OREANDA-NEWS. August 11, 2009. The retail chain MTS reached 9% market share in Q2, and is now the number 3 player in the Russian mobile market. Evroset sits atop the pile, with a roughly 30% share, and Svyaznoi has 20%, while the rest of the market is fragmented into groupings of 2-6% shares. The shares are calculated in terms of the number of handsets sold, reported the press-centre of OTKRITIE FC

View: For mobile operators, a more important benchmark is the sale of SIM cards, which has been slightly higher for MTS in Q2.  Having said that, the lower traffic in MTS stores is a negative indicator for sales of SIM cards in the future. MTS plans to invest into 500 more monobrand stores, increasing its retail chain to 3500. From our standpoint Vimpelcom, which controls Evroset and is well-represented in Svyaznoi, currently maintains the best position among the big three in terms of distribution.

Valuation: MTS trades at 5.5x EBITDA 09 while Vimpelcom trades at 5.9x.

Action: The news underpins our neutral view on MTS. The Q2 results for MTS, due out today, could provide a short term positive catalyst for the stock, however we do not believe that the results will lead to upgrades of market FY estimates, which are already quite bullish.