Russia mobile operator MTS profit sinks 61% in quarter on high interest costs

Aug 19 (Reuters) - Russia's largest mobile operator MTS MTSS.MM said on Tuesday that its second-quarter net profit fell 61.1% to 2.8 billion roubles, weighed by rising interest expenses amid tight monetary policy.

Financial costs jumped 76.4% year-on-year to 39.7 billion roubles, the company said, due largely to higher interest expenses.

MTS said it had refinanced part of its debt by issuing bonds at rates below the Central Bank's key rate to ease pressure on the company. Net debt rose 1.5% year-on-year to 430.4 billion roubles.

"The easing of monetary policy, combined with a reduction of the key rate, will lead to a further decrease in the company's borrowing costs," MTS said in a statement.

Revenue grew 14.4% to 195.4 billion roubles, supported by higher income from core telecom services and expanding media and advertising businesses.

Capital spending fell 9.8% to 28.1 billion roubles amid less active investments during the second quarter, MTS said.

The results showed the pressure Russian companies face as interest rates remain at their highest in over 20 years.

In December 2024, MTS said it would cut about 2% of its staff and abandon expensive mergers and acquisitions to reduce its debt burden.