Ukrtelecom reports 1Q09 results

Ukrtelecom (UTLM) finished 1Q09 with net revenue of UAH 1,679 mln (+0.9% yoy), EBITDA of UAH 299 mln (-2.9% yoy), and net loss of UAH 182 mln (1.8x yoy). Alexander Paraschiy: Ukrtelecom’s revenue increase looks extraordinary against the backdrop of aggregate yoy revenue decrease in Ukrainian telecom sector (mobile telecom revenues dropped 6% yoy in 1Q09; fixed line revenues decreased 14% yoy). The company’s losses are related to inefficient local fixed tariffs and high interest expenses on the company’s borrowings (UAH 139 mln in 1Q09). However, in 2009 up to UAH 500 mln of annual losses from tariff inefficiency are likely to be compensated from a planned Universal Telecom Service Fund. A draft law on the fund creation is in the parliament now. Additional driver for Ukrtelecom’s bottom line could be a revision of fixed-to-mobile and mobile-to-fixed interconnection rates. The revision could result in an additional UAH 100-300 mln in annual sales for Ukrtelecom.