Mobile TeleSystems Q1 2007 Earnings Call Transcript

Tags: Manitoba Telecom Services Inc.

Question-and-Answer Session

Operator

Thank you, if any participants would like to ask a question, please press the Star followed by the One on your telephone. If you wish to cancel your request press the Star followed by the Two. Questions will be posed in the order they are received. There will be a short pause while participants register for a question.

The first question comes from Mr. Alex Kazbegi with Renaissance Capital. Please state your company name followed by your question.

Alexander Kazbegi – Renaissance Capital

Yes, good evening. Alex Kazbegi from Renaissance. I was wondering if you could give us a bit more color on Ukraine and the reasons why ARPU fell quite considerably, especially given the ARPU fell 14%, I think. I generally don’t like contrasting you. It would be very helpful if you could give us some color on that. Also, if you could tell us what the situation is currently and when do you think more price stabilization will be coming into the market? Thank you.

Andrei Terebenin

Alex, could you repeat the question regarding ARPU in the Ukraine? We didn’t hear it well enough.

Alexander Kazbegi – Renaissance Capital

Sorry, I was just trying to contrast, we have seen the ARPU falling on about 14%, and what I was wondering was given the similar subscriber bases you would have roughly the same type of performance and given that ARPU fell by 22%, I was just wondering if you could give us a bit more color on exactly the reasons for that kind of performance, and secondly, what is the situation currently ,whether the trend on the pricing pressure is continuing and when do you think there will be a reversal in the current situation?

Vsevolod Rozanov

Thank you, that was clear. Regarding the ARPU situation in Ukraine, we have witnessed relatively stable growth in APRU in Q1 combined with decrease in ARPU in pre-paid customers in Ukraine.

The reason for this is the following. Customers are usually loyal to our company and value the quality of the network that we have elaborated. They see income is growing and active usage, and actually our marketing, were not oriented to somehow retain the customer base in the Ukraine since the customer base is stable. The major marketing activities took place in the pre-paid section where we have had marketing difficulties since two years ago where the quality of the NC network fell down and it doesn’t have significant reputation among the pre-paid customers. On the one hand, their expectations are lower than would be expected. On the other hand, there are direct financial suppositions to newcomers who also don’t have, I believe, the perception of the excellent network quality, but who aggressively promote new business.

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