MTS delivers solid Q1 but provides cautious outlook

Russian operator MTS saw revenues grow 9% in Q1 but believes the whole-year performance is likely to be flat.

MTS has delivered a financially solid Q1 with a total revenue of RUB 119.6 billion ($1.7 billion), up by 8.9% year-on-year. The company’s OIBDA grew by 1.6% to RUB 51.5 billion ($730 million), while net profit improved 0.8% to RUB 17.7 billion ($250 million) compared to the same period of 2019. The strongest growth comes out of its mobile and fixed telecom services, but about half of the top line growth comes from the adjacent businesses, including fintech, digital services, and retail.

“…this is an unprecedented time that is impacting billions of people around the world, including millions of our customers and thousands of our employees,” Alexey Kornya, MTS President and CEO, said during the earnings call. “Connectivity has never been more critical and we are proud to be helping our customers stay in touch with their friends and family as well as colleagues and classmates.

“Overall, I am deeply proud of the MTS team and would like to express my appreciation for their professionalism in this challenging environment. Looking ahead, I am cautiously hopeful for the future, and our strategic focus is clear: supporting our customers today while not losing sight of our goals for tomorrow.”

As Russia entered COVID-19 lockdown only at the end of March, its impact was not reflected in the Q1 results. However, MTS does provide a glimpse into the impact on April and the first half of May.

Similar to other operators that have witnessed during COVID-19, MTS has seen increased traffic but a big drop in retail with many shops are closed. Meanwhile, the operator has seen and expects increased digital activities, in communication, media, and in financial product consumption. In mobile, MTS has received the regulatory approval to implement self-registration SIM cards through an app.

“Looking ahead, we plan to prioritize this channel at the key level to lower subscriber acquisition cost,” said Inessa Galaktionova, First VP for Telecommunications. MTS is “also broadening our SIM-based infection tracking across all of our sales channels.”

“Now more than ever, consumers are shifting to digital-first banking from online customer service to virtual cards and contactless payments,” said Andrey Kamensky, VP for Finance, on the earnings call, suggesting there could be greater benefit for MTS.

Looking at the full-year expectations, MTS’s management is more cautious. Citing concerns including reduced number of retail outlets as well as the impact of lockdown on roaming income, the operator projects a 0% to 3% growth in total revenues and -2% to 0% OIBDA move, compared with 2019.

MTS is the latest of telecoms companies to show that the industry has withstood the uncertainties from COVID-19 well enough especially when it comes to coping with surging traffic, but it is certainly not immune to the impact. Factors ranging from reduced retail and roaming income due to lockdown to overall economic weakness are beyond the telecom operators’ control, but have or will have manifested on telecom operators’ quarterly and annual numbers.

EE elects Ericsson Expert Analytics for excellent experiences

Ericsson has scored a significant deal win to help out UK operator EE with its customer experience management efforts.

The real significance of this for Ericsson will be as an endorsement of its Expert Analytics as it’s not exactly synonymous CEM. And that’s not for want of trying as Ericsson has been involved in BSS/OSS for some time and has been desperate to diversify away from just flogging radios, etc, to operators. But as we see time and time again, diversification it not easy.

“This is another significant milestone in our relationship with EE and an important deal for us in the field of IT,” said Arun Bansal, Head of Market Area Europe and Latin America for Ericsson. “The introduction of Ericsson Expert Analytics will enable more effective customer care and service operations, allowing EE to proactively resolve issues before they have an impact on subscriber satisfaction.”

“With Ericsson Expert Analytics supporting our new customer experience management capability, we will be better able to understand our customers’ experience in real-time, and the detailed insights provided will help us keep improving network quality,” acquiesced Dave Salam, EE Director of Mobility and Analytics.

Elsewhere Ericsson got together with Qualcomm and MTS in Russia to deploy Licensed Assisted Access (LAA) in that county for the first time. In case you forgot, LAA is a technology that augments licensed radio frequencies with unlicensed ones. The announcement claims this deployment achieved Gigabit LTE speeds in Ufa City.

“This is the first LAA network in Russia and Eastern Europe and an important milestone on the way to 5G,” said Andrey Ushatsky, VP of Technology and IT at MTS. “LAA will allow us to build gigabit LTE networks quickly and cost-effectively in places with active traffic consumption, where operators do not always have enough available frequencies in the licensed spectrum.”

“LAA gives service providers access to new spectrum, increasing network capacity and supporting both higher peak rates and higher-than-average speed rates,” said Sebastian Tolstoy, Head of Ericsson Russia. “This commercial LAA rollout marks another important milestone in our strategic cooperation with MTS. Earlier we achieved peak throughput data rates of 25 Gbps at our joint 5G trial. The next step is to prepare for a new demonstration of enhanced 5G capabilities during the football tournament in Russia this year.”

Qualcomm delivered its standard brand of undiluted self-promotion. The deployment, which took place in a large trade center on May 17, featured 256-QAM and 4CC carrier aggregation of 10 streams with 4×4 MIMO on a 20MHz licensed carrier coupled with 3x20MHz LAA.