Mobile Telesystems OJSC ADR Earnings Call Insights: Pricing in Russia and VimpelCom
Mobile Telesystems OJSC ADR (NYSE:MBT) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Pricing in Russia
Cesar Tiron – Morgan Stanley: Two questions actually, first on Russia, well done on the performance of your core business. I would like to ask if you can comment on the data pricing environment in Russia and why you think you are growing data revenues significantly faster than Megafon. Second question on the Ukraine you continue to gain quite a substantial market share in the quarter. Can you please explain what you think the driver is and also let us know if you are seeing the margin improvement in Ukraine is that sustainable? Thank you very much.
Vasyl Latsanych – VP, Marketing: It’s Vasyl Latsanych, CMO, replying to the first part of question regarding the data pricing and data growth. The data pricing is a substantial, but not far from being the only factor of growth of data revenues in 2013. We have to take into account the significant increase of our network, both in terms of coverage and in terms of the throughput in most of places where data does matter, which is the result of very significant buildup of the data capacity in 2011 and 2012. At the same time, as we indicated, we have committed and we have executed huge number of activities to promote the data capacity that we build and to enhance the customer experience with the data devices like smartphones and tablets. We have seen quite substantial growth of both tablets and smartphones throughout 2012 in all of our territories and especially in big cities. We believe that that all is quite equal contributor of the overall data sales and we believe that that is quite – that is going to be quite a substantial – there is going to be quite a substantial growth in 2013 as we see that our efforts are unfolding through the year and our plans are pretty aggressive to go after the data market and to grow to be the leader in the market quite soon.
Andrei Dubovskov – CEO: It’s Andrei Dubovskov. I just want to talk about your second question and it’s very simple answer and it’s not concerned in our Ukrainian aggregation also but other markets of course. In my opinion, the normal base for all results across the MTS countries is its subscriber loyalty. If you have good subscriber loyalty you have very good possibility to translate it into your revenue and after that you have very good possibility to translate it to good marginality and we are going to do the same in the Russian market of course.
Cesar Tiron – Morgan Stanley: So do you believe that the uplift in the EBITDA margin in the Ukraine is sustainable?
Andrei Dubovskov – CEO: I think it can be no less than 50% in Ukraine and maybe better. It depends on the economy in Ukraine. It depends on the latter factors but I think it will be no less than 50%.