Rostelecom: Q2 2026 operating loss and 7.6% EBITDA decline — dividend sustainability questioned

On August 12, 2026, Rostelecom reported Q2 2026 results: revenue grew 9.9% YoY, but EBITDA fell 7.6% and operating profit turned to a loss of RUB 37.5 billion. This review examines what lies behind these figures, the state of debt burden, and implications for dividends.

Key takeaways

— Q2 revenue grew 9.9% YoY, but EBITDA fell 7.6% — margin compression

— Operating loss of RUB 37.5 billion — driven by one-off write-offs and impairments

— Net loss for the quarter was RUB 7.4 billion versus profit a year earlier

— Debt leverage at 2.3x EBITDA — above three-year average, but no trend

— Capex for H1 declined by RUB 3.2 billion, but free cash flow remains negative

— Dividends for 2025 were RUB 2.71 per share, but sustainability questioned given current earnings

Key figures, RUB bn

Q2 revenue grew 9.9% YoY, but EBITDA fell 7.6% — margin compression

In Q2 2026, Rostelecom's revenue reached RUB 208,919 million, up 9.9% YoY. Growth has continued for five consecutive quarters, but the pace slowed from 13.5% in Q2 2025 to 9.9%.

EBITDA for the quarter fell 7.6% YoY to RUB 74,483 million. EBITDA margin dropped from 39.2% to 35.6% — costs are growing faster than revenue, pressuring operational efficiency.

Operating loss of RUB 37.5 billion — driven by one-off write-offs and impairments

Operating profit in Q2 2026 was minus RUB 37,480.8 million versus a profit of RUB 36,261 million a year earlier. This is the first operating loss in the period under review, driven by one-off write-offs and asset impairments.

The H1 report mentions impairment losses on intangible assets of RUB 168 million and write-offs of fixed assets, but the bulk of the loss likely stems from other expenses, which rose from RUB 7.4 billion to RUB 11.4 billion in H1.

Net loss for the quarter was RUB 7.4 billion versus profit a year earlier

Net loss in Q2 2026 was RUB 7,433.6 million versus net profit of RUB 6,100 million in Q2 2025. The 221.9% YoY decline reflects the operating loss and higher interest expenses.

Interest payable in H1 rose from RUB 50.1 billion to RUB 52.0 billion, increasing pressure on net profit. A tax credit of RUB 3.6 billion partially offset the pre-tax loss.

Debt leverage at 2.3x EBITDA — above three-year average, but no trend

As of end-Q2 2026, Rostelecom's net debt stood at RUB 661,220 million, up RUB 24.4 billion from the previous reporting date and RUB 27.6 billion from a year earlier. Debt continues to grow, but at a slower pace.

Net debt to EBITDA for the trailing twelve months is 2.3x. This is above the three-year average (2.93x on EV/EBITDA), indicating elevated leverage, though the trend is not disclosed.

Capex for H1 declined by RUB 3.2 billion, but free cash flow remains negative

In H1 2026, capital expenditures totaled RUB 24,171 million, down RUB 3.2 billion from RUB 24,994 million in the same period last year. The company is cutting investments, but not enough to generate free cash flow.

Operating cash flow for H1 remained negative: minus RUB 32,808 million versus minus RUB 17,149 million a year earlier. Including capex, free cash flow is deeply negative, requiring increased debt to finance operations.

Dividends for 2025 were RUB 2.71 per share, but sustainability questioned given current earnings

In June 2026, shareholders approved dividends for 2025 of RUB 2.71 per ordinary and preferred share, totaling RUB 9,464.8 million. Current dividend yield is 6.9% at a price of RUB 44.57 before the announcement.

However, with a net loss of RUB 9.6 billion in H1 2026 and negative free cash flow, paying dividends at the previous level looks unlikely. Our model estimates next payout at RUB 2.71 per share, implying a forward yield of 6.9% versus our fair yield of 7.0%.

Valuation on the latest reported figures

Bottom line

Rostelecom continues to grow revenue, but Q2 2026 showed that growth is not converting into profit: EBITDA fell 7.6%, and operating result turned to a loss of RUB 37.5 billion due to one-off write-offs. Net loss for the quarter was RUB 7.4 billion, questioning dividend sustainability. Debt leverage remains high, and free cash flow is negative. For investors, the key question is whether the company can restore margins without increasing debt, and whether capex cuts will become a source of future problems.