MTS announces 1Q results, gives 3G forecasts

1 Jun 2007

Mobile TeleSystems (MTS), Russia’s largest cellco by subscribers, has announced its operational and financial results for the first quarter of 2007. The company’s consolidated revenues for the quarter reached USD1.741billion, OIBDA was USD903 million and the OIBDA margin 51.9%. In the period under review MTS acquired 1.4 million net new subscribers, including 300,000 in Russia, 700,000 in Ukraine, 252,000 in Uzbekistan, 162,000 in Belarus and 15,000 in Turkmenistan. Churn in Russia grew by 6.1% in the first three months of the year, compared to 5.1% in the previous quarter. In Ukraine the figure fell from 8.2% in the previous quarter to 7.8%. As of 31 March MTS claimed to have a 33% market share in Russia, 40% of the Ukrainian market, and 56%, 83% and 54% of the Uzbek, Turkmen and Belarusian markets respectively.

MTS said yesterday that it expected annual revenue from 3G mobile services to reach USD2.5 billion in 2011. Alongside domestic rivals Vimpelcom and MegaFon, MTS won a 3G licence in April this year and said it would invest USD1 billion in its development in the next three years to build a network of around 3,000 W-CDMA base stations; it also said it would cut expenditure on 2G GSM technology by USD250 million. ‘3G is a strategic choice for MTS,’ Chief Executive Officer Leonid Melamed told reporters. MTS forecasts the number of subscribers for 3G services in Russia will reach eleven million by 2011. It estimates there are currently 1.6 million 3G-capable handsets in Russia. ‘A limited commercial use of the [MTS] network in Moscow may begin already in 2007,’ Melamed said. MTS had previously forecast the system would be commercially launched in mid-2008 and would cover the whole of Russia in 2009. It plans to connect up to 43 cities to the network by 2009. Melamed said priority would be given to cities populated by at least one million people.

Russia, Mobile TeleSystems (MTS)