1H Telecom Revenues Up 22% yoy.

The fastest growing telecom segment was again cellular mobile (+41% yoy). Internet and data transmission revenues were up 11% yoy, while fixed-line revenues fell: long-distance by 2% yoy, local by 5% yoy. Alexander Paraschiy: Whereas in 2004-2005 the mobile sector’s growth spurred increases in fixed long-distance revenues (due to synergy), now the mobile sector is cannibalizing fixed line revenues. We expect a further decrease in long-distance fixed revenues in 2H06 and 2007. Note also that the mobile sector’s growth is slowing down as it is approaching saturation level.

Telecom Revenue Growth, By Segment (1H06, yoy)

——————————————————————————————
                                2003              2004              2005              2006
——————————————————————————————
Fixed LD                       7%               35%                9%               -2%
Fixed Local                  25%                 4%               11%              -5%
Mobile                         38%             141%               57%              41%
Internet and Data         82%               49%               30%              11%
——————————————————————————————
Total                            22%               61%              32%             22%
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Source: State Statistics Committee, Concorde Capital calculations