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The company has pleased investors with even a larger upturn in its OIBDA margin and a comparably higher increase in revenue. Sibirtelecom securities are currently traded at extremely lucrative rates and look like excellent long-term investment vehicles, along with those of most other interregional companies.
On September 30, Sibirtelecom released its 1H 2008 financials audited to IFRS.
The published financial results were generally strong. Revenue rose by 9%, which is quite a good result against the backdrop of a tariff freeze. We note that due to a refusal to index tariffs in 2008, revenue from the operator’s core business, local communications, dropped 0.2%. However, we do not see any reasons for continuation of this negative trend: in autumn 2008, the Federal Tariff Service will most likely raise tariffs for local communications for all interregional companies.
The operator’s OIBDA margin grew by 2% to 38%, which is obviously an excellent result. This value is probably close to a record high for all interregional companies; however, it will not be possible to draw any conclusions until all companies of Svyazinvest holding have released their financial reports.
On the downside, we see some stagnation in the operator’s cellular business: in 1H 08, revenue in the cellular segment went up by just 10%, while the number of subscribers advanced by 36%. However, this event has already been included into our financial models: we projected that in 2009, Sibirtelecom’s market share will be reduced and revenue will grow slower due to pressure from the federal players.
Table. IFRS Financials 1H 2008
| | 1H2007 | 1H2008 | 1H2008/1H2007 |
|---|
| Revenue | 17,007 | 18,461 | 9% | | OIBDA | 6,168 | 6,942 | 13% | | OIBDA margin | 36% | 38% | 2 p.p. | | Net profit | 1,913 | 2,005 | 5% | | Net profit margin | 11% | 11% | 0 p.p. | | Revenue from local communications | 5,720 | 5,709 | -0.2% |
Source: company data, Finam estimates
In our opinion, the operator’s securities are an excellent investment vehicle. We recommend that long-term investors BUY both Sibirtelecom commons and prefs, with a target price of USD 0.18 and USD 0.12 per share, respectively.
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SiberiaTelecom
Capitalization: $51 095 601,96
Common shares:
Price: $0,014
Delta week: 2,7%
Delta month: -23,0%
Delta year: -88,8%
Preferred shares:
Price: $0,0098
Delta week: 4,8%
Delta month: -26,7%
Delta year: -88,0%
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0.569
0.073
