The company's press release on January 24 stated that Uralsvyazinform's broadband access subscriber base topped 300,000 users and this metric rose more than 2.5x y-o-y. In 2006, the company's share in this segment rose to 52% from 49% in the year-earlier period in terms of earnings. The share of dial-up users dropped from 61% to 45%.
A few days ago Sibirtelecom released its broadband Internet access subscriber base data; see our daily dated January 14, 2008. The tone of the company's report is similar to that of URSI. Robust growth of xDSL services comes as no surprise, since this technology is cheaper and more convenient than dial-up access. In addition, PC penetration in Russia has risen and the country is among the global leaders in terms of desktop and notebook sales.
Traditionally, we believe that xDSL projects are extremely important for URSI as well as for all the RTOs. When companies possess access to end customers, they can maximize their profit from VAS.
Overall, in the absence of any unexpected data, we do not expect this development to produce the slightest impact on the company's stock valuations or its financial model. We reiterate our Buy recommendation on URSI with a target price of $0.064 per common share and $0.040 per preferred share.
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