Art Capital Research: Ukrtelecom posts record-high profit of UAH 352mn in 3Q15

Ukrtelecom earned UAH 352mn in 3Q15, up from the loss of UAH 73mn in the same period of last year. The company has not reported this much of quarterly profit since at least 2004. EBITDA went up by 56% YoY in 3Q15 to UAH 509mn, also a record-high level for the past three years. At the same time, sales fell by a small 1% YoY to UAH 1.55bn. In 9M15, though, sales went up by 1% to UAH 4.77bn. EBITDA also went up by a small 1% to UAH 1.19bn, which has to do with a sharp drop in depreciation. The net profit of the company for 9M15 amounted to almost UAH 500mn. Art Capital view: The news is POSITIVE for the shares of Ukrtelecom. The third-quarter numbers mostly confirm our conclusions and forecasts made three months ago. The company was able not only to maintain but also to improve business profitability by reaching 10 years’ highest profitability indicators. This goes to show that the slowdown in the local phone connection segment is adversely impacting only the company’s sales now, we believe. Among positive changes to the balance, we point out a drop in net debt by UAH 250mn over the past three months. In the cash flow statement, we point out positive operating cash flow in the amount of UAH 1.75bn for 9M15, which is much higher than EBITDA. Among negative trends, we again emphasize the idea that low capital expenditures may have a serious impact on the company’s efficiency and competitive edge in the near term, especially given the fact that Ukrtelecom has virtually refused to develop the mobile segment and is looking to sell it. The current level of investment is unacceptably low for a telecom company.

• Full name
  Ukrtelecom OJSC
• Registration country
  Ukraine
• Industry
  Communication