MTS upped its 2014 revenue guidance by one percentage point as it reported rising sales in the third quarter.

The Russia-based operator said full year 2014 revenues would grow by two percent rather than one percent.

The third quarter saw sales grow 3.6 percent year-on-year to 107.1 billion rubles (€1.9 billion).

In Russia, sales were up 8.4 percent to 99.2 billion rubles (€1.75 billion) as mobile and fixed revenues grew by 9.1 percent and 2.7 percent respectively.

ARPU rose by 10 rubles (€0.18) in its home market as consumers continued to upgrade to smartphones.

MTS said smartphone penetration now stood at 40 percent, while the number of tablets on its network had grown by 35 percent.

Despite the difficult macroeconomic situation, sales were up 6.9 percent in Ukraine and 1.9 percent in Turkmenistan. However, revenues were down two percent in Armenia.

Fears over the market in Ukraine prompted MTS to slash its revenue projections in August.

CEO and President Andrei Dubovskov commented: “The situation in Ukraine remains highly volatile and creates uncertainty at group level. It is hard to forecast what the operational trends would be going forward.”

But he added: “Nevertheless, with the potential of 3G on the horizon we remain enthusiastic about the long-term prospects of the market.”

Meanwhile, net income fell 11.2 percent to 16 billion rubles (€283 million).

MTS Vice President for Finance and Investments Alexey Kornya said: “Profitability was under pressure due to increased taxes and frequency fees, higher payroll, electricity, site rental costs and the impact of currency devaluation on cost items, including roaming and SIM cards, denominated in foreign currencies.”

Earlier this month, the operator announced plans to expand into the satellite TV space.

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