Ukrtelecom Earned USD 46.7 Mln Net Income In 1H05

The State Property Fund (SPF) reported that Ukrtelecom earned a net income of USD 120 mln in 1H04, almost half of which was dividends from its long-distance subsidiary, Utel. Concorde Capital: TheSPF forecasted a USD 314 mln net income in 2005, while we forecast a USD 255 mln (please refer to our desk note of July 18). The increase in net income is possible due to tariff policy changes in 2H05. Moreover, freeing UTEL from its cross subsidization (described in our pervious news), we expect a further increase in UTEL?s net income. However, it is not clear whether this increase will occur in 2005, or in early 2006. Most depends on the telecom sector regulations.