Ukrtelecom reports 3% revenue decline, margins squeeze in 1Q11

Ukrtelecom (UX: UTLM UK), Ukraine’s incumbent fixed line telecom operator, reported a 3% y-o-y decrease in its top line in 1Q11 to UAH 1,631 mln, according to company filings yesterday according to Ukrainian Accounting Standards. EBITDA decreased to UAH 247 mln from UAH 390 mln in 1Q10 (margin of 15% vs. 23% year ago). Net losses amounted to UAH 200 mln vs. UAH 36 mln year ago. Yegor Samusenko: Given the ownership change, we see the margin decline as logical and expect further losses to be posted this year to clean up Ukrtelecom’s balance sheet for the new owner. We note that fixed line tariff growth will change top line dynamics later this year and should contribute to a 6-8% top line increase this year.