One of Russia's top four mobile majors Mobile TeleSystems (MTS) reported 11% year on year growth in revenues to RUB129bn ($1.8bn) in 2Q21 under IFRS, with 10% EBITDA gain to RUB54bn and 44% margin and 46% net income jump to RUB17bn.

As followed by bne IntelliNews, the company paid a solid final dividend for 2020 after seeing 4Q20 results supported by economic recovery in Russia. The operator is an anchor asset of the AFK Sistema multi-industry investment conglomerate.

In the reporting quarter the growth in top line was attributed to continuous stable increase in mobile service revenue (+5%) and jump in handset and software sales (+28%) in Russia.

The positive pricing and subscriber trends in mobile, normalization of comparison base for roaming revenue and favorable one for handset sales (lockdown in 2Q21), all helped, BCS Global Markets commented on August 19.

After the recent consolidation of MTS Bank, banking revenue grew 43% y/y, speeding up from 18% in 1Q21 due to a mix of organic growth and base effect. The COVID-relation provisions at MTS Bank supported EBITDA as well.

However, the capital expenditure for MTS remained front-loaded, up by 35% y/y to RUB55bn and making 22% of the revenues, resulting in an estimated negative free cash flow (FCF) of RUB17bn in 1H21 (RUB11bn positive excluding MTS Bank).

Nevertheless, MTS slightly increased the 2021 guidance: revenue up high single digit and EBITDA up 5%+ (previously up 4%+), with capex expected in the RUB100bn-RUB110bn range.

Overall BCS GM sees the numbers of MTS in 2Q21 as "solid", with continued solid underlying trends and tailwinds from comparison base, and a "reasonable" full-year guidance upgrade.

The analysts maintained a Buy call on MTS shares and suggested focusing on mobile services competition, FCF and capex, development of video streaming service and banking, and dividend prospects.