Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Trump Threatens EU Tariffs Over Canada Membership Proposal 
Asian Chip Stocks Rally as Treasury Yields Ease 
Iran Economic Crisis Forces Afghan Families to Return Home 
US Stock Futures Rally as Markets Digest Fed Rate Hike 
Asian Currencies Mixed as Dollar Holds Gains After Fed Rate Hike 
Venezuela Nears Deal to Move $4 Billion in Gold to New York Fed 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Bolivia Approves $1.9 Billion IMF Financing Deal 
Yen Sinks as BOJ Rate Hike Fails to Impress Markets 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
Wall Street Mixed as Treasury Yields Rise After Fed Hike 
Trump Hopes Iran War Nears End as Yemen Fighting Escalates 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
2025 Market Outlook: Key January Events to Watch 
Strait of Hormuz Oil Shipments Hit Six-Month High as U.S. Clears Mines 
Add as a preferred source on Google
The profitability of Russian telecommunications companies will remain under pressure due to high inflation and foreign exchange losses, as well as rising mobile market competition, says Moody's Investors Service.
"Inflation will pressure the profitability of the 'Big Three' mobile operators given their focus on the domestic market," said Julia Pribytkova, a Moody's Vice President -- Senior Analyst. "EBITDA margins will weaken as a result of cost inflation driven by rouble depreciation, which operators will only be able to partially pass on to subscribers in a highly competitive and saturated market."
However, Moody's expects the Big Three -- Mobile TeleSystems PJSC (Ba1 stable), Vimpel-Communications PJSC, the main Russia-domiciled asset of VimpelCom Ltd (Ba3 stable) and MegaFon PJSC (Ba1 stable) -- to see stable or slightly higher rouble revenues in the next 12-18 months. Services remain adequately priced and demand is relatively inelastic.
Furthermore, data usage will likely increase as consumers seek alternatives to expensive entertainment, according to a Moody's report published today.
Moody's report, titled "Telecommunications -- Russia: Sector Faces Stagnation As Competition Increases And Economy Deteriorates", is available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release.
"Still, as Tele2, a new entrant in the Moscow mobile market, rolls out its network in Moscow, competition in the Russian telecoms market will increase," added Pribytkova. "However, given the near-term scope of investment planned by Tele2 compared to the Big Three, Tele2 will lag behind them in terms of service quality, at least in the next two or three years".
In addition, heightened competition will drive the Big Three to focus on service quality, network enhancement and marketing to retain price sensitive customers. Sustainably high capex will protect revenue stability and stimulate growth in the medium term, though it will weigh on profitability and free cash flow generation in the next 12-18 months.
