OREANDA-NEWS. May 25, 2009. Event: The Russian mobile subscriber base rose 1.1% MoM in April, which is roughly double the levels seen in Jan-March 09 when the subscriber base added just 0.6% MoM on average. The leaders continued to be MTS and Vimpelcom, with a 28% and 31% share of new additions, reported the press-centre of OTKRITIE Financial Corporation.

View: Good subscriber statistics coupled with anecdotal evidence of stable pricing support our view that Q2 results could already by encouraging by MTS and Vimpelcom. Strong Ruble so far in Q2 suggest positive financial gains compared to significant fx losses expected to be reported for Q1. Note that MTS will be reporting Q1 already on Friday May 22.

Valuation: MTS and Vimpelcom trade at 4.7x and 5.7x EBITDA09E compared to their emerging market peers trading at 4.5x.

Action: The news is positive for both MTS and Vimpelcom and we prefer MTS due to the valuation discount.