS had to indefinitely delay the sale of its tower assets, although MTS said it was continuing to review various scenarios and was in contact with potential investors.

(1 dollar = 62.0000 rubles)

Brooke Vargas

"Devoted gamer. Webaholic. Infuriatingly humble social media trailblazer. Lifelong internet expert."

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