MTS Slumps to Q1 Loss on Foreign Exchange Losses

Russia's Mobile TeleSystems (MTS) has reported that its first-quarter revenues dropped by 24% to US$1.8 billion, due to local currency depreciation and seasonal factors. The company also reported a net loss for the quarter of $57.7 million, compared to a profit of US$610 million a year ago. The loss was due to US$462.4 non-cash foreign exchange losses through US GAAP translation of US dollar-denominated debt.

Mr. Mikhail Shamolin, President and CEO of MTS, commented: "In spite of the volatile macroeconomic situation in Russia and the CIS, MTS demonstrated year-over-year revenue growth in national currencies in all of its markets of operation with the exception of Ukraine, where growth dynamics were inline with the market's overall performance. The changes in the foreign exchange rates impacted our US dollar-denominated results that led to a decline in the Company's main US dollar-based financial indicators, however, the stable financial position of MTS allows us to continue to execute on our business development strategy."

Mr. Shamolin added, "Despite the slight impact on our operating margins, investments in our next-generation network infrastructure and proprietary distribution provide MTS with a solid foundation for future growth. The financial standing of the company remains our priority as our strong balance sheet allows us to attract additional financing, including our recent syndicate loan and ruble bond placements, and provides possibilities to create additional shareholder value, such as our recommended payout of 60% of net income as a shareholder return for 2008."

As of March 31, 2009, MTS' total debt was $4.0 billion.

The Company added approximately 1.0 million new customers during the first quarter of 2009. The company grew its subscriber base in all the countries it operates in, with the exception of Ukraine, where it saw a loss of 179,000 customers.

Posted to the site on 22nd May 2009