Friday, Mobile TeleSystems OJSC (MBT), the largest mobile phone operator in Russia and the Commonwealth of Independent States, reported a net loss for the first quarter, compared to profit last year, hurt by non-cash currency exchange and translation losses that impacted the company's US dollar-denominated results.
Mobile TeleSystems or MTS, which provides GSM services in the regions of Russia, as well as Armenia, Belarus, Turkmenistan, Ukraine, and Uzbekistan, reported a consolidated net loss of $57.7 million or $0.00 per share for the quarter compared with net income of $608.4 million or $0.31 per share in the corresponding period last year.
The Moscow, Russia headquartered company attributed the loss to $462.4 non-cash currency exchange and translation losses due to US GAAP translation of US dollar-denominated debt. For the prior year period, the company reported FOREX gains of $95.86 million.
Consolidated revenues slid 24% to $1.81 billion from $2.38 billion impacted by local currency depreciation and seasonal factors. Three analysts expected the company to report revenues of $1.85 billion for the quarter.
Service revenue and connection fees decreased to $1.78 billion from $2.37 billion in the year-ago quarter. Sales of handsets and accessories rose to $28.3 million from $5.7 million in the same period last year.
Mikhail Shamolin, president and chief executive officer of MTS, said, "MTS demonstrated year-over-year revenue growth in national currencies in all of its markets of operation with the exception of Ukraine, where growth dynamics were in line with the market's overall performance. The changes in the foreign exchange rates impacted our US dollar-denominated results that led to a decline in the Company's main US dollar-based financial indicators."
Group operating income declined to $464.2 million from $704.6 million in the comparable period last year. The company organically added approximately 1.0 million new customers during the quarter. Total subscribers eop rose to 96.61 million from 88.88 million in the corresponding period last year.
Operating income from Russian operations declined to $378.4 million from $562.5 million in the year-ago quarter. MTS added 0.5 million subscribers in Russia and maintained its market share at 34% during the three month period. At the end of the quarter, 86% of the company's customers in Russia were signed up to pre-paid tariff plans.
Operating income from Ukraine operations plunged to $22.4 million from $85.4 million in the same period last year. During the quarter the company churned 179 thousand subscribers and market share declined to 32% from 33% in the year-ago period. In Ukraine, the share of customers signed to pre-paid tariff plans was 92%.
At Uzbekistan, the company added 0.3 million customers and maintained the market at 46%. Operating income increased to $40.6 million from $35.1 million in the year-ago quarter.
Operating income from Turkmenistan declined to $15.4 million from $21.9 million in the corresponding period last year. The company added approximately 197 thousand subscribers and maintained its 87% market share in the market.
At Armenia, the company added about 32 thousand subscribers and increased market share to 81% from 79% last year. Operating income was $7.4 million compared to an operating loss of $0.3 million in the year-ago period.
Amongst others in the industry, telecommunications services provider Windstream Corp. (WIN) reported net income of $88.2 million or $0.20 per share for the first quarter, down from $123.7 million or $0.27 per share in the prior-year quarter. Revenues declined to $755 million from $800 million in the year-ago period. Analysts expected Windstream to earn $0.23 per share for the quarter on revenues of $775.71 million.
MTS announced a dividend for fiscal year 2008 of RUB 20.15 per ordinary share or $2.96 per ADR2. This, the company said, amounted to RUB 39.40 billion or $1.16 billion or 60% of US GAAP net income.
Looking ahead, the company said it continues to see sustained macroeconomic volatility in its markets of operations that may impact performance throughout the Group.
MBT is currently up $2.57 or 7.59% and trades at $36.42 on volumes of $572 thousands shares.The stock has traded between $18.36 and $89.24 during the past year.
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