MTS digital ecosystem presented its financial results for the first quarter of this year. IFRS revenues increased by 17.4% annually to 161.3 billion rubles, while the company’s capital expenditures increased by 69%.
Independent analyst, author of the Telegram channel “Invest or Lose” Yuri Kozlov, in a conversation with socialbites.ca, noted that over the past few quarters MTS has been actively investing in the development of ecosystem services, which is part of the company’s strategy to bring high-growth businesses to the exchange through an IPO.
“In April this year, as we know, MTS successfully sold shares of its subsidiary MTS Bank, where demand for securities exceeded supply by almost 15 times. This indicates a high interest of investors in fast-growing companies, so this strategy and bet on the development of the ecosystem are justified,” the expert said.
“However, as the head of MTS Vyacheslav Nikolaev emphasized, the stock exchange entry should be carried out with a significant amount of capital. In this regard, the operator is actively investing in the development of its assets in order to subsequently receive a high price for the media business,” added Yuri Kozlov.
Commenting on the increase in capital expenditures of MTS, Arikapital Management Company investment strategist Sergey Suverov explained that this indicator is primarily associated with double-digit growth rates of digital businesses and the MTS ecosystem itself.
“Investments need to be increased to sustain double-digit business growth. Telecom provides a stable cache for the company and more investments are now needed to keep it in top shape,” the analyst said.
According to him, such a strategy will bring results to the company in the coming quarters.
“For example, the same successful IPO of MTS Bank was also the result of investments made by the MTS group of companies in its subsidiaries,” Suverov said.
He is confident that the ecosystem will grow “at the same high rate thanks to investments.”
“Business growth and investment are interconnected components,” the expert concluded.