MegaFon cited the scrapping of unlimited tariffs for an uptick in mobile data revenues in the second quarter, but its CEO warned about the challenges the company faces in sustaining growth.

The Russia-based operator revealed mobile data revenues jumped 5.8 percent year-on-year and 4.4 percent quarter-on-quarter to RUB21.91 billion.

It put the increase down to the cancellation of unlimited tariffs, the repricing of others and the introduction of new digital-based offerings that leveraged its acquisition of internet company Mail.Ru earlier this year.

[Read more: MegaFon teams up with Uber to tempt customers, develop new offerings]

However, overall wireless revenues were broadly flat at RUB64.27 billion and a 13 percent decline in sales of equipment and accessories meant total revenues from telecoms services fell one percent to RUB77.95 billion.

The operator put the fall in equipment and accessories sales down to the fact that it cut the number of retail stores it owns and prioritised the sales of higher margin but lower volume handsets.

On the plus side, this boosted operating income by 1.4 percent to RUB30.67 billion.

Fixed line revenues ticked up 2.9 percent to RUB6.48 billion, with MegaFon citing an increase in customer numbers and an expanded portfolio as reasons behind the growth.

However, net profit sank by over 30 percent to RUB6.07 billion due to increased interest expense and forex losses.

MegaFon CEO Sergey Soldatenkov said: “We have reached a turning point where we see signs of recovery in our overall mobile revenue which has been declining during the previous five quarters.

“However, sustaining this positive trend will be challenging so long as market risks such as aggressive actions by industry players, further proliferation of independent MVNOs or the possibility of adverse regulatory action still prevail in the Russian mobile market.”

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