Dallas, Texas 07/05/2013 (Financialstrend) – Mobile TeleSystems OJSC (ADR) (NYSE:MBT), one of the largest telecommunications groups in Russia, is aggressively trying to expand its business and for this purpose has contracted Nokia Siemens Networks to build a fourth generation wireless system for an amount of over $200 million. FDD LTE radio access and IP core network equipment and services will be supplied by Nokia, under the terms of the contract. By adding FDD LTE to the TDD LTE, already launched in 2012, the management expects to take full advantage of the spectrum allocation and increase capacity.
The first quarter of the current year was disappointing for MBT, since net profit fell by 17%, affected by a weak Ruble, as well as by the closing of the company’s Uzbekistan operations;the company was the largest telecom provider in Uzbekistan, with 10 million subscribers. MBT experienced an increase in data revenue by 37%, steadily approaching its bigger rival,OAOMegafon.
MBTis in negotiations to buy the wireless broadband operator and pay TV provider Akado Group and has already applied for carrying out a due diligence. Akado Group operates in Moscow, Moscow region and St. Petersburg. The company also settled a lawsuit over its 51% stake in Bitel, the leading mobile operator in Kyrgyzstan, a fact that will add $320 million to MBT’s book value in the second quarter of 2013.
The market has not yet responded kindly to all these developments, as it remains concerned with deteriorating net income, weak operating cash flow and higher debt management risk. The company has $15 billion in assets and $11 billion in liabilities. On a positive note for long-term investors, the company increased its asset base by $400 million the last 3 years and cut its liabilities by $350 million over the same period.
