Ukrtelecom reports unexpectedly strong 1H14

Ukrtelecom reports unexpectedly strong 1H14



28 липня 2014 года
Конкорд Капитал

Укртелеком (UTLM)


Ukraine’s biggest fixed-line telecom operator Ukrtelecom (UTLM UK) reported a 2% yoy decline in net revenue to UAH 3,164 mln in 1H14, according to its July 25 filing. The decline was caused by smaller revenue in most of its segments, excluding Internet services. Despite its weak top line, the company was able to improve its gross profit 2% yoy to UAH 927 mln in 1H14, which we attribute to a 3% yoy cut in its workforce expenses (to UAH 1,417 mln).



The company’s EBITDA improved 29% yoy to UAH 852 mln in the period, mainly prompted by higher “other operating profit,” which jumped 12x yoy to UAH 247 mln. The company’s bottom line improved 70% yoy to UAH 46 mln.



Alexander Paraschiy: There are few positives in Ukrtelecom’s financial reporting: the company remains barely profitable and is demonstrating weakening sales in most of its core segments. Slightly encouraging news is that Ukrtelcom was able to restore its policy of decreasing workforce expenses, though they are still eating away most of its operating profit.



The company’s market position might be undermined further in the coming quarters, when we expect more cannibalization of Ukrtelcom’s voice and Internet traffic by mobile operators. In particular, last week’s initiative of the Ukrainian president to start selling long-awaited 3G mobile licenses, if fulfilled, will harm Ukrtelecom’s core profit-generating business, which is broadband access to the Internet.

Источник: Конкорд Капитал

Аналитик: Александр Паращий
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