Ukrtelecom improves profitability on flat revenue in 9M16

Ukraine’s leading internet and fixed-line voice operator Ukrtelecom (UTLM UK) reported flat yoy revenue at UAH 4.76 bln in 9M16, according to its Oct. 25 regulatory filing. The key driver of its revenue was Internet services (+21% yoy to UAH 1.32 bln) and telephone subscription fees (+10% yoy to UAH 2.23 bln). The company’s EBITDA improved 8% yoy to UAH 1.29 bln in 9M16 solely on its cost-cutting efforts as the company reduced its workforce and social costs 8% yoy to UAH 1.70 bln. At the same time, its bottom line fell 49% yoy to UAH 249 mln, solely due to higher D&A charges.

The company’s debt decreased 18% YTD to UAH 1.59 bln, and net debt fell 21% YTD to UAH 1.42 bln as of end-September.

Alexander Paraschiy: It’s a positive development that the company was able to stop its revenue decline while contributing to its cost-cutting efforts. A possible increase in telephone subscription fees (still regulated by the government) in 4Q16 will enable the company to improve its profitability further. At the same time, UTLM stock’s poor liquidity is unlikely to allow capital gains on the company’s improved fundamentals and prospects.