Ukrtelecom increases EBITDA, losses in 1Q14

Incumbent fixed line telecom operator Ukrtelecom (UTLM UK) reported a 1% yoy decrease in net revenue to UAH 1.60 bln in 1Q14, as a 7% increase in revenues from Internet services was offset by a 4% yoy drop in revenue from local landline calls. The company’s key cost component – workforce and social expenses – increased 2% yoy to UAH 739 mln. But despite cost growth, UKrtelecom’s EBITDA improved 28% yoy to UAH 405 mln, mainly due to “other operating income”. At the same time, the company reported a 4.3x yoy increase in financial costs (to UAH 251 mln) in the quarter. As a result, Ukrtelecom generated a UAH 50 mln net loss in 1Q14, vs. UAH 16 mln net income in 1Q13.