Question-and-Answer Session
Operator
Your first question comes from Alex Kuznetsov – Bear Stearns.
Alex Kuznetsov – Bear Stearns
Good afternoon. Let me congratulate you on the strong ARPU expansion in the Ukraine. Could you let me know if the trend is expected to continue in the second half of 2007? Could you elaborate on the major reasons behind the Ukraine ARPU expansion, apart from the additional seasonality? Have you seen significant improvement in the competitive landscape in the second quarter and do you expect the improvement to continue throughout the year?
My second question is regarding the announcement you made earlier today. There was a comment that Mobile TeleSystems is going to increase leverage by borrowing $1 billion, which is quite an interesting development given the increased cost of debt and the current cash flow generation we’ve seen in the last quarter. Could you comment on how you are going to use the debt please?
Leonid Melamed
Thank you for your question. Good afternoon. Let me pass it over to Pavel Pavlovsky, the Head of Business in Ukraine, to comment on ARPU development there.
Pavel Pavlovsky
Thanks, Leonid. Good evening everyone, it’s evening in Moscow. Talking about ARPU dynamics in Ukraine, yes indeed we saw some noticeable growth in ARPU which resulted from higher usage, impacted by the seasonality. But also in Q2 and even more in Q3 have been introducing the new brand which has stimulated the usage. We will also see the [inaudible] participation is cooling down a little bit and even here more in Q3. Again, after the introduction of the new brand and our new tariff we saw little response from the competitors which gives us a good sign. So, we do hope that this trend will continue although we should not be over optimistic. Thank you.
Let me pass to Vsevolod Rozanov
Vsevolod Rozanov
Thank you Pavel. I will take the second question on the potential debt increase. As it was previously announced, we are likely to register the new bond issuance with the federal service or financial markets later this year for the sum of up to 50 billion Rubles. The sum is by no means the exact number and the exact number will depend on the general corporate needs. Another reason for the Ruble bonds is the refinancing of the Euro bonds which is due to mature in January 2008. At this stage, and I would like to reemphasize it, we are not aiming to attract $1 billion. We are registering the prospectus for this sum, if there is a general corporate need over the course of the next year. Thank you.
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