Telecommunications Sector Grows 14% yoy In 1Q06.

Again, the main driver for the communications market was mobile segment (36% growth yoy). The fixed long-distance segment only grew 2.5%, and local fixed segment showed a decrease in revenues.

Telecom Revenues, 1Q changes, yoy

                             2004            2005          2006

Local                      3%               12%          -4%

LD                       29%                11%          3%

Internet, Data       42%               36%          6%

Mobile                 142%              57%          36%

Source: State Statistics Committee 

Concorde Capital: Note thatgrowth in all telecom segments is slowing down. The LD segment, which had been showing double digit growth, has stopped increasing due to the slowdown of fixed-to-mobile traffic growth, and increasing mobile cannibalization. We expect improvement in fixed revenue growth after regulators approve fixed tariff liberalization – expected later this year.