Ukrtelekom lost USD 190 mln in revenue in 2007?

Ukrtelekom (UTEL: HOLD) lost UAH ~900 mln (USD 190 mln) in revenue in 2007, said the Control & Revision Administration of Ukraine yesterday following an inspection. This resulted from customers that had leased Ukrtelecom’s digital channels switching to other networks over 2007. The CRA also said that Ukrtelecom overspent its budgeted marketing and advertising amount last year: it spent UAH 160 mln (USD 32 mln), 60x more than approved by the Cabinet of Ministers of Ukraine. Alexander Paraschiy: We see the CRA’s claims against Ukrtelecom as groundless: Ukrtelecom’s advertising expenses are smaller than for other domestic mobile operators. Moreover, it looks unreasonable for the Cabinet’s 2006 ruling, which limits state companies’ advertising expenses at 1/200 of their net income, to be applied to Ukrtelecom as its broadband and mobile services call for heavy marketing in the competitive marketplace.