Ukraine’s largest fixed-line telecommunications company Ukrtelecom (UTLM UK) endured a 2% yoy decline in its 9M13 revenue (to UAH 4.87 bln) as a 17% decline in revenue from long-distance calls was not offset by a 17% yoy growth in local call proceeds and 4% yoy increase in Internet revenue.
The company’s workforce and social expenses – the key cost item that exceeds 40% of revenue – increased 1% yoy to UAH 2.16 bln despite headcount having declined 4% yoy to 58,539 as of the end-September. Higher workforce costs and lower revenue resulted in a 14% yoy EBITDA decline to UAH 1.07 bln for 9M13. Ukrtelecom’s bottom line amounted to UAH 113 mln for the period, a 68% yoy plunge.
Alexander Paraschiy: Since Ukrtelecom recently changed its ultimate owner, there is still a chance for its turnaround in the mid term. So far however, we do not see any signs that Ukrtelecom’s revenue in its most profitable long distance and Internet segments is recovering. So we remain neutral on Ukrtelecom.