Russia's VKontakte owner VK hit by second quarter loss

FILE PHOTO: St. Petersburg International Economic Forum (SPIEF)
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LONDON (Reuters) - VK, owner of Russian social network VKontakte, reported a second-quarter net loss of 3.4 billion roubles ($56 million) on Thursday, partly due to a 14 billion rouble ($231 million) foreign exchange hit.

The VKontakte network, often compared to Facebook, has emerged as a key player in the race to replace Western services in the wake of Russia's invasion of Ukraine and blocks imposed by Moscow since then on Western social media platforms.

VK's second quarter result was adjusted from a 3.6 billion rouble profit after volatility in the rouble, which recovered from a record low in March to a near seven-year peak in June.

The company said that total adjusted EBITDA had fallen 37% year on year to 4.2 billion roubles ($69 million).

Russia is pushing for the rapid development of domestic digital alternatives and has accelerated efforts to exert control since launching the war on Ukraine on Feb. 24. The Kremlin has blocked access to Twitter, Facebook and Instagram, and found Meta Platforms Inc guilty of “extremist activities”.

A shareholder and management shake-up saw Gazprom Media acquire a chunk of VK's voting rights in December, adding to a growing media empire controlled by the state energy giant.

Yandex said in late April it was selling its news aggregator platform Yandex News and content recommendation service Yandex Zen to VK, but did not disclose terms.

($1 = 60.5500 roubles)

(Reporting by Reuters; Editing by Alexander Smith)