OREANDA-NEWS. November 19, 2009. Comstar UTS has released its 3Q09 US GAAP results. While the direct calculations of revenues, OIBDA and net income are below the consensus by 0.4%, 0.9% and 14% respectively, OIBDA and net income were affected by a one-off non-cash inventory obsolescence charge (USD 8.8mn) of its old analogue equipment (in compliance with MTS’s strict accounting policies prior to the inclusion of Comstar UTS’s results into MTS’s). The adjusted for the one-off charge OIBDA is 5% above the consensus and the adjusted net income would be around USD 34mn (around 8% above the consensus).

In rouble terms total revenues were more or less flat (QoQ) in most lines, with residential broadband revenues in Moscow (+4% QoQ in rouble terms) as the only exception (in addition to operator’s revenues, largely offset by an increase of intercompany eliminations).

Comstar UTS continued to increase its broadband customer base in the regions (+6% QoQ) and in Moscow (+3% QoQ) resulting in 3.5% total operator’s customer base increase, which lags behind the regionals’ results of around 14% during the period. Comstar UTS’s broadband ARPU experienced a seasonal decline in the regions (-8% QoQ) and in Moscow (-3% QoQ) in rouble terms.

The company showed a good cost performance with an 8% QoQ decrease of labour costs in rouble terms coming from seasonal dynamics and the added effect of Stream-TV’s structure optimisation, and a 13% QoQ decrease in S&M costs. Network traffic costs increased 12% (QoQ) due to a further increase of long-distance and CPP (fixed-to-mobile) traffic.

During 3Q09, Comstar UTS’s capex stood at USD 18mn (4.8% of revenues) and its free cash flow amounted to USD 100mn. By the end of 3Q09, cash and short term investments hit USD 293mn, which we see as important prior to potential Comstar UTS’s acquisitions of regional broadband and pay-TV operators.