Ukrtelecom reports flat sales in 2010

Ukrtelecom (UX: UTLM UK), Ukraine’s incumbent telecom operator, reported UAH 6,749 mln in net revenue in 2010 according to UAS, a decline of 1.7% y-o-y, according to financial results published yesterday. The company`s EBITDA margin stayed at 19% in 2010, while net losses declined to UAH 258.8 mln (a margin of -4%). Yegor Samusenko: The results were in line with market expectations; the company suffered from declining revenues in fixed line segments while its revenue growth from broadband and mobile telephony did not exceed the decreases in fixed line. We expect 2011 to be loss-making again, primarily as a result of balance sheet clearing as part of restructuring by the new owner, which unofficially confirmed it would accept the UAH 10,575 mln valuation for the state’s 92.8% stake. Within three years, we see the company able to improve its EBITDA margins to 40% from 19% in 2010 and increase revenue at a 7% CAGR thanks to a decrease in staff and increase in sales of broadband services.