National Telecom Regulatory Committee proposes 35%-56% hike in local call tariffs

Yesterday, the National Telecom Regulatory Committee published a draft of new tariffs for local voice calls, which has yet to be approved by the Cabinet of Ministers. Fixed-month fees are set to grow by 35% in cities and by 56% in villages. Local voice call tariffs were last revised in May 2009. Yegor Samusenko: Ukrtelecom (UX: UTLM UK), the incumbent telecom operator, earns a third of its revenues from local voice calls, which are subject to the proposed tariffs hikes. Should the proposed hike happen, the company will be able to increase its revenues by ~6-8% in 2010 and another 5-7% in 2011 due to tariff growth alone; the suggested growth exceeds our expectations by almost twofold. We expect a positive market reaction to the stock.